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28 Aug 2012 06:51
Samsung has urged consumers to shun Apple as its shares dropped dramatically after a US court's patent ruling against the South Korean group. (AFP)
Shares in the Asian smartphone manufacturer plunged 7.5% in the South Korean capital Seoul on Monday as shareholders reacted to Friday's ruling that the group had copied key elements of the iPhone's behaviour and appearance, resulting in a $1-billion fine.
Samsung's management responded with an angry internal memo saying Apple had rebuffed attempts to settle the case out of court.
Urging consumers to shun Apple products, Samsung said: "History has shown there has yet to be a company that has won the hearts and minds of consumers and achieved continuous growth when its primary means to competition has been the outright abuse of patent law, not the pursuit of innovation. We trust that the consumers and the market will side with those who prioritise innovation over litigation, and we will prove this beyond doubt."
Analysts said the verdict could result in Apple broadening its attack on other handset makers that use Google's Android operating system, potentially hobbling them in the US, the richest segment of the $219-billion global smartphone business.
Those fears hit shares in Google, which fell 1.35% in early trading in New York.
It might also open a door for Nokia, the loss-making Finnish mobile phone maker, because it would be able to offer products without fear of lawsuits.
Although Samsung said it would appeal against the verdict, Judge Lucy Koh could triple the fine because the nine-strong jury in San José, California, determined that the infringement of Apple's patents and designs was "willful". Apple will also be able to apply for an injunction against the 24 smartphones and tablets named in the suit at a September 20 hearing.
Apple's shares gained 2% in the first morning of trading after the victory, which chief executive Tim Cook told Apple staff on Friday had been "about something much more important than patents or money. It's about values ... we [make products] to delight our customers, not for competitors to flagrantly copy."
Apple filed the suit against Samsung in April 2011 and has dozens more in other countries against various Android handset makers, accusing them of infringing patents on function so that they behave like the iPhone or iPad.
The lawsuits were initiated by the late Steve Jobs, Apple's co-founder, who said he would "go thermonuclear" against Google's Android, which he considered a copy of the iPhone's software. Versions of Android shown off before the iPhone's release in 2006 looked more like RIM's BlackBerry; those released after 2010 functioned much more like the iPhone.
According to analysts, the verdict – and Apple's expected request for injunctions against Samsung's infringing phones – will not hurt the two companies' enormously valuable supplier relationship.
Samsung's lawyer told the trial that the company provided about a quarter of the parts in every iPhone, measured by value. Apple is Samsung Electronics' biggest customer, with Samsung providing screens and memory chips for the iPhone and iPad.
Since the verdict, there has been an increasing focus on the jury, which shocked observers by reaching a decision in just two and a half days, following four weeks of complicated arguments over "utility patents" and "trade dress".
Its foreman, Velvin Hogan, is himself a patent owner and the seven men and two women had legal and engineering experience from companies including Intel and AT&T. Those who have spoken to the press say they worked diligently through the 23 questions on the verdict form, some about alleged infringement by up to 24 devices from three different Samsung subsidiaries.
The decision could embolden Apple to broaden its attack on Google's Android, especially the handset makers offering it. "We think that the real winner here will be Microsoft and the Windows Phone ecosystem," Nomura analysts CW Chung and Manabu Akizuki said in a note. "As Android and Apple tear each other apart, Microsoft has been waiting in the wings and is in a very good position to move in and entice users to switch from Android to Microsoft."
Microsoft's Windows Phone software only has about 5% of the global market, but Nokia has now staked its future in smartphones on it and is expected to unveil new devices next month. "In addition to Apple, we name Microsoft and Nokia as the main beneficiaries from this outcome," said Nordea analyst Sami Sarkamies. – © Guardian News and Media 2012
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