Print 115 comment(s) - last by Motoman.. on Aug 30 at 10:39 AM

  (Source: Tech Digest)
Samsung lost an estimated $12B USD in worth from the decision

The weekend has passed, but the shock is still setting in after a potentially precedent setting jury verdict at the U.S. District Court for the Northern District of California, which left Samsung Electronics Comp., Ltd. (KSC:005930) on the hook for approximately $1.05B USD and facing at least temporary bans on most of its product lineup.

I. "Appleflation"?  Cupertino Company's Win Stirs Controversy

Apple, Inc. (AAPL) was quick to gloat about the victory, whose foundation certainly had some controversial aspects -- such as Apple's ability to re-patent inventions (pinch to zoom) in the context of capacitive multi-touch, Apple's ability to (essentially) patent the animation of natural phenomena (the rubber-band animation is a textbook visualization of nature's transient response e.g. see spring), and Apple's ability to "patent a shape" (Apple's attorneys argued that its design patents offered an exclusive right to make rectangular smartphones with rounded edges).

Thus in the aftermath of the trial, much of the controversy has focused not on whether the jury made the right decision, but whether the U.S. Patent and Trademark Office was crippling the free market with its lacking scrutiny.

Tech mogul Mark Cuban (also a prominent venture capitalist featured on the show Shark Tank) blasted Apple's decision in a series of Twitter posts, as noted by Neowin.  He implies that he is going to boycott Apple's products as a result of the lawsuit, and accuses Apple of conspiring to raise prices for electronics customers a term he calls "Appleflation":
Mark Cuban
[Image Source: Twitter/Neowin]

Mark Cuban
[Image Source: Twitter]

Google, Inc. (GOOG) makers of the Android operating system also chimed in, writing that the claims in the case "don't relate to the core Android operating system", explaining:

The court of appeals will review both infringement and the validity of the patent claims. Most of these don't relate to the core Android operating system, and several are being re-examined by the US Patent Office. The mobile industry is moving fast and all players — including newcomers — are building upon ideas that have been around for decades. We work with our partners to give consumers innovative and affordable products, and we don't want anything to limit that.

While that may sound like Google is throwing Samsung to the wolves, Google is aiming to offer Samsung and other Android OEMs powerful long-term protection, by filing a major new suit against Apple, which seeks to ban almost Apple's entire product lineup.

II. What's Next?  Bans, Appeals, Appear Likely

Reuters reports that after the ruling South Korea's markets had a wild day of trading, with 1.27 million shares of Samsung stock changing hands, and the company facing its worst single-day value loss in nearly four years.  Overall, Samsung shed $12B USD of its $160B USD valuation.  Apple, meanwhile added approximately $12B USD to its market cap this morning, reaching $634B USD, and creeping ever closer to Microsoft Corp.'s (MSFTrecord 1998 valuation, which adjusted for inflation totals around $850B USD.

Korean Won
The verdict cost Samsung $12B USD in value. [Image Source: 
SeongJoon Cho/Bloomberg]

In a statement to Dow Jones NewsWires, Samsung complained that the ruling would limit consumer choice, writing:

We will move immediately to file post-verdict motions to overturn this decision in this court and if we are not successful, we will appeal this decision to the Court of Appeals

It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners or technology that is being improved every day by Samsung and other companies.

In other words, Samsung will first try to sway Judge Lucy Koh to reduce the infringement and damages in the trial verdict stage.  The jury's ruling is only guidance for the judge's verdict/sentencing in this kind of civil case, although it usually closely resembles the final ruling.

If it cannot sway Judge Koh, it will begrudgingly move up the food chain with its appeal, while it continues to challenge the validity of Apple's broad patents in complaints to the USPTO.

A memo to employees from Samsung's management highlights how the U.S. ruling was much more punitive than rulings in other countries, who largely rejected Apple's design claims (Germany is the only other region to embrace Apple's design claims).  Samsung writes:

We initially proposed to negotiate with Apple instead of going to court, as they had been one of our most important customers. However, Apple pressed on with a lawsuit, and we have had little choice but to counter-sue, so that we can protect our company.
The NDCA verdict starkly contrasts decisions made by courts in a number of other countries, such as the United Kingdom, the Netherlands, Germany, and Korea, which have previously ruled that we did not copy Apple’s designs. These courts also recognized our arguments concerning our standards patents.

The Korea Times quotes a senior Samsung Electronics executive as saying; "It’s absolutely the worst scenario for us."

A South Korean patent lawyer involved in the case asserted, "Judge Lucy Koh will make the final ruling in the next few weeks. Samsung will try best to persuade Koh that we didn’t willfully infringe on Apple’s design patents. Samsung, however, is ready to bring the issue to the Supreme Court as the verdict was based on protectionism."

