Rich Karlgaard: Apple's Lawsuit Sent a Message to Google

Last week Apple made headlines twice. On Monday it broke the world record for shareholder value. Apple's $623.5 billion market cap beat Microsoft's record from tech's notorious bubble era. (Microsoft needed a price-to-earnings ratio of 72 in 1999 to set the record. Apple's ratio is a modest 16.) Then on Friday, Apple won a $1.05 billion patent-infringement judgment against Samsung, the Korean electronics giant and the maker of the Galaxy line of smartphones that stirred Apple's ire.

Congratulations, Apple—twice. But these two coinciding events should give us pause.

“Let me repeat, the patenting of shapes is ridiculous and patent bureaucrats who issue them are just as ridiculous.”

Great, so perhaps you should work within the system to change things. In the meantime, Apple is using the patent system as any smart company would - to its best advantage.

Samsung will be fine, it supplies $5 billion a year in components to Apple. I’m sure the two companies will work out a licensing arrangement, and the cost for Samsung phones and tablets will go up a bit.

Business as usual.

If you bother to look at the 889 patent, you’ll notice it references several previous designs. This is about trade dress, how a product looks, and the 889 patent is different in key ways from every predecessor. “Curved rectangle” may sound absurd, but overall the design creates a look of a product different from every tablet that has ever been on the market before. Remember, this is as of 2004. That is why Apple got the patent.

These have been around for years. Bottle with a fluted, curved design? Yeah, there’s a design patent for that from about 100 years ago, assigned to the Coca-Cola company. Pretty much every new car that hits the road has a design patent behind it, as do the grilles on them. Kia and others came dangerously close to the designs of Mercedes, Jaguar and BMW, but notice they made sure not to be too close, or get sued.

BTW, these bureaucrats are some of the few constitutionally authorized bureaucrats in the country. Actually, they’re underpaid, overworked examiners who have to put their limited time and budget up against megacorporations that will sue their rejection of a patent to infinity. Speaking of budget, you’d think with examination fees they’d have enough money to operate, but Congress keeps stealing their money for other pet projects.

BS. In a word. A look at Apples patent application for a rectangular curved tablet makes it pretty clear that the product they brought to market actually resembles Samsungs picture frame tablets in production before Ipads ever came to be more than their original design. And there are no underpaid/overworked government bureaucrats no matter how much of an Applephile you are.

In fact etch a sketch was a tablet rectangular in shape with curved plastic edges before most Applephiles were born. Just to name one other concept that predated the asinine patent granted for a shape.

The patent system was designed to encourage innovation not to stifle competition. The patenting of rectangular shapes with curved edges is asinine and the support for asinine government bureaucrats here at FR is eye opening.

How many times do you fandroids have to be told THAT WAS NOT WHAT WAS PATENTED???? Nor is that what was copied! And finally that was not what the jury found was infringed! In fact, the specifically did NOT find that specific look and feel infringed, because it was not, at the time the claim was made, registered as a Patented trade dress. Incidentally, the US Patent Office is established by the United States Constitution. That is why we support it so strongly and the patenting of designs have been allowed since it opened.

Design Patents are for specific products, NOT for generic shapes, Jwalsh. Just because RED toys with gray knobs and grey screens with mystery chemicals inside them were made in the past with rectangular shapes rounded corners, but far thicker than the iPad DOES NOT mean Etch a Sketch was "prior art" that invalidates the Design Patent of the iPad.

When this first came up, I researched Design patents because I knew people were going to claim things just like you are.

In fact, prior art is NOT an invalidator of ANY design Patent so long as it is sufficiently different from the current design being patented. That is what the law says. That is why last year's Lincoln Continental can be design patented and so can this year's Lincoln Continental, even though the designs are only superficially and slightly different!

Design patent serve a different purpose than do utility patents. . . but that does not mean they are not enforceable.

Etch a Sketch has both a Utility Patent and Several design patents. The Utility patent has expired, because the general invention is no longer renewable, but the design patents are still in force, being updated with new, modified designs.

“The patent system was designed to encourage innovation not to stifle competition.”

Are you really so clueless that you don’t realize those are two sides of the same coin?

The patent system is intended to reduce competition, temporarily, so that innovators may profit from their inventions for a bit without copycats getting a cut. Alternatively, the inventor may choose to license the invention and make extra money that way.

At any rate, as others have pointed out the award in this case did not involve the shape of the devices. You might want to research “straw man argument”.

