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  (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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RE: Has anyone actually read the patents?
By Tony Swash on 8/27/2012 6:09:05 PM , Rating: -1
It's the defeatism that's so striking and embarrassing. So Samsung, and other the Android players, have to now stop copying Apple so much, so they have to be careful to make their stuff not look like Apple's stuff.

So what?

Why do Android fans feel the need to weep and whine in public so much. Not making stuff that looks like Apple's stuff is a challenge but if Android, Google and the OEMs are any good they will rise to it. And if they are not then their businesses will suffer, deservedly.

What this verdict and the subsequent wailing and hand wringing from the Android community shows is that all that pretend indignation about Apple trying to stop competition through injunctions and Apple being afraid of competition was just so much smoke designed to cover up the embarrassing and awful truth. That the Android fans don't have any real confidence that their guys can pull this off. That if they have to make stuff that's different to Apple's stuff they not be able to come up with anything good, let alone great. That Apple's innovation is going to out pace them, again.

Leaving aside the details of the case, details that will be forgotten soon, and the damage payments and product injunctions that may or may not follow, the really lasting outcome of this Apple victory is simple. When the iPhone 5 and iPad Mini are announced sometime in September and October no Android company can risk copying them. Apple's new products may of course turn out to be lemons, or just so-so, but they may not. The chance of Apple coming out with really compelling and popular new products are pretty high I would think. And the Android boys cannot copying them. That's gonna hurt. For a long time.


By Belard on 8/27/2012 7:23:11 PM , Rating: 2
But Apple is COPYING them by making a 7" class "iPad Mini" tablet to go against the Samsung Nexus7 and Kindle tablets.

I think and HOPE Apple gets sued. Why *IS* Apple coming out with a 7" tablet? Oh yeah, because Kindle and Android has proven that there is a market for that size. Never-mind that Steve Jobs himself said there WILL NEVER be a different size iPad. But since he is dead, apple releasing... a smaller iPad.

The detail are important. Apple shouldn't have been granted for that shape - which the the shape of phones LONG before the iPhone. What next? A computer or phone than is shaped like a circle?

Find people who bought a Samsung phone who thought it was an iPhone. I did a google search, no posts from anyone crying "I bought a Samsung by accident".

For the past few months, since I'm about to upgrade my phone and not happy with my past experience with a Samsung Android phone, I was opened to Windows Phone (Lumia 900) - which looks quite cool and the iPhone4 as well as latest Android phones. WP7 lost because its tech is out-dated and Win8 is fail. I already have an iPad1 which I am *HAPPY* with... with this ruling and apple's stupid-ass tactics. I'm getting another Android phone and I won't be buying an iPad4. Apple made that decision for me. I'm NOT a Apple-fan boy, not an Android fan boy and of course I have no love for Microsoft. I get what works.

I've picked my phone to get in the next week or so, it won't be Samsung - not because of apple or Samsung, but its a personal preference for me to get the Motorola after trying them out. I know the Samsung Galaxy S3 is the best phone on the market at this time.

So screw Apple... I *WANT* them to gain market share and kick Microsoft in the balls. But *I* want them to do it with technology and proper business and support for its customers. Not doing baby bull-shit in the courtroom.

This may make investors happy for now, but it makes Apple look like a smelly turd. The articles and reaction from many in the industry and us consumers is already starting a back-lash against Apple. What if this costs Apple 200,000 iphone and iPad sales? That could costs them about $500m in profit. I don't know the reaction to most people, but other than Apple fanboys such as yourself - Apple is becoming poison.

*I* really want Apple to stop this. I want them to WIN my business and anyone else on their products, not because they lock out competition out of the market over bullshit with "Rectangle with curved corners". As the poster above stated from the actual patent. They didn't actually patent the way to do the scroll bounce, just the idea - after the fact.

Hmmm... Apple has added the pull-down notification shade in iOS 5.0... something that has been in Android for a long time. Apple has STOLEN a function... I'm sure they're trying to patent too.


"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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