Bloomberg News

Samsung Defeats Apple’s Repeat Bid for Smartphone Sales Ban (4)

March 06, 2014

Samsung Electronics Co. (005930) defeated Apple Inc. (AAPL:US)’s bid for a court order barring U.S. sales of some Samsung smartphones that were found to infringe Apple patents in a ruling that may affect a trial over current products.

U.S. District Judge Lucy Koh in San Jose, California, for a second time rejected Apple’s request to ban more than 20 Samsung smartphones, no longer on the market, that were at issue in the companies’ first U.S. patent trial in 2012.

The decision may give Samsung leverage as the world’s top two smartphone makers continue to talk to a mediator about a possible settlement before the companies’ next patent trial, scheduled for March 31, which covers newer devices.

“The real importance of this ruling is what it tells us about Apple’s chances of winning a future injunction against Samsung,” said Brian Love, a professor at Santa Clara University law school. “Right now, those chances don’t look very good.”

In their battle to dominate the worldwide smartphone market, Samsung and Apple have spent hundreds of millions of dollars in legal fees claiming each copied features of the other’s products since Apple initiated the fight in 2011.

Samsung accounted for 28.8 percent of global smartphone shipments in the three months ended Dec. 31, down from 29.1 percent a year earlier, Framingham, Massachusetts-based market researcher IDC said in a Jan. 27 statement. Apple was second with 17.9 percent, IDC said.

Irreparable Harm

Koh previously found in rejecting a sales ban that Apple didn’t prove that Samsung’s infringement caused irreparable harm. A federal appeals court later ordered her to reconsider her ruling, saying she set too high a standard in requiring Apple to show that patented features of its phones are the “sole driver” of consumer demand.

Koh concluded today that the iPhone maker hasn’t met a more basic requirement that its patented touchscreen software fuels demand for the phones at issue.

In a final judgment, Koh also approved the $929.7 million penalty against Samsung that was the product of two separate jury verdicts on infringement damages.

Apple, based in Cupertino, California, has argued in court filings that a sales ban is more important to the company than monetary damages, and has complained to Koh that Samsung releases new generations of products faster than courts are able to issue patent-infringement rulings.

Apple said that while the devices it targeted for the ban are no longer sold in the U.S., an injunction was required to combat future patent infringement by Samsung in products that are “not more than colorably different” from those found to have copied Apple’s technology.

‘End Run’

Samsung, based in Suwon, South Korea, urged Koh in January to deny the ban on the ground that Apple’s real aim was to make an “end run” around any injunction by pushing for another order targeting newer products by the Galaxy maker that haven’t been proven to infringe its rival’s patents.

The Galaxy maker contended that an injunction would create “fear and uncertainty” for carriers and retailers about what Samsung products they could legally offer.

Samsung said in an e-mail it agreed with Koh’s ruling that “a few” software features alone don’t drive consumer demand for its products. The company said it’s disappointed by Koh’s “erroneous calculation” for damages, and planned to appeal the ruling that it has infringed the patents at issue. Samsung later filed a notice of appeal with the court.

Next Trial

Love said that as the companies head into their next trial, today’s ruling shows that Apple will have a hard time convincing Koh that its newer phones are any more deserving of a sales ban order against Samsung than its older models.

“Apple’s patents cover just a tiny fraction of what makes a smartphone valuable,” he said. “By one estimate, there are approximately 250,000 patented inventions in a typical smartphone, and this case involves just a handful. Judge Koh understands the complexity of these products and believes, correctly in my opinion, that the features covered by Apple’s patents are, among the myriad features incorporated into smartphones, not those that drive consumers’ choices.”

The companies told Koh yesterday they are still negotiating through am unidentified mediator even as they prepare for the March 31 trial. Koh has urged them to pursue settlement talks before trial.

Mediator Session

Lawyers for Apple and Samsung reported to Koh Feb. 21 that they had been unable to reach any agreement after 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. Apple and Samsung previously tried and failed to reach an accord in court-ordered settlement talks.

Apple, which rose as much as 0.4 percent when the New York Stock Exchange opened hours after the ruling, declined by the same percentage to $530.25 at 3:40 p.m.

Kristin Huguet, an Apple spokeswoman, declined to comment on today’s ruling.

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

To contact the reporters on this story: Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net; Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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