Tuesday, October 18, 2011

Apple and Samsung fight over new evidence as decision on US-wide preliminary injunction nears

On Thursday (October 13), Apple and Samsung squared off in a hearing held by the United States District Court for the Northern District of California on Apple's motion for a US-wide preliminary injunction against four Android-based Samsung products. According to reports, Judge Lucy Koh indicated at the hearing that one of the four asserted intellectual property rights -- a list-scrolling software patent -- wasn't going to form a basis for an injunction, but she believes Samsung infringes Apple's asserted design patents. Still, there's uncertainty as to the outcome since Samsung may have raised sufficient doubt about the validity of those patents to dissuade the judge from ordering a preliminary injunction.

I frequently talk about probability estimates on this blog (and to an even greater extent in confidential conversations with clients). On this one, I'm not able to guess. My gut feeling is that there's less than a 50% probability of an injunction based on all three design patents, but Apple may win on one or two of them. We will know soon.

Late on Monday, Samsung filed supplemental evidence to support its invalidity contentions against Apple's design patents as well as the list-scrolling patent. Even though the judge indicated that the software patent wasn't going to form the basis for an injunction, Samsung continues to fight against that one, too.

Apple objects to Samsung's filing and says it's "untimely".

Very little information on the parties' new filings is in the public record. It basically comes down to two declarations in support of Apple's objections. Nevertheless I wanted to inform you of this last-minute attempt by Samsung to prove Apple's asserted intellectual property rights invalid, and of Apple's objections to such allegedly untimely evidence.

War rhetoric from Samsung

The Korea Times published several articles yesterday on the Apple-Samsung dispute, which is a big topic in the Korean media. When I tweet about Korea Times articles on this matter, I often get reactions that suggest the paper is too Samsung-friendly. But others have accused me of a pro-Apple bias even though I strive to report as accurately as possible. At the end of the day, every writer will always appear somewhat subjective to someone. The Korea Times certainly doesn't bash its country's largest company, but I find its coverage very informative and a useful complement to all other reports that I read.

Yesterday I already linked to this article on Samsung still being a key supplier of components to Apple.

That same day, the Korea Times also published an article that is largely based on an interview with me but also includes some interesting statements from unnamed Samsung officials. For example, this one:

"Samsung officials said the understanding of FRAND terms is different from country to country without elaborating further."

The most interesting one of the three articles has this headline:

"It’s all about war, not battles, Samsung says"

In that article, Samsung acknowledges that it isn't happy with some recent court decisions (mentioning specifically some decision in Europe, such as the Dutch decision on FRAND-pledged 3G patents, but probably also meaning the Australian situation). Still, Samsung vows to keep fighting -- and that intent is perfectly credible.

The article says that Samsung's CEO "will take full responsibility of the ongoing legal issue", that a comprehensive settlement is not in sight, that Samsung's "legal team has reached a consensus to beat Apple at the appeals courts", and that they are in this "for the long haul".

I think Apple has the upper hand, but Samsung may be able to reverse some of the decisions that have been taken. For example, the Australian injunction is an interim injunction and may or may not become a permanent injunction. But unless Samsung asserts more FRAND-unencumbered patents, I doubt that differences between countries concerning the application of the FRAND licensing framework are going to save the day for the Korean electronics giant.

A preliminary injunction in the US might be a tipping point, but if it's only based on design patents, it won't mean the end of Samsung's Android-based product offerings. Samsung could resolve this through design changes.

Apple is currently on a winning streak against Android in general and Samsung in particular, but Samsung won't be up against the ropes until Apple can enforce, on a permanent and not only preliminary basis, technically broad patents that can hardly be worked around. Narrow victories can contribute to Apple's momentum and do some damage to Samsung's business, but that's not enough to force Samsung out of the Android business. Samsung announced yesterday that it has sold more than 30 million Galaxy devices. The profit margins and strategic opportunities in connection with that product range dwarf the opportunity of being a supplier of components to Apple.

Protracted litigation is costly and it's a distraction for management, but for Samsung this also generates a lot of publicity, even if some of it isn't overly positive. Samsung's steadfast defense of its interests may, however, pay off if it enables the company to grow its market share and enhance the strength of its consumer brand before one of the three other platforms Samsung is investing in becomes a viable, patent-safe replacement for Android.

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