HC2121 Comparative Business Ethics: Apple vs Samsung Case Analysis

This essay examines the business ethics surrounding the patent infringement case between Apple and Samsung, focusing on an article from the Sydney Morning Herald. It summarizes the arguments presented in the article, highlighting Samsung's liability for copying Apple's patented features and the subsequent $711 million fine. The essay discusses the ethical implications of intellectual property rights infringement, counterfeiting, and the responsibilities of businesses to respect patents. It evaluates the appropriateness of the court's decision in favor of Apple and suggests that it aligns with the moral philosophy of Deontology, which emphasizes the protection of individual rights and intellectual property. The essay concludes by emphasizing the importance of adhering to ethical codes of conduct and respecting intellectual property rights in the competitive business environment.

Running Head: BUSINESS ETHICS 1
Comparative Ethics and Corporate Social
Responsibility

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Introduction
Business ethics is a type of professional ethics that studies different ethical principles and moral
issues which can arise in the workplace or business environment. It implements all business
conduct aspects and these are related to the conduct and behavior of organization’s people and
whole organization. In a workplace environment, most fundamental ethical issue arises when the
businesses confront the issues related to the trust and integrity (Crane and Matten, 2016). When
the customers think that organization is showing a solid commitment to ethical business
practices, a higher level of trust can be created between firm and customers who it desires to
serve through its product and service offerings. There are different types of business ethics issues
which can affect different stakeholders of the company like customers, employees, competitors
and company’s brand image.
For this essay, an article from “Sydney Morning Herald” is chosen. The chosen article is named
as “Samsung ordered to pay Apple $711m in patent retrial” that includes the ethical issue that
is happened between Apple and Samsung. The top smartphone competitors in the world have
been in the court over the patents and designs since the year 2011, when Apple Inc. filed a case
alleging that tablets and smartphones of Samsung imitated the its products. Recently, Samsung
was founded guilty and ordered to pay $711 million to Apple Company for copying the designs
and features of smartphones (Neils, and Wolfe, 2018). This essay includes the discussion about
the main arguments of the article and its appropriate decisions as well. In the final section, it
includes ethical decision making process which can assist in making decision by including the
most related from the seven moral philosophies.
Business Ethics Issue and Decision
Businesses have the duty and responsibility to develop business ethics and code of conduct that
each and every member in the organization should abide by and put into practice. In today’s
competitive business environment, there is a rise in the infringement of Intellectual Property
Rights (IPR) like designs, patents and utilities (Iphofen, 2016). To compete with the competitors,
companies make efforts to copy the designs and patents of competing brands. It is an unethical
issue to imitate the design the patents without the permission of patent holder. For this
discussion, the chosen article is about world’s two major smartphone rivals i.e. Apple and
Samsung. According to the chosen article, it can be stated that Samsung proved liable for the

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case and it needs to pay $US539 million to Apple for imitating the patented features of Apple’s
smartphones. Both the companies have been in the court over patents since the year 2011, when
Apple filed a case charging tablets and smartphones of Samsung. In the same year, Apple started
litigating against Samsung in the patent infringements suits, when Motorola Mobility and Apple
were already committed in the patent war. In the 2012 trial, Samsung was found guilty, but there
was a disagreement over the amount to be charged and these arguments are ended on 18th May
2018 (Neils, and Wolfe, 2018). The multinational lawsuit of Apple over technology patents
became very popular as the part of smartphone patent wars.
By reading the chosen article, it can be stated that both the company are fighting for the business
ethics issue of patent and design infringement (Islam, 2016). In the article, the major arguments
are that Samsung is under the controversy due to infringement of intellectual property rights of
tech giant Apple. The history of Samsung and Apple’s legal confrontations is complex and
extensive. In the year 2012, both the organizations had more than 50 cases in over 20 nations. In
the very first trial, the court gave the decision in the favor of Apple and court founded that
Samsung had violated patents of Apple for “Bounce-Back Effect”, “Tap to zoom” and others. In
that year, Apple was given $1 billion in damages (Margulis, and Galli, 2018). Due to this,
Samsung had gone under the investigation because it has breached Intellectual Property Rights
laws. Considering the selected article, it can be argued that this is the case of patent and
intellectual property right theft. It is true about this case that Samsung had copied the way the
iPhone works. It is also stated that there are not actually any other interface models which they
could use. Primarily, the Samsung used the patents which are in iPad and iPhone. This wrongful
act directed Samsung to confront the problem of embarrassing terms with public and its
competing brands. It raised fear to loss the customers towards its products (Teulon, 2014).
In this case, Apple had claimed that Samsung sold about 11 million devices which infringed on
the patents of Apple. The sales of those devices moved out over 3 billion in Samsung’s revenues.
By analyzing the above arguments, it can be stated that that Samsung has engage in the unethical
act that has affected the perceptions of smartphone users towards company’s products (Smith,
2017). This is the issue that is related to infringement of Intellectual Property Rights. Moreover,
it is known as the issue of counterfeiting where Samsung has imitated Apple’s design patents and
utility patents. The company is not able to comply with the rules and regulations which are

