A handful of older products are banned, both companies forced to pay the other a small amount of damages

Compete on the market, and stop suing each other.

I. A Tie in South Korea is a Win for Samsung

That seemed to be the sentiment from a court in South Korea, home to the world's largest phonemaker Samsung Electronics Comp., Ltd. (KSC:005930).  Locked in an international court battle with the world's second largest smartphone maker, Apple, Inc. (AAPL), the South Korean case was one of the first to wrap up, and comes at a time when the companies are battling for far greater stakes in U.S. District Court for the Northern District of California.

The South Korean court ruled that Apple had infringed on two Samsung patents, and Samsung had infringed on a single Apple patent.  Samsung must pay Apple 25M won ($22,000 USD) and Apple must pay Samsung 40M won ($35,300) (20M won per patent).

The court soundly rejected Apple's lawyers' arguments to owning the rights to designing rectangular smartphones with curved edges.  Commented the court -- there is "no possibility" that Samsung's and Apple's phones and table PCs could be mistaken for the other company's product.

Samsung iPhone 4S
The South Korean court did not think the iPhone looked much like a Galaxy smartphone.
[Image Source: Snapguide]

The court also noted the fact that Apple did not pay estimated royalties pre-trial, as it did in some other locations as a sign of ill faith.   It writes, "In disputes regarding patent infringement in Japan, the Netherlands and other nations, Apple deposited estimated royalty rates, or expressed its intention to do so, based on the hypothetical acknowledgment of the validity of Samsung's patents and its infringement of them.  It hasn't taken similar measures in South Korea."

Given that other regions like the Netherlands had absolved Apple entirely of Samsung's infrigement claims, while ruling exclusively against Samsung, the South Korean's court's "tie" ruling is widely viewed as a victory for Samsung.

The decision can be appealed to the federal appeals court.  An appeals decision can only be appealed before the South Korea Supreme Court.

II. FRAND Suits -- Okay?

The court broke with its foreign peers, ruling that it was valid for Samsung to sue Apple using "fair, reasonable, and non-discriminatory" (FRAND) licensed standard patents.  The South Korean court argued, again, that Apple wasn't truly cooperative, and only tried to be when it felt it might lose. 

Writes the court, '"It seems that Apple has sought to avoid Samsung's application for an injunction against Apple's infringement of the standard Frand patents, rather than engaging in a sincere negotiation for the determination of royalty rates based on the rational evaluation and verification of the standard patents in this case."

Judge Bae Jun-Hyun -- a member of the three judge Seoul Central District Court panel that decided the case -- acknowledged, "In the Netherlands, the same argument [by Samsung] was rejected as abuse of its patent right.  But each country has a different legal system and standard."

FRAND patents are for friends
[Original Image: Cayusa/Flickr; modifications: Jason Mick/DailyTech]

While Apple is hardly a small company, some fear the case could make it easier for large companies like Samsung -- who typically own a number of standards patents -- to demand larger royalties from smaller companies in other cases.  On the other hand, with large companies like Apple already doing that with non-standard patents, and bullying large FRAND patent holders, this could level the playing field in other cases.

With the South Korean case over, all eyes turn to the U.S., a country where FRAND patents typically are not considered valid fodder for lawsuits.  In that sense, Samsung's position in the U.S. is considered far weaker.  

Still, Apple has a long ways to go to proving that Samsung's current generation of smartphones/tablets infringes on the iPhone/iPad's technology or look and design.  Anything less than a ban on Samsung's latest products, though, would be an unsatisfactory outcome for Apple, who has struggled to keep up with Samsung in unit sales.

Source: WSJ

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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