When Apple litigates, it’s Personal and it’s Business!

Apple Inc. of Silicon Valley has declared war on “The Copyists”, their name for companies they believe have illegally appropriated Apple developed Technology. Many pundits think Apple is being over aggressive in their reaction and should just keep competing. Below I try to lay out Apple’s reasons and point out why this is an important business move but their selection of recipients is personal.

Let’s Begin

Its important here to remember that during Steve Jobs introduction of the original iPhone he quipped something to the effect “Oh’ Boy have we got this patterned” , he was of course referring to Microsoft’s theft of the Mac UI back in the day. Steve and Apple rightfully argue that Microsoft’s misappropriation of the Mac interface rerouted history and denied Apple its leadership role and at least in the opinion of Apple fans was a disservice to the world by stifling innovation for two decades. This is illustrative for two reasons, one, Steve knew way before any one else that what he was introducing in the iPhone would change the way the world computes. Two, Apple did not intend to make that same mistake again and Apple was warning the competition that they were prepared to defend themselves.

Apple has always claimed that they are not afraid of competition but insist that competitors compete by innovating themselves rather than stealing technology Apple has work very hard to bring to the market. They liken their company and it’s employees to artists that deserve to be compensated for their hard work and innovation.

To quote Tim Cook at this years AllthingsD:

“From our point of view, it’s important that Apple not be the developer for the world. We can’t take all of our energy and all of our care and finish the painting, then have someone else put their name on it.”

Writing in support , Patently Apple‘s Jack Purcher doesn’t hold back

“In 2007, Samsung, HTC, Google (GOOG) and all others in the industry didn’t have a smart phone with the likes of Apple’s iPhone features. They didn’t have the solutions that Apple eloquently brought to market to make a smart phone truly smart. Apple carefully and meticulously crafted a full end-to-end smartphone solution. So when the copycats and their followers whine in public and on blogs that Apple should learn to compete instead of initiate litigation – I bowl over with laughter.”

A good example is Apple’s hands off approach to Microsoft’s Windows 7 Phone, I can not find one lawsuit filed by Apple concerning this technology. The Windows phone was developed by Microsoft independently and Apple seems to have no issue with that.

Some may ask why Steve was so upset with Google that he threatened to go “thermonuclear” on Google vowing to spend every penny Apple had to cripple Google’s Android System.

Let’s look at the facts:

Please forgive the overly simplistic explanation below, I feel compelled to focus this from Apple’s point of view.

Samsung was honored by winning contracts from Apple as a parts supplier, they enriched Samsung’s business tremendously, today those contracts add up to almost 7 Billion dollars a year. Business of that magnitude makes Apple a major client with Samsung. With the award of those contracts Apple will need to share technical information with Samsung in order for Samsung to manufacture Apple’s parts correctly to Apples’s specifications.
Under legal agreements these suppliers agree to keep all privileged information from Apple confidential. These types of agreements are referred to as Non Disclosure agreements or NDA. It is the responsibility both morally and contractually to honor these agreements and essential for the supplier to protect their clients. This is how business is done around the world and is one reason Apple is able to keep the introduction of their products a secret until they launch. Samsung has blatantly violated this agreement by using their trusted position to steal Apple’s ideas and designs.
Why would Samsung do such a thing, why would they hurt one of their biggest clients? One reason is the culture of Korean business, who backed and in many cases subsidized by their government consider business as the equivalent of war. They do not subscribe to the philosophy of businesses around the world cooperating together. Instead they consider every non Korean business the enemy.
Apple has sent a clear signal to Samsung and Google that they refuse to subsidize companies that abuse the trust Apple has placed in them. By switching every contract possible away from Samsung and Google. Even as Apple begins to switch out all their business , Samsung believes they can win the big battle. Google is paying a high price for a business decision that provides no income Apple has replaced their apps from the iPhone and created an advertising business for mobile devices.
When a company is a public company as Apple is, the management and direction that the company takes is overseen by a Board of Directors, many different scenarios result from this arrangements some are hostile to the company management and look to make changes as was the case when John Scully rallied the Board to remove Steve Jobs other BODs are friendly and merely rubber stamp management decisions. When Steve Jobs returned to Apple in 1997 he demanded and was given the ability to appoint his own BOD. Some of his choices were Al Gore former VP , Larry Ellison, CEO of Oracle and Eric Schmidt, CEO of Google, the idea here was to pick people who could help you by supplying their expertise to help guide management successfully, much like how a President picks his cabinet to help enact his policies. Depending on the company these positions are viewed as an honor and most come with high salaries. BODs usually meet with management either monthly or quarterly to vote and comment on initiatives proposed by management as well as add their own valuable input. With this position comes the responsibility to treat all the information they learn about the companies business in this case, Apple as confidential. This responsibility is called their Fiduciary responsibility.
Why would Google, once a friend , and not in the hardware business decide to give away software and promote hardware developers in an effort to defeat Apple in mobile? The answer is two-fold, one Google and Apple understand that as computing leaves the desktop for mobile Search and Browser advertising will shrink. Search apps will replace Browser search and the ads will move into the app where Apple not Google control them both these developments pose extreme threats to Google’s core business. Google thru its earlier friendship with Apple was given priority access to the iPhone’s front page with their Maps and YouTube apps, one thing that Apple refused to turn over to both Google and Facebook was access to customer data, something that is essential for Google’s and Facebook’s survival. Before Apple , Google’s arch-enemy was Microsoft at every turn Google challenged Microsoft dominance of the desktop by providing free services that Microsoft traditionally charged for like Google Docs meant to supplant Office and IE with Chrome even proposing to replace Microsoft with its own operating system Chrome OS, this animosity stemmed from Eric Schmidt’s days at Sun & Novell two businesses Microsoft eviscerated using tactics that eventually resulted in the DOJ case against Microsoft in the 1990s. This attack by Google pushed Microsoft to develop Bing and form a tight relationship with Facebook while Google sided with Microsoft’s old nemesis Apple.
In both of these cases Apple believes that ,one, Samsung used Apple priority information to copy the design of Apple’s product and that, two, Eric Schmidt used the information shared with him as a trusted member of Apple’s BOD with his company Google, essentially acting as a corporate spy. Both of these infractions are severely frowned upon in the corporate world as morally reprehensible and in some cases illegal, after all, how would any company compete under this type of betrayal. Google went even further by stealing away Apple employees who helped design and build Apple’s iPhone.
Please keep in mind that this type of betrayal was not surprising to Apple, after all Apple’s once trusted ally Microsoft did a very similar thing back in the 1990’s by using their position as a trusted partner and software developer to steal the desktop interface released by Apple. Microsoft used it against Apple to eventually develop Windows to Microsoft’s benefit. At that time Apple also sued Microsoft for this violation but that effort was thwarted by John Scully maneuvering his trusted friend Steve Jobs out of Apple and then settling with Microsoft. The result was that Microsoft and not Apple would go on to become the dominate computer giant it became.
The betrayal of Jobs by Scully who acted as a pseudo father figure to Jobs had a huge emotional effect on Jobs, so much so that when developing the iPhone he made sure that Apple patented everything it could to protect this game changing device. Apple was determined to protect their designers and programmers genius work from undeserving copycats. They employed a legion of attorney’s on salary to prepare for this outcome, Apple is determined that this time around their hard work and that of their employees is rewarded not only financially but also to receive the credit and respect they deserve.
Make no mistake Apple sees the iPhone platform just as important as the original personal computer a phenomenon that will reverberate around the world affecting almost everything we do in business and personal life. Apple intends to lead this era.for some background $ info click here