But a Samsung executive appeared more aware of the likely grim reality, remarking, "As far as I know, it’s very rare for the presiding judge to make a decision going against the verdict by jurors."

Thus Samsung's next move is to move the matter to an appeals court, and (likely) to work on emergency software patches to remove features like tap/pinch to zoom and new body designs, to escape product bans.

Unless the Samsung Galaxy S III escapes an ITC ban, Samsung's entire lineup may be temporarily forbidden from sale on the U.S. market.
Apple's next move will be to push for speedy product bans.  It will also likely seek to pressure the U.S. International Trade Commission to ban the Galaxy S III, not involved in the case, pointing that it has similar features as Samsung's infringing lineup (e.g. pinch to zoom).  If Apple can ban the Galaxy S III, it may be able to achieve the unthinkable -- secure a complete ban on the products of America's current top smartphone seller.

Sources: Samsung [memo], Mark Cuban on Twitter, Google via The Verge, Reuters

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Can somebody explain to me...
By messele on 8/27/2012 12:10:36 PM , Rating: -1
Can somebody explain to me how denying one company from copying another is stifling innovation as has been claimed.

By definition if you are copying you are not innovating.

Microsoft has managed to create something new and fresh (who'd have thought). Motorola, HTC, Sony etc. have managed to take Android and take in a different direction to Apple.

So where is the Samsung's innovation here? They have been proven over and over to look at what others are doing, rip it off without even bothering to even try and make it better. Where is the innovation?

The Windows PC industry was kicked off simply by being smart and by reverse engineering the ROM BIOS since IBM did not protect their own (very substantial) investment.

Xerox lost the GUI not because it was stolen by Apple but because executives across the country didn't understand the brilliance of their own engineers work and allowed Steve Jobs to trade equity for all their clever work and secrets (and quite swiftly their despairing engineers who followed the visionary).

This case is the best thing that could have happened because it will force Samsung to come up with original stuff. Everybody wins.

RE: Can somebody explain to me...
By Motoman on 8/27/2012 12:14:19 PM , Rating: 5

Apple never innovated anything in the first place. They either stole the concepts to begin with, or managed to get patents for things that are obviously unpatentable.

What you just said about Samsung is at least equally, probably more valid about Apple.

Granting a company the exclusive rights to a basic geometrical shape, or for animations that mimic nature, is not the "best thing that could have happened." And no one is going to win. Except Apple that is. This is exactly the worst possible ruling any court could have ever made - it is the blackest day ever in patent law. It is, in fact, the strongest step made toward fascism ever seen.Simple.

Apple never innovated anything in the first place. They either stole the concepts to begin with, or managed to get patents for things that are obviously unpatentable.

What you just said about Samsung is at least equally, probably more valid about Apple.

Granting a company the exclusive rights to a basic geometrical shape, or for animations that mimic nature, is not the

RE: Can somebody explain to me...
By BSMonitor on 8/27/12, Rating: -1
RE: Can somebody explain to me...
By ritualm on 8/27/2012 12:27:10 PM , Rating: 2
You haven't rebuked his reply - which is 100% true - and you called him out for trolling.

Pot, meet kettle.

RE: Can somebody explain to me...
By messele on 8/27/12, Rating: -1
RE: Can somebody explain to me...
By ritualm on 8/27/2012 12:34:08 PM , Rating: 2
Now you're just throwing random BS at Apple-hating non-believers and hoping that something, anything would stick.

Keep pratce, Tony Swash.

RE: Can somebody explain to me...
By messele on 8/27/12, Rating: 0
By retrospooty on 8/27/2012 12:58:59 PM , Rating: 5
It's not that Apple never inovated anything, they do sometimes. The issue is that they copy more than innovate and this verdict, if upheld in an appeals court basically says that its OK for Apple to copy but not for anyone to copy Apple.

If you want to say "Apple is being copied", then take it back to the root. Apple "copied" the whole mobile phone idea, as well as putting and OS and apps on a phone from Palm/Handspring - grid layout of icons and all. All companies do this. The entire industry builds off ideas of others. It always has. All industries always have. Its as if to say, Toyota, GM, BMW and Honda shouldnt be allowed to make cars because they all copy Ford. This is how business has always been done on planet earth since the dawn of civilization. Somehow Apple thinks that they are above it now.

Fortunately all that happened is a court and a jury from Apple's hometurf in the Silicon Valley is all that agreed (and they did that with evidence that showed Samsung had those designs prior to the iPhone thrown out by the Judge, so the jury never got to see it).

If you cant see the problem there, then you are the troll.

RE: Can somebody explain to me...
By ritualm on 8/27/2012 1:01:03 PM , Rating: 2
You're still sprouting BS, the only difference being you truly, utterly believe all the delusional, insane and hypocritical things you talk about makes the remotest of common sense.

