Apple And Samsung: What Goes Around … Comes Around.

 

ITC rules Apple infringes on Samsung patents and bans the importation and sale of some Apple products, including the iPhone 4.

There has been significant coverage of the Apple/Samsung patent wars.  As of last fall, Apple appeared to be the big winner, at least for now.  As Apple gloated:

Apple Inc. v. Samsung Electronics Co., Ltd, et al.  

On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics Co., Ltd and affiliated parties in the United States District Court, Northern District of California, San Jose Division. On March 1, 2013, the District Court upheld $599 million of the jury’s award and ordered a new trial as to the remainder. Because the award is subject to entry of final judgment, partial re-trial and appeal, the Company has not recognized the award in its results of operations.

With the help of the U.S. International Trade Commission, Samsung strikes back in the ruling with the pithy title, “Notice of the Commission’s Final Determination Finding a Violation of Section 337; Issuance of a Limited Exclusion Order and a Cease and Desist Order; Termination of the Investigation.”  Whew, that’s a lot of bureaucratese.

In the order, the ITC determined that Samsung has proven that the AT&T models of the “accused” iPhone 4, iPhone 3GS, iPhone 3, iPad 3G and iPad 2 3G infringe on a Samsung patent.  [Ed.  Awesome.  The phones are “accused”.  I know there is a term of art at work here, but this is funny.]  The patent relates to encoding/decoding mobile communications.

The ITC also determined that the appropriate remedy is a limited exclusion order and a cease and desist order prohibiting Apple from importing into the United States or selling or distributing the infringing devices in the United States.

President Obama can veto the order, and Apple can appeal it.

Does it matter?  It does if losing sales of the older models would hurt Apple.  According to Apple, for the first six months of 2013:

iPhone year-over-year growth resulted from strong demand for iPhone in all of the Company’s operating segments primarily due to the launch of iPhone 5 beginning in September 2012 and strong ongoing demand for iPhone 4 and 4S. The year-over-year impact of higher iPhone unit sales on net sales was partially offset during the second quarter and first six months of 2013 by a reduction in iPhone average selling prices as a result of a shift in product mix towards lower-priced iPhone models, particularly the iPhone 4.

In other words, iPhone 4 was a continuing source of growth in terms of unit sales, although the lower price reduced overall margins.  Apple still relies on older models for continuing sales growth.

Justin Timberlake, Scarlett Johansson, Nick Cassavettes warn that What Goes Around . . . Comes Around.

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