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Apple vs. Samsung Endangers California's Tech Community

The courtroom is hardly the place to reach consensus and forge a productive business relationship.

Something remarkable is happening in California. After years of high unemployment and bleak state-budget forecasts, California’s jobless rate is the lowest it’s been since 2008, and we now expect budget surpluses. It took bipartisan cooperation and willingness to compromise to bring us to the improved governance we enjoy today.

It’s a lesson California lawmakers learned the hard way, but by the looks of the latest Apple-Samsung battle playing out in a San Jose courtroom, some business leaders should learn that lesson, too.

For more than three years, Apple and Samsung have been engaged in protracted court battles over patent infringements. Last month, a judge tossed out a request from Apple to ban some Samsung smartphone sales in the U.S. Apple appealed the decision — despite already being awarded over $900 million in financial damages from Samsung.

Both companies recently returned to court as parties to a new lawsuit. This time, Apple is seeking a $40-per-device royalty fee on Samsung smartphones. Apple argues that Samsung violated its patents. For consumers and California’s technology community, that could spell trouble.

Mobile technologies have undoubtedly caused a paradigm shift in our economy. Consumers have found tremendous value in having all of the things most important to them — like being able to connect with loved ones, to conduct business, to listen to music, to monitor their finances, you name it — converge in a single device, the smartphone.

And now, the mobile marketplace provides consumers with a range of options from Apple’s more-expensive smartphones to lower-priced models offered by rivals — and even some pay-as-you-go smartphones that do not require contracts, and can be commonly found in major retailers.

California, with its renowned universities and the great minds they produce, coupled with the widespread proliferation of high-speed networks and Internet technologies, has been at the center of this mobile revolution. This state, with the help of companies like Apple, is exporting innovation across the country and around the world. As a result, we have contributed to a story of success that allows the great mass of people to communicate and share through greater accessibility to smartphones and high-speed connectivity. That is why, as someone who is passionate about technology, I am troubled to see Apple now engage in tactics that may hinder the progress under way.

The ongoing Apple-Samsung legal conflict could pose a threat to the adoption of technology with ripple effects throughout California’s tech economy. Whether directly connected to a particular product or service developed within the state or farther away, our economy benefits from greater consumer adoption of innovative, mobile technologies. At the same time, the exorbitantly high patent royalty fees Apple is demanding, if granted, would dramatically increase the price of some smartphones, and place an unnecessary financial burden on consumers who prefer those devices over the Apple iPhone.

These court battles aren’t over emerging technology; rather, they are over common features that anyone with a phone uses regularly. It’s one thing to use patent laws to protect technological breakthroughs and give companies the security they need to develop new programs. It’s quite another to use them as a means to hamstring competition and slow the wheels of innovation.

During my time in government service, I learned that there are two ways of doing business. One is to needlessly lock horns; the other is to (despite differences) set shared goals and work hard to make them a reality. The first approach wastes time and energy, while producing little. The second approach helps advance objectives based on common ground.

As the trial enters another week, I had hoped that Apple and Samsung would have embraced such pragmatism. Rather than pursuing legal action and demanding concessions that will adversely impact consumers, Apple and Samsung could have settled their dispute through some reasonable licensing agreement on their patent portfolios.

Alas, while the courtroom is hardly the place to reach consensus and forge a productive business relationship, that is where Apple has chosen to focus its efforts.

Kevin Terpstra is a former special adviser for information technology, Office of the Governor, State of California.

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