New York City, New York – (StockNewsDesk) – 08/07/2014 — Two technology behemoths Apple and Samsung have issued a joint statement today that they have agreed to drop all suits against each other in countries outside the U.S. The supposed claims are being abandoned in Australia, Japan, South Korea, Germany, Netherlands, the U.K., France and Italy.
The agreement is a sign of an imminent end to the drawn-out and nasty worldwide patent battle, which grew directly in relation to booming smartphone sales. Apple had accused Samsung of copying its original hardware and software designs for the iPhone, and Samsung countered with lawsuits suggesting that Apple is using pieces of its wireless-transmission technology without permission. So far, neither side has achieved an overall decision to its benefit, and the judges involved in the case have repeatedly advised the two companies to settle rather than continue their cases in court.
Signs of de-escalation had been already present; in June, Apple and Samsung agreed to let go of their appeals for patent infringement cases at the U.S. International Trade Commission. As a result, an import ban on some older Samsung phones was enforced. Apple continued its measures of numbing down the hostility by announcing a deal in May to drop lawsuits against Google’s Motorola Mobility division. While this is a welcomed development, Apple and Samsung continue to follow up on cases in the U.S. for now.
The primary precursors for this change in attitude have been the mixed results shown in the latest quarter, in which the two companies have adopted a policy of targeting each other. Due to this, unnecessary expenses and opportunity cost of collaboration have taken their toll. The U.S. continues to be a legal battleground as the smartphone market shares of Apple and Samsung shift. Huawei and Lenovo Group are swiftly gaining ground on the two leaders by offering feature-packed phones at cut-throat pricing.
The patent fight started after Apple launched its iPhone in 2007, which was widely acclaimed and well received by the public. Samsung followed suit with a plethora of different phone models. Due to many similarities in features and looks, patent infringement cases were lodged by both sides. As a result, this rivalry sparked two protracted patent-infringement cases in federal court in San Jose, California. The judgment of the two California suits went Apple’s way, including a $930 million verdict in 2012 and $120 million decision earlier in 2014.
The hearings brought forward a trove of internal company documents on both sides, including e-mails showing Samsung’s urgency to quickly get a smartphone on the market to match Apple’s iPhone, and also notes from Apple executives complaining about the effect of Samsung’s advertising on the iPhone.
The settlement comes at a time when Samsung grapples with declining demand for its smartphones and slumping earnings. Its global market share declined 7.4% points last quarter from a year earlier, and the company lost the top spots in large emerging markets, China and India. It also posted its smallest quarterly profit in two years in its latest quarterly report, with its shipments to China dropping by 15%.
Apple and Samsung have a love-hate relationship since the two are rivals, but also close business partners. Samsung provides Apple with components, like semiconductors and memory chips for its devices. So far, the legal fees have topped hundreds of millions of dollars in an attempt to dominate the smartphone market, valued at $338.3 billion in 2013. According to the International Data Corporation (IDC), Samsung controlled about 31% of the global market last year, compared with Apple’s 15%.