Apple Inc. has scored an important victory in the escalating global battle over technology patents, dealing a second blow in as many weeks to its fastest-growing competitor.
The California-based tech giant convinced a German court to issue a temporary injunction on Wednesday that bans sales of Samsung's Galaxy Tab 10.1 in most of Europe. The device is one of the tablets competing with Apple's iPad. Samsung Electronics Co. Ltd. has appealed the decision.
The ruling comes one week after Samsung was forced to delay the launch of the Galaxy tablet in Australia, after Apple had filed a lawsuit in that country alleging patent infringement.
At a time when major tech firms are willing to spend billions on patent portfolios, the Apple-Samsung war is just part of a complex web of litigation that has ensnared multiple manufacturers.
Motorola and Apple are involved in at least 40 different claims and counterclaims over intellectual property, most of them related to the Google Android operating system, on which many of Samsung's mobile devices also run. Apple is also involved in a number of similar actions against HTC, which builds smart phones that run on Android.
The company's latest court victory comes as a slew of competitors are trying to break the iPhone and iPad stranglehold on global smart phone and tablet profits. Samsung, in particular, has seen impressive success in the mobile space. Even though Apple still continues to dominate the market (especially in terms of profit margin), Samsung has emerged as a surprisingly strong competitor.
According to the most recent IDC research, the Korean company saw a 380-per-cent increase in smart phone shipments between the second quarters of 2010 and 2011, by far the biggest increase of any vendor during that period, putting Samsung in second place overall behind Apple. The company's growth as a consumer device manufacturer is especially surprising given that Samsung's traditional business is as a low-margin component manufacturer.
"What Samsung really wants, the business they're interested in, is that of selling its own nameplate wireless devices," said intellectual property expert Florian Mueller. "Samsung wants market share and mindshare for its own brands, more than anything else."
But Samsung's new strategy faces many hurdles, most of them coming in the form of litigation. Apple and Samsung are embroiled in at least a dozen court cases in nine countries. Apple's chief complaint against Samsung centres on the design of the Galaxy tablet, which Apple claims is too similar to the iPad.
"Instead of pursuing independent product development, Samsung has chosen to slavishly copy Apple's innovative technology, distinctive user interfaces, and elegant and distinctive product and packaging design, in violation of Apple's valuable intellectual property rights," Apple claims in a California district court filing.
Samsung strongly denies the claim, and has already filed an appeal to have the German injunction lifted. If an initial appeal is unsuccessful, Samsung will likely have to wait until the conclusion of a full court case, which could take a year or longer. The stakes of such a case are high for both companies – either Samsung will be permanently prohibited from selling Galaxy tablets in most of Europe, or Apple will have to pay significant damages for lost Samsung sales.
The Apple-Samsung skirmish is just one of many. Indeed, the ongoing patent war in the tech sector has gotten so acrimonious that Google's senior vice-president and chief legal officer David Drummond this month issued a scathing note saying Android's success in the marketplace has resulted in "a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents."
Apple's dispute with Samsung, in particular, may have a more straightforward resolution than the myriad other court cases, as both companies have valuable patents that could make a cross-licensing deal feasible. RBC analyst Mike Abramsky said Apple may look to resolve patent infringement cases with a global perspective, offering to settle cases in areas with strong patent laws, such as the U.S., in exchange for concessions in areas with weaker laws, such as China.
However Mr. Mueller said Samsung is unlikely to agree to any resolution that significantly hinders its ongoing transformation from components maker to smart-phone vendor.
"I think Samsung is going to fight on," he said. "These lawsuits are going to be with us for a while."