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 The iPhone and Galaxy handset makers issued nearly identical
statements announcing the global ceasefire while vowing to pursue
ongoing litigation in the United States, which analysts say involves
much bigger amounts of potential damages.
The stand-down is likely to enable Samsung Electronics, the world's
top smartphone maker, to shift its focus to its Chinese rivals such
as Xiaomi rather than fighting a costly and prolonged legal war with
Apple around the world, analysts said.
"It appears that Samsung and Apple, the market leaders, made a
strategic alliance as China's Xiaomi is emerging as a formidable
rival," said Cho Chang-hoon, a business professor at Sogang
University in Seoul.
Last week, Samsung Electronics posted its weakest earnings since the
second quarter of 2012, partly hit by rising competition from
Chinese smartphone makers.
Xiaomi took China's smartphone crown in the second quarter after
replacing Samsung Electronics as China's largest smartphone vendor,
data from Canalys shows.
The legal battle between Samsung Electronics and Apple began in the
United States in 2011 when Apple first filed a suit alleging that
Samsung "slavishly" copied elements of its iPhones, the device which
launched the industry.
Days after the initial Apple suit was launched in the United States,
Samsung Electronics sued its Cupertino, California-based rival in
South Korea, Japan and Germany, kicking off a series of tit-for-tat
cases that spread around the world.
The latest agreement ends patent disputes in Australia, France,
Germany, Italy, Japan, the Netherlands, South Korea, Spain and the
United Kingdom, countries where the smartphone market leaders had
engaged armies of lawyers for what analysts said were questionable
gains.
The South Korean and U.S. tech giants declined to disclose the terms
of the deal, but said it did not involve "any licensing arrangements
and the companies are continuing to pursue the existing cases in
U.S. courts."
The litigation raged on even as business flourished between the two
companies, with Apple depending heavily on Samsung Electronics for
components such as chips and liquid crystal displays.
Apple and Samsung Electronics together dominate the global
smartphone market with a combined market share of 37.1 percent in
the second quarter, according to Strategy Analytics.
"They now see little need to wage a war around the world, which will
only fatten the bills of lawyers," said Young Park, a Hyundai
Securities technology analyst in Hong Kong, adding that the deal
raised the possibility of a final license agreement settling how the
companies use each other's patented technology.
He and three other analysts whom Reuters talked to said they do not
have estimates for the legal costs that Samsung Electronics and
Apple are facing.
A Samsung Electronics spokeswoman declined to comment.
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NO MERIT
The agreement comes about a month after Jay Y. Lee, vice chairman
and heir-apparent of Samsung Electronics, met Tim Cook, chief
executive officer of Apple, during the Allen & Co conference in Sun
Valley, Idaho, according to media reports. Last week, Lee again made
a business trip to the United States, reports said.
Samsung Electronics did not immediately comment on the reports.
The two companies "decided that there was no merit in dragging on
these lawsuits", an industry source familiar with the matter told
Reuters, declining to be identified due to the sensitivity of the
matter.
Nicholas Rodelli, an attorney and adviser to institutional investors
for CFRA Research in Maryland, said there had been a "trend towards
gradual de-escalation of patent hostilities between Apple and
Samsung".
"It's not yet clear whether this is signal or noise, in terms of
prospects for global settlement," he said.
In the United States, Samsung Electronics is appealing the result of
a blockbuster 2012 trial, seeking to undo $930 million in damages.
While Apple says those damages should stand, the iPhone maker last
week withdrew its request for a permanent sales ban against several
older Samsung Electronics phones, according to court filings.
Separately, Apple went to trial against Samsung Electronics on a
second batch of patents earlier this year and won a $120 million
verdict. Apple still has a request pending for a sales ban against
newer Samsung phones in that proceeding.
On another front, Samsung Electronics is fighting Microsoft Corp
over allegations it refused to make a royalty payment last year on
patent licenses after the U.S. company announced plans to acquire
Nokia's handset business.
Meanwhile, Apple and Google Inc's Motorola Mobility unit agreed in
May to settle all patent litigation between them over smartphones.
Apple and companies that make phones using Google's Android
software, such as Samsung's top-selling Galaxy series, have filed
dozens of such lawsuits against one another around the world to
protect their technology.
Samsung Electronics shares closed 1.2 percent lower on Wednesday,
compared with the wider market's percent drop.
(Writing by Se Young Lee; Additional reporting by Kahyun Yang in
SEOUL; Editing by Stephen Coates and Ryan Woo)
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