MGT3001 - Apple v Samsung: Governance and Business Ethics

This report analyzes the Apple v Samsung lawsuit to evaluate the ethical challenges related to violating business ethical principles. It examines the history of both companies, highlights key facts of the case, and presents an argument supported by Utilitarianism and Deontology ethical theories. The report concludes that Samsung's actions were unethical due to infringing Apple's patent rights, making the penalties an ethical decision. The analysis considers the impact on competition, customer interests, and the broader technology industry, ultimately emphasizing the importance of complying with duties and promoting business ethics in organizations. Desklib provides access to similar solved assignments and past papers for students.

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Governance and Business Ethics
Lawsuit Apple v Samsung

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Executive Summary
The aim of this report is to analyse the case study titled “Lawsuit Apple v/s Samsung” in order
to evaluate the background of this case and identify the key ethical challenges raised in this
case in relation to the violation of business ethical principles. The history of the organisations
involved in the case are analysed, which include Apple and Samsung, and the key facts of the
case are highlighted in the discussion. An argument is made, which is supported by applying
Utilitarianism and Deontology ethical theories. It is concluded based on the ethical principles
that the actions of Samsung are unethical since the company has violated its duties by
infringing the patent rights of Apple due to which the imposition of penalties is an ethical
decision.

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Table of Contents
1. Introduction.........................................................................................................................3
1.1 Background......................................................................................................................3
1.2 Importance of the Issue....................................................................................................3
2. History of the Organisation.................................................................................................4
3. Discussion of the Case........................................................................................................4
4. Argument............................................................................................................................5
5. Ethical Decision Making Approaches and Theories...........................................................6
6. Conclusion..........................................................................................................................8
7. References...........................................................................................................................9

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1. Introduction
In today’s competitive business world, organisations are facing fierce competition which
leads to increasing the number of scenarios involving illegal and unethical practices by
companies which have raised the importance of effective compliance with corporate
governance and business ethics principles (Kim and Song, 2013). The objective of this report
is to evaluate the case study titled “Lawsuit Apple v/s Samsung” in order to identify the key
ethical issues raised in the case and evaluation of ethical decision making approaches and
theories (Acasestudy, n.d.).
1.1 Background
The issue at hand is relating to the violation of patents by technology companies and how
they get away with it or face legal penalties for them. In this case, Samsung is found guilty by
the court for violating the patents of Apple, and the jury imposed penalty on the company for
failing to comply with these guidelines (Gahran, 2012). This is a major issue which affects
companies such as Samsung that relies on the Android operating system to manage their
devices since they find it difficult to include features in their devices without violating
prevailing patents. Since many of the patents are deliberately violated by Samsung, the
amount of penalty is high on the company which is also likely to affect the interest of
customers since the prices of its products will hike (Acasestudy, n.d.). The issue of violation
of patents is prevalent in the technology industry since companies fight with each other for
violation of patents. Organisations such as Samsung pay a certain amount on the sales of its
products to other companies such as Microsoft for using their features in their devices.
1.2 Importance of the Issue
This issue is important because, without the implementation of effective competition law and
patent regulations policies, it will become difficult for the government to make sure that the
actions of these companies can be monitored and the rights of customers are protected. This
report will evaluate the history of the organisations involved and discuss the case to highlight
its key points. This report will make an argument and analyse ethical decision making
theories to reach an ethical conclusion.

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2. History of the Organisation
There are two organisations involved in this case study, which includes Apple Incorporation
and Samsung. Apple is an American multinational corporation that operates in computer
software, hardware, digital distribution, semi-conductor, cloud computing and financial
technology industry (Reuters, 2019). The company was founded in 1976 by Steve Jobs, Steve
Wozniak and Ronald Wayne. The products of the company include iPhone, iPod, iPad, iMac,
MacBook, Apple Watch and others and its services include iTunes, Apple Music, Apple
News, Apple Pay, iCloud, iMessage, AppStore and others. The company has become a
market leader in the smartphone industry with the launch of iPhone, and it recently crossed a
major milestone of US$1 trillion of market capitalisation which makes it the first technology
company to achieve this milestone (Salinas, 2018). The company is known for its innovative
products and services and its dedication towards customer satisfaction due to which the prices
of its products are high than compared to its competitors.
The second company involved in this case is Samsung which is a South Korean multinational
conglomerate which was founded in 1938; the company operates in different industries such
as computer hardware, software, electronics, memory chips, digital media, semi-conductors,
appliances, consumer electronics and others (Samsung, 2019). The company is the key
competitor of Apple, and its products include apparel, automotive, consumer electronics,
medical equipment, home appliances and others. It also offers a wide range of services such
as advertising, entertainment, financial services, hospitality and others (Bondarenko, 2019).
Both of these corporations were involved in a number of patent infringement related disputes
due to the similarity in their products and services with each other.
3. Discussion of the Case
The case highlighted the lawsuit between Apple and Samsung in which the decision was
given in favour of Apple as it received a billion-dollar payment from Samsung for infringing
its patents and there is also the possibility of an injunction on the sale of Samsung phones and
tablets (Acasestudy, n.d.). This case also evaluated the impact of this decision on the decision
making of the customers regarding the purchase of the products of these companies. This
decision is also likely to promote diversity in the smartphone and tablet market since
competitors of Apple are more likely to change their designs in order to avoid legal penalties

