Apple, Inc. (AAPL) has fallen behind top Android smartphone manufacturer Samsung Electronics Comp., Ltd. (KS:005930) in global sales. Analysts say it could face a similar fate in the tablet market by 2014 or 2015. Apple insists that Android is only beating it in sales because it “stole” its intellectual property.
Unable to stop the Android juggernaut on the market, it has taken the top Android smartphone manufacturers to court   , trying to prove they infringed on its often ubiquitous patents, which included claims of inventing multi-touch and the swipe unlock. The Android manufacturers have fought back: Samsung and Apple have over 80 smartphone-related suits and counter-suits to date in courts around the world, since the start of the war.
I. Samsung Can Continue to Sell its Products
Late Friday in the U.S., a judge in Northern District Californian federal court, Judge Lucy H. Koh, dealt a major setback to Apple’s international campaign against Samsung. Following earlier statements where she said she would “likely” deny Apple’s request for preliminary injunction, she made it final — no injunction for Apple.
An injunction could have allowed Apple to ban the sale of all Samsung smartphones in the U.S., as well as imports, without Apple having to work through the full standard due process procedure. Instead, the Galaxy line of smartphones and tablets and other popular models like the Infuse 4G and Droid Charge will continue to be available to holiday shoppers.
Samsung spokersperson Jason Kim told Reuters in an email, “This ruling confirms our long-held view that Apple’s arguments lack merit.”
Apple’s spokesperson Kristin Huguet disappointedly parrotted her company’s previous statement: “[Samsung] blatant copying (Apple) is wrong.”
The full PDF of the ruling is available here.
II. Samsung Likely Infringes Apple’s Technology, But Not Its Design
While Judge Koh didn’t necessarily dismiss the merits of Apple’s lone technology patent in the case — U.S. Patent No. 7,469,381, which covers a menu bounce animation — she raised serious concerns about what she viewed as Apple’s attempts to position itself as the lone manufacture of functional tablets and smartphones.
She comments that “a size that can be handheld, a screen that encompasses a large portion of the front face of the smartphone, and a speaker on the upper portion of the front face of the product” are functional characteristics, not aesthetic ones and thus should not be protected by Apple’s design patents.
Apple asserts that it owns the exclusive rights internationally to produce “minimalist” (that term being the summary of Apple’s more verbose claim by a judge in Germany) tablets — thin, rectangular touch-screen driven tablets with few face buttons. Thus far Germany has been the only nation to buy such a claim.
Judge Koh’s comments call into question whether Apple will be able to successfully prove that Samsung is infringing its design patents — U.S. Design Patent No. D618,677, D593,087, and D504,889 — given the compelling differences that exist between Samsung and Apple’s product lines once you look past basic form factor.
As for the technology claim, Judge Koh ruled that the menu animation wasn’t enough to cause “irreparable harm” to Apple, necessitating a sales ban. She comments, “It is not clear that an injunction on Samsung’s accused devices would prevent Apple from being irreparably harmed.”
She did however indicate that Samsung likely infringed on the patent by including a similar animation in its distribution of the Android operatings system. She wrote, “Apple has established a likelihood of success on the merits at trial.”
Apple must now wait until July 30, 2012 to wrap up that case, though.
III. Legal Situation Grows Dire For Apple
Things are looking bad internationally for Apple’s legal campaign against Android. So far its only victories have been relatively inconsequential ones, with one exception.
A victory in Australian court, in which a single judge granted a preliminary injunction banning Samsung tablet sales was overturned by a three judge panel earlier this week. While an appeal from Apple puts Samsung’s sales down under on ice until Dec. 9, it seems unlikely that Apple will be able to sway the three judge panel, given how critical they were of the idea of a preliminary injunction. Assuming Samsung’s triumph is preserved, it will be able hit the market just in time for the final leg of holiday sales.
Elsewhere, in the Netherlands Samsung has escaped a sales ban by modifying its phones’ Android distribution to remove the aforementioned “bounce” animation. It looks likely that a similar loss, modification, and market reinstatement will occur for Samsung in the U.S. Such a process does little to help Apple as it offers virtually no sales delay for Samsung and no serious damage to the quality of Samsung’s product.
The lone sign of hope for Apple comes in Germany, Europe’s third largest tablet market. A German court ruled in a lawsuit solely dealing with Samsung’s tablets that all of Samsung’s tablets violated the design (not technology) patents held by Apple in the European Union. This rulign was the polar opposite of the decision by a Netherlands court, which ruled, like the U.S. court, that Apple’s design claims were too broad.
Samsung yielded to the German Judge’s ruling, redesigning its product to have a different frame and repositioning its elements such as the speaker and buttons. Apple however has filed a second suit against the new design, which should soon go on sale. It reasserts that it should be the only company legally allowed to make a modern tablet (primarily touch driven, thin, rectangular), regardless of whether the modern tablet looks different from the iPad. The German justice system has not yet decided whether or not to authorize Apple’s request for a new preliminary injunction.
If Apple continues to lose or post inconsequential wins in the majority of its court cases the company may be forced to decide between financial success and continuing its personal legal vendetta against Android. Late company co-founder and CEO Steve P. Jobs, described his final plan for his beloved company remarking, “I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product.”
His successors could be forced to make the tough decision of whether to follow that plan — whether to exhaust all of the company’s fortune on trying to “out-sue” its Android rivals.
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