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Obama veto knocks US$1 billion off Samsung's market value - but that's not the story

Aug 5, 2013

Firstly, the $1 billion share share drop is not as bad as it might seem - it represents only just over half of one per cent of Samsung's total capitalisation. And the reason the impact is so low is that Samsung looks likely to gain on the swings what it just lost on the roundabout.

In June the US International Trade Commission (ITC) ordered a ban on imports of the iPhone 4 and 3GS into the US, having found that Apple had violated one of Samsung's data-over-cellular patents on technology it had built into the phones. This was a rare victory for Samsung in what's become a long-running suit-for-suit struggle between the two smartphone behemoths.

But of course there's always a twist and that came today when it was announced that the Obama administration had vetoed that ban. If it had been allowed to stand Apple would have had to stop selling some of its products in the US next week.

So a case of Obama riding to the rescue of little ole' Apple? Perhaps not so much.

Certainly the decision is the first veto of an ITC ban in over 20 years (then it was Samsung too and the vexed matter of memory chips). This time however, there appears to have been some cool calculation.

The Obama administration has already expressed concern over the tit-for-tat actions over "essential patents" that result in harming consumers and so the ban is being seen as signaling the president's intention to put consumers first. To that end it's expected that the exact reverse challenge (by Apple against Samsung) being heard by the ITC at the end of this week will fail by following the precedent of today's veto.

The ITC is to decide whether to ban some specific Galaxy mobile product imports into the US in response to a complaint from Apple over alleged patent violations. Just like the Apple case these involve older models - including the Galaxy S, Galaxy S II, Galaxy Tab 10.1. They do not involve the Galaxy S III or the Galaxy S4.

It's expected that in the long run this attempt at a ban will fail too, either because it will be turned down by the ITC or, if not, by Obama stepping up to the plate to veto it as well.

This is not a serious attempt to halt the patent wars, by the way, just to limit civilian casualties. The gist of the comments from US Trade Representative Michael Froman, were that Samsung and Apple will still be able to sue each other for compensation for patent violations to their hearts' content - as long as they don't disadvantage the buying public.

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