Samsung shares were off by almost eight per cent on the main Korean stock index, wiping out more than $12 billion US from the value of the company. The sell-off was sparked by a ruling late Friday that ordered the Seoul-based electronics conglomerate to pay more than $1 billion in fines for copying key components of Apple's popular iPhones and using the technology without permission in their Galaxy line of tablets and smartphones.
Apple filed suit in April 2011, accusing Samsung of essentially selling illegal knockoffs of its popular iPhones and iPads. Apple demanded $2.5 billion in damages and an order barring U.S. sales of the Samsung products in question. Samsung countered by claiming Apple was using some of their wireless technology unlawfully.
Such legal tribulations are becoming commonplace in the technology sector and simply a cost of doing business in telecommunications.
Consultancy PriceWaterhouseCoopers recently calculated 182 U.S. lawsuits were filed between 2006 and 2010 involving patents in "computer hardware/electronics, software and telecommunications." That was an increase from 77 filed during the previous five years.
After three days of deliberations, a U.S. jury trial rejected Samsung's defence but refused to award Apple the maximum amount demanded, on the grounds that fewer Samsung products violated Apple's patent than was alleged in the suit.
It's not yet clear what the fallout of the suit will be, but it is doubtful that the wildly popular Galaxy smartphones — Samsung sold 45 million of them last quarter — will be recalled. More likely is that a fine will be paid and future versions will not use the same offending technology.
Samsung is likely to appeal the case all the way to the U.S. Supreme Court, but regardless, the company's wireless rivals are already benefiting. Apple shares gained $20 or about three per cent to trade at $682.65 before North American markets opened.
Finnish smartphone maker Nokia shares were also higher, gain in eight per cent to trade at $3.32 in New York.
And Waterloo, Ont.-based Research in Motion, the maker of the BlackBerry line of smartphones, gained more than five per cent in premarket trading on the Nasdaq on Monday.
That shares in almost all smartphone makers except Samsung are higher is a sign investors see a market opportunity for the company's rivals to make inroads while the company defends itself in court.