The Apple vs Samsung saga continues

The history of the conflict between Apple Inc. (“Apple”) and Samsung Electronics Co. Ltd. (“Samsung”), currently the first two worldwide smart phone manufacturers, began early in April 2011 with a joint patent, trademark, trade-dress infringement and unfair competition action initiated by Apple, in which the company claimed the overall infringement of its products, such as the iPhone and iPad, by several of Samsung’s Android phones and tablets.

SOCIETATEA CIVILA DE AVOCATI NESTOR NESTOR DICULESCU KINGSTON PETERSEN

ANA-MARIA BACIU

ANA-MARIA BACIU

PARTNER at SOCIETATEA CIVILA DE AVOCATI NESTOR NESTOR DICULESCU KINGSTON PETERSEN


ANDREEA BENDE

ANDREEA BENDE

INTELLECTUAL PROPERTY COUNSEL at SOCIETATEA CIVILA DE AVOCATI NESTOR NESTOR DICULESCU KINGSTON PETERSEN

Samsung reacted and in its turn filed patent infringement actions in jurisdictions such as South Korea, Japan, Germany, United Kingdom and also in the United States, among others, before the United States District Court of Delaware and the International Trade Commission, arguing the infringement of their mobile phones technology patents and utility models.

 

The legal battle between the two companies further escalated. By mid 2012,  the companies were facing over 50 different lawsuits  in various jurisdictions, having at stake billions of US dollars  in damages.

 

In August 2012, Apple marked one of its first victories in these disputes, winning a case before a United States court that found that Samsung had infringed several of the patents invoked by Apple, as well as the hardware design and various Apple software features. Nevertheless, in December of the same year, the United States District Court of the Northern District of California issued an order1 denying Apple’s motion for a permanent injunction considering, inter alia, that it would not be equitable to deprive consumers of Samsung’s infringing phones when […] only limited features of the phones have been found to infringe any of Apple’s intellectual property. The court’s decision further mentioned that, though the phones contain infringing features, they contain a far greater number of non-infringing features to which consumers would no longer have access […] while adding that the public interest does not support removing phones from the market when the infringing components constitute such limited parts of complex, multi – featured products.

 

In addition, according to  the same order, the judge also analyzed Apple’s claims with respect to the overall sales lost due to the presence on the market of Samsung’s mobile phones and tablets available on the market, while noting that the arguments raised by Apple were not sufficient to demonstrate an effective link between Apple’s downstream sales and Samsung’s infringement of Apple’s patents. The above court order follows a famous  jury verdict rendered in August 2012 in California finding that Samsung infringed six Apple patents and diluted Apple’s iPhone trade dress, which was interpreted by many as the ruling that will put an end to the battle between the two companies. In fact, this  jury verdict indeed impacted  the entire mobile phone industry, since it created an important precedent under common law, which could determine other smart phones and tablet manufacturers to reconsider which design and software features to include in their products. However,  the  verdict was highly  contested by Samsung and other affiliated companies and businesses in the industry, one of the arguments being that  most of the jury members were not patent or intellectual property specialists and did not possess the necessary information and degree of specialization to assess such a complex patent infringement case. In a statement partly cited by an article published in CNN’s Money section2, a Samsung representative states that it is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners […].

 

In February 20133, Apple filed an appeal before the Federal Court of Appeals for the Federal Circuit from the court's order that had denied a permanent injunction over Samsung’s most mobile phones sold on the U.S. market, which had followed the aforementioned jury verdict.

 

To our knowledge,  this action is still pending and the court is currently expected to issue an opinion in the case. Going back to other recent developments in the Apple – Samsung patent battle, after losing in California its first attempt to obtain an injunction against Samsung, Apple’s chance of successfully obtaining such an outcome  is the issuance of an import ban, pursuant to an investigation performed by the International Trade Commission. Such investigation followed a counterclaim filed  by Apple with the Commission’s court one week after Samsung also filed  a similar case with the same Commission.

 

In this action filed with the International Trade Commission, Samsung alleged  that iPhone4 and iPad2 infringed its patents. In June 2013, the Commission found in favor of Samsung, deciding that the disputed phones could no longer be sold in the United States.

 

According to various opinions, there is a tendency for companies to bring their disputes before  the United States International Trade Commission. This is motivated by the fact that  it is easier to argue such cases before the Commission as opposed to a traditional patent court and more likely to result in a ban on the import or commercialization of certain allegedly infringing products. The a downside of this approach is that, pursuant to U.S. law, the International Trade Commission must forward any such ruling for a presidential decision to be issued within 60 days.

 

In a very surprising turn of events,  the Obama administration, through the United States Trade Representative Michael Froman, vetoed in August 2013 the decision rendered by the Trade Commission. This intervention overturning an International Trade Commission ruling is the first of its kind within the past 25 years and generated many conflicting  reactions, both from the industry and from  intellectual property practitioners, who closely followed the controversial patent litigations between the two companies. The presidential  decree states that the Trade Commission may not block the iPhone4 and iPad2 from entering the United States market and that the sales of these mobile phone devices will continue.

 

A week after the presidential  ruling in August 2013, the trade officials with the International Trade Commission also issued their decision in relation to the case Apple brought before the court, deciding that Samsung infringed Apple’s patents with respect to, certain smart phone specific multi-touch features. The question now remains whether the Obama administration will exercise its veto right over this recent decision. In the meantime Samsung may continue to import all its phones in the United States. Since the presidency has 60 days to review the Trade Commission’s decision, it is only a question of time until Samsung will know whether it may continue its commercial activity on the United States market under the same terms and for which products.

 

If the American administration  does not exercise its veto right over  this second patent case, such approach could be interpreted by many as evidently taking the side of Apple, which is an American company.  This would come after the exercise of its veto right aimed at  overturning the Commission’s decision in the case previously won by Samsung, which was also interpreted as a nationalistic gesture. Nevertheless, such line of action may also reveal an important presidential trend intended to put an end to a  long–lasting patent or intellectual property litigation and to create  a market accessible to all companies manufacturing or commercializing similar products largely acclaimed by the average consumers. By this approach, companies could be motivated to obtain  patent / design / trademark licenses for the use and implementation of features innovated by others within their own products; similarly, innovators could be determined to lower their prices for licensing intellectual property to competitors entering the market with similar products. In addition, this approach could also have other effects on the overall research and development activities in the mobile technology industry, by boosting innovation at an even more rapid pace and thus increasing the variety of patents to be made available to the industry. 

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