Apple, Samsung to end patent fights outside of US

Bitter smartphone rivals Apple and Samsung have agreed to end all patent litigation against each other outside of the US, including in Australia.

The two companies had been suing each other in eight countries outside of the US. With the new agreement, lawsuits in Australia, Japan, South Korea, the UK, Italy, the Netherlands, Germany and France will be dropped.

The legal battle in Australia started when Apple sued to seek a ban on Samsung selling its Galaxy Tab 10.1 in the local market. In October 2011, a judge granted an injunction on sales of the device while the case was being heard, but this injunction was overturned by the Federal Court the following month.

Samsung meanwhile retaliated against Apple, alleging that the company had infringed seven Australian wireless communications patents in several generations of the iPhone. Apple in turn accused Samsung of failing to negotiate royalties for the patents on fair, reasonable and non-discriminatory (FRAND) terms.

According to a statement from Samsung, the agreement does not extend to any licensing arrangements, and their ongoing litigation in the US will continue. But pundits and media are taking the settlement as a sign that the long-running legal battle may be coming to a close.

IDG News Service said the agreement is an “indication of a softening of [a] dispute that has extended across many countries
”. Bloomberg likewise speculates that the deal “shows Apple and Samsung may be nearing a conclusion to what has been a drawn-out and occasionally nasty worldwide patent fight”.

Other commentators have taken a more cautious tone. Santa Clara University School of Law Assistant Professor Brian Love told CNET that it is hard to say at this point whether the agreement does mark a ceasefire “or a mutual decision on the part of Apple and Samsung to focus their energy even more intently on US litigation”.

Certainly the US has been at the forefront of the legal battle between the two companies, and the US lawsuits have the highest stakes. In 2012, a US court awarded Apple $1.05 billion in damages for Samsung’s alleged infringement of iPhone patents, although this was reduced to $930 million in 2013. Samsung is currently appealing the verdict.

But after years of lawsuits and not much to show for it on either side, there’s a sense that companies may be growing tired of fighting.

Former Apple CEO Steve Jobs famously pledged to fight a “thermonuclear war” against Android, spending “every penny” of Apple's bank balance to “destroy Android” if necessary. One theory is that he saw Google’s decision to enter the smartphone OS fray while Eric Schmidt was sitting on the Apple board as a personal betrayal.

But Apple CEO Tim Cook has not displayed the same fervour when discussing the litigation against Samsung and other Android handset makers.

Samsung meanwhile has consistently had a worse track record than Apple when it comes to its own lawsuits. For example, both Apple and Samsung won import bans on some of the others’ older smartphone models in the US during lawsuits with the International Trade Commission. But Apple’s import ban was subsequently overturned by the Obama administration, while Samsung’s was not.

Some other developments also threaten to distract Samsung from its patent battles with Apple. Microsoft last week filed a lawsuit against Samsung in a US court, accusing the Korean vendor of refusing to comply with a cross-licensing agreement between the two companies.

Samsung is using Microsoft’s acquisition of Nokia as an excuse to stop paying royalties under the agreement, Microsoft has alleged. The lawsuit claims that Samsung has already missed one payment and is refusing to pay late fees.

In addition, Samsung is facing a challenge to its dominance of the smartphone market from fast-growing Chinese vendor Xiaomi.

Xiaomi became the world’s fifth-largest smartphone vendor by market share during the second quarter, research firm Strategy Analytics estimated last week. The company’s market share climbed to 5.1%, from 1.5% a year earlier. By contrast, Samsung’s share fell to 25% from 33%.

The challenge is even greater in the massive Chinese market, where Xiaomi has overtaken Samsung to become the top smartphone vendor, according to Canalys projections. Xiaomi now has a 14% share of its domestic market thanks to its strategy of selling powerful smartphones at razor-thin margins.

According to Canalys, 97% of Xiaomi’s Q2 shipments were in mainland China. But the company is now expanding into other markets - including Indonesia, Mexico, Russia, Thailand and Turkey - and if it can mirror the growth it has been generating in China, it will soon be a force to be reckoned with on a global scale.

Image courtesy of GillyBerlin under CC