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Patent ruling could shift tide in favor of Apple

By Nick Wingfield & Brian X. Chen

New York Times

POSTED:
LAST UPDATED: 06:01 a.m. HST, Aug 09, 2013


Over the last couple of years, Apple and its competitors have fought so many patent cases against one another in so many courts that keeping score has nearly become a fool’s errand.

But if a final ruling in a case against Samsung goes Apple’s way today, Apple would clearly hold the momentum in the patent disputes engulfing the mobile market.

The federal International Trade Commission is expected to say today whether it will uphold a preliminary finding that Samsung mobile products violated a handful of Apple patents. A decision against Samsung by the commission could result in an import ban on some of the company’s mobile devices.

A decision for Apple would be its second major legal win against Samsung in less than a week. On Saturday, the Obama administration vetoed the federal commission’s ban on Apple mobile products in a separate case brought by Samsung.

That rare move — the first time for such a veto since 1987 — was a major victory for Apple and other companies that had argued that disputes over a class of patents known as standards-essential patents should not lead to import bans by the trade commission.

Carolina Milanesi, a Gartner analyst, said that if Apple were to score a second victory with the International Trade Commission this week, the company would climb to a significant position of power in patent feuds — not just against Samsung, but against other companies as well.

“Apple can use that as a warning and say, ‘Look, if it hasn’t worked with Samsung, why would it work with you?’” she said. “It’s not real power. It’s more like a mind game.”

The patent disputes have led to a possible political skirmish between the United States and South Korea, where Samsung is a celebrated hometown legend. The decision on Saturday vexed the South Korean government, which issued a statement expressing concern that the ruling may have violated Samsung’s patent rights. The government pledged to watch the commission’s ruling today in the separate case for fairness.

Essential patents, like those at the center of the dispute in Saturday’s veto, cover basic technologies that companies have to support in their products to comply with industry standards. In the case between Apple and Samsung, the standard involved wireless communications. The Obama administration said it overruled the decision on Saturday partly because it feared essential patents, which holders agree to license on reasonable terms, were being used in ways that could hurt competition and consumers. Apple and Samsung disagreed on whether Samsung was offering to license essential patents on reasonable terms.

The decision toiday is not over essential patents. But if the commission hands Apple another victory, Robert P. Merges, a law professor at the University of California, Berkeley, believes the Obama administration could again overrule any import ban the commission puts in place, as part of a broader strategy to diminish the power of patent litigation as an industry weapon.

“I think there are a lot of political implications,” he said, referring to the possible reaction by other governments. “You’ll have the obvious favoring-the-home-team problem. But I would be shocked if they didn’t think this through carefully.”

Kristin Huguet, an Apple spokeswoman, declined to comment on the case ahead of the commission’s decision. David Steel, an executive vice president for Samsung, declined to comment.

Already, Apple has scored the biggest legal victory by far, by winning against Samsung in a federal court last year. In that case, a jury awarded Apple $1 billion in damages for violating mobile patents related to the iPhone and iPad. That award was later reduced to $599 million by a judge, though the figure could go back up as the case drags on in court.

Though the case was a decisive win for Apple, the judge overseeing it denied a request by Apple for a permanent injunction against the sale of some Samsung mobile products. A U.S. Appeals Court is expected to hear arguments on today from Apple about why such an injunction should be granted.

In another positive development for Apple, a U.S. Appeals Court sent a patent case that Apple brought against Motorola Mobility, which is owned by Google, back to the trade commission this week. The ruling gives Apple another shot at winning an important ban on Motorola mobile products after the commission dismissed Apple’s complaint.

Apple has long argued that companies making smartphones based on Google’s operating system, especially Samsung, are copycats that have swiped many of the technical innovations that, at one point, gave the iPhone and iPad a huge edge.

But the wheels of justice grind along slowly, and as Apple’s suits have snaked their way through the courts in the last several years, the popularity of Android phones has continued to grow, swallowing much of the mobile market. In the second quarter of the year, Android phones accounted for almost 80 percent of global smartphone shipments, up from just under 70 percent the year before, according to IDC, the research firm.

The iPhone accounted for 13.2 percent of smartphone shipments in that same period, while Samsung’s share was 30.4 percent, IDC estimated.

It is unclear whether a series of legal setbacks would be more than a speed bump for Samsung, now the world’s largest mobile phone-maker. Samsung has argued that it can modify the software in its phones so they steer clear of Apple’s patents, which could allow it to dodge sales bans.

Still, if the tide of legal battles begins to shift decisively in Apple’s favor, the company could extract a juicy financial settlement from Samsung and put the distraction of fighting its biggest rival behind it.






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