The constant refrain from business is that competition is great and the lifeblood of capitalism. Yet the expensive court cases between Samsung and Apple show the opposite. Global capitalism is now to a considerable extent all about patents.
Patents give corporations monopoly rights. These rights prevent competitors from producing products at a lower cost that contain patented features. Patents provide corporations with cash cows that enable them to milk consumers by charging prices that would not exist in a truly competitive market structure.Even free trade deals are not so much about competition as about restricting competition. Part and parcel of free trade deals are TRIPS(Trade Related Aspects of Intellectual Property Rights). Part of the provisions on patents reads as follows:In order to enter a so-called Free Trade agreement a country must grant corporations monopoly rights for at least 20 years and allow patents in all fields of technology. It is in this context that the dispute between Apple and Samsung should be viewed. The suit is about the rights of Samsung and Apple to sell products to you the consumer in a manner that restricts competition. The result is that prices for their products will be much higher than if they were being produced in a market without patents. For some reason when business people talk about government intervention in the market, patents are never mentioned. Without governments passing laws to give these rights there would be no patents.We now have the results of two cases in which Apple and Samsung sued on the basis of patent infringement. In South Korea where Samsung is headquartered the court ruled against Apple's position that Samsung had copied the design of the iPhone. The court also ruled that Apple had infringed two Samsung patents related to mobile broadcasting technology. However, the court also ruled that Samsung had violated an Apple patent. The judge ruled that many of Apple's claims of design patents were not valid since they had already appeared in inventions of Japanese and European countries. As a result of the court decision Samsung will be banned from selling 10 of its products in South Korea and Apple four products.The Korean judge's views on Apple design patents were quite different than those of a U.S. jury.The U.S. trial took place in San Jose California just a few miles from the headquarters of Apple. The jury found that Samsung had copied key features of the iPhone and iPad and Apple was awarded $1.051 billion in damages. The decision will mean that Apple has successfully limited Samsung's competitive challenge and that sales of some key Samsung products will be banned. The free market triumphs again.Apple is already the biggest company by market value in history. With the money from the Samsung settlement Apple can file more suits against other companies to further boost their economic rents due to patent monopolies. The result of these trials confirm the importance of monopoly power in modern global capitalism.The costs of ensuring the continued triumph of these powers will be passed on to consumers in the price of Apple and Samsung products.
Patents must be granted for "inventions" in all "fields of technology" provided they meet all other patentability requirements (although exceptions for certain public interests are allowed (Art. 27.2 and 27.3) and must be enforceable for at least 20 years (Art 33).