Korea Legal.org

By Don Southerton, KoreaLegal.org Editor

In my previous post, I shared how Apple continued to go after Samsung–taking the battle to the courts in Korea. Samsung has countered and file a complaint with the International Trade Commission.  My opinion is that much of this is but legal maneuvering designed to position each party best for a settlement. Neither could really expect bans on sale of their rival’s products.

I’d advise Apple’s lawyers to learn more about Samsung and their negotiation style and tactics… Apple leadership would benefit, too.  I can help with this.

SEOUL—Samsung Electronics Co.’s countersuits against Apple Inc.’s allegations of product copying have expanded to six countries, the company said Thursday, and now include a complaint with the International Trade Commission seeking to stop the sale of popular Apple products in the U.S.

The suits appear part of a broad strategy by Samsung to fight Apple’s lawsuit over the design of its smartphones and tablet computers with a barrage of litigation around the world.

By doing so, Samsung would build leverage that might force Apple to settle the initial case—which threatens to damage Samsung’s efforts to catch up to Apple in the smartphone and tablet markets, where profit margins are relatively high and market leadership is unsettled.

Samsung declined to answer questions about the strategy. A spokesman said the company doesn’t comment on pending legal matters. Apple declined to comment.

But the scope and ongoing expansion of the countersuits show the importance Samsung, the world’s largest technology manufacturer by revenue, has placed on countering Apple’s accusations that it copied Apple’s designs.

Apple is moving toward seeking a preliminary injunction in the initial case—filed in April in a federal court in San Jose, Calif.—that might limit Samsung’s ability to sell its smartphones and tablet PCs in the U.S., its biggest market.

With the latest filings earlier this week in Delaware and the Washington-based ITC, Samsung now has countersuits pending in California, South Korea, Japan, Germany, Italy and the United Kingdom.

“To have lawsuits in many countries at the start, it’s the best way to protect their patents,” Jong Sang-jo, a law professor at Seoul National University, said of Samsung’s tactics.

Apple filed a follow-up suit against Samsung in South Korea last week. It alleged some of the same product-copying violations as in the U.S. case and accused Samsung of violating some of Apple’s technical patents.

The fight is one of many that have been filed over the past year over smartphone and tablet technology. But this one has gained greater attention because Apple and Samsung, while competing in consumer products, have a customer-supplier relationship in which Apple is the biggest buyer of Samsung’s device components, including chips and screens.

That has prompted speculation throughout the electronics industry that Apple might try to end its supplier relationship with Samsung. Such a move would prove costly to Samsung’s chip business, which has yielded the company’s highest profits for the past two years. It would also prove a challenge to Apple to find other suppliers that can provide parts at the volume and price that Samsung can.

Apple executives have said they expect the relationship to continue. A spokesman said Thursday that Samsung said it would fulfill its long-term contracts with Apple, adding: “We view the patent issue as entirely separate from our business relationship with Apple.”

Samsung chairman Lee Kun-hee in late April indirectly criticized Apple’s lawsuit as an attempt to restrain Samsung. “When a nail sticks out, [people] try to pound it down,” Mr. Lee told local reporters at the time.

Since Apple filed the first suit in late April, the legal approaches of the two companies have laid bare their different basic competencies and advantages in the marketplace.

Apple is asserting the primacy of its ability to design distinctive products, a skill that gives it the ability to charge premium prices and reap larger profit margins. By focusing on technology patents rather than design, Samsung is asserting that the development of components, related technologies and manufacturing prowess should be just as, or more, valuable.

In the market, Apple’s strategy has proved more profitable. It has been able to boost both its profit margins and its sales in recent years. Samsung, meanwhile, has had to contend with declining profit margins even as sales rose in its businesses.

For example, Samsung achieved a record profit last year, beating its previous record set in 2004, but it did so with smaller overall margins and a larger base of revenue, approximately twice the sales level it had in 2004.

Source: WSJ