Litigation

The Totally Unsurprising Apple-Samsung Patent Truce


That Apple-Samsung partial patent truce? We told you so. In March 2012 Bloomberg Buisnessweek published a cover story titled “Apple’s War on Android” that made two central points:

1. Apple’s (AAPL) worldwide intellectual-property war against its erstwhile business partner Samsung (005930:KS) was primarily a legacy of Steve Jobs’s over-the-top hostility toward the Google (GOOG) Android operating system, which Samsung and other Apple rivals use in their devices.

2. The furious litigation that seemed irresolvable would eventually … settle. Because that’s what complex business litigation eventually does.

Thus the overnight dispatch, courtesy of Bloomberg News:

Apple Inc. and Samsung Electronics Co. are starting to wind down their global patent battle. The companies said in a joint statement that they have agreed to drop all suits against each other in countries outside the U.S. Claims are being abandoned in Australia, Japan, South Korea, Germany, Netherlands, the U.K., France and Italy.

The agreement shows Apple and Samsung may be nearing a conclusion to what has been a drawn-out and occasionally nasty worldwide patent fight, which has sprouted alongside the booming market for touch-screen smartphones. Apple has accused Samsung of copying its iPhone designs, while Samsung has countered that Apple is using pieces of its wireless-transmission technology without permission. Neither side won an overarching decision harming the other’s sales, and judges repeatedly urged the companies to settle rather than play out their dispute in court.

The two can’t quite let go of their animosity in the U.S., where, for the moment, lawyerly skirmishing will continue. Still, there are signs of deescalation, even in Apple’s home country. The companies announced in June that they would drop appeals of a patent-infringement case at the U.S. International Trade Commission that had resulted in a not-terribly-important import ban on some older Samsung phones. And in May, Apple and Google announced that they were dropping suits against one another related to Motorola Mobility.

Here’s further helpful background from Bloomberg:

The patent fights grew out of the surging sales for smartphones. After Cupertino, California-based Apple introduced the iPhone in 2007, popularizing the use of phones with touch screens and Internet access, Samsung followed suit with a wave of models with different styles and prices. The rivalry sparked two protracted patent-infringement cases in federal court in San Jose, California. Apple scored victories in the two California suits, including a $930 million verdict in 2012 and a $120 million result earlier this year. …

Apple Chief Executive Officer Tim Cook, Samsung mobile chief Shin Jong-Kyun and other executives from both companies attended a full-day session with a mediator in the first week of February, and representatives from both sides had several follow-up phone calls with the mediator, according to a report the companies filed that month. Other sessions in 2012 and 2011 also failed to generate a deal.

The settlement [outside the U.S.] comes as Samsung grapples with declining demand for its smartphones and slumping earnings. Its global market share declined 7.4 percentage points last quarter from a year earlier, and the company lost the top spots in key markets China and India. Samsung last week also posted its smallest quarterly profit in two years, with its China shipments dropping 15 percent.

“The whole industry paradigm is changing,” Lee Seung Woo, an analyst at IBK Securities Co. in Seoul, said by phone. “Apple and Samsung have no time to waste and it’s time to get back to work.”

One final implication: The slowing of the courtroom theatrics should give lawyers for Apple and Samsung free time to enjoy the vacation homes they’ve purchased with what—by now—must total hundreds of millions of dollars in fees.

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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Companies Mentioned

  • AAPL
    (Apple Inc)
    • $101.79 USD
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  • 005930:KS
    (Samsung Electronics Co Ltd)
    • $1210000.0 KRW
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