Apple's $1 billion patent verdict could corner market

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SAN JOSE, Calif. — It was the $1 billion question Saturday: What does Apple Inc.’s victory in an epic patent dispute over its fiercest rival mean for the U.S. smartphone industry?

Samsung Electronics' Galaxy S III (right) and Apple's iPhone 4S are displayed. A jury decided Friday that Samsung stole innovative technology used by Apple.  AHN YOUNG-JOON/ASSOCIATED PRESS
AHN YOUNG-JOON/ASSOCIATED PRESS
Samsung Electronics' Galaxy S III (right) and Apple's iPhone 4S are displayed. A jury decided Friday that Samsung stole innovative technology used by Apple.

Analysts from Wall Street to Hong Kong debated whether a jury’s decision that Samsung Electronics Co. ripped off Apple technology would help Apple corner the U.S. smartphone market over Android rivals, or amount to one more step in a protracted legal battle over smartphone technology.

Many analysts said the decision could spell danger for competitors who, like Samsung, use Google Inc.’s Android operating system to power their cellphones.

“I am sure this is going to put a damper on Android’s growth,” New York-based Isi Group analyst Brian Marshall said, “It hurts the franchise.”

The Silicon Valley jury found that some of Samsung’s products illegally copied features and designs exclusive to Apple’s iPhone and iPad. Samsung sold more than 22 million smartphones and tablets that Apple claimed used its technology.

Most other Apple competitors have used the Android system to produce similar technology, which could limit the features offered on all non-Apple phones, analysts said.

“The other makers are now scrambling” to find alternatives, said Rob Enderle, a leading technology analyst based in San Jose.

The companies could opt to pay Apple licensing fees for access to the technology or develop smarter technology to create similar features that don’t violate the patent – at a cost likely to be passed on to consumers.

Apple lawyers are planning to ask that the two dozen Samsung devices found to have infringed its patents be barred from the U.S. market. Most of those devices are “legacy” products with almost nonexistent new sales in the United States.

Apple lawyers will also ask that the judge triple the damage award to $3 billion because the jury found Samsung “willfully” copied Apple’s patents.

A loss to the Android-based market would represent a big hit for Google. Android is becoming increasingly more important to Google’s bottom line because Apple is phasing out reliance on Google services.

Some experts cautioned that the decision might not be final, noting the lawsuit is one of nine similar legal actions across the globe between the two leading smartphone makers.

Samsung has vowed to appeal the verdict all the way to the U.S. Supreme Court, arguing that Apple’s patents for such “obvious” things as rounded rectangle were wrongly granted.

The $1 billion represents about 1.5 percent of Samsung’s annual revenue. Jerome Schaufield, a technology professor at the Worcester Polytechnic Institute said the verdict wouldn’t upend a multibillion-dollar global industry.

“Samsung is powerful,” Schaufield said. “The company will regroup and go on.”

Samsung engineers have already been designing around the disputed patent since last year.

THE BACK STORY

APPLE VS. SAMSUNG

BACKGROUND: Apple Inc. claimed Samsung Electronics Co.’s smartphones and computer tablets copied the iPhones and iPads. Samsung countered with its own claims that Apple used its wireless technology without proper compensation.

DEVELOPMENTS:

• On Friday, a nine-person jury unanimously agreed with Apple and ordered Samsung to pay $1 billion; Samsung’s counterclaims were rejected.

• Samsung is asking the trial judge to toss out the jury’s verdict. A hearing is scheduled for Sept. 20.

THE FALLOUT: The question remains whether Samsung and other Apple competitors will have to redesign their smartphones to avoid patent infringements.

– Associated Press


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