Bloomberg News

Samsung Sues Apple over Patents

after Settlement Talks Ordered
By Jun Yang April 20, 2012

For much of the 1980s, Apple (AAPL) battled Microsoft (MSFT) in court, trying to prove that
early versions of Windows illegally copied the look and feel of Apples Macintosh operating
system. Steve Jobs lost that fight, a defeat that at the time seemed like an industry-defining
event. History proved otherwise.
On Friday, Aug. 24, Apple, now the worlds most valuable company in terms of market
capitalization, got the best of Samsung Electronics in the first of its patent cases to go to a U.S.
jury. A nine-person panel in San Jose spent an astoundingly brief three days forging through a
600-question verdict form to conclude that the Korean manufacturer infringed six patents for
Apple mobile devices. The judgment in federal court came with a $1.05 billion price tagless
than half what Apple was looking for, but not too shabby all the same.
On the first day of trading after the verdict, Aug. 27, Samsung shares plunged 7.5 percent (it
made up some of the loss the next day). As Bloomberg Industries mobile-device analyst John
Butler explains, the court outcome signals competitors to steer well clear of Apples designs or
face the possibility of a lawsuit.
While Apple and its legal team had every reason to celebrate, the mobile-device wars arent over
yetnot by a long shot. The verdict represented just one round in a bout being fought fiercely
among at least a half-dozen companies, on four continents, that likely will continue for years.
Samsungs attorneys next will ask U.S. District Judge Lucy Koh to throw out the verdict. Shell
probably decline to do that, and then Samsung will appeal to a higher court. In coming months,
Koh is scheduled to decide whether to issue an injunction blocking the sale in the U.S. of eight
Samsung mobile phones and one tablet that the jury found to have infringed Apple patents, in
which case the Korean company may have to delay some deliveries until it can design around the
offending features. The timing could be advantageous to Apple, which is expected to launch the
new iPhone 5 in September and a smaller version of its iPad tablet in October.

Still, Samsung will not have to write a billion-dollar check anytime soon, if ever. And the effect
on Samsung of a possible injunction would not be cataclysmic; the devices in question are older
ones and will account for less than 1.4 percent of the Korean companys worldwide profits next
year, says Mark Newman, an analyst with Sanford C. Bernstein who previously worked at
Samsung.
The best way to view Apples smartphone victory is that the company now has the upper hand in
a global negotiation being conducted via litigation. Thats right: a negotiation. Apple and
Samsung are using the courts to help set prices for a series of eventual cross-licensing
agreements covering each others intellectual property. Apple, which already cross-licenses some
of its mobile patents with Microsoft, just saw the price of its IP go up as a result of the San Jose
verdict, but it did not mortally wound Samsung.
Apples larger conflict is with a range of device-making rivals that, like Samsung, use the
Android operating system that Google (GOOG) gives away for free. The big prize in the farflung patent disputes is having the dominant operating system in a growing market for mobile
phones and tablets thats already worth several hundred billion dollars a year. Currently, Android
accounts for about 60 percent of the mobile market, three times the reach of Apples iOS,
according to analysts with Bloomberg Industries.
Eventually all the competitors will settle up (on confidential financial terms) and get back to
ordinary competition. Steve Jobs and Bill Gates didnt exactly become friends after their
software litigation petered out in the 1980s; instead, they leashed the lawyers and focused on
new products. Indeed, Apple is Samsungs biggest customer for mobile-device components; the
companies continue to quietly collaborate even as their lawyers bash one another. Unlike his
predecessor Jobs, who was intent on defeating Android, Apple CEO Tim Cook has no incentive
to crush Samsung.
Given how popular Samsungs and other companies Android devices are with consumers, its
unlikely that major telecom carriers would limit their selection of them in the wake of the San
Jose verdict. And in the long term, the duel between Apples closed-garden operating system and
Googles open system (and between the iPhone and its many imitators) will be determined where
it ought to be: at retail sales counters in the U.S. and around the world. In the court of capitalism,
consumers are the ultimate jurors

Review
The article Explains how bitter rivals in the electronics industry are bickering in what appear to
be only a so called patent dispute. Patents, as we know are exclusive rights granted by a
government to an inventor to manufacture, use, or sell an invention for a certain number of years.
As highly regarded as patents are, in my opinion rules were made to be broken, even in
International Business. Samsung should have not break patent rules of Apple and apple should
not react so harshly. Samsung was sued in almost every Continent.
In the midst of all this conflict that has been ongoing since 2011, I find it funny that Samsung
and Apple still have close collaborations with each other where Samsung still buys components
needed for their Phones from Apple Inc. There is suspicion that Apple started this war so that
they can decrease Samsungs stock value globally ad can become the no.1 producer of
Smartphone and Electronic gadgets in the Global Market
In Conclusion, I agree with this articles rapport which states that at the end of the day its the
Customers of the products who decide. I think that Apple has crossed a bit of a boundary in this
case but it is nothing new. In the world of International Business there is always stiff competition
which in this case applies as If you cant join them, you beat them