You're surrounded by sane, logical, well-reasoned folks and the best retort you have is "you all still come across as a bunch of rabid psychos". How pathetically laughable.

Here's a clue. AT&T the monopoly tried - and failed - getting the courts to ban all "telephone accessory" products. More than half a century later, we're watching the exact same circus-du-insanity unfold in the courtrooms.

By theapparition on 8/27/2012 12:41:04 PM , Rating: 2
Internet Explorer. No Apple credits.

Windows Media Player. No Apple credits.

Challenge accepted and won. Now where's my cookie?

RE: Can somebody explain to me...
By BSMonitor on 8/27/2012 2:32:35 PM , Rating: 2
What is there to rebuke?? Apple hasn't innovated ANYTHING. If he truly believes this... Nothing I can say could convince him otherwise...

The notion is so blatantly ignorant that arguing with someone like that only gives the notion credibility... Which, it has none.

By NellyFromMA on 8/27/2012 12:46:25 PM , Rating: 2
He's upset about a foolish decision. Also, it's not a flame, it's kind of the truth...

RE: Can somebody explain to me...
By messele on 8/27/12, Rating: -1
RE: Can somebody explain to me...
By jshadow121 on 8/27/2012 1:25:14 PM , Rating: 2
"Basic geometric shapes? No, a rectangle is a basic geometric shape, round the corners off and it's no longer basic. Familiar yes. Basic no."

What about a Cafeteria Tray?
It's a Rectangle with rounded corners, and that has existed for over 70 years.
That should count as previous art.

RE: Can somebody explain to me...
By mcnabney on 8/28/2012 9:44:08 AM , Rating: 2
There are plenty of prior cell phones that were rectangular with rounded edges. The LG Chocolate comes to mind, but there were scads of others.

RE: Can somebody explain to me...
By Theoz on 8/27/2012 2:09:54 PM , Rating: 1
This post is hilarious (I'm not being sarcastic). Good show.

RE: Can somebody explain to me...
By Reclaimer77 on 8/27/2012 2:18:53 PM , Rating: 1
Basic geometric shapes? No, a rectangle is a basic geometric shape, round the corners off and it's no longer basic. Familiar yes. Basic no.

Okay fair enough, I'll go with that.

Except pretty much every phone before the iPhone had rounded corners. The Blackberry, the Palm Trio, the Nokia E62. Even those cheap flip phones that made up the majority of the market at the time, rounded corners. Rounded corners are just obvious, everyone does it, and always has. Big hint, phones usually go in pockets. Do you like sharp edges on things in your pocket?

There's no way Apple should have been granted a patent on something that's an industry standard and obvious as hell. And if they are, it should be VERY technical. As in the exact radius of the angle. Not just a broad generic "angle" patent.

Anyway I'm sure you'll just troll your way out of this, cause that's how you roll.

RE: Can somebody explain to me...
By BSMonitor on 8/27/2012 2:26:40 PM , Rating: 3
Of course, this was the one patent that the jury found Samsung did not violate.

By BifurcatedBoat on 8/27/2012 1:14:35 PM , Rating: 2
All of the stuff that Apple has patents for, they stole from somebody else. Seriously, I'm not making this up, you can find it for yourself.

For example, they were granted their patent on pinch to zoom in the context of capacitive touch. This would be like getting a patent on the use of a cylinders in a motor that burns a new liquid fuel type that was recently discovered.

A rectangular shape should be obviously unpatentable, because it's the shape of a screen. Of course you're going to make something whose dimensions are based on the shape of a rectangular screen rectangular. It would be idiotic to use any other shape.

The iPhone was not even the first touchscreen phone on the market. There were others before it, they were just less well-done, and consequently not popular. Apple's contribution then was popularizing existing technology, not inventing it. That's what Apple always does though.

RE: Can somebody explain to me...
By Uncle on 8/27/2012 1:46:00 PM , Rating: 1
I love it. Keep going Apple. Monopolize the USA market, keep other products off the market in the USA, while the rest of the world innovates and moves forward. The people who buy into this, deserve what they get. Two choices apple or junk, and I'm not saying that apple could be the best choice. The USA just won't know, their won't be anything on the market place to make an informed decision. Yes apple, shut the USA imports down, protect apples market. I love it makes me feel good when I see how the USA capitalism and free market system works. No wonder the USA is the Free Enterprise system of the world. Cheers to you apple, maybe the USA can build a solid wall like china around itself to protect its people from making their own choices in the market place. Its obvious that apple thinks it has to protect USA people that are too stupid to know the difference between an apple product and a Samsung product or any foreign product. No wonder apple is losing market share in china, they can't bullshit the people over there and shall I say no one to protect apple there.

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