Innovation vs. Litigation: Time for Apple to Look Ahead and Beyond Patent Lawsuits and Leave Samsung Behind?

Last Friday, Apple made the decision to amend the scope of yet another patent lawsuit the company had filed in the United States back in February 2012. Though Apple had hinted that Samsung's newest devices would be a part of this second lawsuit, it hadn't made the move to add them. Now, emboldened no doubt by its success with the recently completed patent suit in CA just over a week ago, Apple has moved to a frontal attack on Samsung's latest smartphone entry - its Galaxy S III.

Apple claims that the latest and greatest Samsung smartphone also infringes on a number of Apple patents - though the patents in dispute here are entirely different than those litigated in the CA lawsuit. The recently released Galaxy Note 10.1 tablet the Google Galaxy Nexus have also been added to the list of offending devices for the case. Interestingly, the trial, which is slated to begin in March 2014, will also be heard in Judge Lucy Koh's courtroom. Judge Koh is the same judge that presided over the recent patent suit that Apple won (appeals not withstanding).

We see two immediate problems for Apple. First, we doubt that Judge Koh will deliver an injunction against Samsung on selling the Galaxy S III, Note Tab 10.1 or the new Nexus phone. Second, the trial date of March 2014 is very far off in the future - an entire lifetime and generation in the mobile world will have come and gone before this trial ever gets to the courthouse. By 2014, the Galaxy S III and other devices - including whatever Apple introduces next week - will be nothing more than a fond memory for all concerned (though perhaps not so fond for Apple - which has seen Samsung sell well over 10 million S IIIs since it launched in June 2012).

Samsung Will Innovate

Longer term, Samsung and Google will also no doubt begin to introduce bona fide innovations that will clearly move away from Apple. Samsung is firmly entrenched in the game now - it has managed (despite its recent patent loss) to gain - and maintain - significant market traction, which was the entire point of crossing the line on "look and feel" aspects of its earlier devices, and the company is now positioned to move forward in new ways while operating on a level playing field with Apple. Even if Samsung does end up paying Apple hefty fees, it will still have been well worth it to Samsung to have cheated up front. It was a calculated risk that still pays off long term.

The next tough issue is that of the patents themselves that will be in question. Historically, companies with large patent portfolios tend to break even - for any (possibly large) number of patents one company holds, another holds a more or less equally valuable sets of other patents. Patent infringements overlap and ultimately companies end up somehow settling differences and negotiate their ways around infringement issues.

Samsung was caught with its hand in the Apple cookie jar, so to speak, with the recent lawsuit - look and feel (let's call it extremely substantial imitation) patents are very visceral - and the odds for an Apple victory here were pretty darn good. But as the argument moves toward less visceral and more technical issues, the boundaries blur - and a great deal of fuzziness emerges in terms of crossing the lines of patent holder infringement.

Apple Can Fail to Innovate

Apple won its look and feel case - it is now time for the company to get back to the drawing board, to pull its design team back into the design team's "innovation kitchen" and to begin working on tomorrow's generation of innovation. Sure, Apple is no doubt already hard at work on this - but timing is everything, especially in terms of innovation perception. Based on what we know is likely to be announced next week, Apple appears to be falling behind the innovation delivery curve.

In truth, if all the Apple cards on next week's next generation iPhone announcement play out as has been predicted, there will be no true innovation coming from Apple next week. In fact, although there will be many improvements to both iOS and the iPhone, ultimately Apple itself will be 100 percent guilty of still perpetuating the design elements it introduced in 2007! The next iPhone - even as it becomes the largest smartphone launch in history - will simultaneously work toward moving large scale consumer perceptions of Apple towards having failed to innovate.

The larger problem here is that it plays directly into Samsung's new mantra of claiming that rather than innovating Apple is now left with litigating. That mantra can in fact work greatly to Samsung's advantage going forward - perception becomes perceived as reality as Apple itself falls behind in innovation perception based on its own lack of innovation with the next iPhone.

As Microsoft has clearly demonstrated over the entire last decade, the innovation perception needle moves slowly or not at all once momentum is lost - that is the single greatest fear some of us have regarding Apple. The next opportunity Apple will likely have to drive its innovation perceptions will be a year from now, with at least another six months beyond that to convince consumers it is back on top of its game. That will put Apple behind the eight ball as its March 2014 patent suit on what will be really old technology by then hits the courtroom. No one will care, and Samsung, Google/Motorola, Microsoft and Nokia will all have moved on.

For Apple to stay on top it needs magic and innovation - and Apple needs to innovate at a much higher level than the competition. That is what makes Apple innovation magical - as Steve Jobs well knew. We don't believe for a minute that Samsung will innovate at such a level - Samsung will innovate marginally and just enough to avoid the "I copied Apple" issue going forward. But Samsung won't drive new thinking of the sort Apple needs to drive.

The one thing we do not want, and that the tech world and consumers cannot afford to have happen, is for Apple to become associated with B.B. King's old blues chestnut, "The Thrill is Gone."

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