Apple may widen its attack

Samsung's shares plunged after a ruling in the US last week that it had copied key elements of Apple's technology. (Ahn Young-joon, AP)

Samsung's shares plunged after a ruling in the US last week that it had copied key elements of Apple's technology. (Ahn Young-joon, AP)

Shareholders reacted to last Friday's ruling that the group had indeed copied key elements of the iPhone's behaviour and appearance, resulting in a $1-billion fine.

Samsung 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 and 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 to include other handset-makers that use Google's Android operating system, potentially hobbling them in the United States, the richest segment of the $219-billion global smartphone business.
These fears hit shares in Google, which fell by 1.35% in early trading in New York. It might also open a door for Nokia, the loss-making Finnish cellphone maker, because it would be able to offer products without fear of lawsuits. US-listed shares in Nokia gained 9% in early trading.

Although Samsung said it would appeal the verdict, Judge Lucy Koh could triple the fine because the nine-strong jury in San Jose, 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 copy flagrantly."

Infringing patents
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. Apple is the biggest customer of Samsung Electronics, which provides screens and memory chips for the iPhone and iPad.

Since the verdict, there has been  an increased 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 a patent owner and the other members had legal and engineering experience from companies including Intel and AT&T. – ©Guardian News & Media 2012 Charles Arthur is the Guardian's technology editor

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