Apple Inc. (AAPL) and Samsung Electronics Co. both won temporary victories in the German case over tablet computer sales in the European Union. They will try to turn the court’s conflicted position to their advantage when judges hear oral arguments over the Korean company’s product this week.
The Dusseldorf Regional Court on Aug. 9 granted Apple, the maker of the iPad, a sales ban against Samsung’s Galaxy 10.1 tablet in 26 of the 27 EU member countries, only to then scale back its effects a week later over jurisdictional doubts. The backtracking indicates the court is open to revising the rulings it made under time constraints, said Alexander Bulling, a patent attorney at law firm Dreiss in Stuttgart.
“Nothing is finally decided yet, and we will have to see how the judges see the case after reviewing all arguments,” said Bulling, who isn’t involved in the case.
Samsung’s dispute with its rival -- and biggest customer -- across three continents is undermining the company’s ability to compete in a tablet market that’s forecast to rise to $53 billion by 2015. If the ban were in place until January, Samsung may miss out on sales of as many as 500,000 Galaxy tablets, or about 10 percent of its estimated total for the year, said Neil Mawston, a London-based analyst at Strategy Analytics.
Courts in EU member states can issue orders against certain forms of intellectual-property violations that cover the whole region. Whether that allows a German court to issue a ban beyond its national borders against a company headquartered outside Europe has became a point of argument since Samsung opposed the injunction. The German judges decided not to impose that part of the ruling until after an Aug. 25 hearing.
While it’s clear Apple can sue Samsung’s German unit for pan-European relief, it’s trickier with the Korean parent, said Magnus Hirsch, an IP lawyer at SKW Schwarz in Frankfurt who represents clients in similar suits in Germany.
“You can sue a non-EU-based company if it has a subsidiary here,” said Hirsch. “But Samsung’s German unit was set up as an independent company so it probably doesn’t count.”
Apple may also be able to invoke case law saying a German court has jurisdiction over foreign companies that violate EU- wide intellectual property protections if they are part of a chain of violators along with a Germany-based company, he said.
Apple must protect its intellectual property when other companies are stealing its ideas, the company said in an e- mailed statement, reiterating previous comments on the dispute.
If the iPad maker can’t convince the judges to back the pan-EU ban, it can try to sue in each EU member state, as it has already done in the Netherlands. It may also seek an EU-wide injunction in a Spanish court, where the agency that registered the intellectual property is based.
“Samsung is very committed to make its mobile- communication devices available on the market,” said Katja Meincke, a spokeswoman for the Suwon, South Korea-based company. “That’s why we look forward to claim our intellectual property rights at the Aug. 25 hearing.”
Apple said in court papers that German computer magazines had already published reviews of the Galaxy device, showing its introduction was imminent.
While Apple risks damage claims if it loses the dispute in the end, the iPad maker may not be afraid of that.
“The amount of damages in these cases isn’t easy to gauge,” said Timo Ehmann, an intellectual property lawyer in Munich. “Apple most likely has balanced that risk against the value it takes from preserving its singular status in the tablet market for as long as possible.”
The iPad was the second-biggest source of Apple’s $28.6 billion in second quarter revenue, behind the iPhone.
Apple provided its iPad, as well as a Galaxy device, to the court for review. The judges are likely to issue a ruling within three weeks of the hearing, court spokesman Peter Schuetz said.
Beyond the jurisdiction hurdle, Cupertino, California-based Apple may have a problem with the strength of its protection.
Apple won the temporary halt because it relied on a so- called EU design, registered with the European trademarks and designs office in Alicante, Spain. It is generally easier to revoke an EU design than its equivalent in the U.S., a so-called design patent, Bulling said.
“A registered community design can only prevail if the form is new, meaning it hasn’t been made available to the public or used before,” Bulling said. “If you look at the design Apple filed, it reminds you of things we well know: a picture frame or a mirror -- some people even say it looks like a slice of toast.”
It’s up to competitors and other interested parties to oppose a design’s validity. Bulling said it was “very odd” Samsung hadn’t done so before because the design was filed in 2004 and the design register is public.
Protected designs can’t force competitors to make bad products, said Ehmann, who isn’t involved in the case and hasn’t compared the two devices.
“A tablet is flat and has a touch screen. It’s difficult to picture how you can make one that looks fundamentally different,” he said.
The German case against Samsung is: LG Dusseldorf, 14c O 194/11.
To contact the reporter on this story: Karin Matussek in Berlin at email@example.com
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.