If the gain is greater than the penalty, then what would motivate a person or a company to desire to make ethical choices? That question is burning in my mind as I read that the judge associated with the Apple verdict against Samsung has reduced the penalty by 40% or $400 million dollars. Let me get my head around this…I’m Samsung and I can take Apple’s patents – violate them – use them to gain market share and the penalty is paltry in comparison to the gain. As a business ethics speaker I wonder if this sets a negative precedent toward honesty and ethics. I find this Amazing!
In April 2011, Apple accused Samsung of infringing on seven patents and last summer jurors found that Samsung infringed on all but one of the seven patents at issue in the case—a patent covering the physical design of the iPad, seems rectangles with rounded edges are not deemed to be novel.
However, in December 2012, federal Judge Lucy Koh refused to order a sales ban on the products the jury found infringed Apple’s patents. She said Apple did not prove that the patented technology is what drove consumers to buy a Samsung product instead of an Apple iPhone or iPad.
Now last Friday, six months after the original jury verdict, Koh ruled that Apple’s $1B award from Samsung be reduced to $600M, finding “an error in the jury’s damages verdict”, and additionally ordering a new trial. (CNN Money). Go figure! Wonder what smartphone the judge uses…iPhone or a Samsung Galaxy?
So after all of the uproar following the original jury decision, we’re not even close to a final resolution of round one in this case – let alone what’s likely to be a lengthy appeal process. So, this case is far from over, much to the delight of lawyers on both sides. Right…I forgot…the lawyers are the ones who make off like bandits in cases like this…but that is another ethical story about billing and time.
Since the time of the original court filing, Samsung says that it is continues to sell only three of the two dozen products originally found to have infringed Apple’s patents.
During 2012, Samsung came out on top in the U.S. — taking a 31.8 per cent share of the market vs. Apple’s 26.2 per cent. (CNN Money) And in a recent technology review comparing Samsung’s Galaxy devices with that of Apple’s iPhones and iPads elicited the conclusion that “Samsung appears to be innovating at a pace faster than Apple can.” (CNN Tech)
Based on the fact that Samsung is both taking the lead in market share and innovation in spite of losing the initial jury verdict, one wonders what would motivate a company to make ethical choices and abide by patent law, when the returns on a violation are far greater than the fines assessed when it is found guilty?
What ethics apply with regard to the infringement of intellectual property, skills, and knowledge? Regardless of what we might deem ethical behavior, it seems that ethical choices are not rewarded. That’s my beef! If the consequence of an unethical choice is not great enough then there is no incentive to act ethically. We would all agree that theft is unethical, but if one stole $1 million and only had to pay back $100,000 then what’s the motivation to act in an ethical manner?
While Koh did uphold that Samsung did infringe on some of Apples’ patents, she reversed the finding that Samsung’s acts of patent infringement were willful – because Samsung had reasons to believe that what it was doing was legal. (Associated Press). This latter determination would have enabled punitive damages to be awarded Apple.
Which seems to imply that as long as a defendant claims to be unaware of an existence of a patent, there is a lessor penalty. Which seems to fly in the face of the understanding that “ignorance of the law does not excuse”. This is priceless…if you don’t know it’s unethical then it must be kinda ok?
There are several questions there that deserve attention.
Perhaps there’s complicit understanding that these types of suits would not be prosecuted and/or will be in court beyond the useful life the invention that it’s a bad business decision to NOT infringe on a patent?
If it is deemed that these types of patents are valid and enforceable – What would need to happen to make them taken more seriously by the technology companies?
Would adding the accused infringers’ directors as co-defendants be enough of a deterrent against patent infringement?
I feel a bit like Forest Gump…I don’t know the answers to the questions, but I do know that if we want people and/or companies to act ethically there must be some motivation to promote ethical behavior. Thus far, as seen with the Goliath and Goliath example…the only winners are the lawyers and those who steal patents.
Your Comments are Welcome!
