Global legal war between Apple and Samsung remains far from over and damage may soon escalate

Samsung Electronics Comp., Ltd. (KSC:005930), the world's largest maker of feature phones and smartphones, remains embroiled in a heated legal battle with Apple, Inc. (AAPL) over features in each other’s phones.  Each company claims the other's designs "steal" from their patented intellectual property.

I. Judge Koh -- U.S. Galaxy S III Ban is Possible, at a Cost

In the U.S. Apple is chasing a ban of the upcoming Galaxy S III smartphone, which will launch June 21 on all four of America's top networks.  A ban could help Apple's upcoming sixth generation iPhone get a head start on Samsung in sales, and prevent the reverse scenario -- Samsung beating it to the summer market.

In Northern District of California late Tuesday, Judge Lucy Koh delivered a bit of an ultimatum to Apple, telling it, "I cannot be an Apple v. Samsung judge."

The judge had previously tried to get the two companies to reach an understanding at the settlement table, but talks quickly collapsed.

The remark relates to Apple's last minute decision to file for a preliminary injunction on the Galaxy S III, which it had hoped to tack on to the its request for a ban on the Galaxy S II and the Galaxy Nexus.  Samsung complained about this tactic, saying it should be to late for such an addition.

Judge Koh partially agreed.  She said a preliminary injunction before June 21 was out of the question.  However, she said it might be possible for her to hear arguments from both companies on a restraining order on sales, but that the hearing would push the July trial date to August or September.

In other words, in order to have a chance to ban the Galaxy S III, it must sacrifice its chances of having a ban on the Galaxy Nexus and Galaxy S II for the next couple months.  Still, that may be a chance Apple is willing to take, given the potential damage to Samsung and its potential gains in sales.

The Samsung Galaxy S III

While its potential to secure a short-term ban, at a cost, remains strong, Apple's long-term prospects of stifling Samsung in court are less hopeful.  The recent federal court ruling in Oracle Corp.'s (ORCL) Java anti-Android lawsuit, and the dismissal of Motorola Mobility and Apple's suits/countersuits, have set a precedent that patent damages must be reasonable.

Samsung's lawyers appear to be latching on to this tact.  While to they do not admit to infringement, they point out that patented features like autocorrect likely to not constitute a significant portion of the iPhone's value.  Attorney William Price comments, "There is no advertising or marketing on these features at all."

Thus if Samsung is found in infringement, but can successfully argue that the value equation is slender, it could be only on the hook for millions, rather than billions.  That means that the financial danger to Samsung is mainly from a potential ban, rather than the actual court outcome.

II. Samsung is Not Happy With Australian Patent Office

On the other side of the globe, in the "Land Down Under" (Australia), Samsung has sued the Australian patent commissioner, part of the nation's federal government.  Samsung is looking to force the Australian patent office to review four patents granted to Apple that it considers questionable:
  • 2006330724 - Unlocking a device by performing gestures on an unlock image (Granted April 1, 2010)
  • 2007283771 - Portable electronic device for photo management (Granted May 20, 2010)
  • 2008201540 - List scrolling and document translation, scaling, and rotation on a touch-screen display (Granted February 11, 2010)
  • 2009200366 - List scrolling and document translation, scaling, and rotation on a touch screen display (Granted July 23, 2009)
Samsung is not necessarily contesting the validity of Apple's invention claims, but rather is questioning the fact that Apple filed for duplicate innovation patent and general patents on these technologies.  This is a common problem in Australia because the innovation patent review process is completed much more quickly.

Kangaroo crossing
Samsung takes issue with the Australian government's patent granting procedure.
[Image Source: Search Engine Journal]

Mark Summerfield, patent lawyer and senior associate with Watermark, expects the case to be settled quickly and says Samsung has a legitimate case.  He comments, "Technically, the patents should not have been granted, so there is a legitimate case for review.  On the other hand, the consequences for Apple are fairly harsh ... I think the court will consider itself to have considerable discretion in determining what the legislative intent was in a case like this."

One difficulty facing Samsung, though, is the judge involved -- Justice Annabelle Bennett.  In the past she has shown favor to Apple, ruling to ban Samsung's Galaxy Tab 10.1 tablet.  Her colleagues in a higher court called her justification of the ruling highly inappropriate and reversed the decision.

It remains to be seen if the experience leads her to continue to show favor to Apple or forces her to give more heed to Samsung's arguments.  The initial hearing is scheduled for June 25.

The Samsung Galaxy Tab 10.1 is currently available for sale in Australia, with the lifting of the ban.  However, the trial regarding tablet infringement between Samsung and Apple is ongoing and will conclude in a series of hearings between July and October.  Apple has announced its decision pursue a total of 258 claims and 22 patents (including the duplicate patents being challenged).

A finding of infringement could force Samsung to pay damages to Apple and/or modify its products to avoid a ban on the basis of "willful" infringement.

Sources: Chicago Tribune, IT News

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

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