Apple Inc is seeking speedy bans
on the sale of eight Samsung Electronics phones,
moving swiftly to translate its resounding court victory over
its rival into a tangible business benefit.
The world's most valuable company wasted no time in
identifying its targets on Monday: eight older-model
smartphones, including the Galaxy S2 and Droid Charge. While
Apple's lawsuit encompassed 28 devices, many of those accused
products are no longer widely available in the world's largest
mobile market.
Although Samsung's flagship Galaxy S III phone was not
included in the trial, the jury validated Apple's patents on
features and design elements that the U.S. company could then
try to wield against that device. Apple may not have to seek a
new trial over the S III, but can include it in a "contempt
proceeding" that moves much faster, according to legal experts.
Many on Wall Street believe Apple now has momentum behind it
in the wake of its near-complete triumph over the South Korean
company on Friday.
"The evidence and weight of the case are heavily in Apple's
favor," said Jefferies & Co analyst Peter Misek. "We expect
there's a two-thirds chance of an injunction against Samsung
products."
An injunction hearing has been set for Sept. 20. If U.S.
District Judge Lucy Koh grants sales bans, Samsung will likely
seek to put them on hold pending the outcome of its appeal.
Samsung said it will take all necessary measures to ensure
the availability of its products in the U.S. market. A source
familiar with the situation said Samsung has already started
working with U.S. carriers about modifying infringing features
to keep products on the market should injunctions be granted.
Apple's win on Friday strengthens its position ahead of the
iPhone 5's expected Sept. 12 launch and could cement its market
dominance as companies using Google Inc's Android
operating system – two-thirds of the global market – may be
forced to consider design changes, analysts say.
Apple was awarded $1.05 billion in damages after a U.S. jury
found Samsung had copied critical features of the iPhone and
iPad. The verdict could lead to an outright ban on sales of key
Samsung products.
Apple's stock scored another record high on Monday.
While the victory does not cover new Samsung products
including the Galaxy S III, Apple will push its case on these
products in the near-term, Evercore Partners analyst Mark
McKechnie said.
"While a ban would likely increase Apple's leading
smartphone share in the U.S. market, we believe this verdict
could lead to Samsung also delaying near-term product launches
as it attempts to design around Apple's patents," Canaccord
Genuity analysts said in a note.
TOOTH-AND-NAIL
Apple's shares gained 1.9 percent to close at $675.68,
tacking on another $12 billion-plus to its already historically
leading market value. Samsung lost about the same amount in
market capitalization as its shares slid 7.5 percent in Seoul.
Samsung shares rebounded 1.8 percent on Tuesday.
"The ruling marks an important victory for Apple against
Android. Competitors may now think twice about how they compete
in smart mobility devices with the industry's clear innovator,"
Barclays analyst Ben Reitzes wrote on Monday. "If Apple forces
competitors to innovate more, it could take longer for
competitive products to come to market, and make it more
expensive to develop them."
The victory for Apple – which upended the smartphone
industry in 2007 with the iPhone – is a big blow to Google,
whose Android software powers the Samsung products found to have
infringed on patents. Google and its hardware partners,
including the company's own Motorola unit, could now face legal
hurdles in their effort to compete with the Apple juggernaut.
Google shares closed 1.4 percent lower at $669.22. Microsoft
Corp, a potential beneficiary if smartphone makers
begin to seek out Android alternatives, ended up 0.4 percent.
Nokia, which has staked its future on Windows phones,
gained 7.7 percent.
Even Research in Motion – which has
hemorrhaged market share to Apple and Google – climbed more than
5 percent, before ending 2 percent higher.
"The mobile industry is moving fast and all players,
including newcomers, are building upon ideas that have been
around for decades," Google responded in a Sunday statement. "We
work with our partners to give consumers innovative and
affordable products, and we don't want anything to limit that."
The verdict came as competition in the device industry is
intensifying, with Google jumping into hardware for the first
time with the Nexus 7 and Microsoft's touchscreen-friendly
Windows 8 coming in October, led by its "Surface" tablet.
Samsung, which sold around 50 million phones between April
and June – almost twice the number of iPhones – will have to pay
damages equivalent to just 1.5 percent of the annual revenue
from its telecoms business.
"The verdict does not come as a surprise," wrote William
Blair & Co analysts. "From Apple's perspective, Samsung's market
position and its leadership in the handset world was something
the company could no longer overlook, and viewing this as
another 'imitation is a form of flattery' was not possible."
"Companies such as Samsung, who we categorize as fast
followers, have been viewed by the industry for their ability to
quickly adopt the latest handset trends … rather than their
ability to introduce fundamental innovation."
