U.S. judge favors bond or ban on Samsung imports

Samsung Electronics should post a bond equal to 88 percent of the value of smartphones found to infringe Apple patents if it loses a U.S. trade ruling and wants to keep selling the devices, a judge said.

U.S. International Trade Commission Judge Thomas Pender in October found that more than a dozen models of Samsung mobile phones, media players and tablet computers infringed patents on the iPhone and other Apple products.

Pender, in a recommendation posted on the agency’s Web site on Friday, said Samsung should face a ban on imports of the infringing products. Pender also specified bonds Samsung is to post if the full commission accepts his decision to ban imports and the company wants to keep selling the products during a 60-day period when President Barack Obama could overturn the ban.

“That’s a high rate,” Christopher Marlett, founder of MDB Capital, an intellectual-property consultancy, said in an interview. “With those economics, it will be difficult for Samsung to decide whether to sell the products at all.”

The six-member trade commission is to finish its investigation by Feb. 25.

Samsung could try to avoid the bonds by changing product designs to address the dispute, and Apple could ask the commission to decide whether the new equipment still infringes its patents, Rodney Sweetland III, a lawyer with Duane Morris in Washington who specializes in ITC cases, said in an interview.

Even if the commission were to order an import ban, it would probably give Samsung time to work around the patents to ensure there is no disruption to consumers and carriers, Sweetland said.

Samsung is battling Apple worldwide over smartphone and tablet-computer technology. Samsung lost a $1 billion jury verdict in August against Apple.

At stake is a market that Bloomberg Industries said grew 62 percent last year to $219 billion. Samsung has more than a quarter of global mobile phone sales compared with Apple’s 17 percent, though the iPhone has 34 percent of the U.S. smartphone market to Samsung’s 18 percent, according to market researcher ComScore.

Among tablet computers, Apple had about 70 percent of the market in the second quarter, compared with 9.2 percent for Samsung and 4.2 percent for Amazon.com, according to IHS ISuppli.

The products involved in the ITC case include models of the Galaxy Tab tablet, and the Galaxy Nexus and Galaxy S2 smartphones. Not included are some popular products including the Galaxy S3 smartphone and Galaxy Note 2 pen-equipped phone.

Samsung “will continue to take all appropriate measures to ensure the availability of our innovative products for American consumers,” Adam Yates, a company spokesman, said in an e-mailed statement on Monday.

“We remain confident that the full commission will ultimately reach a final determination that affirms our position,” Yates said. “Patent law must not be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.”

Kristin Huguet, a spokeswoman for Apple, didn’t immediately respond to an e-mail seeking comment.

Pender, in Friday’s order, said Samsung should pay bonds of 32.5 percent on sales of media players and 37.6 percent for tablet PCs. Samsung argued for lower payments based on a royalty rate of 4.9 percent, Pender said in his order. The judge accepted Apple’s suggested rates.

In his Oct. 24 decision, Pender found Samsung had violated four patents including one for design of the front face of the iPhone and one for touch-screen technology co-invented by Apple co-founder Steve Jobs.

The case is one of more than three dozen between the makers of about half of the world’s smartphones.
Bloomberg