For Germans, a trip to Spain means sunshine. For Samsung Electronics (005930) Co., it’s a tactic to avoid adverse rulings from German courts on smartphones and tablet computers targeted by Apple Inc. (AAPL:US) lawsuits.
Cases covering five Samsung tablet and 10 smartphone models in Dusseldorf have been delayed for months by Samsung filings at the European Union Trademark Office in Alicante, Spain, in a bid to invalidate the intellectual property at the center of the dispute. The German suits over the design of the products are scheduled to be put on hold until the process in Spain is completed.
“Even if the invalidity procedures fail in the end, the attacked products will no longer be on the market once the court can finally issue a ruling,” said Oliver Ruhl, a patent litigator at Rau, Schneck & Huebner in Nuremberg, Germany. In the meantime, Apple’s claims “are going nowhere.”
Apple scored one of its biggest victories in Germany as part of the global patent battle between makers of smartphones and tablet computers that also includes Microsoft Corp. and Google Inc.’s Motorola Mobility. A Dusseldorf court last year issued an EU-wide ban on Samsung’s flagship Galaxy Tab 10.1 computer. While the order was later restricted to Germany, it allowed Apple to reiterate its claim that Samsung “slavishly” copies the iPad’s design.
Apple disclosed the tablet injunction on Aug. 9, 2011. On the same day, Samsung filed invalidity motions against five design rights the iPad maker had registered for tablets and smartphones at the EU trademark agency. When Apple filed additional suits against its rival’s smartphones, including the Galaxy S Plus and the S II, Samsung added another four cases. The litigation is listed as pending on the EU Trademark Office’s website.
Apple and Samsung’s battle has continued even as the Cupertino, California-based maker of the iPad has shown a willingness to resolve other patent disputes. Apple in November settled all its global lawsuits with HTC Corp. (2498)
Samsung said Dec. 18 that it will unilaterally withdraw its request for injunctions to block some Apple sales in Germany, U.K., France, Italy and the Netherlands. On Dec. 21, the European Union sent Samsung a formal complaint outlining how the use of the injunctions violates antitrust rules by blocking the licensing of essential patents to other mobile-phone manufacturers on fair terms.
Samsung’s spokeswoman Rhee So-Eui declined to comment on the German design cases, as did Apple spokesman Alan Hely.
Design rights are a form of intellectual property that have protection similar to trademarks under European law. The IP protects the outward appearance of a product or parts of it, resulting from the lines, contours, colors, shape, texture, or ornamentation.
“Companies have only in recent years become aware of how important design rights can be,” Ruhl said.
Apple successfully used its iPad design rights to block at least some Samsung tablet sales in Germany. While the company may have to pay for Samsung’s losses should the IP be invalidated, Apple may have found more value in the global headlines than anything it will have to pay out in a lawsuit.
“If you look at the design right registered for the iPad, it seems quite possible that the office will declare it invalid,” said Ansgar Ohly, a law professor at Munich University. “It’s such a basic form, just a rectangle with rounded corners, that’s not individual enough to stand the test.”
Some IP rights, including the EU designs, are listed in public directories allowing competitors to review them to avoid conflicts before putting their own products on the market. They can also ask the authorities to invalidate IP they think shouldn’t have been granted in the first place. In practice, things often work differently, said Ohly.
“What kind of procedure you choose is all a question of tactics,” Ohly said. “Samsung may have opted for just putting its own tablet on the market with full view of the risks and staying very close to the iPad design. As we can see from the sales figure, that tactic turned out to be quite successful.”
The global market for mobile devices, which includes phones, tablets and e-readers, reached $436 billion last year and is projected to almost double to $847 billion by 2016, according to Carl Howe, an analyst with Yankee Group.
Apple’s share of the global tablet market fell to 57 percent in the third quarter of 2012 from 65 percent a year earlier, losing sales to devices running Google’s Android software, such as Samsung, according to Strategy Analytics. Samsung shipped 56.9 million smartphones, giving it a 35 percent market share, compared with 17 percent for Apple, Strategy Analytics said Oct. 26.
Samsung today reported higher-than-expected fourth-quarter earnings as sales of Galaxy smartphones withstood the debut of the iPhone 5. Operating profit rose 89 percent to a record 8.8 trillion won ($8.3 billion) in the three months ended December, the Suwon, South Korea-based company said in a statement of preliminary results. Samsung didn’t give net income or divisional figures.
Sales jumped 18 percent to 56 trillion won, helped by demand for Galaxy Note II and Galaxy S III phones. Earnings at the mobile-phone unit probably doubled from a year earlier, according to a Bloomberg News survey of five analysts, while sales of iPhone 5s were hit by glitches with mapping software.
Courts around the world have issued divergent rulings in patent cases between the two companies. In August, Apple won a $1.05 billion U.S. jury verdict in a patent case between the companies, while a week later a Tokyo court ruled Samsung products don’t infringe an Apple invention for synchronizing music and video data with servers.
In October, U.K. judges criticized their German counterparts, describing the Dusseldorf court’s initial Europe- wide injunction over the designs as “extreme.”
Any ruling by the Alicante-based trademark authority can be appealed internally and again to a European court. If all venues are used, the process can take as long as four years.
Instead of filing an invalidity bid in Spain, Samsung could have started a countersuit in Dusseldorf, said patent litigator Ruhl.
“As a rule, the bid in Alicante will delay the pending suit,” said Ruhl. “The agency lately seems to disregard to a greater extent differences that are merely due to technical design features, leading more easily to the cancellation of IP for devices with a minimalist design.”
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