Apple Faces iPhone Ban In U.S. - InformationWeek
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6/5/2013
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Apple Faces iPhone Ban In U.S.

ITC grants Samsung's request to block the import of older iPhones and iPads due to patent infringement.

5 Apple iPad 5 Wishes
5 Apple iPad 5 Wishes
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Apple was dealt a significant blow in its ongoing patent battle with Samsung on Tuesday. The U.S. International Trade Commission upheld a ruling that found Apple guilty of infringing on a patent owned by Samsung. The result? Apple may not be allowed to import some older iPhones and iPads into the U.S.

The patent covers standard essential 3G technology. Because it is labeled as such, Samsung will have to license the patent for fair and reasonable terms. It requested the ban, claiming financial harm due to Apple's sales of the infringing devices.

The ban affects the AT&T versions of iPhone 3GS and iPhone 4, as well as the AT&T 3G versions of the original iPad and iPad 2. Though a ban is a tough hurdle for Apple to surmount, the good news is that the company's newest devices aren't affected. The iPad Mini, iPad 3rd and 4th generation, as well as the iPhone 4S and iPhone 5 are all in the clear.

Apple was unhappy with the ruling.

"We are disappointed that the Commission has overturned an earlier ruling and we plan to appeal," said Apple spokeswoman Kristin Huguet. "Today's decision has no [immediate] impact on the availability of Apple products in the United States. Samsung is using a strategy which has been rejected by courts and regulators around the world. They've admitted that it's against the interests of consumers in Europe and elsewhere, yet here in the United States Samsung continues to try to block the sale of Apple products by using patents they agreed to license to anyone for a reasonable fee."

[ Is it time for Apple to lower the walls surrounding iOS and OS X? Read Apple Must Look Beyond Its Platforms. ]

The U.S. Department of Justice has cautioned courts, including the ITC, against the use of product bans. It believes such bans are harmful to consumers and not in the best interest of competition. The ITC appears to have forgotten the Justice Department's warning in this case. The ban can only be overturned by the Court of Appeals for the Federal Circuit or the White House.

At least one analyst believes Apple will survive the ban mostly unscathed. Perennial Apple bull Gene Munster pointed out that the iPhone 4 is the only one of the iPhones still available for sale in the U.S. It is offered for free by some carriers and amounted to less than 8% of Apple's revenue over the last two quarters.

"The actual impact will likely be less than 1% [on its revenue] given AT&T customers that would not have a chance to purchase an iPhone 4 could buy an iPhone 4S or 5 instead," said Munster. "Given the iPhone 4 will likely be retired at the end of September, there should not be an impact after the September 2013 quarter."

Samsung is, understandably, elated about the ITC's ruling.

"We believe the ITC's Final Determination has confirmed Apple's history of free-riding on Samsung's technological innovations," said Samsung in a statement. "Our decades of research and development in mobile technologies will continue, and we will continue to offer innovative products to consumers in the United States."

It's not clear if or when the ban will go into effect. Apple has yet to officially file its appeal of the ITC's decision.

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