Elmer-DeWitt, Phillip. “Apple’s $1B award from Samsung reduced to $600M.” CNN Money. 1 March 2013. http://tech.fortune.cnn.com/2013/03/01/apple-samsung-600-million/?iid=H_T_News
Lev-Ram, Michal. “Samsung’s road to global domination.” CNN Money. 22 January 2013 http://tech.fortune.cnn.com/2013/01/22/samsung-apple-smartphone/
Kovach, Steve. “How Samsung is out-innovating Apple.” CNN Tech. 21 February, 2013. http://www.cnn.com/2013/02/18/tech/gaming-gadgets/samsung-apple-innovation
I believe samsung is the most horrid personification of a “professional” business organization ever to exist. They blatantly copy every single design element from apple. They literally have no originality whatsoever. ie. siri and s-voice; gold iphone 5s, gold galaxy s 4; iphone 5s galaxy s5; original iphone commercial samsung s gear commercial; the list goes on and on….
As a lifelong Apple customer, I’m reconsidering ever buying apple again due to their quasi-legal but entirely unethical tax avoidance of billions of dollars, while we struggle to fund schools and roads. Granted, a tiny redirecting of our bloated military expenditure would solve this, but Apple is doing our country no favors.
Just curious – if the government gave you the chance to set aside money from your wages and eliminate the tax burden from them, would you take advantage of that option?
You might as well move to another planet. One where corporations and people who work for them don’t live. While you hope that your statement might resonate with someone you clearly don’t understand the world we live in today. For whatever it is worth, as ethics go, you could do a lot worse than Apple. Yes they make mistakes and seek the lowest taxes possible, like all companies do, but do you have any idea how much they are taxed in USA? What about the jobs they bring to the table in countries across the globe? Even in china they understand being employed has advantages that mean something, Frankly I would bet my next paycheck that if you have been loyal to Apple all these years, you won’t change to anything else simply because the competition is no better or on the same playing field, and because you clearly throw your ethics out the window when you shop like the rest of us.
Nokia was the most “ethical” company in the business but you see how that ended. I call BS on your comment.
An excellent article. While many might counter with Apple being a “patent troll” which by definition they are not, (since they actually make prototypes and work hard to innovate without reverse engineering everything from a-z as many of thier competitors have), it is very troubling that the USA court system is tainted with as much brand loyalty as a comments section in a tech blog. While our current patent system may be broken, I find it very disturbing that anyone (steve woznaik included) could actually laud Samsung for being so damn innovative when they cleary gain huge advantages from stolen technologies whenever it suits them. This ranges from everything from Dyson vacuums to tmsc finfit technology, and Apple right in between of course. Why can’t they make these advances on their own, and take products into new directions.Motorola, even with having been through hell still manges to be creative, as do many others, while still respecting the legal playing field.
After having given Samsung the benefit of the doubt for decades I have come to the conclusion, first hand, that thier products are simply not made to last, nor are they made with safety and quality ahead of aggressive marketing in mind. What Samsung is, is the worlds most successful technology thief in the business, with a strategy to play dumb after the fact and counter sue companies that dare challenge them. I found it laughable that this conclusion was further reinfoced in recent months with the note 7 disaster as well a lengthy list of home appliances that fail or typically end up in a recycle bin long before they ought to. Our family has had numerous Samsung products fail, from stoves to phones, under warranty or not.
While not perfect (nothing made by humans is), Apple does not have to do anything but keep doing what they have and do best, and god only knows that you can’t compare a Kia to a BMW; but as long as it looks like one, and acts like one, people are going to buy it- all the while assuming it’s just a more “reasonably” priced version of the same thing. Sorry Average Samsung guy, but No it is not… Yes the patent system and laws are in dire need of an overhaul, but anyone who thinks Apple is holding back innovation by protecting thier own hard work is clearly a very confused individual.
One must wonder how Samsung ever even gained a loyal following considering the fact that they are the textbook definition of how a company can cheat thier way to the top, and this is reflected in a great many products they design and develop as thier “own” innovations. I guess the birds of a feather rule applies here.
Well said. I am actually using some of what you said in my Ethics paper. Thank you for the inspiration.