From the article:
. . . Apple founder Steve Jobs and Macintosh computer designer Bill Atkinson drew heavily from the work of Xerox's Palo Alto Research Center. In the 1970s, PARC had developed a computer called Alto. The computer featured all kinds of new stuff, including a mouse and pop-up windows. Jobs visited PARC in 1979 and a light switched on. A day or two later, Jobs met with an industrial designer and ordered him to build a prototype computer with a mouse. Thus was born first the failed Lisa, and ultimately the very successful Apple Macintosh, which made its debut in 1984.
I interject the Lisa into the discussion to make the point that turning the tour of PARC into a personal computer was not something just anyone could have done; even Steve Jobs had to get past a false start in order to get it right. If it had been that easy, Xerox itself coulda woulda shoulda done it.

Did Apple steal from Xerox PARC or not? In the broadest sense, yes. The visit to PARC did more than inspire Steve Jobs. It sent him directly on a mission to build something very much like the Alto.

Notice, dear reader, the similarity between the claim that Apple stole the Mac from Xerox and “you didn’t build that . . .” Yeah, the government might have built a road past the place where someone put up a building and started selling ice cream, or maybe preparing income tax returns or selling dry cleaning services or some other specific business (often even the road construction is privately done), but it took vision, to identify a particular business that would work in that particular location, and it took perseverance to actually make it happen.
Yes, and maybe PARC invented the GUI/mouse combination, but it took vision, dedication, and skill - yes, and perseverance, too - to convert the idea into hardware and software you and I could buy and use. Yes, if you own a business your employees may have done most of the physical work which built and sustained it - but you paid them for that. Likewise, Apple paid Xerox - and it is only because of Xerox’s failure of vision that the payment isn’t reflected in maybe a billion dollars of asset on Xerox’s books today.

Everyone knows that "Thomas Edison invented the electric light." But that’s not the real story. Thomas Edison founded GE to make light bulbs, and founded Consolidated Edison to generate and distribute the electricity to power them. Just “inventing” the light bulb was not enough to merit the credit that Edison actually deserved, and got. Similarly, Xerox “invented the GUI and the mouse” - but Steve Jobs put Macs on store shelves where you could buy them. Each deserves their proper credit, but don’t tell Steve Jobs - don’t tell any businessman - “you didn't build that.” That’s just ignorance on parade.

A look at Apples patent application for a rectangular curved tablet makes it pretty clear that the product they brought to market actually resembles Samsungs picture frame tablets in production before Ipads ever came to be more than their original design.

That picture frame was unveiled two years after this patent. Try again. In fact, a good case could be made that Samsung modeled the picture frame after this patent. Of course, a picture frame is not the same product type or used the same way, so it couldn't be considered prior art even if it had come first.

And there are no underpaid/overworked government bureaucrats no matter how much of an Applephile you are.

This isn't an Apple problem, it's a patent issue. This problem has been going on for a while, and has let a lot of baseless patents come through. One guy patented doubly linked lists (a programming construct) something like 30 years after they had been publicly used in programming. And that was a utility patent, not a design patent. We need competent examiners who have time to vet each patent application. You don't call soldiers bureaucrats, don't call these guys bureaucrats either.

In fact etch a sketch was a tablet rectangular in shape with curved plastic edges before most Applephiles were born

Not smooth, too thick, has dials, used completely differently from the device in Apple's patent. And, it's not a tablet. Named five reasons it has no bearing on the patent.

And don’t forget, in the end the Mac was very different from the Alto. Apple managed to engineer a full GUI into a product that cost only $2,500, in the average personal computer price range, instead of around $50,000, which is what a workstation with Xerox’s technology cost when it hit the streets. That was quite a technological achievement. Apple also introduced several GUI concepts that Xerox didn’t have, such as dragging and dropping files. It’s best to say Xerox showed Apple a general direction, but Apple chose the actual destination and drove there.

Apple sucks and the notion that you can patent rectangles with rounded edges is patently ridiculous.

Well, you can at least read a Samsung press release pretty well. The jury, on the other hand, actually looked at the facts which included emails from Samsung executives scrapping their existing designs and intentionally copying Apple's.

Samsung certainly doesn't think Apple sucks -- after all, they're the ones copying them lock, stock, and barrel and claiming in court that Apple's design is the only workable design out there.

But as for the argument that Apple's designs are non-patentable because they're the only way of doing things, Microsoft, of all companies, proves that false with their phone designs. Note, however, that Microsoft did license Apple's patented technologies that they used, while Samsung refuses to do so.

However, to see the other side of the story, Samsung defends itself from charges of copying Apple.

As part of this investment agreement, which was for PRE-IPO common stock, Xerox allowed Steve Jobs and a team of design and software engineers two 8 hour visits to PARC and to USE anything they learned there... but they could not take notes, or take any software, or copy any hardware. They could use what they learned. This was a formal agreement for Xerox being allowed to buy the pre-IPO stock. i.e. Apple purchased the rights to what they saw and learned. Microsoft and Bill Gates were never there.

In your FReepmail you estimate the present value of the stock XRX sold back in the day at $8 Billion. Guess what the market cap of XRX is today? Yahoo lists it at $9.62Billion. I guess you could say that XRX paid dearly for the $16 Million it sold AAPL for, back in the day . . .
Incidently the math doesn’t quite work: you say XRX got only $16M for its AAPL, but the source you quote says XRX invested $1.1 M and got back 19 times that, which would have been more like $20.9 M.

Apple purchased the rights to what they saw and learned. Microsoft and Bill Gates were never there.

. . . so Apple and or Xerox had a claim against Microsoft/Gates.
In that telling maybe XRX had a claim against Microsoft - but not against AAPL.

Incidently the math doesn’t quite work: you say XRX got only $16M for its AAPL, but the source you quote says XRX invested $1.1 M and got back 19 times that, which would have been more like $20.9 M.

You are right: this data is more accurate. Apparently, the amount has been distorted downward in the retelling over the years. I got my figure from Internet data from people who were estimating the return based on the immediate post IPO price of the stock. I will re-adjust my re-telling of the story to the actual figure from the horse's mouth data at the 19 times figure.

In that telling maybe XRX had a claim against Microsoft - but not against AAPL.

That claim would have been beyond the statute of limitation by the time that XRX began the mistaken suit against Apple.

Similarly, Xerox “invented the GUI and the mouse” - but Steve Jobs put Macs on store shelves where you could buy them. Each deserves their proper credit, but don’t tell Steve Jobs - don’t tell any businessman - “you didn't build that.”

Interestingly, XEROX did not invent the computer mouse. Douglas Engelbart and his team at Stanford Research Institute laboratory's Augmentation Research Center are credited with that back in 1964, 6 years before XEROX PARC was founded (US Patent 3,541,541, granted 1970). SRI and ARC also invented the first GUIs. Also interesting is that Apple paid SRI $40,000 for a license for using the patent for the mouse.

Everyone knows that "Thomas Edison invented the electric light." But that’s not the real story. Thomas Edison founded GE to make light bulbs, and founded Consolidated Edison to generate and distribute the electricity to power them. Just “inventing” the light bulb was not enough to merit the credit that Edison actually deserved, and got

What everyone doesn't know is that Edison's light bulb could not be ultimately successful until a man he fired for doing what he told him to do, NikolaTesla, enabled another company, Westinghouse, to efficiently transmit generate and transmit Alternating Current (AC) instead of the Direct Current (DC) that Edison espoused through GE. DC was limited to only a few miles of transmission, while AC could be transmitted hundreds of miles. With the advent of AC, the electric light became available to millions.

"Thus was born first the failed Lisa, and ultimately the very successful Apple Macintosh, which made its debut in 1984."

I interject the Lisa into the discussion to make the point that turning the tour of PARC into a personal computer was not something just anyone could have done; even Steve Jobs had to get past a false start in order to get it right. If it had been that easy, Xerox itself coulda woulda shoulda done it.

As a vintage collector, I own both machines. The Lisa is actually a very nice machine, more powerful and better designed in many ways than the Macintosh. Steve Jobs prevailed with the Macintosh mostly on the price point, which he wanted to be $1995 but corporate (John Sculley) raised to $2495, much less than the Lisa. Much cheaper than $50,000 machines sold by others. If Jobs had sold it for $1995 the Macintosh would have been successful right out of the gate instead of taking a couple years. It's one thing to build a machine; you have to get people to buy them for it to be successful. Xerox failed at that.

People keep claiming that the Mac at $2495 was so expensive when it came out... but the basic IBM-PC in 1984, according to contemporaneous advertisements was more expensive at $2995 before you bought a monitor. . . and that was just with two floppy drives. Harddrives were extra. By the time you fully equipped an IBM-PC you were easily paying $4500. The Mac HD was $1000 extra.

Steve Jobs wanted the Mac to sell for $1995, to compete more favorably with many home computers. He was overruled by John Sculley.

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