Apple Wins Order to Block Samsung Tablet Sales in Australia

October 12, 2011, 11:17 PM EDT

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By Jacob Greber and Joe Schneider

(Updates with analyst comment in fourth paragraph.)

Oct. 13 (Bloomberg) -- Samsung Electronics Co. lost a bid to sell its newest tablet computer in Australia until after a patent dispute with Apple Inc. is settled, a decision that means the product may not come to market in the country.

Federal Court Justice Annabelle Bennett today granted Apple’s request for an injunction barring the sale of the Galaxy Tab 10.1 in Australia until the two companies’ patent dispute is resolved following a trial.

The ruling is a blow to Samsung’s efforts to boost sales in the tablet market, the fastest-growing segment of the computer industry. The world’s two biggest makers of smartphones and tablets are fighting a patent dispute across four continents, with the South Korean company saying earlier this month it would seek a ban on iPhone 4S sales in France and Italy.

“It’s not good news for Samsung,” said James Song, a Seoul-based analyst at Daewoo Securities Co. “They will have to look for legal and other countermeasures, such as modifying disputed elements.”

Samsung shares declined as much as 1.9 percent to 881,000 won after the ruling. They changed hands 1 percent down as of 10:42 a.m. in Seoul trading.

The company is “disappointed” with the ruling, according to an e-mailed statement from Suwon, South Korea-based Samsung. Steve Park, a Seoul-based spokesman for Apple, said the company had no comment about the ruling.

‘Dead’ Tablet

Samsung had said it would scrap the release of the Galaxy 10.1 if the injunction was granted because missing the Christmas season would make the new tablet “dead” by the time it reached market, Neil Young, a lawyer representing Samsung, told Bennett in Sydney on Oct. 4.

Apple claims the Samsung tablet infringes at least three patents, and its litigation had delayed the release of the Galaxy 10.1 for more than two months in Australia. Apple claims Samsung’s Galaxy products “slavishly” copied the designs of iPhones and iPads.

“Samsung proceeded with its eyes wide open with respect to the launch of the Australian Galaxy” since Apple began proceedings against Samsung in the U.S. in April, Bennett said. Apple is also one of the biggest buyers of chips and displays from Samsung.

Return to Court

The two sides will return to court tomorrow to hear if Samsung will be allowed to offer a modified tablet that doesn’t include technology based on the two patents Apple cited in its complaint, Bennett said.

Samsung also offered $2 smartphones in a temporary shop meters away from Apple’s Sydney store ahead of the release of the iPhone 4S, the Sydney Morning Herald reported yesterday. A line longer than the one outside the Apple store was seen outside Samsung’s “pop up” store, it said.

Still, earlier this month, Samsung delayed introducing a new product after the death of Apple co-founder Steve Jobs. Samsung, which had sent out invitations last month for an event in San Diego, decided “it wasn’t the right time” to announce a new product so soon after Jobs’s death.

A German court temporarily banned sales of Galaxy tablets in August, a ruling Samsung has appealed. The two companies are also involved in legal disputes in South Korea, Japan and the Netherlands.

Young said earlier this month that technology changes so quickly that even another month’s delay in the release of the Galaxy 10.1 would threaten the product’s sales prospects. Samsung had offered to agree to a quick trial on Apple’s patent claim if Apple agreed to drop its demand for a ban on the sale of the Galaxy 10.1, Young said.

Apple rejected the proposal, he said.

Samsung said a trial can’t be held until next year because it must collect evidence.

The case is: Apple Inc. v. Samsung Electronics Co. NSD1243/2011. Federal Court of Australia (Sydney).

--With assistance from Jun Yang in Seoul. Editors: Anand Krishnamoorthy, Nicholas Wadhams

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