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Australia – Smartphone Wars – Apple/Samsung IPR Infringement Dispute Heating Up Down Under.

18 January, 2013

 

Around the world, global giants Apple and Samsung are locked in intellectual property rights (IPR) disputes relating to patents and registered designs in the highly lucrative smartphone and tablet market. Ashurst Australia acts for Samsung in the Australian branch of the litigation, which, as elsewhere, is being hotly contested due to the complexity and untested nature of the issues involved. The dispute has resulted in the largest patent trial in Australian legal history and we explore some of the key issues below.

Apple sues Samsung

The fast-paced Australian aspect of the global battle began on 28 July 2011, when Apple applied for an interim injunction to prevent Samsung from launching its Galaxy Tab 10.1 tablet device, claiming that it infringed 10 patents owned by Apple.

The injunction was granted at first instance on 14 October 2011 on the basis that Apple had established a prima facie case of infringement in relation to both the “Touchscreen Patent” and the “Heuristics Patent” (for determining commands) and that the balance of convenience, although almost evenly weighted, fell slightly in Apple’s favour because:


  • Samsung had been unwilling to be available for a limited early final hearing; and
  • in light of ongoing US proceedings, Samsung had proceeded with its “eyes wide open” to launch the Australian Galaxy Tab 10.1.

Samsung then appealed to the Full Federal Court, which, on 30 November 2011, unanimously allowed Samsung’s appeal and discharged the injunction.

The Full Federal Court found that Apple had not established a prima facie case and therefore there were no grounds to grant an injunction. In considering leave to appeal, the court also noted the brief commercial life of the Galaxy Tab 10.1, and the fact that the injunction would effectively kill off the product in Australia.

Although Apple subsequently sought, and was granted, a stay of the Full Federal Court’s decision pending an application for special leave to appeal to the Australian High Court, on 9 December 2011, the High Court dismissed Apple’s special leave application and the injunction was lifted. As a result, Samsung has been able to sell the Galaxy Tab 10.1 in Australia since December 2011, while the case has proceeded.


Apple expands claims


Following its injunction application, Apple expanded its case against Samsung. Apple’s claim now covers infringement of 22 patents and four registered designs, in relation to 11 different products (two tablets, the Galaxy Tab 10.1 and the Galaxy Tab 7.7, and nine phones, including the Galaxy SII and the Nexus S). Samsung has cross-claimed, alleging that all of Apple’s patents and designs are invalid under Australian IP law, for grounds including, lack of novelty, lack of inventive step, lack of fair basis and that the invention is not a “manner of manufacture”. The case has been set down for a 16-week trial in the first half of 2013 and both sides are currently in the process of reviewing and preparing evidence.


The case will be closely watched by the Australian intellectual property community, as it raises a number of interesting issues, such as:


  • whether the user interface methods, the subject of the Apple patents, are entitled to patent protection; and
  • the application of the Australian Designs Act 2003, which is still a relatively recent piece of legislation.

Of the 22 patents claimed by Apple, 13 are “innovation” patents. Innovation patents are unique to Australia and were introduced relatively recently in 2000 as a cheaper and quicker form of protection for small-scale “innovative” incremental advancements on existing technology that do not meet the inventive threshold for standard patents. However, the number of claims in an innovation patent is limited to five and the maximum term is eight years.

Samsung sues Apple

In September 2011, Samsung filed a cross-claim against Apple alleging infringement of a number of Samsung’s patents. Initially, Samsung’s claim related to the iPhone 3GS, iPhone 4 and the iPad 2. The iPhone 4S was added in October 2011 after its launch

Which Samsung patents are affected?

The case has proceeded in relation to the iPhone 4, the iPhone 4S and the iPad 2 for infringement of three of Samsung’s “standards essential” patents. These are patents that have been declared by Samsung essential to a particular standard developed by the European Telecommunications Standards Institute (ETSI). The patents relate to methods and apparatus for transmitting and receiving data.


Apple’s defence to Samsung’s infringement claims are that Samsung’s patents are invalid or that Apple has not infringed in any event. In addition, Apple alleges that it has an implied licence to Samsung’s patents, that Samsung’s patent rights are exhausted and that Samsung has not complied with its obligations to license on fair, reasonable and non-discriminatory (FRAND) licensing terms.

Apple also claims that Samsung commencing proceedings for injunctive relief and making a non-FRAND licensing offer constitutes a misuse of market power in breach of Australian competition law. FRAND terms were discussed in greater detail in relation to the Apple Nokia dispute in our update in the July 2011 Communications newsletter. Australia and the United States are the only jurisdictions where anti-trust issues have been raised.


This part of the case is currently part-heard. The court sat on and off throughout 2012, depending on availability, and the final aspect of the case, regarding competition issues, is now set down for late 2013.


Contrast with Europe


The Apple/Samsung dispute is also being waged throughout Europe, although to date, the European proceedings have tended to be more confined in scope, with just one or two designs or patents in dispute.


Proceedings have been brought in the UK, the Netherlands, France, Italy and Germany. In the UK, the design of Samsung’s Galaxy tablet was found not to infringe Apple’s iPad design, and this decision was upheld on appeal. Apple was ordered to publish a statement on its website that the High Court had found that the Galaxy Tab 10.1, Tab 8.9 and Tab 7.7 did not infringe Apple’s registered design. In January 2012, the Dutch appeals court overruled the civil court decision, rejecting Apple’s claim that Samsung’s Galaxy Tab 10.1 infringed its design rights.


The global battle continues


The Australian Apple/Samsung proceedings will be important both in the global battle between the two companies and for the development of Australian patent law. Unlike its approach in European jurisdictions, in Australia Apple has brought infringement claims in relation to a large number of patents and registered designs. Samsung has strongly rejected the allegations, denying infringement and bringing counterclaims for invalidity of Apple’s patents and infringement by Apple of a number of Samsung’s patents. The scale of the proceedings reiterates that IPR is a fierce battleground in the handheld device market.

 

For further information, please contact:

 

Belinda Findlay, Partner, Ashurst

[email protected]

 

Katherine Payne, Ashurst

[email protected]​urst.com

 

Homegrown Intellectual Property Law Firms in Australia

 
 

 

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