a broken patent system? the case of samsung vs. apple
Vanity Fair has a new article on the Samsung-Apple litigation. Kurt Eichenwald makes the following case about Samsung’s business strategy:
- Pick a cool area of electronics.
- Quickly reverse engineer lower quality, low cost versions of the innovators.
- When sued for copyright or patent infringement, fight non-stop legal battles that only end with last-minute settlements.
- You win by either (a) grabbing insurmountable market share during the legal battle or (b) punishing small firms with exhausting litigation and high legal fees (Samsung counter-sues almost all plaintiffs).
If this is an accurate account of Samsung’s strategy, it has interesting implications. First, it contradicts resource based value theory in that the firm doesn’t need a monopoly on anything – just the ability to quickly mimic and exploit the system. Second, it suggests that markets are indeed stable in the absence of patents or enforceable intellectual property rights. Samsung has beat up some other firms, but most competitors have survived. Third, it suggests an interesting use of slack resources – throw them at emerging markets. Fourth, it suggests that the patent system is simply an ineffective means of enforcing intellectual property rights when the defendant is sufficiently large.
Strategy scholars and intellectual property gurus – go nuts in the comments.