Apple Escalates Samsung Fight With ITC Case

Apple Inc. (AAPL) filed a U.S. trade complaint that seeks to block imports of Samsung Electronics Co.’s Galaxy S mobile phone and Galaxy Tab computer, days after asking a federal court to halt sales of the devices.

The complaint submitted yesterday with the U.S. International Trade Commission in Washington counters patent- infringement claims Samsung filed at the agency last week that seek to block imports of Apple’s iPhone and iPad. Cupertino, California-based Apple claims Samsung is infringing seven patents related to the technology and design of the devices.

Apple, which has accused competitors of “widespread imitation,” has taken particular aim at Suwon, South Korea- based Samsung, which had been a supplier of chips for some Apple devices. The ferocity of the legal dispute that began in April, which now includes cases in at least four countries, is surprising because the companies are partners, said Brian Marshall, an analyst with Gleacher & Co. in San Francisco.

“It has become very public and very ugly, very quickly,” he said. “They’re just going after each other’s throats.”

Marshall said a ban on Samsung imports is unlikely. He expects the companies to reach a settlement and cross-licensing deal. He said that while Apple has been reluctant to license its intellectual property, the company “may not have a choice” in this case because Samsung has so many patents Apple may need.

Photographer: ChinaFotoPress/Getty Images

Apple Inc. filed a U.S. trade complaint that seeks to block imports of Samsung Electronics Co. smartphones and tablet computers, days after asking a federal court to halt sales of the devices. Close

Apple Inc. filed a U.S. trade complaint that seeks to block imports of Samsung... Read More

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Photographer: ChinaFotoPress/Getty Images

Apple Inc. filed a U.S. trade complaint that seeks to block imports of Samsung Electronics Co. smartphones and tablet computers, days after asking a federal court to halt sales of the devices.

Samsung representatives weren’t immediately available to comment.

Galaxy Competition

Apple rose $2.33 to $351.76 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock rose 9 percent this year. Samsung closed at 898,000 won in Seoul trading and is down 5.4 percent this year.

The ITC case, which could be heard in 15 to 18 months if the commission agrees to investigate, opens a second front in which Apple is trying to slow Samsung’s Galaxy products before they can eat into the iPhone and iPad markets in the U.S. Apple last week filed a request in federal court in San Jose, California, asking that sales of the Galaxy S 4G, Infuse 4G, Droid Charge and Galaxy Tab 10.1 be halted until a patent- infringement trial can be held.

“Samsung has followed each of Apple’s groundbreaking products with imitation products that incorporate Apple’s technology and distinctive design,” Apple told the ITC.

Market Share

Apple, once best known for its Mac computers, now relies on its iPhone for about 50 percent of sales and the iPad tablet for 12 percent, according to first-quarter figures compiled by Bloomberg. Samsung got about 31 percent of its total revenue from telecommunications devices and equipment.

Samsung introduced a larger tablet computer in February and an update to its Galaxy S smartphone, which both run on Google Inc.’s Android operating system.

Android is the most popular mobile-device operating system in the U.S., accounting for 38.1 percent of the market in the three months ended in May, according to Reston, Virginia-based researcher ComScore Inc. Apple’s iOS, used in the iPad and iPhone, made up 26.6 percent of the market.

HTC Buys S3

Apple, which filed the first lawsuit against Samsung in April, has gone after other handset makers, including Motorola Mobility Holdings Inc. and Taoyuan, Taiwan-based HTC Corp. HTC today said it agreed to pay $300 million for closely held S3 Graphics Co., a maker of image-compression technology used in video games that has accused Apple of patent infringement. S3 won a ruling last week in which an ITC judge said Apple was infringing two of the company’s patents.

The patents in the ITC complaint against Samsung cover gestures on a touch screen, a way of presenting opaque and translucent images simultaneously, a type of push-button system, and a headphone interface that detects the presence of a headphone or handset plug. The design patents cover the unique ornamental features of the iPhone, including the rounded edges and profile.

Samsung, Asia’s biggest maker of chips, flat screens and mobile phones, has been the second-highest recipient of U.S. patents for the past four years, behind International Business Machines Corp., according to figures compiled by the Intellectual Property Owners Association. Samsung received 4,518 patents last year, while Apple received 563.

Litigious History

Jack Ablin, chief investment officer for Harris Private Bank in Chicago, which oversees $55 billion, said the aggressive legal approach makes sense for Apple.

“If you’re in the business of design, you have to protect your patents,” he said. “That comes with the territory. This is completely consistent with their entire history. They’ve been pretty litigious when it comes to defending their intellectual property.”

In response to Apple’s request for a quicker trial in the civil case, Samsung yesterday claimed that Apple “attempts to create an emergency where none exists,” and contended that, even if Apple succeeds, the case “will not affect by one minute Samsung’s ability to continue selling competing products.”

The new case is In the Matter of Certain Electronic Digital Media Devices, Complaint No. 2827, and Samsung’s case is In the Matter of Mobile Electronic Devices, including Wireless Communication Devices, Portable Music and Data Processing Devices, and Tablet Computer, Complaint No. 2824, both U.S. International Trade Commission (Washington.)

The civil suit is Apple Inc. v Samsung Electronics Co., 11cv1846, U.S. District Court for the Northern District of California (San Jose).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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