Is Apple’s Quest for Samsung Phone Ban a Stretch?

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March 31 (Bloomberg) -- Apple’s failure to convert its victory in a first U.S patent trial to a ban on sales of Samsung smartphones may undercut the iPhone maker’s chances of faring better in a second high-stakes showdown. 3LP Advisors Managing partner Kevin Rivette speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Different, is this more of a fight with google and the last time they were in court?

I think you are right.

I think it is a conversation, if you will, between apple and the rest of the smartphone ecosystem.

I think it goes to the operating system this time.

In what ways, kevin?

The way i see it is, you look at microsoft, as you mentioned, bringing in nokia.

That brings the microsoft operating system up.

You look at the developments in the google system.

Then you look at china, which is trying to bring on cos, which will be an alternative to apple.

You look at the smart watch coming out of samsung, which they are looking at moving away from google, to have a different operating system which they may bring into their smart phones.

So apple is saying to the rest of the ecosystem, look, i own these features, these are mine.

If you want to compete, you have to come up with something different.

That is the conversation i think is going on.

Apple is asking for $40 for every samsung device that infringes on these patents.

Is that anywhere near realistic?

That is huge.

I believe microsoft has been reported to be getting about $10 for all of its patents on software, architecture, and everything else, from samsung, five dollars from htc.

So, $40 is almost a shutdown price.

It disrupts costa goods sold, disrupts margins to the point where it is very difficult to move on.

That is partly a consideration of the google operating system being free.

Apple has got to do something to really change the economics for the rest of the industry.

You also wonder if the economics change as apple and samsung starts to look downstream at cheaper smartphones with even lower margins and profits available to them, where losing five percent of an operating line is not that big of a deal with 40% gross margins.

But when the gross margins fall below that, if they were to lose five percent of that, that could make a diffrerence.

If you are in licensing, one of the things you want to do is get what apple is asking for, which is a set rise for each unit.

As opposed to going with a percentage.

As we all know, as the margins or the selling price goes down, the percentage goes down.

This way, the percentage goes up if they keep the price.

Let's talk about the specific things apple is claiming samsung or google essentially copied, some of the swipe to unlock, the ability to click on a phone number in a text message and i'll directly.

Based on what you've seen, who is right?

Does apple have a strong case?

This is the gazing into the crystal ball side of life.

These are interesting patents in the sense that they potentially could be questioned on validity.

The infringement side is pretty clear, but the validity side will be interesting.

Did they really come up with that feature?

Is that feature so novel -- because you have been able to do it in the apple system by clicking on links to other things.

What is universal search?

You have been able to do that with the google system actually on your pc.

That was many years ago.

These are the sorts of things that will need to be worked out in court.

The specifics here matter.

Kevin, managing director of 3lp advisers, thank you.

This text has been automatically generated. It may not be 100% accurate.


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