Samsung Can Sell Galaxy Nexus During Appeal, Court Rules

By Susan Decker and Todd Shields - Oct 12, 2012 6:47 PM GMT+0400

Samsung (005930) Electronics Co., the world’s largest mobile-phone maker, won its bid to continue selling its newest Galaxy Nexus smartphone in the U.S. while it battles patent-infringement claims filed by Apple Inc. (AAPL)

The U.S. Court of Appeals for the Federal Circuit yesterday granted Samsung’s request to lift a lower court’s ban on sales. Samsung wants to continue selling the phone while it challenges a federal judge’s June 29 ruling that Apple was likely to win its suit claiming the Galaxy Nexus infringed four patents and that sales were hurting Apple’s business in the meantime

Apple argued that it’s important to keep the Galaxy Nexus out of the U.S. market now because most Americans haven’t yet switched to smartphones, and a product that copies Apple’s features could steal customers from its iPhone. Photographer: Denis Doyle/Bloomberg

The case is part of a global battle between the two biggest makers of mobile phones that surf the Web, play video games and do most other functions of a computer. The case involves different patents than the ones at the heart of a $1 billion verdict Apple won against Samsung Aug. 24 in San Jose, California.

Apple argued that it’s important to keep the Galaxy Nexus out of the U.S. market now because most Americans haven’t yet switched to smartphones, and a product that copies Apple’s features could steal customers from its iPhone. A jury trial on the patent claims isn’t scheduled until March 2014, according to the court docket.

A feature in the Nexus phone that aids data searches was an issue in yesterday’s opinion. The appeals court said the district court had abused its discretion by deciding that Apple would suffer harm because of the feature. The patent-holder needs to show “that the infringing feature drives consumer demand for the accused product,” and Apple presented “limited” evidence of such a link, the appeals court said.

’Stifle Competition’

“Today’s decision confirms that the role of patent law is to protect innovation and not to unreasonably stifle competition,” Adam Yates, a spokesman for Suwon, South Korea- based Samsung, said in an e-mail. Kristin Huguet, an Apple spokeswoman for Cupertino, California-based Apple, declined to comment in an e-mail.

Apple and Samsung are involved in more than 30 patent- infringement lawsuits spanning four continents as they vie for a greater share of a smartphone market that Bloomberg Industries said grew 62 percent last year to $219 billion.

Apple claims the Galaxy Nexus infringes patents that cover the way the iPhone’s voice program, Siri, searches for information, its slide-to-unlock function, an automatic recognition of phone numbers or e-mail addresses and a word- suggestion feature, according to the filing. Apple was ordered to post a $95.6 million bond to cover any losses incurred by Samsung should the case end in Samsung’s favor.

‘Menacing’ Letters

Samsung, which makes other phone models that aren’t affected by the order, said in filings that Apple has been sending “menacing” letters to Samsung customers and “engaged in a campaign of litigation around the world against the largest sellers of Android devices.”

Android, owned by Google Inc. and distributed for free to bolster Google’s advertising business, is the most popular platform for mobile phones. The Galaxy Nexus is the first to run on the 4.0 version of Android, called Ice Cream Sandwich.

The case is Apple Inc. v. Samsung Electronics Co., 12-1507, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Apple Inc. v. Samsung Electronics Co., 12-630, U.S. District Court for the District of California (San Jose).

To contact the reporters on this story: Susan Decker in Washington atsdecker1@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net