Bloomberg News

Apple, Samsung Inch Toward End of Smartphone Patent Fight

December 18, 2012

Samsung Says It Will Drop Lawsuits Against Apple in Europe

The two companies have clashed over the intellectual property behind the $219 billion smartphone market, even after Apple settled all its lawsuits with HTC Corp. last month. Photographer: SeongJoon Cho/Bloomberg

Apple Inc. (AAPL:US) and Samsung Electronics Co. may inch closer to settling their global litigation over smartphone patents with decisions in the U.S. and Europe that allow sales of competing handsets while the fight over legal damages continues.

Facing an antitrust probe by European regulators, Samsung said today that it will halt efforts to block sales of Apple products there. Hours earlier, a U.S. judge in California rejected Apple’s request to block sales of Samsung devices.

Samsung and Apple, the world’s two biggest smartphone makers, have each scored victories in their patent disputes fought over four continents since Apple accused Asia’s biggest electronics maker of “slavishly copying” its devices. The companies, competing for dominance of a global mobile-device market estimated by researcher Yankee Group at $346 billion this year, are fighting over patents even as Apple remains one of Samsung’s biggest customers.

“There will be some settlement of some sort and all this stuff is just going to dictate who’s going to provide a bit more money than the other,” said David Long, a patent lawyer with Dow Lohnes PLLC in Washington who’s not involved in the case. “All this court stuff is just posturing.”

The U.S. International Trade Commission in Washington is scheduled to announce the next steps in Apple’s case against Samsung on Jan. 9, with a decision in Samsung’s case against Apple expected the following week. The agency has the power to block products at the border if they infringe U.S. patents.

‘How Much?’

“You’ve got potentially determinative rulings occurring over the course of the next several weeks and these are the kinds of rulings that drive people to settle,” said Rodney Sweetland, a lawyer with Duane Morris LLP in Washington who specializes in ITC cases. “The question is, how much is it going to take?”

Apple rose (AAPL:US) 2.9 percent today to close at $533.90. Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment.

Samsung rose 0.8 percent in Seoul today following the U.S. ruling and before the company’s announcement on the European cases. The increase came after two days of losses, extending its gain for the year to 43.2 percent.

“Samsung has decided to withdraw our injunction requests against Apple on the basis of our standard essential patents pending in European courts, in the interest of protecting consumer choice,” the Suwon, South Korea-based company said in an e-mailed statement today.

Samsung still has cases pending in the U.S., Korea, Japan and Australia in which it is seeking to halt sales of Apple products.

Ban Rejected

Apple’s request for a U.S. sales ban on 26 Samsung devices was rejected by a federal judge yesterday following a California jury verdict in August finding infringement of six of the iPhone maker’s patents that awarded Apple $1.05 billion. Apple can ask the judge for more money for any continued infringement.

Apple failed to establish that consumer demand for Samsung products was driven by technology it stole, U.S. District Judge Lucy H. Koh in San Jose, California, said in her ruling yesterday. She said it wasn’t in the public interest to bar Samsung’s devices because the infringing elements constituted a limited part of Samsung’s phones.

Koh’s ruling was based on an October decision from the U.S. Court of Appeals for the Federal Circuit in Washington that overturned a ban on Samsung’s Galaxy Nexus phone in another case brought by Apple. Apple is asking the full appeals court to review the case. The court yesterday asked Samsung to respond to the request, indicating that at least some members of the Federal Circuit are interested in a review.

26 Products

Only three of the 26 products that Apple sought to block are still being sold, according to Samsung: the Galaxy S II by T-Mobile, Galaxy S II Epic and Galaxy S II Skyrocket. Newer smartphones made by both companies, including Samsung’s Galaxy S III and the iPhone 5, already have been added to a related lawsuit in which Apple and Samsung accuse each other of copying products. That case is also before Koh and is scheduled for trial in 2014.

Most of the European injunctions that Samsung is withdrawing involve the company’s claims that Apple infringed its patents over so-called standard-essential technology for wireless communications, the company official said. Such patents are selected as an industry standard that must usually be licensed on fair terms.

Samsung’s move won’t affect a London trial that started last month where the company is seeking damages from Apple for using protected technology without authorization.

Compete Fairly

“We strongly believe it is better when companies compete fairly in the marketplace, rather than in court,” Samsung said in its statement.

Samsung’s injunctions also triggered a European Union antitrust investigation that examines whether the company violated agreements to license standards-essential patents to other mobile-phone manufacturers on fair terms.

Antoine Colombani, a spokesman for the European Commission, said an antitrust probe would continue. “Our investigation is ongoing,” he said in an e-mailed statement.

The patent disputes began when Samsung released its Galaxy smartphones in 2010. Apple co-founder Steve Jobs vowed before his death last year to wage “thermonuclear war” to prove that phones run on Google Inc.’s Android operating system copy the iPhone.

Sweetland said it may take a court ruling that disrupts sales by one company or the other to finally bring them together.

“Neither of these parties is out of money yet,” he said.

The case is Apple Inc. v. Samsung Electronics Co. (005930) Ltd., 11- cv-01846, U.S. District Court, Northern District of California (San Jose).

To contact the reporters on this story: Aoife White in Brussels at awhite62@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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