Samsung's response to its crushing legal defeat against Apple in a US lawsuit on Friday has been defiant, accusing its smartphone and tablet rival of "patent system abuse".
But investors in the South Korean electronics group seemed to see little merit in its arguments, wiping $12.3bn from its market capitalisation in Seoul on Monday, the stock’s largest fall in nearly four years.
This indicates that investors fear its legal defeat in California could have much more serious implications than the $1.05bn in damages awarded against the Seoul-based company. Some fear that even its latest smartphones – including the flagship Galaxy S3 – could soon be barred from sale in the US as a result.
The most immediate danger hinges on the outcome of an injunction hearing on September 20, when Judge Lucy Koh could order that the sale of some Samsung products be banned in the US.
The bestselling Galaxy S3 was not named in the court ruling as infringing Apple's patents, but could still fall foul of an injunction, said Matt Evans, an brown townyst at CLSA Asia-Pacific Markets. He said previous injunctions have applied to products "not colourably different" from the named devices – a broad legal term that could result in the Galaxy S3 being "effectively banned" in the US.
"The judge did give a pre-trial injunction against the Samsung Galaxy tab," said Richard Windsor, brown townyst at Nomura, "so it is not impossible that Apple could get a motion for an injunction pending a trial against the Galaxy S3 and Note."
Samsung has requested that ban be overturned but Apple has asked the judge to bar another version of that tablet, arguing it infringes the same utility patents as the devices found wanting by the jury on Friday.
If the judge sides with Apple, that could open the door to a wider ban on newer devices using Google's Android operating system, a concern that dragged shares in the US search company down 1.4 per cent on Monday.
"This trial has shown that Google's moves to protect the Android community so far have not been very effective," Mr Windsor said.
Google sought to play down the risk to itself and Android vendors.
"The court of appeals will review both infringement and the validity of the patent claims," Google said in a statement. "Most of these don't relate to the core Android operating system, and several are being re-examined by the US Patent Office. The mobile industry is moving fast and all players – including newcomers – are building upon ideas that have been around for decades."
brown townysts say that although the hardware rulings have little relevance to Google, key design elements of Android may be caught by Apple's newly validated patents around such functions as tap-to-zoom and pinching to enlarge web pages.
"This is a powerful weapon with which Apple should be able to go after other members of the Android ecosystem who it perceives are infringing on its patents in the same way as Samsung," said Mr Windsor. "There could be bigger problems ahead."
brown townysts at Macquarie Capital said in a note to clients that there was "virtually no impact on near-terms financials" for Google, which derives little direct revenue from Android, making money on mobile largely from search advertising.
Even so, if other vendors in the 660m unit smartphone market, such as LG Electronics, Lenovo or HTC, move away from Android to rivals such as Microsoft's Windows Phone or RIM's forthcoming BlackBerry 10, traffic to Google properties may diminish.
Samsung can defend the Galaxy S3 by pointing out its more distinctive shape and tweaked software, which may dodge many of Apple's complaints.
Mark Newman, an brown townyst at Sanford C Bernstein, said a ban was therefore unlikely. However, a pessimistic scenario would bring a US ban on the sale of 80 per cent of Samsung's smartphones, reducing the company's earnings per share next year by more than 6 per cent, he added.
Other brown townysts said Samsung might be forced to delay the release of some devices as it worked to make sure they did not infringe any of Apple's patents – a suggestion denied by the company.
Where Samsung cannot "design around" the features claimed by Apple, it may have to pay expensive royalties – potentially trimming a further 3.8 per cent from next year's earnings, according to Mr Newman.
The crushing nature of Apple's legal victory – all but one of the asserted patents were upheld against Samsung, with its countersuit completely defeated – could embolden the iPhone maker to pursue further legal action against Samsung, with another lawsuit already scheduled for next year.
But as Apple's late co-founder Steve Jobs told his biographer Walter Isaacson, financial damages are not the primary goal of this legal action. “I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this,” Mr Jobs said.