Samsung’s shares tumbled nearly 8% on Monday after a California jury upheld claims by rival smartphone manufacturer Apple that the Korean electronics company had infringed its patents.
The court ordered Samsung to pay $1.05bn in damages, Reuters reported, but the impact on the company’s share price was more significant, with more than $12bn wiped off its value on the day of the verdict.
Samsung Electronics said it will contest the US court ruling, which could see a ban placed on the contested products, which include the Galaxy SII smartphone reviewed by AccountingWEB last March and its successor the Galaxy SIII.
“We will move immediately to file post-verdict motions to overturn this decision in this court and if we are not successful, we will appeal this decision to the Court of Appeals,” the company said.
“There are still too many variables including the final ruling to come at least a month from the recent verdict, and whether there will be a sales ban on Samsung’s main sellers such as the Galaxy SIII," said a fund manager at one of the company’s biggest institutional shareholders.
A Reuters analysis pointed out oddities in the case, such as Samsung’s role as a key component supplier for Apple’s devices, and its counter accusations that the US manufacturer infringed some of its intellectual property. Another of Apple’s targets may well be Google’s Android operating system, which powers Samsung’s devices.
Although the verdict went in Apple’s favour, tech commentators see it more as a victory for patent lawyers and voiced concerned about the case’s impact on innovation.
Apple and Samsung would be better off - and their consumers would be better served - if the tech giants took their epic patent battle out of the courtroom and into the marketplace, argued Julie Samuels, a staff attorney at the Electronic Frontier Foundation.
“Apple v. Samsung demonstrates so much of what ails our patent system. But it's not all bad. This case made big news; people are paying attention. Now is the time to talk about the many ways that software patents hinder innovation instead of helping it. It is the time to talk about the public interest and how taking Galaxy products off the market would harm consumers,” she blogged.
Another view is that the costs of the court case and the billion dollar damages award are a relatively small amount for Samsung to have to pay for its ascent (allegedly on the back of Apple’s patents) to become the second most profitable smartphone maker.
Meanwhile, Mark Stadnyk, a 48-year-old garage inventor who owns three patents is suing the US government over its latest patent law revision, the American Invents Act, which he argues favors large companies over smaller startups and individual inventors.
The America Invents Act gives patents to the first person or company to file the patent. Before the act, patents went to the party that could show it had the idea first, using lab notebooks, correspondence and prototypes as proof. Though the change will help speed up the US patent-granting process, currently bogged down with a backlog of hundreds of thousands of patents, it will favour larger companies with patent lawyers who can file quickly on their behalf.
Stadnyk’s suit argues that the America Invents Act violates the US constitution, which protects the rights of individual inventors.