Bloomberg News

Apple’s Win of Import Ban on Samsung Said Not a Knock Out

August 10, 2013

Apple Turns Tables Seeking Samsung Phone Ban After U.S. Reprieve

Apple Inc. and Samsung Electronics Co. together make almost half of all smartphones sold, with Samsung holding the title of world’s biggest and the two companies vying to be No. 1 in the U.S. Photographer: SeongJoon Cho/Bloomberg

Apple Inc. (AAPL:US) won an order against Samsung Electronics Co. (005930) that prevents U.S. imports of devices that infringe two Apple patents, a victory that may nonetheless have limited impact on their global fight.

“If you use the analogy to a prize fight, it’s not a knock-out punch,” said Susan Kohn Ross, a lawyer with Mitchell Silberberg & Knupp in Los Angeles. “It’s a well-placed jab.”

Some Samsung devices infringe two Apple patents for multitouch features and headphone jack detection, while newer devices work around those patents, the U.S. International Trade Commission said in a notice posted on its website yesterday. The trade agency cleared Samsung of infringing patents for the design of the iPhone.

The ruling is unclear how many of Samsung’s phones would be affected by the import ban, which is subject to review by the administration of President Barack Obama. Samsung can import all of its phones during that review period, while Apple can argue to U.S. customs officials that Samsung’s new models copy the inventions.

Apple is seeking to limit Samsung’s increasing share of the U.S. smartphone market, saying the products emulate the iPhone’s unique look and features.

“With today’s decision, the ITC has joined courts around the world in Japan, Korea, Germany, Netherlands and California by standing up for innovation and rejecting Samsung’s blatant copying of Apple’s products,” Kristin Huguet, an Apple spokeswoman, said in an interview. “Protecting real innovation is what the patent system should be about.”

Samsung Competition

While saying it was disappointed with the exclusion order, Samsung applauded being cleared of infringing Apple’s design patents, which would have been harder to work around.

“Apple has been stopped from trying to use its overbroad design patents to achieve a monopoly on rectangles and rounded corners,” Adam Yates, a Samsung spokesman, said.

“The proper focus for the smartphone industry is not a global war in the courts, but fair competition in the marketplace,” Yates said. “Samsung will continue to launch many innovative products, and we have already taken measures to ensure that all of our products will continue to be available in the United States.”

The companies are embroiled in patent fights worldwide for a greater share of the $293.9 billion market, which increased 34 percent last year, according to data compiled by Bloomberg.

Both have sought to block the others’ products. The Obama administration on Aug. 3 vetoed an import ban of some Apple iPhone 4s and iPad 2 3Gs won by Samsung at the trade agency.

Jobs’ Patent

In the case decided yesterday, the ITC found that Samsung had infringed the feature patent for a multitouch screen that names Apple co-founder Steve Jobs as one of the inventors, and another for detecting when headphone jacks are plugged in.

It overturned ITC Judge Thomas Pender’s findings of infringement on two other patents, including a design patent for the iPhone’s flat front face with wider borders at the top and one covering translucent images for applications displayed on a phone or computer screen. The commission said the judge was right to say another design patent, and a second headphone jack patent weren’t infringed.

Among the products that Cupertino, California-based Apple sought to block from the U.S. are Samsung’s Nexus 4G, Replenish and Intercept mobile phones, and older models of its Galaxy Tab computer. The judge found that some of Samsung’s newer products, including the Galaxy S II and Galaxy Note, had been designed to work around the patents, and the commission agreed. Samsung’s Galaxy S4 wasn’t part of the case.

Work-Around Designs

Samsung, based in Suwon, South Korea, denied infringing Apple’s patents and challenged their validity. The company also told the commission it had altered products to avoid the Apple patents, though warned that a broadly worded import ban “could create an immediate shortage of millions of mobile devices.”

The patents under consideration by the commission are different than those a California jury said last year were infringed by Samsung. Earlier yesterday, Apple asked the U.S. Court of Appeals for the Federal Circuit in Washington to block sales of the products named in the California case.

In both proceedings, the Apple patents are for the design or features of the smartphones. In filings with the trade commission, Apple contrasted that with some of the patents asserted by Samsung against Apple, which covered inventions that are part of industrywide technology standards.

Apple Veto

U.S. Trade Representative Michael Froman, who is designated by Obama to review import bans imposed by the commission, on Aug. 3 overturned one against some of Apple’s older iPhone 4s and iPads 2 3Gs. The administration said it wanted to ensure patents on widely used technology standards are available at low prices to anyone that wants to use them.

The legal standard considered at the trade agency is different from that used by courts.

At issue in the appeals court arguments earlier yesterday was a trial judge’s decision to let Samsung continue selling products because Apple hadn’t proven that its patented features and designs drove sales of the devices, and that Apple could be made whole with money.

A decision in the Federal Circuit case, which isn’t expected for several months, could have broad ramifications for any complex product like a smartphone or computer with multiple components and features.

The Apple 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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