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(Nam, Nam and Kim, 2015). However, it was also argued that Samsung and other Android
device makers are likely to continue managing their business as usual due to the deals with
they cut with other companies. A good example is the payment of $11.50 on sale of every
phone by Apple to Monika and payment of $10 to $15 by Samsung to Microsoft for its
products (Gahran, 2012). In this lawsuit, Apple claimed that Samsung had violated its patents
relating to the “jumping animation of the screen”, “pinch to zoom” and other features which
are a part of the Apple operating system. However, Samsung used it in its devices as well,
and it offers them to its customers in the US market.
The jury agreed with the claimed made by Apple, and they provided that Samsung has
violated the patent rights. It was argued that all the jury members are selected from
Cupertino, where the co-founder of Steve Jobs is considered as a pioneer which could
influence their decision (Elias, 2012). The history of these issues goes back to the first launch
of Android when Steve Jobs called it a “total rip-off” of Apple’s operating system and he
pledged to take this issue to the court. Since then there has been a number of lawsuits filed
between Apple and other competitors including Samsung in which most of the decisions are
given in favour of Apple; however, Apple itself has found guilty of copying the technological
innovations of other companies such as Sony (Kim and Song, 2013). Lastly, this case
evaluated the impact of this decision on the customers since the fine imposed on Samsung is
likely to increase the prices of its products which make it difficult for customers to get better
devices at lower prices. However, may also argue that these decisions will not affect the
current operations of major technology companies such Apple and Samsung, and they will
continue their operations despite imposition of high penalties on their operations as told by
Samsung that is willing to appeal against the order given in favour of Apple (Jeruss, Feldman
and Walker, 2012).
4. Argument
It is argued that these companies did not comply with ethical principles while taking their
decisions since they are focused on maximising their profits despite the fact that they are
violating many laws in order to achieve their goals. Samsung is copying the features of Apple
to attract those customers who wanted to purchase the products of Apple but who are not
willing to pay the high prices which resulted in increasing the profits of Samsung (Kim, Park
and Kim, 2015). On the other hand, the restrictions imposed by Apple on its competitors
resulted in proving an unfair advantage to the company by limiting the level of competition

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and creativity in the industry which could be harmful to the customers due to lack of effective
competition laws. However, in the long run, the imposition of penalty is correct, and
compliance with duties should become mandatory for promotion of business ethical
principles in organisations.
5. Ethical Decision Making Approaches and Theories
A relevant theory that can apply in this case is the Utilitarianism ethical theory which
provides that ethical decisions are made when they have positive consequences. This theory
argues that the actions should focus on achieving greater happiness for a large number of
people in order to become ethical (Kagan, 2018). In the given scenario, the interest of
customers is not fulfilled by the imposition of restrictions on companies such as Samsung that
are not able to improve their services by taking notes from other organisations. This also
creates a monopoly of Apple in the market and makes it difficult for its competitors to use
similar features in their devices, which limit the creativity in the market. Moreover, the
selection of jury members that are more likely to support the actions of Apple is also
considered as unethical since it leads to bias decision making by the jury (Acasestudy, n.d.).
It makes it difficult to deliver justice by putting Samsung at a disadvantageous position since
all the jury members are likely to support Apple and it also increased the amount of penalty
imposed on Samsung for infringement of patent rights.
This case can also be evaluated based on the principles of the Deontology ethical theory,
which provides an opposing view than compared to the Utilitarianism ethical approach. As
per this theory, the actions of parties should not lead to violation of duties or else they are
considered as unethical (Dion, 2012). This theory did not emphasise on the importance of
achieving position consequences by the actions of parties, and they provide that parties
should not violate their duties to act ethically even if it leads to negative consequences. The
maxim of the parties is analysed in order to determine whether their actions are ethical or not.
In the given case study, Samsung has deliberately violated the patent rights by copying the
content of Apple, which shows that it has violated its duties, which leads to unethical actions.
In order to increase its sales, the company has used the innovations and services of Apple,
which leads to a violation of its rights (Jeruss, Feldman and Walker, 2012). Since the actions
of the parties lead to violating the duties of Samsung, its actions are considered as unethical
despite the fact that the availability of these services could lead to positive consequences. The
maxim of the company was to increase the profitability of the company while misusing the

