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Product differentiation

The Mobile World Congress usually represents a forum for all of the major technology companies to display their latest offerings to the world of mobile communications. However, having visited the various stands at this year's congress – which took place in Barcelona during March 2015 –one was struck by the fact that the smartphones produced by each of the manufacturers seems increasingly to be converging towards the same design, form factor and features.

The Mobile World Congress usually represents a forum for all of the major technology companies to display their latest offerings to the world of mobile communications. However, having visited the various stands at this year's congress – which took place in Barcelona during March 2015 –one was struck by the fact that the smartphones produced by each of the manufacturers seems increasingly to be converging towards the same design, form factor and features.

Whilst Samsung, LG, Sony and Nokia have, in the past, dominated the mobile communications market with slightly more divergent offerings, the Chinese manufacturers ZTE, Huawei and HTC have caught up rapidly and are now offering smart phones which are very similar in appearance, form factor, performance, features and quality to those available from the traditional market leaders. Indeed, the convergence in the form of the smartphone makes it difficult to distinguish any manufacturer based solely on the technical offering.

Of course, that leaves price and it is here where newcomers to the market will erode the market share of the traditional incumbents. Arguably, the real winner is Google, since the majority of the smartphones are now using the Android operating system. However, Apple has retained its position as market leader with the iPhone 6, with its own iOS operating system.

One area where companies can seek to differentiate their products is inpromoting wearable technology accessories – such as the smart watch – or in the provision of more robust devices, which may be, for example, waterproof or shockproof.

At this year's Mobile World Conference, LG launched its standalone smart watch, which incorporates an LTE wireless access interface and all of the functionality associated with a smart phone, but with the size and features of a watch. Other manufacturers, including Apple, were showcasing devices which are paired with a user's smart phone.

In a market crowded with ever converging design and form, wearable technology innovation provides an opportunity for manufacturers to differentiate. The factors which enable product differentiation require protection and clearly therefore necessitate the acquisition of intellectual property rights.

The communications technology relating to the wireless access interface and the chip sets delivering communications service to mobile devices will be covered by standards related patents. These still provide a valuable tool for those companies who have contributed to the development of 3GPP standards and could provide a barrier to new entrants. The 3rd Generation Partnership Project, or 3GPP, unites seven telecommunications standard development organisations – ARIB, ATIS, CCSA, ETSI, TSDSI, TTA and TTC – who are known as 'organisational partners'. This provides a stable environment in which members can produce the reports and specifications that define 3GPP technologies.

Standards related patents are powerful in demonstrating infringement if the device operates in accordance with the standard have been weakened.

The courts in European countries have, in recent years, begun to restrict the enforcement of standards essential patents, making it harder for a patent holder to obtain an injunction against an infringer. The courts also require that licences be available on Fair Reasonable and Non-Discriminatory (FRAND) terms.

As such, an innovation in an item of wearable technology which appeals to the consumer and which has not been designed in accordance with a standard – but rather in accordance with a proprietary interface, operation or design – could represent more valuable intellectual property and help to protect valuable market share.

Furthermore, the design of something which is fundamentally worn on the body will usually require aesthetic appeal to the end user and therefore could be the subject of a Community registered design. It may well be that through this ancillary differentiation of smart phones, through innovation in wearable technology products, that manufacturers may distinguish their offering and gain a valuable foothold in the market place backed of course by powerful intellectual property rights.


Further detailed information is available in the Knowledge Bank or by contacting a Partner at D Young & Co LLP. Both can be found at dyoung.com Alternatively, email the author at jdv@dyoung.com

Author
Jonathan DeVile

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