Protecting Intellectual Property at Apple Inc.

Students are required to address an issue or problems faced by their company (Apple Inc.) and analyze it]

Abstract

Apple. Inc is an American multinational that engages in designing, manufacturing, and marketing technological products. Since its establishment, the company has focused on offering innovative consumer products. Subsequently, it has established a large customer base that is characterized by customer loyalty and high profitability. Despite being a market leader, the company faces substantial competition from other rival firms such as Microsoft and Samsung. One of the key issues affecting the company is the protection of intellectual information. The issue has remained a challenge for a long time involving local and international technology developers. The recent wrangles are between Apple and Samsung due to the infringement of iPad and iPhone designs. The challenges presented by this situation include expenses in legal processes and the risk of a bad public image. Protection of intellectual information can be achieved through various approaches. In this paper, increased employee awareness and legal protection emerge as the most appropriate solutions to guarantee the sustainable protection of intellectual property.

        

Company Profile

Apple Inc. is an American multinational company that was founded in 1976 by Steve Jobs, Steve Wozniak, and Ron Wayne. The company became the first technology developer to focus on producing computers for the individual consumers, rather than large computers that were not affordable for personal use. From the start, the company had the core purpose of making computers available and affordable for the average user (Finkle & Mallin, 2010). The company contemplates innovation as an essential part of its success, and it has maintained this through a talented pool of people through the design, manufacturing, and marketing processes. Subsequently, Apple has remained an influential organization in the technology industry, not only because of its innovativeness, but also due to its financial capacity. The commitment to offer the best and latest technology in computing and entertainment has developed loyalty among different market niches that include learners, teachers, creative professionals, businesses, administrations, and users by developing quality hardware, software, services, and peripheral business lines. The company has diversified products that satisfy the needs of different consumers, including, computers, smartphones, software, and technological accessories (Johnson, Singer, Li, Phan, & Trinh, 2012). The products include a line of Macintosh desktops and notebook computers, iPod digital music players, the iOS operating system, iTunes music store, Servers, the iPhone series, and among others. The Apple products are sold via online platforms, directly, and through third-party dealers throughout the world. The key markets for Apple products are in the Americas, Europe, China, Japan, and Asia Pacific regions. The company has maintained a strong market orientation due to its approach of making decisions based on what it believes its consumers need. Additionally, the innovative and high-quality products have maintained a loyal customer base that has to keep the business profitable and sustainable. The mission to offer the best personal computing experience exhibits a core value of superiority in the industry, which facilitates its competitiveness. Currently, the company is headed by Tim Cook as the Chief Executive Officer and Director. The intent of this paper is to highlight the issues facing Apple and offer a strategic approach to resolving the challenges.

Problems or Issues Facing the Company

Apple has consistently been among the most successful companies and is one of the most admired organizations worldwide. Like other companies in the industry and other industries, Apple faces various challenges that might be detrimental to its success, sustainability, and reputation. In the recent past, the company has faced various ethical issues that could have a great impact on the organizational performance. Additionally, the existing reputation of the company can be easily damaged due to misconduct or lack of appropriate measures to address the risks that emerge. Although there are various issues, one of the key and persisting challenges facing Apple is the protection of intellectual property (Wang & Wu, 2003). The company’s creativity and talent pool are exemplified in its intellectual property, which is engraved in its patents, trademarks, and copyrights. Despite the existence of a national and international legal structure that offer protection of intellectual property, this issue remains a key concern for the company. Additionally, Apple has shown considerable effort in keeping its important information a secret and preventing other stakeholders from stealing it. The existing legal proceedings and speculations of intellectual theft show that Apple has not been successful in its protection practices. Consequently, Apple is held up in many lawsuits with other technology companies. Nevertheless, the issue of intellectual property is not new to the organization. In 1982, the company went to court alleging that Franklin Computer Corporation was interfering with the company’s product. The allegations suggested that the accused company was formatting Apple II’s operating system and ROM so that they could be functional in Franklin Computers. The case had great influence on the formulation of intellectual property laws. It sets a precedent that codes and programs are covered under the legal copyright provisions. Subsequently, the case has been instrumental for technology firms by offering a better intellectual property protection framework.

Another major case on intellectual property infringement was the company’s lawsuit against another tech giant, Microsoft. The issue was that Apple had licensed Microsoft to use its technology for the release of Windows 1.0, but the firm went on to release Windows 2.0. Apple stated that Microsoft’s Windows 2.0 had the features of its computer’s graphic interface system (GUI). The ruling was in support of Microsoft’s defense, with the court stating that the agreement did not include the specific features found in the Apple Computer’s GUI. Despite the fact that there were similarities between the two products of both companies, the court declared that Microsoft did not violate the copyright laws or the agreement to use Apple’s technology (Carew, Florkowski, & Smith, 2006).

