Samsung May Have to Post An 88% Bond On U.S. Smartphone Sales

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It appears that the October 24, 2012 ITC ruling by Administrative Law Judge Thomas B. Pender which asserted that Samsung had infringed on for of Apple’s patents could be far worse for Samsung than originally thought. If Judge Pender’s determination and recommendation, which went public yesterday in the ITC’s electronic document system, is accepted completely by the US trade agency, then Samsung will be hit with some very serious sanctions.

  • A U.S. import ban that would enter into effect after the 60-day Presidential review period following a final ITC decision
  • A simultaneous cease-and-desist order that would prohibit the sale of any commercially significant quantities of the imported infringing accused products in the United States (this remedy was denied against HTC)
  • The requirement to post a bond of 88% of the value of all mobile phones, 32.5% of the value of all media players, and 37.6% of the value of all tablet computers found to infringe Apple’s patents-in-suit during the Presidential review period.

Judge Pender went along with just about everything Apple had suggested with regards to rates based on a “price differential analysis”, rather than Samsung’s suggestion of a 4.9% royalty rate. The ITC says that the 88% rate is correct because there is such a large price differential between the companies’ products. Even though the ITC doesn’t see the lower costing Samsung phones in direct competition, Pender’s decision says that an internal Samsung memo stating the U.S. mobile phone market was a “two horse race” between the companies, proves they were trying to undercut Apple’s devices. Judge Pender at one point even went so far as to tell Samsung he’d recommend a bond rate of 100% if they continued to press for the different rates.

Luckily for Samsung these are only recommendations. On top of that Pender also approved of some minor design changes that allowed for Samsung to avoid infringing on Apple even more. That means for now Samsung is safe to freely import their products to the U.S. without penalty. However if Judge Pender’s recommendations are accepted by the ITC, Samsung may have to pay the bond even on devices that have the approved design changes. Samsung fears that this may cause shipments to be held up in customs which would affect products not even included in the lawsuit like televisions, cameras, etc., so they are now asking that customs receive “special guidance” with regards to these products.

…And so the patent infringement beat goes on.

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