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mentioned in Intellectual Property Right Laws (Papageorgiadis, Alexiou and Nellis, 2016). In the
first trial of 2012, the company found liable for the case and jury ruled that smartphones of
Samsung infringed on the design and utility patents of Apple. This business ethics issue
emphasizes on three design patents which included the black rectangular front face with rounded
corners, iPhone interface’s grid of 16 icons and a front face with bezel on surrounding rim.
Referring the Patent Act, the court stated that Samsung was obliged to pay Apple all profits that
it generated from the phones using Apple’s designs (Weiss, 2014). This case relates to a major
portion of Patent Act that states that any person or firm who utilizes patented design is liable to
the level of total profit. In order to reply this, Samsung has argued that it will be absurd to pay
Apple all the profits from phones which have various other specifications that provide them
amazing functionality and totally irrelevant to their designs. Previously, Samsung had paid
$US399 to Apple to compensate the company for this breach. Due to that credit, if the decision is
upheld on appeal then it will result to Samsung making an extra payment to winning firm of
about $US140 million (Samuelson, 2016).
After almost 7 years in the court, both of the tech giants reached to a decision in the May 2018.
Considering all the issues and claims, the court has made the decision in the favor of Apple Inc.
Jury Awarded Apple $US533.3 million for violation of Samsung of Apple’s design patents and
$US5.3 million for breach of utility patents (Neils, and Wolfe, 2018). In this case, the court
stated that keeping rivals away from IP is not company’s right but also its responsibility.
Moreover, it said that each and every organization should respect the intellectual property of
others and it should be only used under certain situations. In this context, it can be stated that the
court has made an appropriate decision in favor of Apple because designs of iPhones and iPads
are one of the major parts of its business growth and revenues (Mossoff, 2015). By paying off
this heavy penalty, Samsung will not do this again in the future. Apple believes deeply in its
design’s value and the company head stated that this lawsuit has always been more than money.
The decision in this case could be more appropriate if the court has given the decision by
identifying the fair competition and other attractive features in Samsung’s phones. One of the
major examples of IP infringement case was the fight between Uber and Waymo. In this case,
Waymo claimed that Uber was utilizing its trade secret in self-driving cars of Uber. In this case,

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the court has given the decision in favor of Waymo and Uber has to pay $245 million worth of
equity in Uber. Thus, it is very important for all the companies to respect each other’s IP.
Ethical Decision Making Process
In the above chosen case, the decision can be made by using a systematic ethical decision
making process (Ferrell and Fraedrich, 2015). The above report includes the decision of court
against Samsung in context of Apple’s IP infringement. The process for this case is given below:
Identification of Business Ethics Issue
In the first step, the company will find out the issue that is faced by it in its business practices. In
this case, it is revealed that Samsung found liable to imitate its patents and features of iPhones
and iPads. It has used the similar specifications in its smartphones like Galaxy model.
Collection of relevant data
After the identification of unethical issue, the company was investigated when Apple filed a
lawsuit against Samsung (Hartman, DesJardins and MacDonald, 2014). In this step, the data of
Samsung has been collected by court so that it can reach to the most appropriate decision.
Analyze different options
In the chosen case, the court has identified that Samsung has sold more than 10 million
smartphones by using infringed patents of Apple. It has increased the sales and profits of the
company. The case is analyzed by making an investigation on Samsung. A team tried to make
the differences among different models of Samsung. The below-picture shows the difference
between before and after iPhone infringement.