The issue of intellectual property has also had on the ethical aspects of the company. The situation was evident in the struggle to acquire the domain name iTunes.co.uk. The domain name had been issued in 2000 to Ben Cohen, who used it to link people to the Napster website which is a competitor to Apple. When the attempts to purchase the domain name failed, Apple took the case to the UK registry to act as a mediator (Kane, 2011). The case was concluded that Cohen had violated the registration rights and took unfair advantage over Apple’s reputation in the iTune product by redirecting users to the competitor’s website. Consequently, Apple won the case, but the situation had a significant impact on its reputation because it was deemed that the big company was favored, considering that the first person to register the domain name held the rights to use it.

In 2007, Apple was accused of trademark violation by Cisco Systems. The issue was the use of the iPhone trademark, which Cisco had registered since 2000. Although the two companies were in negotiations for Apple to use the trademark, no conclusion had been reached when Apple exited the discussions. Nevertheless, the case ended in both parties coming to a consensus of using the iPhone trademark. Despite this, how Apple carried itself in the situation raised skepticism as many people viewed it as a controversy (Carew et al., 2006)

The recent issue faced by the company in intellectual property infringements is the case of another technology competitor Samsung. The issue began in 2010, when Apple raised concern that Samsung had infringed on its patents. Despite the accusations, the company did not sue Samsung immediately because of the business relationship that existed between the two tech firms. Being a trusted partner, Apple expected that Samsung would respond appropriately by addressing the allegations outside court. Additionally, Apple had faced HTC, another tech firm in 2010 and came to a conclusion for a cross-licensing patent deal. Apple and Samsung executives met in October 2010, where Apple proposed to be paid $30 and 40$ per piece of phone and tablet sold respectively for infringing on design patents. Samsung declined the deal and Apple sued Samsung for using its iPhone and iPad designs (Kane, 2011). Consequently, the two companies have been trying to bring each other down since then through various lawsuits across the globe. For instance, Samsung countered by suing for 3G patents in Germany, Japan, and South Korea. Apple has used legal opportunities to ban the sale of Samsung devices in some countries and the removal of some features such as the universal search bar on Galaxy Nexus and S3. Samsung used the court to compel Apple to issue a public apology that stated that Samsung did not use its designs. The rivalry between the two leading technology developers was settled in a US court in 2012, where Apple was awarded $1billion in damages. Nevertheless, Apple did not give up, but followed with another lawsuit that focused on newer Samsung products (Kane, 2011). The case has been rejuvenated many times through appeals and issues surrounding the amount Samsung should pay Apple. The case has had a significant impact on both companies as they struggle to compete and maintain a positive public image.

Situational Analysis

SWOT Analysis

Strengths

Advertising capabilities. Apple has been gradually increasing its advertising budget, which amounts to billions. For instance, in 2015, the company had an advertising budget of US$1. 8 billion, which was almost double of what it used in 2011. Although the budget is not the largest compared to that of its key competitors, the company has been using this approach effectively in building brand awareness and creating demand for its products. Subsequently, the company has made its products known to the consumers, which is imperative in alleviating the confusion that is brought about by infringements in design (Khan, Alam, & Alam, 2015).

Strong supply chain. Apple has established a strong market base in the US and Europe, and it is well recognized throughout the globe. The company enjoys multiple channels for delivering products to consumers as well as direct sales to consumers. Only a few of its rivals have physical retail stores and have reliable networks such as those of Apple. The supply chain is important in maintaining credibility and reliability of the organization building loyalty and trust among the users. Resultantly, the company has maintained competitiveness by remaining profitable, which is key in research and development of innovative products.

Vertical integration. The company has various separate businesses that are operated as one (Khan et al., 2015). Subsequently, it can protect critical information that facilitates the operation of all businesses. It also gives the company a stronger position in the market as well as the financial capability to take on competitors in court.

Brand awareness and reputation. Apple is recognized as one of the most valued organizations in the world. Its innovativeness and quality products make it one of the most noticeable companies in the invention of innovative products in the technology industry. Subsequently, the allegations of infringement of intellectual property are less likely to have a significant influence on the profitability of the firm compared to other competitors such as HTC or Samsung.

