ITC to reconsider patent rulings against Samsung

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ITC to reconsider patent rulings against Samsung

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A model holds the Galaxy Grand, a five-inch, lower-priced smartphone Samsung rolled out yesterday. Running on Android’s Jelly Bean 4.1 platform, the phone has an eight-million pixel camera and retails at 720,000 won (674 dollar), about 300,000 won cheaper than the Galaxy Note 2 “phablet.” Provided by the company


The International Trade Committee of the United States decided on Wednesday to accept Samsung Electronics’ request to reconsider a preliminary ruling on patent violations made by its administrative judge in October.

In the ruling, Judge Thomas Pender found Samsung’s mobile devices violated four patents owned by Apple and did not violate two.

Samsung has seized an opportunity to temporarily avoid a U.S. import ban on its smartphones and tablet PCs, including the Galaxy S, Galaxy S2, Galaxy Nexus and Galaxy Tab. The latest Galaxy S3 and Note 2 were not included in the ruling.

The decision by the U.S. panel specializing in patent disputes also has the potential to affect the ongoing patent litigation between the two smartphone giants - one in San Jose, California, in particular.

In July 2011, Apple filed a suit against Samsung with the trade panel claiming Samsung infringed six of its patents. In October last year, Pender ruled that Samsung infringed on three function-related patents (including one involving the touch screen) and one design-related patent, all held by Apple. He also found the Korean tech titan did not violate two others, including one related to the iPhone design. Both Apple and Samsung applied for reviews of the decision.

On Wednesday, the ITC asked Pender to re-examine his preliminary ruling on two of the violations.

A final decision on the case was originally due on March 27 but will now have to be pushed back further due to the review.

“We remain confident that the full commission will ultimately reach a final determination that affirms our position,” Samsung said in a statement.

Meanwhile, Apple missed Wall Street’s revenue forecast for the third straight quarter after iPhone sales came in below expectations on Wednesday, fanning fears that its dominance of consumer electronics is slipping.

Shares of the world’s largest tech company fell 10 percent to $463 in after-hours trading, wiping out some $50 billion of its market value - equivalent to the value of Hewlett-Packard and Dell combined.

Apple said it shipped a record 47.8 million iPhones in the December quarter, up 29 percent from a year earlier. But that lagged behind the 50 million that analysts on average had projected.

Expectations for the company’s results had been subdued by news of possible production cutbacks by some component suppliers in Asia, triggering fears that demand for the iPhone, which accounts for half of Apple’s revenue, and the iPad could be slowing.

But some investors clung to hopes for a repeat of years of historical outperformance, analysts said.

“It’s going to call into question Apple’s dominance in the space. It’s still one of the strong players, the others being Samsung and Google. It’s still a two-horse race, but Android continues to grow rapidly,” said Sterne Agee analyst Shaw Wu.

Apple also undershot revenue targets in the previous two quarters, and these results will prompt more questions about what Apple has in its product pipeline and what it can do to attract new sales and maintain its growth trajectory, analysts said.

Net income of $13.07 billion was virtually the same as $13.06 billion a year earlier. The year-ago quarter also had an extra week compared to this year.

“You can’t just keep rolling out iPhones and iPads and think that everybody needs a new one,” said Jeffrey Gundlach, who runs DoubleLine Capital, a $53 billion bond firm. “The mini? What is that all about? It is a slightly smaller iPad - so what? So that is our new definition of innovation?”

“There are plenty of competitors like Samsung and other legitimate competitors like them,” added Gundlach, one of the highest-profile Apple bears. He maintains a $425 price target for its shares.

Taking into account the drop in shares in Wednesday’s after-hours trading, Apple’s stock is now down 34 percent from its September record high.


By Seo Ji-eun, Reuters [spring@joongang.co.kr]

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