12.08.201302:51:21UTC+00Samsung losses to Apple give IPhone maker an advantage in talks

Apple Inc.’s patent-infringement success over Samsung Electronics Co. could go far in boosting its claim of providing and copying an advantage in any settlement between the world’s two top smartphone manufacturers.

The U.S. International Trade Commission on Aug. 9 stated that Samsung infringed two Apple patents and issued an order banning imports of products using the iPhone maker’s multitouch features and headphone jack detection. President Barack Obama’s administration could overturn the import ban on public policy grounds, as it did Aug. 3 in an order versus older iPhones.

Four Continents

Apple filed its first patent-infringement case against Samsung in April 2011, saying the Korean company “has chosen to slavishly copy Apple’s innovative technology.” Samsung responded a week later with its own patent claims, and the fight has escalated into a legal battle on four continents with no clear winner and no end in sight, despite negotiations that have included direct talks between chief executives of both companies.

Innovation Fatigue

Cupertino, California-based Apple has claimed that many of the phones running on Google Inc.’s Android operating system copied unique features of the iPhone, introduced in 2007. Its first suit, in March 2010 versus Taiwan’s HTC Corp., resulted in a settlement that included a pledge by HTC that it wouldn’t make “cloned” copies of Apple products.

New Measures

“The designs and capabilities of some of these premium devices -- you’re really scratching your head to find something new,” Stofega said.

U.S. Verdict

“Samsung’s market share in the U.S. was the lowest among those markets, but it has been on the rise because there were no new products released by Apple during the first half,” Kim said. “When the new models come out in late third quarter or in the fourth quarter, the market rivalry will again intensify, and it won’t be as easy as before for Samsung to extend its market share.”

Apple Bullets

For both reputation purposes and settlement negotiations, hindering the other company’s sales is often more important than money. The $1 billion verdict equals less than two weeks’ worth of iPhone sales and one-seventh of Samsung’s second-quarter profit.

Even though Samsung “has successfully convinced consumers that all this business about copying is vastly overdone,” that may not help it in the legal arena considering how the two types of patents are treated, Yankee Group’s Carl Howe said.

“My guess is Apple will amass a lot more bullets before it’s over,” Howe said. “Samsung’s bet is that at the end they’ll have to pay, but, in the meantime, they’ll have amassed a lot of money and mindshare and market share. And that’s why Apple is insisting on import bans.”

The Apple ITC 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).

The Apple appeal is Apple Inc. v. Samsung Electronics Co., 13-1129, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Apple Inc. v. Samsung Electronics Co. (005930) Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).