Weaknesses

Increased reliance on iPhone sales. The iPhone has become the most important product of the company, contributing more than 50% of its total sales (Khan et al., 2015). Consequently, Apple is very vulnerable to risks that might cause changes in the smartphone market. For instance, the agreement with Cisco systems on the use of the same trademark name can limit the sales of Apple smartphones as consumers may get confused with both companies’ products. Also, the infringement of design patents by Samsung offers an alternative for the consumers, considering that Apple products are higher priced than those of its most competitors.

Low investment in research and development (R&D). Apple built its vast market share and reputation through technological breakthroughs and invention of new products in the market. Nevertheless, the company has not in the recent past presented anything new that would influence the market in its favor (Jurevicius, 2013). Investing more in R&D will facilitate the growth of the company and development of unique products that are not likely to lead to legal ties with other technology developers.

Opportunities

Future technology. The innovativeness associated with Apple offers an opportunity for it to develop technologies better than the competitors. For instance, the Internet of Things (IoT) is expected to grow significantly over the next decade (Julnual, 2016). Investing appropriately in R&D and being the first to make key process in the area will enable Apple to set the framework for other companies without dispute in the development of the technology.

Patenting the accessories. There is considerable growth in the use of compatible technologies such as smartphones and wearable gadgets. Apple’s rivals such as Samsung are making significant progress in the use of these technologies such as smart watches. In this line, Apple should address emerging markets such as health and education-related wearable and patent products appropriately to remain competitive in the market.

Threats

Lawsuits. The existing lawsuits and unhealthy competition between Apple and Samsung has an impact on its reputation and might affect business. Additionally, the company has also faced cases where it has infringed other companies’ patents unwillingly. Also, some approaches used by the company are suspicious, subjecting it to ethical scrutiny by the public and other stakeholders in the business. Subsequently, the company has become a target for patent infringements, and this might often affect how it conducts business, including the release of products for end-users.

The risk of data breaches. Like many companies, Apple is vulnerable to the increased cyber-attacks that target essential corporate information. Consequently, the loss of valuable information can be detrimental to its operations as well as business outcomes. Additionally, the exposure of such information to competitors can limit its competitiveness in the market.

Strategic Options

The success of Apple lies in its capability to ensure that it protects its intellectual property. The following are strategic options that the organization can use to heighten its measures to protect intellectual property.

Strategic Option 1: Make information available to other players in the industry

Apple develops its software and hardware that are compatible with the company products. Despite the developments made by other organizations, most Apple products lack compatibility with key products from other companies that are used by their consumers (Khan et al., 2015). The issue is attributed to the secrecy of the information that limits the development of hardware or software by other developers that users can use on Apple devices. Sharing of key development information can limit the challenges of infringement, and this has successfully been used by Google through the Android operating system. By offering key information and making Android available to other developers, Google has expanded the use of the OS and increased its influence in the technology industry.

Strategic Option 2: Increased employee awareness

The loss of fundamental information about the design and development of Apple products can be linked to operations that involve the workforce. The company is also susceptible to cyber-attacks, which can be as a result of various actions by the workforce. In this light, increasing employee awareness on the need to secure company information and how to engage in online platforms as well as the supply chain can be imperative in increasing protection of intellectual information. There is accumulating evidence that workers contribute significantly to the loss of company information and they can also contribute to its security.

Strategic Option 3: Legal protection

 Apple like many technology developers has followed legal provisions to protect their innovations. Nevertheless, these legal provisions vary widely across the globe, and some countries lack the fundamental aspects of protecting patents, trademarks, and copyrights. Subsequently, it is important to seek expert guidance and legal advice on intellectual property, and ensure that the company does not suffer huge financial repercussions in the process.

Criteria to Evaluate Each Strategic Option

The strategic option for handling protection of intellectual property at Apple should meet the following criteria:

Strategic Option Evaluation Criteria 1: Consistency

Consistency alludes to the ability of the strategy to interact with the static and dynamic aspects of the organization. In the static approach, it implies weighing the efficacy of the strategy with the situation as it exists now, while the dynamic entails focusing on how the approach will resonate with future undertakings (Kim & Sanders, 2002)

Strategic Option Evaluation Criteria 2: Resources

The proposed strategy should be feasible based on the available resources to achieve the corporate objectives. In this context, it includes human resources, finance, competence, and facilitates. 

Strategic Option Evaluation Criteria 3: Size of risk

The more resources of the company committed to a particular strategy the higher the risks involved. Subsequently, a good strategy should pay off with less risks involved (Kim & Sanders, 2002).

The Evaluation of Each Strategic Option

Strategic Option 1: Make information available to other players in the industry

Consistency. The strategy will resonate with the current focus of Apple to provide innovative products. Opening up about the technology behind the products will offer an opportunity to tap new talents that can improve the existing technology. Nevertheless, it limits competitiveness as other companies might exploit the weaknesses to develop better products, challenging the sustainability of the business.

