Samsung Shares Fall After Apple Wins $1 Billion Verdict

Apple Inc.’s victories in patent disputes over phones using Google Inc.’s Android operating system may extend, rather than end, the litigation that’s lasted more than two years and spanned four continents.

Samsung Electronics Co. (005930) fell the most in almost four years in Seoul trading after a U.S. jury found the mobile-phone maker infringed Apple Inc. (AAPL)’s patents and ordered the South Korean company to pay more than $1 billion.

Samsung dropped as much as 7.7 percent, headed for the biggest decline since Oct. 24, 2008, to 1,177,000 won before trading at 1,187,000 won as of 9:20 a.m. on the Korea Exchange, while South Korea’s benchmark Kospi index declined 0.4 percent. Yields on Samsung’s five-year U.S. dollar-denominated bonds due April 2017 rose 1 basis point to 1.58 percent as of 9:10 a.m. in Seoul, according to prices from Credit Agricole SA.

The nine-member panel in San Jose, California, found on Aug. 24 that Samsung infringed six of seven patents for mobile devices in the first lawsuit between the dominant global smartphone competitors to go before a U.S. jury. The verdict may also lead to a ban on U.S. sales of some Samsung mobile products.

“We expect there is a two-thirds chance of an injunction against Samsung products,” Peter Misek, an analyst at Jefferies & Co. Inc., wrote in an Aug. 26 report. “While there is going to almost certainly be an appeal by Samsung, we believe the evidence and weight of the case are heavily in Apple’s favor.”

Samsung, which called the U.S. verdict a loss for the American consumer, said it will file post-verdict motions to overturn the decision and will appeal if the filing is unsuccessful.

The jury rejected Samsung’s patent counterclaims against Apple and its request for damages. A Seoul court ruled hours earlier that both companies infringed each other’s patents.

Design, Software

LG Electronics Inc., the world’s fourth-largest mobile- phone maker, gained 3 percent to 69,100 won in Seoul. Nokia Oyj (NOK1V) rose 4.2 percent on Aug. 24.

Apple sued Samsung in April 2011, and the Korean company countersued as part of a battle being waged on four continents over a smartphone market valued at $219.1 billion according to Bloomberg Industries. The world’s two largest makers of high-end handheld devices that blend the functionality of a phone and a computer have accused each other of copying products, design and technology.

In the U.S. trial, Apple sought $2.5 billion to $2.75 billion for its claims that Samsung infringed four design patents and three software patents in copying the iPhone and iPad. Samsung’s demand for as much as $421.8 million in royalties was based on claims that Apple infringed five patents.

Hours earlier on Aug. 24, a Seoul court ruled that the companies infringed each other’s patents and must stop selling the involved products.

Commercial Tie

The allegations over intellectual property contrast with the commercial ties that bind the two companies.

Apple’s reliance on Samsung chips for its best-selling phones and tablets will be worth as much as $7.5 billion to Samsung this year, a 60 percent jump from 2011, according to estimates from industry researcher Gartner Inc. Apple accounts for about 9 percent of Samsung’s revenue, making it the company’s largest customer, according to a Bloomberg supply- chain analysis.

In the last quarter, Samsung controlled about 35 percent of the global smartphone market, followed by Apple with about 18 percent, according to market researcher Strategy Analytics.

Both sides have had legal victories. Apple won a U.S. court order on June 29 blocking sales of Samsung’s Galaxy Nexus smartphone, the first smartphone to use Google Inc. (GOOG)’s Android 4.0 operating system. The product has remained on the market as Samsung appeals the order to the U.S. Court of Appeals for the Federal Circuit in Washington.

In November, Samsung won a battle in an Australian court that allowed customers to buy Samsung’s rival to the iPad.

“Pending court cases in other regions are also increasing uncertainties over the company,” Ahn Seong Ho, an analyst with Hanwha Securities Co., wrote in a report yesterday.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Darren Boey at dboey@bloomberg.net

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