Apple demands $2.5B USD from Samsung -- plus complete sales ban on most of its smartphones/tablets

Samsung Electronics Comp., Ltd. (KSC:005930) is in the middle of a tough week in the courts.

I. Samsung Accused of Destroying Evidence

The South Korean gadgetmaker recently celebrated outselling arch-rival Apple, Inc. (AAPL) nearly two-to-one in smartphone sales in the recent quarter.  Those strong sales are driven by the Galaxy S III, a smartphone whose hardware beats Apple's flagship iPhone 4S in nearly every category.

Apple is struggling to keep up in sales despite continuing to haul in record profits as the world's most profitable tech company.  Apple attorney Josh Krevitt sums up his company's plight, remarking, "Samsung is always one step ahead, launching another product and another product."

But Apple has been relatively effective at looking to stifle its competitor in court.

In recent weeks it scored sales bans on the Samsung Nexus smartphone and Samsung Galaxy Tab 10.1 tablet, although it failed to secure its most hoped for ban -- a kill shot on the Galaxy S III.

Now it's scored another small victory in its U.S. court battle, with Judge Paul Grewal of the U.S. District Court for the Northern District of California (San Jose/San Francisco) granting an Apple request to give an "adverse jury instruction." The judge told the jury that Samsung destroyed evidence that might have been pertinent to the case.

Samsung is accused of destroying evidence. [Image Source: Office Products NYC]

Samsung's global electronics empire maintains a purpose-built central email network.  That network automatically deletes emails after two weeks.  That's run Samsung into trouble in past lawsuits, including a 2004 one where it received a similar sanction for the practice.

In the current case, the U.S. International Trade Commission had ruled that Samsung behaved responsibly.  While it acknowledged the automatic email deletion, it noted that the company had informed employees that they should be saving any documents pertinent to the case.

But Judge Grewal saw things quite differently.  He argued that Samsung did not do enough to monitor that its order was being enforced.  He remarks, "In effect, Samsung kept the shredder on long after it should have known about this litigation."

Samsung plans to appeal, but if it loses, the order could be a blow to its image when the trial goes before the jury.

II.  Apple Wants $2.5B USD

Apple is suing Samsung on the grounds of a slew of patents and trademarks.  The trademarks encompass largely deal with the look of certain icons -- such as a white email envelop on a blue background.  The patents cover a host of software features such as slide to unlock and multi-touch, as well as the "look" of the iPad and iPhone.

A UK court recently found that most of these patents were invalid due to prior art.  It forced Apple to print a public apology to Samsung acknowledging that Samsung did not "steal" the look of the iPad with its Galaxy Tab.  In recent interviews Judge Richard A. Posner, one of the most experienced intellectual property experts in the U.S., expressed similar sentiments remarking that the majority of software patents -- including Apple's -- should likely be ruled invalid.

Apple wants an exorbitant $2.525B USD from Samsung ($2B USD of which represents profits from devices).  It also wants Samsung to be banned from selling the majority of its Android smartphones and tablets in the U.S.  These provisions would surely provide a nice padding to Apple's already industry-leading profits, and help it overcome its product design difficulties.

Apple money
Apple wants Samsung's devices banned and Samsung forced to pay billions in damages.
[Image Source: SomanyMP3s]

Samsung sought a 2.4 percent royalty from Apple on its 3G patents in the U.S., a proposal that is also slightly outlandish, given that it's grossly above the industry standard for licensing fair, reasonable, and non-discriminatory (FRAND) patents.

III. Galaxy Tab 7.7 Banned Throughout the EU

More bad news came for Samsung this week when a decision by the Dusseldorf Higher Regional Court was expanded into a complete ban on sales of the Galaxy Tab 7.7 throughout the EU.  The ban comes courtesy of Community Design 000181607, which depicts a rectangular tablet:

Apple D'889 patent

It was found that the Galaxy Tab 7.7:
Galaxy Tab 7.7

...looked too much like the iPad, despite being a different size, having different back decals, and different ports.

Again, this would seemingly indicate Apple has a government-enforced monopoly on tablets in the European Union, but this is clearly not the case, as Samsung's Galaxy Tab 10.1N was deemed valid for sale thanks to the addition of extra metallic accents.

About the only conclusion one can thus draw from these divergent rulings is that bans are rather arbitrary and based on the sentiments of whatever court they happen to wind up in for the ruling.

The ban is tentative, pending appeal, and likely does not apply to the UK, which already found Apple's design claims invalid.

Sources: WSJ, PC Magazine

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