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Make most appropriate decision and Implementation
After analyzing all the alternatives, the court has chosen the most appropriate decision for Apple
and Samsung. This decision can be made considering the moral philosophy of Deontology that
emphasizes on protection of individual rights and on the intentions related to that behavior.
According to this philosophy, patents are individual’s rights of a company which are granted by
the law to an inventor that assists them to exclude other from creating and using that invention
without the permission of inventor (Bentham, 2014). It is the right of Apple to protect its patents
and designs and Samsung should respect of its IPRs. It needs to comply with the Intellectual
property rights laws which are applied in this industry. In the future, the company needs to be
aware in the future. Currently, the decision is made in the favor of Apple and it is awarded by
$US533.3 million for Samsung’s breach of design patents of Apple (Neils, and Wolfe, 2018).
Conclusion
In the limelight of above essay, it can be concluded that each and every organization needs to
focus on its code of conduct and comply with it. Intellectual property Rights are the exclusive
rights of a company which cannot be copied by any other firm. The companies should comply
with the rules and regulations of related laws. The above essay discusses the business ethics issue
which is faced by Samsung and Apple. The case stated that Samsung has copied the designs and
features of Apple and it is penalized by a heavy amount. From this essay, it is found that each
and every company should make efforts to protect its IPRs as its responsibility.

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References
Bentham, J., (2014) Deontology; or, The Science of Morality.: In two volumes. Adegi Graphics
LLC.
Crane, A. and Matten, D., (2016) Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Ferrell, O.C. and Fraedrich, J. (2015) Business ethics: Ethical decision making & cases. Nelson
Education.
Hartman, L.P., DesJardins, J.R. and MacDonald, C. (2014) Business ethics: Decision making for
personal integrity and social responsibility. New York: McGraw-Hill.
Iphofen, R., (2016) Ethical decision making in social research: A practical guide. Springer.
Islam, M., (2016) Legal Responses to IPR Infringement in Internet Sphere. Asian Journal of
Humanity, Art and Literature, 3(2), pp.133-146.
Margulis, C.S. and Galli, B.J. (2018) A case study of Apple v. Samsung and how big data
analytics might have changed the outcome. International Journal of Qualitative Research in
Services, 3(1), pp.21-35.
Mossoff, A. (2015) Why Intellectual Property Rights? A Lockean Justification, Available from
http://www.libertylawsite.org/liberty-forum/why-intellectual-property-rights-a-lockean-
justification/. [Accessed on 28 May 28, 2018].
Neils, S. and Wolfe, J. (2018) Samsung ordered to pay Apple $711m in patent retrial, Available
from https://www.smh.com.au/technology/samsung-ordered-to-pay-apple-711m-in-patent-
retrial-20180525-p4zheo.html. [Accessed on 28 May 28, 2018].
Papageorgiadis, N., Alexiou, C. and Nellis, J.G. (2016) International licensing revisited: the role
of copyright and trademark enforcement strength. European Journal of Innovation
Management, 19(2), pp.261-275.
Samuelson, P., (2016) Apple v. Samsung and the upcoming design patent
wars?. Communications of the ACM, 59(7), pp.22-24.

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Smith, A.D., (2017) Integrating Intellectual Property and the Smartphone Patent Wars: Case
Study of Conflicts of Supplier Partnering.(pp. 33-36).
Teulon, F. (2014) Ethics, moral philosophy and Economics. Financial Economics, pp.28-8.
Weiss, J.W., (2014) Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.

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Appendix

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