Resources. The strategy does not require huge investments in resources. Notably, there is a need to invest in how the technology and information are dispensed to others and how licenses are charged for various products.

The size of risk. The approach has huge risks for the company. Despite this, this approach has worked well in the Android market. Nevertheless, the large market share of Android products might compromise market penetration due to the high pricing of iOS products.

Strategic Option 2: Increased employee awareness

Consistency. There is no doubt that this strategy is already in use in the organization. It is fundamental for keeping the company innovative by protecting its patents, trademarks, and copyrights now and in future.

Resources. Improving employee awareness needs increased investment in training programs that will address the significance of protecting intellectual property and how to protect it.

The size of risk. The strategy poses no fundamental risks. Rather, it is an appropriate approach to mitigate risks.

Strategic Option 3: Legal protection

Consistency. The strategy is a sustainable approach to ensure that Apple’s intellectual property is protected, ensuring that it remains profitable and competitive. Nevertheless, it is influenced by differences in countries where the company operates.

Resources. Patenting processes are timely and expensive. Subsequently, unless there are substantial improvements in the processes, the strategy is costly and also limits the business processes such as releases of new products. Additionally, the lawsuits that emerge in this context increase the expenses and jeopardize the company’s reputation.

The size of risk. The strategy presents very minimum risks since it is a legal process. Additionally, it is a necessity for the company to engage in legal protection for the business to be viable.

Recommendations and Action Plan

The most appropriate strategies for protecting intellectual property for Apple is to increase awareness of the workers and legal protection. Apple should increase ventures that promote the engagement of the workers in protecting data. Fundamentally, the company should focus on creating loyal workers to prevent chances of the workers engaging in information theft or facilitating access to the information by external parties. The legal protection is fundamental to the survival of the company. Over the years, intellectual property laws have improved in various countries, and this offers a sustainable approach for the company. Apple can also avoid markets that lack these fundamental legal provisions and focus on secure markets. Additionally, the company should seek legal guidance to ensure that decisions made are valid and do not raise skepticism among the people and stakeholders to maintain a good reputation. The action (Appendix 1) will entail engaging the workforce in training to strengthening their responsibility in ensuring the protection of intellectual data, and seeking legal protection through various approaches as the technology is developed.

References

Carew, R., Florkowski, W., & Smith, E. (2006). Apple Industry Performance, Intellectual Property Rights, And Innovation: a Canada-U.S. Comparison. International Journal of Fruit Science, 6(1), 93–116.

Finkle, T. A., & Mallin, M. L. (2010). Steve Jobs and Apple, Inc. Journal of the International Academy for Case Studies, 16(7), 31–40.

Johnson, K., Singer, J., Li, Y., Phan, H., & Trinh, H. (2012). The Innovative Success that is Apple, Inc. sc. Marshall Digital Scholar, 1(1), 1–43.

Julnual, F. (2016). Bringing the Internet of Things to life with Microsoft Azure IoT Services Fukiat Julnual, 510(July).

Jurevicius, O. (2013). Apple SWOT Analysis 2013 | Strategic Management Insight. Strategic Management Insight, 3(3), 115–130.

Kane, Y. I. (2011). Apple accuses Samsung of copying iPhone, iPad. Wall Street Journal Asia, 35, 16.

Khan, U. A., Alam, M. N., & Alam, S. (2015). A Critical Analysis of Internal and External Environment of Apple Inc. International Journal of Economics, Commerce, and Management, III (6), 955–967.

Kim, Y. J., & Sanders, G. L. (2002). Strategic actions in information technology investment based on real option theory. Decision Support Systems, 33(1), 1–11.

Wang, L., & Wu, Q. (2003). Fall and Rise of Apple Inc.: Different Factors Influencing the Company’s Growth. Growth (Lakeland), 3(2), 1–13.

Appendix

Action Plan

Action StepResponsible PartyDeadline DateComments
TrainingHuman resourcesDecember 2017The company has more than 100,000 workers in different sectors. The training programs should focus on how these teams engage with intellectual property, and how they can contribute to its protection. Motivational approaches should be incorporated to increase loyalty among the workers.
Legal protection (Patenting, trademarking, and copyrighting)ExecutiveOne yearThe legal protection processes take different periods. Subsequently, the company should advocate for improvements in the legal protection procedures to ensure that its products are safe. The lawsuits emerging from violations of these laws should be handled ethically to protect the image of the company.

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