Sunday, August 26, 2012

As the Apple v. Samsung Litigation Continues, Consider a View from 1994

As these firms litigate tablet and mobile phone design related issues in countries around the world, two decisions came last week: 1) a court in Seoul, South Korea  provided a spit decision and 2) in San Jose, CA  jurors were favorable to Apple, with a verdict that included $1.05 billion in damages (Apple wanted $2.5 billion).  In addition, while Samsung is the named defendant in these cases, it is Google’s Android software platform, used by Samsung and other device manufacturers, that is at the heart of these disputes. (Note: The litigation has not focused on Samsung’s recent offerings such as its Galaxy S3.)

MY TAKE
  • In the short term, Apple’s stock may move higher, while Samsung's and Google’s may be lower; but lawsuits and appeals will continue.  As technology companies expand their patent portfolios, debates will continue about whether patent or copyright law should cover software (Europe and other regions favor copyright) and if user interface design and business processes should fall within the scope of patent law at all. 
  • The history of technology innovation is mostly a process of refinement and/or better execution of pre-existing ideas.  For example: 1) several innovations popularized by Microsoft’s Windows and Apple’s Macintosh are based on the Xerox Star - introduced in 1981 and 2) many tablet design concepts were introduced in by Roger Fidler  in 1994  (see  video below), then Director of New Media for Knight-Ridder Inc.  Let’s hope patent wars do not stifle innovation and consumer choice.

The Certainty of Global Uncertainty

Notable commentary last week included:
  • Caterpillar, Inc. CEO Doug Oberhelman  -  “There’s never been a more unpredictable set of tea leaves than right now.  Even in 2008 and 2009, U.S. housing was already dying and had been for two years. We saw that”  and “I don’t think the situation is as grave as it was in 2008, but the uncertainty, the storm clouds are around things that none of us know about – like what will happen with the political situation in Europe”,
  • the U.S. Congressional Budget Office’s updated Economic Outlook suggests if the Fiscal Cliff is not addressed, “fiscal tightening will lead to economic conditions in 2013 that will probably be considered a recession, with real GDP declining by 0.5% between the fourth quarter of 2012 and the fourth quarter of 2013 and the unemployment rate rising to about 9% in the second half of calendar year 2013”  and
  • German Chancellor Angela Merkel - “I want Greece to stay in the Eurozone and that’s what I’m working for."
MY TAKE
With mixed economic data and comments by central bankers and policy makers driving market moves, this week’s focus is on an annual gathering  in Jackson Hole, WY - Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi will speak, as well as the Republican convention in Tampa, FL. Expect more debates on the effectiveness of economic stimulus, austerity and debt reduction efforts.

Sunday, August 19, 2012

As the LIBOR Scandal Expands; Is New York State the New Sheriff in town?

Last week, Benjamin Lawsky, the head of New York State’s Department of Financial Services, announced a $340 million settlement with U.K based Standard Chartered Plc related to improper financial transactions with the government of Iran.  Additionally, New York’s Attorney General Eric Schneiderman issued subpoenas to Deutsche Bank, Citigroup, JPMorgan Chase, Royal Bank of Scotland, Barclays, HSBC and UBS for documents and other communications related to the global investigation into the London Interbank Offered Rate (LIBOR) manipulation scandal.

MY TAKE
While the U.S. Federal Reserve, the Treasury Department and the Justice Department often take the lead in these types of investigations, there may be a growing  sense of impatience and timidity with their recent oversight efforts of the  “too big to fail” banking crowd.  Given the broad use of the LIBOR index in setting rates for over $300 trillion of home mortgages, student loans, commercial loans and derivative contracts, any help in cleaning up the LIBOR mess is welcome.  Note: New York State passed the Martin Act in 1921 to expand the attorney general’s powers in financial fraud investigation, which are generally broader than other states and federal oversight entities.  Expect more activity by New York State in this area.