In Korea, Samsung's loss to Apple puts innovation in spotlight
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| Seoul
The battle between聽Samsung Electronics and Apple, the two global leaders in mobile devices, gets at the heart of innovation versus creativity in South Korea鈥檚 rise as an industrial powerhouse since the Korean War.
Samsung Electronics, the loser in a milestone patent infringement case brought by Apple, was ordered Friday to pay $1.05 billion for violating Apple鈥檚 patents on iPhone and iPad technology. Samsung is vowing, however, to fight to overturn the verdict of the nine-person jury in a federal court in Cupertino, Calif., near Apple鈥檚 global headquarters.
Whatever the final outcome, the case may force Samsung to focus more intensively on innovation, according to analysts here.
Samsung should 鈥渟top fighting it,鈥 says James Rooney, chairman and chief executive officer of the Seoul advisory firm Market Force. 鈥淚t鈥檚 time to stop copying others. Samsung would be far better advised not to fight it. To continue fighting it is to give themselves a bad name.鈥
Samsung Electronics chairman Lee Kun-hee, the head of a sprawling empire that accounts for 20 percent of South Korea鈥檚 economy, has periodically called on his army of executives and engineers to 鈥渟hift from copying to innovation.鈥
Intrinsic to Korea鈥檚 rise as an industrial power from the devastation of the Korean War has been the drive to imitate whatever worked for major economies, notably Japan and the United States.
In recent years, however, Korea has been bursting with creativity in fields ranging from motor vehicles to music as epitomized in K-Pop groups with global followings. 鈥淭here is a huge capacity to create,鈥 says Mr. Rooney, 鈥淭hey鈥檝e been schooled so much in the other way of doing things. Copying has been the backbone of Korea鈥檚 economic growth since the 1960s.鈥
The jury in California, after deliberating for three days on a wide range of complicated issues and questions, came out with the unanimous verdict that Samsung had infringed on six of seven of Apple鈥檚 patents for mobile phones. The jury flatly rejected Samsung鈥檚 countersuit in which it had asked for $421.8 million in damages.
Although the award of $1.05 billion in damages for Apple was far less than the $2.5 billion Apple had asked for, the amount seems almost incidental when balanced against Apple鈥檚 desire to keep Samsung from intruding on its markets with Apple-like products in Samsung packages.
Samsung immediately leaped on the implications of forcing the company to retreat as a competitor. The verdict, said Samsung, was not only 鈥渘ot fair鈥 but would deprive American consumers of the freedom to choose between brands and manufacturers, meaning 鈥渇ewer choices, less innovation, and potentially higher prices.鈥
In a foretaste of the grounds on which it will battle the verdict, Samsung charged that Apple had 鈥渕anipulated鈥 the patent laws that form the basis of its case. The verdict, it said, was by no means 鈥渢he final word鈥 as Samsung pursues not only the US case but similar cases in Germany, Australia, and elsewhere.
It was 鈥渦nfortunate,鈥 said Samsung, that patent law could be 鈥渕anipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies."
The California jury came out with its verdict hours after a judge in a district court in Seoul ruled that Apple had actually infringed on two of Samsung鈥檚 patents for wireless technology and spurned Apple鈥檚 claims of copycat design. The judge, however, ruled that Samsung鈥檚 Galaxy had copied the capacity of the iPhone screen to 鈥渂ounce-back鈥 after reaching the bottom of the page.
Some analysts agree that Samsung has a point in disputing Apple鈥檚 claim that it had copied the rounded corners of Apple鈥檚 iPhones.
鈥淛ust because the Samsung phone looks similar, that鈥檚 a bit of a stretch,鈥 says Hank Morris, financial adviser at Industrial Research and Consulting, a Korean firm. 聽Similarly, 鈥渙n a store counter, one laptop looks like another,鈥 he says. 鈥淚t鈥檚 very hard to tell them apart.鈥
What goes on inside Samsung and Apple products is another matter. 鈥淥n the internal systems, in the processes required, obviously Apple was ahead of the field,鈥 says Mr. Morris. 鈥淪amsung was unable to show it had the technology.鈥
The case, though, has another dimension that inevitably draws the two giants together. Apple is one of Samsung鈥檚 major customers for memory chips.
鈥淭hey clearly have an enduring relationship,鈥 says Morris. In the end, he believes, Samsung should pay to license Apple intellectual property. 鈥淎ppeals will be difficult,鈥 he says. 鈥淚 doubt if they can overturn the outcome.鈥
In fact, there seems to be no silver lining for Samsung in a case that will compel the company at the least to reconfigure some of its products for sale in the US. 鈥淭he decision,鈥 said Yonhap, the South Korean news agency, 鈥渃ast dark clouds over Samsung's booming sales of smart phones and tablet computers in the US market.鈥