updated 09:14 pm EST, Sat December 29, 2012
Pender approves "design-arounds" that could avoid embargo
Documents filed in relation to the October ITC ruling that Samsung had stolen four of Apple's design patents for use in its own products show that the penalty Samsung will reap for its actions is likely to be severe but mostly short-term. Judge Thomas Pender is recommending a complete sales ban on infringing products, and ordering Samsung to post a bond for 88 percent of the value of the products that might be sold during the 60-day presidential review.
At the same time, Pender has already approved a number of "design-around" plans submitted by Samsung (with no apparent objection by Apple) that would eventually be incorporated into the products and could, if implemented quickly enough, avoid the sales ban entirely. The judge's recommendations -- which could cost Samsung millions of dollars in bond money -- await the approval of the full ITC Commission.
The penalties come despite one of the patents involved -- covering heuristic touchscreens -- recently having been tentatively deemed invalid by the US Patent and Trademark Office. The preliminary invalidation doesn't really have any bearing on the case in question, since the review will be ongoing for several years and may very well be reversed later on. In any event, a final ruling on the patent will be largely moot relative to the current products, which are mostly older Samsung models of phones and tablets. Current flagship models like the soon-to-be-replaced Galaxy S III or Galaxy Note are not affected by the potential sales ban, but are involved in a separate lawsuit which is scheduled to begin in 2014.
The 88 percent bond follows Apple's recommended methodology for the rates, based on a "price differential analysis," reports patent case analyst Florian Mueller. Samsung had argued for a 4.9 percent royalty rate. ITC staff are known to disagree with Judge Pender on the higher general bond rate, but Pender pointed to an internal Samsung presentation that suggested a willful strategy of undercutting Apple. He warned Samsung that if it "continues to press" for a lower rate, he would change his recommendation to a 100 percent rate for all infringing products sold during the 60-day presidential review period.
Once the full commission has approved or modified Judge Pender's recommendations, the order for a sales ban is effectively held while the Obama administration reviews it and makes a decision based on how the action could affect the US economy or other factors. It is unusual for the President to override a US ITC recommendation, and given that Samsung already has design-arounds on the table, a rejection of the ban seems unlikely.