tant to disseminate as broadly as pos-
sible. Recall that Apple once sued Mi-
crosoft in 1988 for copying the “look
and feel” of the Lisa and Macintosh
graphical user interface (GUI). Apple
had engaged Microsoft in the early
1980s to create versions of Word and
Excel for the Macintosh, which came
out in 1984. From this experience, Mi-
crosoft learned how to design graphi-
cal software—similar to how Samsung
learned about the details of the iPhone
and iPad by being the largest supplier
of the microprocessors to Apple. 5 Mi-
crosoft had licensed some GUI design
elements for Windows 1.0, a layer it
built to sit on top of DOS. But Micro-
soft continued to use Apple’s design
elements in later releases of Windows,
which Apple challenged. Apple lost
this case at least in part because it had
licensed and copied aspects of the GUI
from Xerox, which had done the pio-
neering work at its research lab, Xerox
PARC. In its defense, Microsoft also
argued that a company should not be
able to protect something as vague as
a “look and feel.”b
So while Apple was the first to
commercialize the graphical user in-
terface, the court did not grant Apple
a monopoly on the general design
(though it made Microsoft change its
trash can icon because this copied
the Macintosh garbage can too explic-
itly). Microsoft eventually made the
GUI ubiquitous by broadly licensing
Windows to many PC manufacturers,
which brought down prices. The Ma-
cintosh remained expensive (the “Ca-
dillac” of PCs?) and became a niche
product, where it remains despite
a recent revival in sales. The iPhone
and the iPad have turned Apple into
the world’s most valuable company,
but Microsoft still generates remark-
able profit levels (see “Reflecting on
the Facebook IPO,” Communications,
Oct. 2012). More importantly, thanks
mainly to Microsoft and Windows PC
manufacturers, the Macintosh-style
graphical user interface became the
dominant way to use a personal com-
puter, elevating billions of people be-
b Apple Computer, Inc. v. Microsoft Corporation,
35 F.3d 1435 (9th Cir. 1994); http://bulk.re-
source.org/courts.gov/c/F3/35/35.F3d.1435.93-
16883.93-16869.93-16867.html. Also see S.
Manes and P. Andrews, Gates (Doubleday,
1993), especially pp. 357–364 and 437–438.

Many hardware and
software companies
are acquiring stocks
of patents and suing
each other with
increasing frequency.

yond character-based DOS computing (which reminds me of the horse and buggy).

How valuable Apple remains in the future has a lot to do with how effectively it can prevent other firms from copying its innovations. At the same time, whether billions of consumers will be able to buy iPhone-like smartphones and iPad-like tablets that are rectangular and have touch screens and other functions that work in similar ways has a lot to do with how patent offices, juries, and judges act in the future.

These cases are complex because there are valid arguments on the different sides. From the innovators’ point of view, strong intellectual property protection is desirable to stimulate and protect their investments. Apple may not have developed the Macintosh in 1984 or the iPod, iPhone, or iPad products in the 2000s if Steve Jobs did not believe he could prevent others from copying the designs, at least to some extent. From the competitors’ point of view, strong patent protection is not desirable when they want to “borrow” or “build on” good ideas or follow the “dominant design” established in the marketplace.c From the point of view of consumers and society at large, we all lose if companies do not have sufficient incentives to invest in research and development. We also lose when patents prevent advances in a particular technology or make it difficult or expensive for the majority of consum- c For a discussion of the “dominant design” concept, see J. Utterback, Mastering the Dynamics of Innovation (Harvard Business School, 1994).

ers to adopt the most useful, usable, and elegant designs.

Conclusion

Apple needs to be fully rewarded for its innovations. But if the company’s patents and lawsuits prevent other firms from creating elegant, simple-to-use products patterned after the iPhone and the iPad but perhaps better, faster, and cheaper, then it will be a sorry ending to the current battle between Apple and Samsung. Perhaps there could be a middle-ground solution where, for example, Samsung, as well as Google and other companies, reach agreements with Apple to make royalty payments and then cross-license some of their own patents. In fact, a recent court did this with a lawsuit filed between Apple and Motorola, and Apple and Google are already engaged in patent discussions. 2, 9 With a negotiated outcome, companies would be able to take better advantage of the innovations they and their competitors produce, while giving proper credit to the innovators and allowing them a fair return on investment. The definition of “fair” will be another matter of negotiation and litigation. Nonetheless, even small royalties on every Android device sold could quickly produce a financial windfall for Apple that exceeds current iPhone and iPad sales.

 

References

1. ante, s. and troianovski, a. Microsoft’s mobile moment: Will consumers buy in? The Wall Street Journal (aug. 29, 2012), b1.

2. bloomberg news. apple, Google discuss patent issues. The Boston Globe (aug. 31, 2012), b6.

3. Cusumano, M. and selby, R. Microsoft Secrets. Free Press, new york, 1995, 164–166, 436–437.

4. Elias, P. apple asks judge to ban u.s. sales of 8 samsung phones. The Boston Globe (aug. 28, 2012), b6.

5. Koetsier, j. apple stuck in bed with samsung as exclusive CPu deal with taiwan semi fails. Venturebeat.com, (aug. 29, 2012); http://venturebeat.com/2012/08/29/apple- samsung-taiwan-semi-cpu-iphone-ipad/.

6. lohr, s. a patent war in your pocket. The New York Times (aug. 26, 2012), a4.

7. Murray, F. and stern, s. do formal intellectual property rights hinder the free flow of scientific knowledge? an empirical test of the anti-commons hypothesis. Journal of Economic Behavior & Organization 63, 4 (2007).

8. tabuchi, H. and Wingfield, n. tokyo court hands win to samsung over apple. The New York Times (sept. 1, 2012).

9. Vascellaro, j. apple wins big in patent case. The Wall Street Journal Online (aug. 25, 2012).

10. Wingfield, n. In apple’s patent case, tech shifts may follow. The Wall Street Journal (aug. 20, 2012), b1.

 

Michael A. Cusumano ( [e-mail]) is a professor at the MIt sloan school of Management and school of Engineering and author of Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Unpredictable World (Oxford university Press, 2010).

Copyright held by author.