Apple has dealt a hammer blow to the hopes of Samsung in the tablet space by blocking the sale of the Galaxy 10.1 across the EU. The Android tablet, which had just hit the shelves in the UK, was ruled to infringe Cupertino-owned hardware and user interface patents in a preliminary hearing in court in Dusseldorf, Germany.
As the dust of the initial outcome settles retailers have yet to make any decisive moves but, given that Samsung could face huge fines for shipping its iPad 2 killer, what options does the Korean giant have to protect its investment? Pocket-lint spoke to German-based, award-winning intellectual property analyst Florian Mueller to find out.
“The first thing that Samsung can try to do is get the decision reversed through procedure but, if I was Samsung, I wouldn’t be overly optimistic.”
The background for the skepticism appears to be the very reason why Apple chose this court in Dusseldorf to bring its case. According to Mueller, its known to be particularly sympathetic to the plaintiff in IP cases and, for that reason, the judges themselves have also become something of a group of experts on the subject; offering those bringing the complaints confidence that their rulings will be upheld, as well as little need to explain the details of just what a Community Design patent is all about.
“Maybe also Apple like the approach in Germany where you can obtain the injunction without the other party being involved at all,” something which Samsung took great exception to in its statement on the matter to the press.
So, with option a) looking unlikely, what’s the next step?
“This is only a preliminary decision, but the full-blown main proceedings would take about a year to come and the injunction would remain in force until the case is decided.”
With the intellectual property right granted by an EU agency, the injunction can indeed be enforced across the EU member states and, naturally, a year down the line, having no Galaxy Tab 10.1 units sold across Europe could be catastrophic for Samsung in tablet space. Of course, should the court eventually decide in favour of the Korean giant, then Apple would have to make up for the losses and pay the costs.
“Is the the 10.1 a sell-able product a year down the road? What are the lost sales? What were the development costs? These are the kinds of question that would have to come into play when deciding the damages,” explained Mueller but, according to the analyst, an Apple loss would seem an unlikely outcome anyway.
“The judges have already demonstrated, by granting the injunction, that Apple has more than a 50 per cent chance of prevailing in a full hearing. The other blow for Samsung is that the main proceedings would most likely be held before the same judge.”
Not particularly good news for Samsung in the long term either. So what happens to all the Galaxy Tab 10.1s currently sitting in the back rooms of consumer electronics retailers of the EU; the same shipments that have been on sale since the beginning of August?
“The injunction is only binding upon Samsung itself. The retailers are not currently obliged to do anything, but it’s very likely that what Apple is doing right now is calling them up and saying, ‘Are you going to take them off the shelf or are we going to bring proceedings against you?’ They may also threaten to remove their own products from these stores.”
So far, the only official statement from any of the UK retailers has been from the Dixons group, stating that it has had no legal instruction to remove the Galaxy Tab from sale but, as Mueller points out, a more general injunction could be what Apple is after - if the action the company has been concurrently taking in the Netherlands is anything to go by.
Given an unlikely chance of coming out on top, then, it might appear that the most sensible course of action for Samsung would be to make a deal with Apple. This would be much in the same way that Jobs Inc. had to with Nokia, when the Cupertino-based company agreed to hand over a percentage of each iPhone sale to the ailing Finnish company after making a patent dispute. By Mueller’s reckoning though, this might not be something that Apple is up for in this case.
“It’s never too late to settle. There’s certainly no hurdle in the courts, whom themselves would work to make it possible; however, the problem is strategic. The stakes are just too high for both companies in this instance.
“For Samsung to sell its own name-plated product in the shops rather than just screens and components to Apple is huge. And for Apple, it’s very important to protect its higher margins because it’s very possible that Android can do to iOS what Wintel [Windows and Intel] did to Macintosh in the 1990s.
“In the late 80s, the Macintosh was the computer, but Wintel became so ubiquitous an ecosystem that all the developers moved over to that platform and not Mac. Then Apple became a second class citizen and this is the same risk that Apple faces with Android.
“Android is not as lucrative for developers but it has such staggering growth that the innovation could shift its way, marginalising iOS. So, Apple must defend itself.”
Even if Apple doesn’t end up victorious, it would certainly seem a risk worth taking with $70-80bn in the bank and its golden goose to lose should Android win the war. And while this case in Dusseldorf is just one of the battlegrounds in 12 courts over 9 countries across 4 continents, getting this first win is of major importance to Apple “giving them leverage” as Mueller puts it.
So, with the courts not looking too promising, Samsung does have another option - to ignore them altogether. What stands in the way is a fine of up to €250,000 for each violation.
“If they keeping selling, then the courts would raise the fine up to the limit, but each violation wouldn’t be each unit but something more like each shipment. If that didn’t work, if Samsung just decided to pay them like parking fines, then the court would seek imprisonment of the management for up to 2 years. Now, seeing as Samsung is based in Korea, there’s no way that they could be extradited for something like this, but the courts would very likely imprison the management of Samsung Germany instead.
“This is all very hypothetical though. My feeling is that Samsung will be very compliant. They will carry on with their broader strategy and keep fighting. That’s very much the Korean mentality.”
And there lies Samsung's final option. Do nothing or, more accurately, do whatever is asked of it without any fuss. If Mueller's analysis is right, then it seems that there's little option left for the company to do anything else. Tablets are just one of the huge array of products that Samsung manufactures and sells and this is just one case in that field.
The bigger opponent for Apple is Google and how the search, and now mobile, giant chooses to fight back, on behalf of itself and its hardware-producing partners, remains the next episode of the saga after these initial skirmishes are through.
You can read more of Mueller's thoughts all things IP-based on his Foss Patents blog.