Apple: Litigation as a Business Strategy.

August 4, 2011

Apple: Litigation as a Business Strategy.

The article in the WSJ that inspired me today was the one entitled "Google: Rivals Ganging Up". It once again led me to look at Apple even though the more I read about Steve Jobs, the less enjoyable I find his quotes. "Picasso had a saying - 'Good artists copy, great artists steal.' And we have always been shameless about stealing great ideas." 

Professionally, I am engaged in the health care sector, which sees its share of litigation. Take a look at J&J's 2010 Annual Report and you will find pages, and pages, and pages in tiny font dedicated to ongoing litigation.

The article today drew my attention to Apple's current legal status and the amount of Dollars invested in lawsuits and patent infringement litigation is truly mind boggling. [Curious to know how many people are employed in Apple's legal department. As of today, there were 10 open job postings on Apple's Web site under "Legal". Maybe "Legal" is where today's job opportunities are.]

Lawsuits to collect royalties, prevent/delay competitive product launches, tie up resources of competitors otherwise invested elsewhere. Litigation is a fascinating business strategy! The other day, you may recall, Apple successfully closed a few select copy-cat stores in China.

By no means do I mean to imply that there is no justification for pursuing patent infringements legally. IP should be protected, however, in select industries including software, consumer electronics, telecommunications, the number of litigations seem to be escalating. True innovation in the space is clearly hard to come by and the window to benefit from the first-mover advantage and hold on to the differentiation is becoming smaller and smaller. But looking at this picture….





Image: "Current Litigation", Journal Of A So-Called Business Woman (8/11).

…. it does not appear to be so much about protecting rights as it is about stalling the competition and charging ahead.  Smaller companies who could really benefit from patent protection don't have the resources and are probably too intimidated to pursue legal actions against major corporations. Especially, since these litigations can drag on for years.

Imagine how the U.S. financial crisis could be helped if these funds were invested to relieve the government's debt. Wouldn't that be an interesting scenario: Each of the most profitable U.S. organizations acquires a stake of the U.S. government. A corporate-run America…. wait a minute!!!