Apple, Samsung Duke It Out in Europe


A German court dealt a blow Tuesday to Apple's (NAS: AAPL) efforts to block its rival Samsung Electronics from distributing its Galaxy tablet computers throughout all of Europe, but the famed iPad maker may get another chance if it goes through Spanish courts.

But first, let's describe the backdrop of the European legal wrangling. Last week, Apple's expansive iPad v. Galaxy Tab 10.1 intellectual property rights fight, which has spanned a number of continents from Australia to North America, claimed a win when a German court in Duesseldorf issued a temporary injunction against Samsung sales of its Galaxy Tab in all of Europe except the Netherlands, where Apple has another lawsuit under way.

The Duesseldorf regional court sided with Apple, which argued that swift action was needed because Samsung was gearing up to release its Galaxy Tab 10.1 in Europe and enough similarities existed between the two tablets to put a temporary halt to the Galaxy sales, even though a Samsung brief had argued there was no urgency to take such action.

But in a surprising and rare move, the same justices in the Duesseldorf court pulled a mea culpa Tuesday and substantially reversed their earlier decision, said Thorsten Vormann, an intellectual property rights attorney with Clifford Chance's office in Frankfurt.

In essence, the Duesseldorf court said it didn't have the jurisdiction to order Samsung Korea to halt sales of its Galaxy Tab to other European countries, except Germany where it operates a sort of stand-alone company called Samsung Electronics GmbH.

But if Samsung Korea had operated a branch office or domicile in Germany, the Duesseldorf court wouldn't have felt the need to reverse itself, noted Anette Gartner, an intellectual property rights attorney with Clifford Chance in Frankfurt.

What's to come at Thursday's hearing
As a result, what's up for grabs at Thursday's opposition hearing are two things: One is whether the Duesseldorf court should make its earlier temporary injunction stick regarding Samsung Electronics GmbH's ability to sell the Galaxy Tab throughout Europe, except the Netherlands. And secondly, whether Samsung Korea can sell its Galaxy Tab in Germany.

Without locking up Samsung Korea's ability to sell to other European countries, it would be rather easy for Samsung to get its Galaxy Tab computers into Germany -- even if Apple prevails at the Thursday hearing. After all, what's to prevent retailers and third-party resellers from purchasing Galaxy Tabs in London and distributing them or selling them to other stores based in Germany?

It's unlikely Apple would take a dragnet approach to filing lawsuits against all retailers and resellers who distribute or sell the Galaxy Tab in Germany. After all, they are the same parties Apple counts as its iPad customers.

Tango anyone?
For Apple, the answer to its problem may be found in Spain. If Apple and Samsung Korea don't have a domicile in a European country, a Europeanwide injunction can only be granted by a court in the country where the European trademark and design office is stationed. This would be the mercantile court in Alicante, Spain, say the attorneys.

Hmm ... which begs the question why didn't Apple go to Alicante first? And more importantly, could it still make a trek to Alicante?

Apple could separate the Samsung Korea part of its Duesseldorf court case and file it with the Alicante courts, the attorneys said.

But the attorneys note that the Alicante courts are not known for handling a ton of patent infringement cases or processing cases with lightning speed. So in other words, it's more of a crapshoot for plaintiffs. Duesseldorf, on the other hand, is the mecca for IP cases in Europe, handling more than 2,000 patent and design cases a year -- more than London, Paris, and Madrid courts combined, the attorneys noted. And in most cases, the court will issue its decision on the same day as the opposition hearing.

European gold
As one can imagine, the European market is a big deal for any company -- including Apple and Samsung.

For Apple, Europe accounts for roughly 30% of its total sales and last year represented approximately 29% of its total revenues, says Brian Marshall, a Gleacher & Co. analyst.

If we applied that 30% total European sales to the 9.2 million iPads sold worldwide in the June quarter, using rough calculations, Apple would have made approximately 2.76 million iPad sales in Europe during the last quarter.

While Android tablets have been able to ship a good amount of inventory to retailers, the actual sales number to consumers is disputed and generally considered lackluster.

In other words, whether Samsung's Galaxy is allowed to orbit the European market, it will have little effect on dampening iPad sales in the region. That, however, isn't stopping Apple's rabid fight to defend its intellectual property, which just last week also ensnared Motorola Mobility (NYS: MMI) with a patent design infringement lawsuit over its Xoom tablet, based on its potential new parent company Google's (NAS: GOOG) Android technology, in Germany.

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