Samsung Electronics Co. (005930), told by a federal jury to pay Apple Inc. (AAPL) more than $1 billion for copying the iPhone and iPad, wants another U.S. body to give it leverage to fight back.
The Korean company has asked the U.S. International Trade Commission in Washington to reverse a finding by one of its judges that Apple's devices don't infringe four Samsung patents. The agency, which can block imports of products found to infringe patents, is scheduled to announce today whether it will review that Sept. 14 decision.
Samsung needs a victory to counteract a series of Apple wins in U.S. courts, as the world's two largest smartphone makers fight for increased shares of a $219 billion market.
"For Samsung, it's most important to not lose," said Alex Spektor, an analyst with Strategy Analytics in Boston, Massachusetts. "I don't think they need to cripple their competitors as much as they need to make sure every product they sell into the U.S. continues selling because those products have proven very popular."
The ITC's power to block products from the U.S. market gives the commission's ruling more potential economic impact than even the $1 billion jury award Apple won in San Jose, California, in August. Apple's newest iPhone could contribute as much as one-half a percentage point to U.S. economic growth this quarter, according to an analysis by JPMorgan Chase & Co. released just before the smartphone's debut in September.
"Getting a judgment at the ITC means a lot," said Victor Siber, who was former chief intellectual property counsel for International Business Machines Corp., and is now at Baker Hostetler in New York. "We're not talking about small numbers. It impacts the whole economy, so they should get it as right as they can."
Samsung is the world's largest smartphone maker while Apple dominates in the U.S. In the third quarter, Samsung had a record 28 percent of the U.S. market to Apple's 34 percent, Spektor said.
Apple has claimed phones running on Google Inc.'s Android operating system, including Samsung's, copy the look and unique features that have contributed to the iPhone's popularity since it was first sold in 2007.
Apple settled with Android-handset maker HTC Corp. (2498) this month, striking a 10-year licensing agreement. Apple said Nov. 15 it is negotiating an agreement with Google's Motorola Mobility unit for binding arbitration of their disputes over how to license patents relating to technical standards all device makers must follow.
A HTC-like resolution of the Apple-Samsung fight doesn't appear to be coming anytime soon. Shin Jong Kyun, the head of Samsung's mobile unit, was quoted in Korean media last week as saying the company wasn't going to negotiate with Apple.
Suwon, South Korea-based Samsung contends Apple infringes four patents, including two that relate to how phones transmit data. ITC Judge James Gildea said Apple didn't infringe any of the patents, and that one, for a way to detect movement on a touch-screen, was invalid. The fourth patent in the case is for a way to detect phone numbers in e-mails so they can be dialed or stored in the phone's contact list.
The case targeted all models of the iPhone 4S, the iPhone 4, the iPhone 3GS, the iPad 2, the iPad, and the iPod Touch. Gildea recommended that the ITC issue an import ban of the products if it finds Samsung's patent rights were violated.
In addition to winning the preliminary round in Samsung's complaint, Apple, based in Cupertino, California, has been successful so far in its own ITC case against Samsung.
Trade Judge Thomas Pender said Oct. 24 that Samsung infringed four Apple patents, including one for the design of the iPhone and one for touch-screen technology co-invented by Steve Jobs, Apple's late co-founder. The commission is scheduled to announce the next steps in that case on Jan. 9.
Apple's legal success against Samsung in the U.S. hasn't been replicated in other nations. In the U.K., Apple was ordered to post a public apology on its website for accusing Samsung of copying a tablet computer design. Samsung also has won non- infringement rulings in The Hague and Tokyo courts.
Samsung has about 140,000 patents worldwide on things like light-emitting diodes, computer-memory chips and televisions. It's been in the mobile-phone market since the 1980s, and is counting on that history to get an upper hand in its global fight with Apple. It filed its ITC complaint in June 2011.
The iPhone generated $80.5 billion in sales for the fiscal year ended Sept. 29, or 51 percent of Apple's revenue, according to data compiled by Bloomberg. Its iPad brought in $32 billion, and the iPod generated $5.6 billion.
Samsung's case against Apple is In the Matter of Electronic Devices, Including Wireless Communication Devices, 337-794, and Apple's case against Samsung is In the Matter of Electronic Digital Media Devices, 337-796, both U.S. International Trade Commission (Washington).