Tuesday, August 28, 2012

Steve Jobs Vindicated By Verdict Protecting Apple Design

By Peter Burrows - Aug 27, 2012 6:41 PM GMT+0400
Steve Jobs, famous for his view that a product’s look and feel is just as important as how it works, was vindicated by a California court exactly one year after he stepped down as chief executive officer of Apple Inc. (AAPL)
A jury found on Aug. 24 that Samsung Electronics Co. must pay Apple $1.05 billion for infringing six patents, including four covering the design of its mobile devices.
Apple co-founder Steve Jobs often bemoaned his competitors’ lack of attention to design. Photographer: David Paul Morris/Bloomberg
Aug. 27 (Bloomberg) -- John Butler, a Bloomberg Industries analyst, and Mark Newman, an analyst at Sanford C. Bernstein & Co., talk about the patent battle between Apple Inc. and Samsung Electronics Co. He speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg)
Aug. 27 (Bloomberg) -- In "Street News," Bloomberg's Sara Eisen reports on today's top stories including Samsung Electronics stock dropping on concern devices may be banned in the U.S. after a jury said it violated Apple Inc. patents, Hertz agrees to buy Dollar Thrifty for $2.6 billion and Tropical Storm Isaac is forecast to strengthen over the eastern Gulf of Mexico. She speaks on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)

Courts tend to give greater credence to utility patents, which cover a product’s underlying technology. This case was distinct for its emphasis on design patents, which reflect Jobs’s focus on the stylized nature of Apple’s devices. Of the 359 patents listing Jobs as co-inventor, 86 percent are the design variety, according to MDB Capital Group LLC.
“Given the infringement of the design patents, which protects the non-functional appearance of the iPad and iPhone, Apple now has considerable power to keep knock-off phones off the market,” said Tim Holbrook, a professor at Emory University School of Law in Atlanta.
The shares of Cupertino, California-based Apple rose 1.9 percent to a record $675.68 at the close in New York. The stock has gained 67 percent this year.
The ruling could prompt more technology companies to issue design patents and bring suits to protect them, said MDB CEO Christopher Marlett. It also deals a setback to Google Inc. (GOOG), maker of the Android mobile operating system running Samsung’s phones.
In a court filing today, Apple sought a ban on eight models of Samsung’s smartphones, including several of its Galaxy S devices.

‘Consumer Desires’

“Because the use of an iPhone is so intuitive, competitors attempting to design around the patents will have a far more difficult time connecting with the needs and desires of consumers,” Holbrook said. “Google’s Android system may suffer as a result.”
Jobs, whose patents cover the final design of many Apple products, including docks, chargers and even the glass staircases found in many Apple stores, died in October 2011.
Courts have historically favored heavy-duty technology involving electronic circuitry or computing algorithms over the brand of innovation that has made Apple’s products more appealing to use and look at. That was the case in the 1980s, when Apple failed to convince courts that Microsoft Corp. (MSFT) CEO Bill Gates had violated Apple’s copyright on the look and feel of the Macintosh operating system in early versions of Windows.
“Steve was furious when Bill Gates introduced Windows 1.0 as he thought Microsoft was ripping Apple off and he told Bill so,” former Apple CEO John Sculley said via e-mail. “That’s when Apple began its lawsuit, which went on for years and Apple eventually lost.”

Design Matters

Jurors who sided with Apple in the case against Samsung were swayed by internal e-mails describing how Google asked Samsung to change the design of its products to look less like Apple’s, Velvin Hogan, foreman of the panel, said in an Aug. 25 interview.
The trial showcased how, in the increasingly competitive market for consumer electronics, design is taking on a more central role. Apple rose above rivals in the nascent personal computing world of the 1970s in part because it was the first to package its device in an attractive enclosure with built-in display.
Jobs often spoke of his fascination with design. In a 1996 interview with Robert Cringely, he described a 1979 visit to Xerox Corp. (XRX)’s Palo Alto Research Center. While there, Jobs was so taken with the graphical user interface of its prototype PC that he didn’t even notice other technical breakthroughs, including the use of networking that linked more than 100 machines.

‘No Taste’

Jobs made no bones about drawing on what he saw at PARC as inspiration for the Mac.
“Picasso had a saying: good artists copy, great artists steal,” Jobs said in the interview. “And we have always been shameless about stealing great ideas.”
He drove Apple engineers to build on the concepts, creating a user interface based on a desktop metaphor, such as moving files into folders, that largely defined the modern PC. Jobs hired graphic designer Susan Kare to create fun, easily- understandable icons, such as the trashcan used for deleting files.
Jobs often bemoaned his competitors’ lack of attention to design, even as Apple benefited from it.
“The only problem with Microsoft is that they just have no taste,” he said in the interview with Cringely. “I don’t mean that in a small way, I mean that in a big way -- in the sense that they don’t think of original ideas, and they don’t bring much culture into their products.”

Pixar Patents

After his return to Apple in 1997, the company benefited all the more from Jobs’s obsession with detail. When Apple introduced its transparent, blue iMac the following year, other PC makers began experimenting with colors other than beige or black.
Jobs was undeterred by Apple’s legal defeat versus Microsoft, and he became adept at using intellectual property to achieve business goals. His Pixar Animation Studios was finishing its first feature-length film, “Toy Story,” while preparing to go public in 1995. Some bankers said that the company’s sales were too low to support an initial public offering, said a person with knowledge of the matter, who asked not to be identified because he’s not authorized to discuss it.

Financial Incentives

Jobs called Microsoft’s then-CEO Gates and threatened to sue for infringement of some of Pixar’s graphics-related software, the person said. Microsoft and Pixar instead reached a licensing deal that gave Pixar’s sales a much-needed boost.
Tara Walberg, an outside spokeswoman for Microsoft, declined to comment.
Apple has stepped up efforts to protect intellectual property, in part due to the rise of Google’s competing Android operating system. Apple in recent years has offered engineers financial incentives for patent applications that increase with the number of filings, said one former Apple manager who requested anonymity because the information is not public.
Kristin Huguet, a spokeswoman for Apple, declined to comment.
By early 2011, Jobs had decided to use the legal system as aggressively as possible to protect Apple’s intellectual property. He famously told his biographer, Walter Isaacson, that he would spend “every penny” in Apple’s coffers to combat Google’s software.
“I’m going to destroy Android, because it’s a stolen product,” Jobs said. “I’m willing to go to thermonuclear war on this.”
On Aug. 24, Jobs posthumously enlisted allies in that war in a nine-person jury in federal court in California.
To contact the reporter on this story: Peter Burrows in San Francisco atpburrows@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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