Bloomberg News

Samsung Gets Review of Apple Victory in U.S. Trade Fight

January 24, 2013

Samsung Granted Review of Apple Victory in U.S. Trade Dispute

A box for the Samsung Electronics Co. Galaxy S III smartphone. Photographer: Brent Lewin/Bloomberg

Samsung Electronics Co. (005930), the world’s largest smartphone producer, persuaded a U.S. trade agency to review a preliminary ruling that more than a dozen models of its mobile phones copied Apple Inc. (AAPL:US)’s patented features.

The U.S. International Trade Commission in Washington said yesterday it would review the findings, and it ordered a judge to address specific issues on two of the four patents found to be infringed. ITC Judge Thomas Pender in October recommended the agency order a ban on U.S. imports of Samsung products found to violate Apple’s patent rights.

The review means a final decision, originally scheduled for March 27, will be pushed back. The case is one of dozens in which the world’s two largest smartphone makers are using their patents to try to force each other into changing products or removing some models from store shelves. They are fighting for increased share of a mobile device market that researcher Yankee Group expects to double to $847 billion by 2016.

Apple has generally been more successful in its litigation in the U.S., including a $1 billion jury verdict it won in August that Samsung is trying to overturn. Samsung has filed regulatory challenges to some of Apple’s designs in Europe to keep German cases on hold, and it won a ruling in the U.K. that it didn’t infringe an Apple design patent.

Patents Disputed

“We remain confident that the full commission will ultimately reach a final determination that affirms our position,” Adam Yates, a spokesman for Samsung, said. Kristin Huguet, an Apple spokeswoman, said the company had no comment.

Pender in October said Samsung infringed a design patent for the flat front face with wider borders at the top and bottom and a lozenge-shaped speaker slot above the display screen. Apple’s design chief, Jonathan Ive, and its late co-founder, Steve Jobs, were among the inventors.

Also found to be infringed were a feature patent for a multitouch screen that lists Jobs and Apple’s former iOS software chief, Scott Forstall, among the inventors; one that covers the translucent images for applications displayed on a screen; and one for a way to detect when headphone jacks are plugged in. There was no violation of two other patents, he said. Each side asked the commission to look at aspects of the case it lost.

While the commission said it was reviewing the decision “in its entirety,” it told the judge to issue additional findings regarding infringement of two of the patents. The review concerns whether Samsung products infringe elements of the patents for translucent images and headphone jacks.

New Deadline

The commission said it didn’t need additional written arguments from the parties at this time. Pender will have to set a new deadline to complete the investigation.

Pender also found that Samsung in some instances had designed devices to avoid infringing the patents, a finding Apple challenged. Any exclusion order would have to be reviewed by President Barack Obama on public policy grounds, and the underlying patent case would be heard by an appeals court that specializes in patent law. Presidents rarely overrule the ITC on import bans in these types of cases.

Samsung, which denies infringing any of the Apple patents, said that its products shouldn’t be shut out of the U.S. market. In a Dec. 3 filing with the agency, Suwon, South Korea-based Samsung said such an order would “create a void in the marketplace, harming consumers and wireless carriers.”

Biggest Competitor

The company lost the first round in its own ITC patent- infringement case against Apple when a trade judge said there was no violation. The full commission is reviewing that case and is scheduled to issue a final decision March 7.

The companies make about half of the world’s smartphones, and Samsung is the biggest competitor to Apple in sales of tablet computers. It’s also the biggest supplier of components to Cupertino, California-based Apple.

Apple said yesterday that it sold 47.8 million iPhones and 22.9 million iPads in the quarter ended Dec. 29. The iPhone 5 went on sale in September.

Samsung, in a preliminary statement of results on Jan. 8, reported an 89 percent jump in profit in the three months ended in December, boosted by its Galaxy line of smartphones. Samsung sold about 62 million smartphones in the quarter, according to a Daewoo Securities Co. estimate.

Google Filing

Google Inc., (GOOG:US) which makes the Android operating system that runs the Samsung phones and tablets at the center of the dispute, also urged the ITC not to block Samsung products even if it does find a violation.

“To justify this extraordinary remedy, which would harm consumers and sellers alike in one of this country’s most critical and fastest-growing industries, Apple asserts patents that cover only small aspects of the feature-packed Android platform and that do not drive consumer demand,” Google said in a Dec. 3 filing.

Samsung lost a bid yesterday to have a U.S. judge order Apple to provide it with documents and iPhone exemplars, including one shown by Jobs during a 2007 presentation, for use in a separate court case between the companies in Japan.

U.S. Magistrate Judge Paul Grewal in San Jose, California, denied Samsung’s request because a similar petition already is pending before a court in Tokyo. Grewal said Samsung could renew its request after the Japanese court issues its decision.

The Apple trade case against Samsung is In the Matter of Electronic Digital Media Devices, 337-796, and Samsung’s case is In the Matter of Electronic Devices, Including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computers, 337-794, both U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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