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Unplugged: Apple-Samsung showdown has diaper whiff

Mark Veverka, USA TODAY
  • Apple-Samsung%27s infringement battle has historic precedent
  • Pampers-Huggies legal showdown offers a parallel
  • Expect a similar conclusion to the diaper wars

(Editor's Note: This is the debut tech column of Mark Veverka, which will run twice a month in the Money section.)

SAN FRANCISCO -- Apple's testy patent war with Samsung about smartphone technology infringement won't amount to more than a fragrant pile of loaded diapers.

USA TODAY columnist Mark Veverka.

Despite the hype and sensational press coverage surrounding the U.S. litigation late last summer, the ramifications of the legal skirmish will ultimately fall flat.

It's likely to play out like another high-profile corporate intellectual property battle: Pampers vs. Huggies. Procter & Gamble and Kimberly-Clark spent several years late last century slapping each other with series of lawsuits about technology (what, you don't consider elastic bands technology?) used in their popular lines of disposable diapers, Pampers and Huggies, respectively. They ultimately settled and are still going toe to toe, but more on them later.

First, why will Apple and Samsung continue to fuel their share of incendiary headlines in this new year? Any time a corporation is on the hook for more than $1 billion in court-awarded retribution, as is Samsung, people -- especially shareholders, customers and competitors -- are going to pay attention.

That's a big number, and the Korean industrial giant is poised to spend millions on appeal. Then there's this notion that Apple's intellectual property victory in August is some sort of death knell for consumer choice and purchasing power. Fear-mongers foretell soaring smartphone prices and new limitations on cool innovations for non-Apple handset makers, which include Samsung, Nokia, Research In Motion's BlackBerry, HTC, Google's Motorola unit and others.

These are simplistic conclusions that the average person can grasp in what is an incredibly complex and arcane domain of federal law. But they're also very unlikely to come true.

"The patent wars between Apple and Samsung may well be like two elephants fighting -- when it's over, only the grass will be hurt," says Alan Fisch, an intellectual property litigator with Fisch Hoffman Sigler in Washington, D.C.

Fisch, who has been trying technology-based intellectual property cases for decades, expects the two sides to use the legal system as incentive to negotiate "cross-licensing" deals that would allow both companies to share each other's technology. As a result, Fisch expects that Samsung could eventually settle the dispute and agree to pay a lower cash award to Apple. The higher the jury award is, the greater likelihood of a settlement.

"The length and the uncertainty of the appeals process often motivates major competitors to cross-license, even where there is a large jury award," says Fisch, predicting that the appeal process could last 18 to 36 months.

Time and money: Those two things can weigh heavily on technology companies that can't afford to lose their competitive edges. Samsung is the largest seller of smartphones, of which many use Google's Android operating system, with around 72% share of the global market. Apple is second, with about 14%, according to industry consultant Gartner. What they can't afford is for Google to gain momentum or for RIM and Nokia to rally while spending tens of millions in court and legal fees as opposed to research and development.

What does all this have to do with diapers?

Consumer products behemoth Procter & Gamble introduced its iconic Pampers line of disposable diapers in 1961. Pampers ruled the playpen for nearly two decades before rival Kimberly-Clark launched its innovative Huggies line in 1978, which featured an elastic waist band and elastic leg bands. (Genius, I know.) In just seven years, Kimberly-Clark's share of the disposable diaper market saw major growth, while P&G's market share took a hit.

That loss of market share prompted P&G to file a patent-infringement suit in 1985 against Kimberly-Clark, which countered with a lawsuit of its own the following year. The two consumer products giants slugged away in federal court for seven years before settling their cases in May 1992 on the eve of an antitrust case filed by Kimberly-Clark. More than 20 years later, neither company's diaper business has pooped out. Kimberly-Clark leads the $30 billion global segment, and Procter & Gamble is second.

When all is said and done, expect Apple and Samsung to reach a similar settlement, averting a smartphone Armageddon that probably wasn't going to happen in the first place.

Paul Michel, retired Chief Judge of the United States Court of Appeals for the Federal Circuit, which hears federal patent appeals, may have said it best.

"I don't understand why people think the end of the world is coming because Samsung was ordered to pay Apple a lot of money," Michel told the University of Virginia Law School alumni magazine. "Lawsuits are the best way anybody's ever invented to resolve complex commercial disputes. That's the way the system's supposed to work."

And that's probably how it will work again.

Mark Veverka is a technology columnist with more than 25 years of financial journalism experience. He was previously a columnist at Barron's, The Wall Street Journal and the San Francisco Chronicle.

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