Apple suffered its first major defeat against Samsung in a US court, and faces a ban on imports of some older devices including the iPhone 4.
The decision by the US ITC (International Trade Commission) that Apple infringes a Samsung patent was posted on its website on Tuesday. Models affected include the iPhone 4, iPhone 3GS, iPhone 3, iPad 3G and iPad 2 3G. These variously run on the AT&T or T-Mobile networks and on those of two regional carriers, General Communication Alaska and CT Cube in Texas.
Though Apple had shown signs of wanting to dial back on the IPR war last year, this is unlikely to help, since it was vital that any truce was seen to be on the iPhone maker’s terms. Although new models like the iPhone 5 were not included in this action, Apple still sells considerably numbers of older products especially in the prepaid sector and as it chases market share among lower end users, this will become more important.
Will Stofega, program director at research firm IDC, told Bloomberg: ‘There’s too much skin in the game now. It’s almost so ugly I don’t think they’ll come to any agreement. Both companies have a lot of cash and are generating a lot of money. It’s not like they have to worry about paying the legal bills.’
The ITC injunction is still subject to review by president Obama, though a president rarely overturns such a ban, but Apple can keep selling the device during that 60-day review period.
‘We believe the ITC’s final determination has confirmed Apple’s history of free-riding on Samsung’s technological innovations,’ said Samsung spokesperson Adam Yates. ‘Our decades of research and development in mobile technologies will continue, and we will continue to offer innovative products to consumers in the United States’.
‘We are disappointed that the commission has overturned an earlier ruling and we plan to appeal,’ said Apple. ‘Today’s decision has no impact on the availability of Apple products in the United States.’
The decision is also important for the ongoing global debate about standards-essential IPR. The patent at issue concerns a widely used way to transmit data from a phone. Many believe standards-essential patents should not be subject to injunctions, but the ITC has not taken that view. Apple had argued that its rival was demanding unreasonable royalties going beyond the Frand (fair reasonable and non-discriminatory) terms that should apply to technology used in standards. Samsung retorted that Samsung never made a fair offer and demanded that Apple pay 2.4% of the average sales price of every iPhone and cellular-enabled iPad.
Three other patents were involved in the ITC case but the final panel agreed, in these cases, with the preliminary ruling of Judge James Gildea, that Apple did not infringe the other three and that one was invalid.
The case is important for setting precedents in the broader issues of whether a product should be barred for using technology that is included in a standard, or whether compulsory licensing plus damages should be the only remedy available for SEP. ‘This will be the most important decision from the ITC dealing with the standard essential patents to date,’ David Long, a patent lawyer with Dow Lohnes in Washington, told Bloomberg ahead of the ruling. ‘In other cases, they found ways out. Here, they seem to be indicating there’s infringement, now what do we do?’
Apple also suffered a blow in the Netherlands, where the Supreme Court has rejected an appeal against an earlier defeat by Samsung. The case centers on trademark rights and claims of design similarities between the iPad and the Galaxy Tab 10.1v. A court in The Hague had rejected the case, saying the devices were sufficiently different from one another.
The Supreme Court reviewed the case and especially applicable legislation covering “informed users”. According to the Supreme Court, the informed user lies between the average consumer and the expert, able to perceive the differences between models. There is a separate Dutch case regarding the user interface.