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patents of Apple, which is considered as unethical as per the provisions of the Deontology
ethical theory.
Based on the analysis of these ethical theories, it can be concluded that the actions of
Samsung are considered as unethical based on the fact that it has violated its duties in order to
maximise its profits which harmed the interest of the organisation. Although it can be argued
that the selection of the jury members can be deceptive; however, they have provided their
judgement based on the evidences which show that they have not violated their duties.
Moreover, the restrictions imposed on companies through the patents of Apple did not
necessarily limit their ability to reach to a large customer base; instead, it encourages them to
rely on innovation to improve their products and services which will benefit the interest of
customers (Kim and Song, 2013). Although the principles of Utilitarianism theory can argue
that the actions of Apple are not necessarily ethical; however, it can be argued that it did not
achieve “greater good” since Samsung violated the patents rights of Apple. It also harmed the
interest of stakeholders of Apple, which shows that the actions of Samsung are unethical.

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6. Conclusion
In conclusion, the case study of the lawsuit between Apple and Samsung is analysed in this
report in order to determine whether the actions taken by the parties in this case are ethical or
not. Apple and Samsung are both market leaders in their respective industries, and they have
been alleged for violating specific patent laws while developing their products and services.
In this case study, the judgement is given in favour of Apple by providing that Samsung has
violated the patent rights of the company by including its features into its smartphones. The
jury members of the case were from Cupertino which is likely to affect their decisions;
however, they provide the decision based on the evidence present against Apple which shows
that they have taken a fair decision. The actions of Samsung are considered as unethical as
per the provisions of the Deontology ethical theory and similar policies should be followed in
future lawsuits as well. In case this argument is not supported in the future, then it will
become easier for large corporations to violate the rights of small organisations and misuse
them to gain an unfair advantage. Compliance with these policies will promote innovation in
the industry, and it will also ensure that organisations are able to act in an ethical manner
which will create a just and fair society.

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7. References
Acasestudy. (n.d.) Case Study: Lawsuit Apple V/S Samsung. [Online] Available at:
https://acasestudy.com/case-study-lawsuit-apple-vs-samsung/ [Accessed 06/06/2019].
Bondarenko, P. (2019) Samsung. [Online] Available at:
https://www.britannica.com/topic/Samsung-Electronics [Accessed 06/06/2019].
Dion, M. (2012) Are ethical theories relevant for ethical leadership?. Leadership &
Organization Development Journal, 33(1), pp.4-24.
Elias, P. (2012) Samsung ordered to pay Apple $1bn. [Online] Available at:
https://www.independent.co.uk/news/business/news/samsung-ordered-to-pay-apple-1bn-
8080950.html [Accessed 06/06/2019].
Gahran, A. (2012) What the Apple vs. Samsung Lawsuit Means for the Future of Smartphone
Design. [Online] Available at: https://www.entrepreneur.com/article/224289 [Accessed
06/06/2019].
Jeruss, S., Feldman, R. and Walker, J. (2012) The America Invents Act 500: Effects of patent
monetization entities on US litigation. Duke L. & Tech. Rev., 11, p.357.
Kagan, S. (2018) Normative ethics. Abingdon: Routledge.
Kim, H. and Song, J. (2013) Social network analysis of patent infringement
lawsuits. Technological Forecasting and Social Change, 80(5), pp.944-955.
Kim, S.Y., Park, S.T. and Kim, Y.K. (2015) Samsung-Apple patent war case analysis: focus
on the strategy to deal with patent litigation. Journal of digital convergence, 13(3), pp.117-
125.
Nam, S., Nam, C. and Kim, S. (2015) The impact of patent litigation on shareholder value in
the smartphone industry. Technological Forecasting and Social Change, 95, pp.182-190.
Reuters. (2019) Apple Inc (AAPL.O). [Online] Available at:
https://www.reuters.com/finance/stocks/company-profile/AAPL.O [Accessed 06/06/2019].

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Salinas, S. (2018) Apple hangs onto its historic $1 trillion market cap. [Online] Available at:
https://www.cnbc.com/2018/08/02/apple-hits-1-trillion-in-market-value.html [Accessed
06/06/2019].
Samsung. (2019) About Us. [Online] Available at:
https://www.samsung.com/us/aboutsamsung/home/ [Accessed 06/06/2019].