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Apple vs Samsung

Why Apple shouldn’t be reining in its legal team

Apple has been waging legal battles against a number of its rivals. Its chief judicial opponent in these wranglings has been one time manufacturing ally Samsung. Apple and the South Korean tech giant faced off against each other in court rooms across the globe. Suits were followed by counter suits and court orders by appeals. Thing is, lawyers cost money. They’re renowned for it. It turns out Apple may have spent more than $100 million on legal bills in 2011.

Tom Foremski: In Silicon Valley
Tom Foremski is a former Financial Times journalist and the Founder and Publisher of Silicon Valley Watcher, which is an online news site reporting on... More

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Tim O’Reilly, the influential CEO of book and conference company of the same name, tweeted:

The fact that the vast majority of the people being sued by Apple are Android manufacturers seems to suggest that the company is determined to follow through with late co-founder Steve Jobs’ vow to destroy Android.

He isn’t the only critic, you can see more here, and here, and here.

It might seem like a lot of money is being wasted by Apple, but is it?

It looks like cheap insurance: $100-million represents just 1/460th of just three months’ sales — $46-billion in its most recent quarter. It’s an even smaller fraction of total annual sales.

Companies take legal action to protect their business, and in Apple’s case it’s a very big business indeed: $112 billion in 2011. That would make that $100 million in legal costs less than 0.1% of total revenues. No matter which way you look at it, for the world’s most valuable company, that kind of money is chump change.

That’s a tiny cost to hedge against competitors. And Apple can’t be accused of using patent lawsuits instead of innovating, like Interval Research — most agree that it continues to bring out unique and useful products.

It’s easy to see why Apple won’t be pulling back in its legal claims. In fact, it’ll probably “lawyer-up” even more in 2012.

But Apple has an opportunity to go even further: protect iPhone and iPad app developers from lawsuits. An important key to the success of the PC platform was the cross-licensing that Intel and Microsoft engaged in with other large tech companies. This created a safe development environment which led to a mass of applications and devices that propelled PC popularity and reduced prices. Apple could make even more money if it followed a similar strategy.