Apple vs Samsung: Yet Another Blow Awaits Already Punch-Drunk Samsung

Hyungsuk Yoon is a JD candidate at Osgoode Hall Law School and is enrolled in Professor Ikechi Mgbeoji’s Patents class in Fall 2011. As part of the course requirements, students are asked to write a blog on a topic of their choice.

While a few bloggers on IPilogue have already commented on the ongoing patent battle between Apple and Samsung, it is worth commenting on some of its recent developments and the battle’s likely prognosis. So far, the battle that began in April 2011 has been a series of victories with Apple’s name written all over them as the German court, the Dutch court, and now the Australian court all granted an order of preliminary injunction against the sale of Samsung Galaxy line products in their respective countries.

Yet another blow awaits already punch-drunk Samsung. US District Judge Lucy Koh, who is presiding over Apple’s request for a preliminary injunction barring sales of Galaxy line products in the US, have recently highlighted during a hearing that there is a remarkable resemblance between Samsung’s Galaxy Tab and Apple’s iPad, hinting that Samsung’s product appear to infringe on Apple’s design patents. During the hearing, Koh asked Samsung’s counsel whether she could recognize which is which, holding up Samsung’s Galaxy Tab and Apple’s iPad about ten feet away from the counsel. The response: “not at this distance your honour.”

At the same time, Samsung’s attacks against Apple with its own arsenal of patents were met with un-FRAND-ly responses in the Netherlands as a Dutch court held that before Samsung could request an injunction against the sale of Apple products allegedly infringing on Samsung’s patents, it should have offered to license its patents to Apple at “fair reasonable and non-discriminatory” (“FRAND”) terms. This rule allows the licensing of a patent at FRAND terms once it is established that the patent in question is part of the current industry standard. Without going much further into other details, it is against this rather lopsided backdrop that some commentators have predicted that their differences will be settled most likely on Apple’s terms. It may seem that the ultimate losers of these legal battles would be the end-use consumers as these costs, i.e., litigation costs, licensing fees, etc., tend to get internalized, driving up the price.

Some may be surprised to find out, however, that the relationship between Apple and Samsung is not all about hate. Samsung is the provider of some of the iPhone’s most important components, including the applications processor that makes the whole thing work (overall, Samsung is accountable for 26% of the iPhone’s cost structure). While some commentators have framed this as a risk of collateral damage against Samsung that the bitter ending of the legal battle would entail losing one of its biggest customers, other commentators have noted that this may work out in favour of Samsung. As much as the relationship matters to Samsung, it will be as difficult for Apple to find another parts supplier that is as good as Samsung. Some have gone as far as to say that “Apple will have to keep Samsung as its critical parts supplier because it is the industry’s sole company that can guarantee output commitment, pricing, on-time delivery and qualified products in components” (emphasis mine).

After all, it seems that there is still some love left in this love-hate relationship for them to set their differences aside and move on.