Can Apple Win in the Courtroom?

If designers run the show at Apple (Nasdaq: AAPL  ) , then lawyers are responsible for greasing the wheels. Right now, the Cupertino giant could use some better luck in that department.

Apple's top patent expert, Chip Lutton, is leaving the company after a decade-long stint. His heir is BJ Watrous, formerly a top lawyer in the Hewlett-Packard organization, but that's kind of beside the point. Replacing a leading legal mind in the midst of several high-stakes intellectual property lawsuits is hardly ideal, no matter how talented the replacement may be.

Slinging darts at Sammy
On that note, the complicated cross-suing action against Samsung could soon get even tougher, as Samsung has moved to replace some or all of Apple's third-party legal staff for the case. According to Samsung, there's a conflict of interest as five lawyers on Apple's side previously represented Samsung in a different patent-related lawsuit. The confidential information those folks saw earlier might taint them for Apple's purposes.

The Samsung drama is complicated by the fact that the Korean company manufactures several important parts of Apple's popular iPod, iPhone, and iPad product lines. Unless the combatants kiss and make up, Apple might even need Intel (Nasdaq: INTC  ) to step up and manufacture Apple's in-house processor designs based on ARM Holdings (Nasdaq: ARMH  ) technology, which runs counter to Intel's down-home policies.

LG Display (NYSE: LPL  ) and AU Optronics (NYSE: AUO  ) might be able to fill the void in high-quality LCD screens, but those Retina displays probably have some Samsung-owned patents attached to them. And we're years away from anyone not named Samsung producing OLED screens in volumes approaching Apple's high-volume needs, in case the company had any plans on going there.

As you can see, there are complications involved in cutting Samsung loose entirely.

Moreover, a federal judge has just denied Apple's request for a speedier trial. "Apple has not established substantial harm or prejudice justifying a shortened briefing and hearing schedule for its Motion to Expedite," says the court order. Hence, Samsung will be able to keep importing and selling its Galaxy S and Galaxy Tab gadgets for a while despite Apple's cries of copycat products and design infringements.

On that note, Taiwanese smartphone builder HTC is thumbing its nose at Apple's attempts to stop the flow of HTC Androids. "HTC is disappointed at Apple's constant attempts at litigations instead of competing fairly in the market," says HTC's official response to yet another legal action from Apple. Translation: Shouldn't you guys be innovating rather than litigating?

The damage done
How will the loss of one and perhaps several more top litigators affect Apple's many legal actions? I'm no lawyer, but I'd expect defections and court setbacks to at least delay everything by quite a while, and perhaps render the idea of blocking current gadget imports moot; there'd be new generations of smartphones and tablets on the market before anything gets settled.

In that case, the whole exercise seems like a pointless distraction from the real business at hand, particularly with revered leader and famed micromanager Steve Jobs largely out of commission.

By contrast, Google (Nasdaq: GOOG  ) isn't caught up in suing anyone over Android technologies because the whole package is open-sourced -- anyone can read, even modify and publish, the code, albeit at an unpleasant time delay. And Android phones are selling like hotcakes. On the other hand, Google does find itself at the hands of other companies (like Oracle) trying to sue over Android IP infractions.

What is Apple doing wrong?
I'm not saying Apple should open its source code or anything, but the courtroom seems like the wrong venue for the smartphone wars. The market simply moves too quickly for the slow gears of the legal system to make a difference, other than imposing damages long after the alleged crimes were committed.

On top of that, I remain unconvinced that many of the patents and trademarks at issue should have been granted in the first place. For example, Apple wants exclusive rights to the App Store name in suits filed against Amazon.com and others.

That's kind of like Johnson & Johnson trademarking the term "adhesive bandages" rather than the Band-Aid name that it actually owns. If Apple had given its store a distinctive name akin to the truly trademarkable iTunes store (iApps, anyone?), I would understand fighting to protect it. But staking out exclusive rights to a common, descriptive term? Not so much.

Apple may win some of these lawsuits and settle others in its favor, but I doubt that any of it will result in significant changes to the mobile computing markets. To see how it all turns out, I'd suggest adding Apple to your watchlist so you can keep an eye on the stock without lifting a finger. OK, one finger for that first click. You might as well get that hardship out of the way right now.

Fool contributor Anders Bylund owns shares of Google and has sold puts on Intel, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Oracle, Apple, Johnson & Johnson, and Google. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Apple, Amazon, Google, Johnson & Johnson, and Intel. They have also recommended creating a bull call spread position in Apple as well as diagonal call positions in Johnson & Johnson and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2011, at 11:53 AM, jafutral wrote:

    "But staking out exclusive rights to a common, descriptive term?"

    Exactly when was "Appstore" _common_ before Apple started using it after they bought it from Salesforce.com? Point out who used it before Apple made it famous? Exactly what out there was described as an app store before APPle opened theirs?

    Joe

  • Report this Comment On July 15, 2011, at 12:54 PM, TMFZahrim wrote:

    @jafutral, what else would you call a store for apps? A program store? An app auction? Cf. trademarking the word Windows just because you've applied it to organizational units on your computer screen. Equally ridiculous.

    Anders

  • Report this Comment On July 15, 2011, at 2:11 PM, jafutral wrote:

    Actually, back in the day before the iPhone, we called them computer stores. When they made the move to online, we still called them computer stores. If you do a Google Trend, you find App Store and appstore, get NO use until right after the iPhone. Even the term app starts to trend up only after the iPhone. Google doesn't even describe their Android Market as an "app store" so apparently it is doable.

    The charge is Apple is trademarking a "common, descriptive term." At what point before Apple's work with the iPhone was this term ever common? It was never common. It didn't even exist until the SUCCESSFUL 2006 Salesforce.com trademark.

    And the second biggest similar store doesn't even use the term. So I can only conclude that it is descriptive only because stores are similar to what Apple first created with its App Store.

    As for ridiculous, I won't argue that point at all. I think most trademarks are ridiculous. And I think it is very telling that trademarks and patents are handled by the same office, since I think many patents are equally ridiculous.

    But ridiculous or not, that is the system as it currently exists. Apple is playing by the rules and deserves equal consideration and protection with all the other ridiculous trademarks and patents.

    Joe

  • Report this Comment On July 15, 2011, at 5:47 PM, Jazzmmab2011 wrote:

    Apps is an abbreviation for Applications. Correct me if I'm wrong. Seems like going back to the beginning of the Apple Mac Programs were called Applications and with Microsoft DOS/Windows Applications were called Programs. That was way before there was a mobile platform.

  • Report this Comment On July 15, 2011, at 6:28 PM, rfaramir wrote:

    Just because Apple was first to popularize (not first to use, since they bought it), doesn't mean it wasn't obvious.

    I'm long AAPL and a Mac programmer, but over-lawyering irritates me. Kiss and make up, guys!

  • Report this Comment On July 15, 2011, at 7:34 PM, jafutral wrote:

    Any more obvious than The Container Store (TM)? Or Lampstore (TM)? (Do you want me to dig up more? It isn't hard.)

    Joe

  • Report this Comment On July 16, 2011, at 2:05 PM, INoFoolin wrote:

    The author is no lawyer, and not even a businessman. Apple needs to defend its intellectual property aggressively. It is the inventor of many new classes of products, software, software development platforms, and the world's greatest retailer. Of course companies like Samsung and HTC want to copy everything they do!

Add your comment.

DocumentId: 1519740, ~/Articles/ArticleHandler.aspx, 7/29/2014 8:20:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement