Why don't compensation cases really deter companies?

It is almost traditional news that we hear about a case due to the infringement of "patents". Perhaps the most famous of these cases is the ongoing war between Apple and Samsung, in which the former accuses the latter of stealing their designs and matters protected by patents. But despite Apple's complaint about the stealing of its patents by others, it is itself a multiplicity that specializes in stealing university patents. Indeed, Apple has been convicted several times and fined a total of more than one billion dollars. But despite the judgments and despite the cases, the thefts do not stop. So why don't judgments and cases deter companies?

What are patents?

Simply and briefly, a patent is that you invent something or a method of implementing a specific thing. For example, Apple has patented app icons with curved letters. This means that no company has the right to offer icons with exactly the same design. You can do it differently by adjusting the size of the icon and the angle of curvature, for example. Of course, patents are not in simple matters like that. Perhaps they are in the way of integrating 802.11n and 802.11ac, two of the Wi-Fi technologies, and they are combined together in a certain technical way, and the California Institute of Technology registered a patent for the same in this way. Thus, when a company that makes telecom chipsets such as Broadcom manufactured a chip that combines the two technologies in the same way and sold it to Apple, the university filed a lawsuit against Apple and Broadcom.

Image showing the number of patents registered in 2017 and 2016 issued by IBM and Samsung

Why do companies violate patents?

Because this is an easy way. Imagine that a major car company wants to insure the driver from side accidents. Researches are conducted and come to an idea, which is to place inside the door a column of titanium weighing 20 kilos, for example, and in a specific place. This order is registered a patent. It worked and this car sold massively. Now a Chinese auto company wants to do the same and implement this titanium shaft idea. There are two ways, the first is that they do research, so they may reach to use another material, for example, or another place that is more suitable for their cars, but research may lead to many expenses and the result is unknown, so they may reach another insurance method, but it is more expensive. So why spend on research, let's copy the iconic car.

By the way, this example, although it is not the literal reality, but it is what actually happens, which is one of the secrets of low cost in Chinese products such as cars and phones compared to European and American ones. Simply because they (most, but not all) are stealing designs and infringing patents. And this corporate research budget is very low. In fact, the budget for research R&D at Apple and Samsung, for example, may exceed the entire budget of many companies, the phones that come after them.

The following image shows you the 12 largest research spenders in 2017

What about issues? Why not stop companies?

Once again, see the previous picture, which shows you how much research spending is. The above is spending in just one year. Samsung, for example, spent 12.7 billion and Apple 10 billion (the figure later increased to 11.6 billion). Yes, these sums are spent in several areas, not one area. Apple is spending on developing processors, artificial intelligence and smart cars. Samsung spends on monitors, processors, home appliances and more. But in the end, the sums are huge and a project to produce one order may take several years. Now turn to the compensation cases; Most of it is $ 100-200-300 million. Compensation exceeding 500 million and close to a billion are few and scarce. So the easiest company is thinking like this:

I will spend 1 billion dollars for a similar technology, and it will bring me 4 billion dollars in profits. Well I will save the 1 billion spent and steal the technology and in the end I may pay only 0.5 billion compensation while I made 5 billion (4 profits and 1 research provision).

This is what is actually happening, or it may be another reason, which is:

◉ It will take me two years to find the same thing. My competitors will outperform me sharply. I will steal the advantage and let the team of attorneys argue for the case, which is likely to be adjudicated after 4 years, and I will be fined much less than I won..

An image to illustrate the size of compensation of half a billion dollars in a case that lasted 7 years compared to Apple's profits during the litigation period. The compensation is negligible in comparison to the company's revenue.

Why aren't patents canceled and companies prevent monopolies?

A few months ago, I had a discussion with a friend and he told me that these patents are a bad thing, that they stall progress and that no company should ban any technology from anyone. I answered my friend that were it not for these patents, we would have been living in the Middle Ages. And I asked him to think with what is the reason why Amazon, for example, spends 16 billion dollars on research, then produces something, and another company imitates it immediately !!! The cost of the product on Amazon will be very high because the cost of research is charged to the product while the other only bears the cost of manufacturing. Remember how much you report The cost of the iPhone In it, we mentioned that the cost of the parts is approximately $ 300, but there are operating and research costs of $ 200 or more per piece, meaning the real cost exceeds $ 500. It is unreasonable for a party to demand that it spend billions to reach a technology, medicine or product and then make it available to everyone for free.

Sources:

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