Apple Gets $1 Billion From Samsung—Nothing Changes

It ain’t over yet, not by a long shot.

Apple got the best of Samsung in the first of their many patent trials to go to a U.S. jury. A nine-person panel came back to the federal courtroom in San Jose, Calif., Friday afternoon, after only three days of deliberation, and announced that the Korean electronics giant had infringed six of the seven patents for Apple mobile devices that were at issue in the trial. The verdict came with a $1.05 billion price tag, less than half of what Apple was looking for, but not too shabby, all the same.

While there are plenty of reasons for Apple’s (AAPL) legal team to celebrate, keep in mind that this is just one round in a bout being fought fiercely on four continents. The battle likely will continue for some time, maybe years. Samsung (005930:KS) will appeal the San Jose verdict, and it will not pull out its check book any time soon.

The smartest way to view this big Apple victory in the smartphone wars is that the Cupertino (Calif.)-based innovation machine now has an upper hand in a global negotiation being conducted via litigation. That’s right: a negotiation. Apple and Samsung are using the courts to help them set prices for a series of cross-licensing agreements covering each other’s intellectual property. In fact, it’s broader and more complicated than that. Apple is engaging in this multi-dimensional negotiation-by-lawsuit with a range of device-making rivals that, like Samsung, use the Android operating system given away by Google (GOOG). The San Jose case and dozens of others around the world are part of a struggle between Apple and Google over whose operating system will dominate a market for mobile phones and tablet computers worth hundreds of billions of dollars a year.

It is not a struggle, however, in which any one company is going to get destroyed or put out of business in court. Competitors are using the courts to figure out the terms of cooperation—whose intellectual property is worth what. Eventually they will get back to ordinary competition in the marketplace. Indeed, Samsung is one of Apple’s main component suppliers for mobile devices; these  companies are quietly collaborating, even as their lawyers bash one another’s brains out.

In the end, the duel between Apple’s closed-garden operating system and Google’s open system—and the brutal competition between the iPhone and its many Samsung, Motorola, and HTC (2498:TT) imitators will be determined where it ought to be—at retail sales counters. Consumers are the ultimate jurors in the court of capitalism.

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Cornell’s $2 Billion Campus Fuels N.Y.C. Search for Tech Jobs

December 20, 2011, 3:05 PM EST By James S. Russell

Dec. 20 (Bloomberg) -- Broad sloping buildings roofed by solar panels and swaddled in plants that filter storm water will rise on an island in New York’s East River.

That’s Cornell University’s vision for a new applied- sciences campus in New York City. The school was named yesterday as the winner of a competition set up by the city to build a facility for job-spinning engineering research -- the way Stanford University has helped seed innovation in Silicon Valley.

The question now is whether the project will run counter to the trend for spinoff jobs to flee the city for suburbia.

Seven proposals involving 15 universities were considered. Cornell’s bid was bolstered by the announcement last week of an anonymous $350 million gift to the university for the project.

Cornell, based in Ithaca, New York, worked with the Technion-Israel Institute of Technology in Haifa on a $2 billion proposal for a 10-acre campus on Roosevelt Island. The city offered the site free, along with providing $100 million for infrastructure work.

The project could involve more than 2 million square feet for more than 2,000 students. The first 150,000-square-foot building would generate as much power as it would use.

In Cornell’s proposal, designed by Skidmore, Owings & Merrill LLP, people move through multilevel interior courtyards lit by sun sliding between arrays of photovoltaic panels. The courtyards become places where engineers meet entrepreneurs and new media pioneers pitch budding venture capitalists.

Since the campus will be built over a number of years, it could be shaped less by the technology of labs and more by the collaborative necessity to bend very complex teams to daunting tasks. The campus also exemplifies how much “green” design has permeated the world of technology.

Uncertain Outlook

Beyond the campus, the economic upside for New York is far from clear. The city has proved congenial to small media startups and makers of applications, but can’t compete with the suburbs’ cheaper, horizontal space once a company’s growth requires more room.

New York City is a powerhouse of medical research, for example, but much of the spinoff wealth is created in drug labs and medical-device makers that dot New Jersey’s suburbs.

And yet the intensely urban and collaborative engineering scene in New York City suggests that tech must increasingly leave isolating suburban office parks behind.

“Software and applications need the kind of dense expertise that cities are full of,” said Seth W. Pinsky, president of the sponsoring New York City Economic Development Corporation in a telephone interview.

MIT, Harvard

High-tech companies that used to locate in office parks along route 128 in Boston’s suburbs now tighten bonds with MIT and Harvard by building large-scale labs in urban Cambridge. That’s the kind of linkage New York City wants to build with the major applied-sciences institution it doesn’t now have.

New York hopes that spinoffs create such a Cambridge-style future for gentrifying Long Island City, near Cornell’s planned location. Inevitably, the spinoff would likely benefit the region not just the city. That’s fine as long as suburbs share the costs (mainly in transportation improvements).

Stanford University and City College of New York floated a 1.9-million-square-foot Roosevelt Island proposal featuring a street hanging high in the air and dubbed “the river,” but that was withdrawn last week. Other universities sought sites at the Brooklyn Navy Yard, in midtown Manhattan and on Governors Island.

Falling Short

Before the competition was announced, New York University had planned to expand its recently acquired Brooklyn Polytechnic, but that campus is small and landlocked. Working with five international institutions, it bid for the new campus anyway. Columbia University offered a slice of its $7 billion expansion in Manhattanville, but winning may have required the university to shift away from its medical-research focus.

I hope the high environmental performance and the seamlessly interweaved research and educational facilities proposed by both Cornell and Stanford will spur NYU and Columbia to look anew at their feeble, innovation-averse growth plans.

(James S. Russell writes on architecture for Muse, the arts and culture section of Bloomberg News. Island Press has just published his book, “The Agile City.” The opinions expressed are his own.)

--Editors: Jeffrey Burke, Lili Rosboch.

To contact the writer of this column: James S. Russell in New York at jamesrussell@earthlink.net. web.me.com/jscanlonrussell

To contact the editor responsible for this column: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net.

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