Samsung Electronics has filed a massive patent-infringement lawsuit against Apple which could cost about W70 trillion in Paris and Milan, seeking bans on the sale of the Apple iPhone 4S (US$1=W1,192). Samsung said Apple continues to flagrantly violate its patents and it is considering lawsuits in other countries as well.
Paradoxically, Apple is not only Samsung's top rival in the global smartphone market but also its biggest client for chips and LCD screens. Apple is expected to buy a total of USS$7.8 billion worth of parts from Samsung this year. But Samsung decided to push ahead with the lawsuit even at the risk of damaging relations with Apple. In the worst-case scenario, Samsung may have to forfeit the massive portion of sales Apple accounts for.
Sales of Samsung's tablet PC Galaxy Tab 10.1 have been banned in Germany following a lawsuit filed by Apple, and the product has not even been unveiled in Australia also due to legal action. At this rate, Samsung feels its entire smartphone and tablet PC business is at risk.
If Samsung loses the case, it must compensate for all the sales Apple stands to lose due to the legal dispute. According to U.S. consulting agency Piper Jaffray, Apple is forecast to sell 25 million units of the iPhone 3Gs, iPhone 4 and iPhone 4S in the fourth quarter of this year. And the iPhone 4S, the target of Samsung's lawsuit, would account for 75 percent of total sales once it is released later this month. That means Apple stands to lose W15 trillion in sales during the October to December period if each iPhone 4 costs W800,000.
The trial is expected to last at least a year, so Apple's losses could swell to W60 trillion. Combined with the amount of products Apple buys from Samsung, Samsung could end up paying W70 trillion in compensation. Asked about the high-stakes lawsuit, a senior Samsung executive said, "We are confident that Apple cannot manufacture its smartphones without using our patented communication technologies."
Apple has yet to comment about Samsung's lawsuit. Apple was the first to start the patent battle by filing a lawsuit in the U.S. in April claiming Samsung's Galaxy S infringed its smartphone design. At present, Apple and Samsung are locked in some 20 different lawsuits in nine countries, including Korea, Australia and Germany. The legal battle is expected to be protracted.