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Apple Closes, Urging Big Damages For Samsung

Sending patent case to the jury, Apple says Samsung willfully copied iPhone and iPad, and Samsung says Apple fears competition.

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
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In San Jose, Calif., Tuesday, attorneys made closing arguments in the Apple vs. Samsung trial. It took Judge Lucy Koh two hours to read aloud the list of instructions on how the jury should decide the trial's separate issues before the case was sent to the jury.

At the end of the reading, the seven men and two women were newly minted experts in U.S. patent law and/or staggered by the task that lies in front of them. Before their task is done, they will have filled out a 70-page form dealing with the issues in the case. One observer, Ted Smith, a coordinator for the International Campaign for Responsible Technology, shook his head in disbelief at the end. "This is the kind of case that shouldn't go to a jury," he said. Rather it should be decided by a panel of judges well-versed in patent law.

But the two parties failed in an arbitration attempt to come to any agreement. At the judge's direction, the CEOs of the two firms consulted again with the same result. One side or the other wants the case to go to a jury verdict, and many observers believe that it's Apple, playing for a stunning blow from a jury chosen from a populace steeped in the legend of Steve Jobs.

The stakes have grown with the evolution of the case. Apple attorneys had opened with charges that Samsung copied it and infringed specific industrial design and utility patents. The task of making those charges stick in a closing statement fell to Harold McElhinny of the San Francisco law firm of Morrison Foerster (a.k.a. Big Mac of Mofo, in the gallery's shorthand). McElhinny stands six feet two and is solidly built.

In closing, he gave a straight-ahead narrative of Samsung suffering from the iPhone's competition, then gathering its design experts from three different plants in Korea to do a crash project of duplicating the iPhone's features in its Galaxy line. With multiple iPhone-like models, he said, Samsung began to thrive.

[ Learn more about how testimony wrapped up. See Samsung Gets In Last Word Against Apple. ]

"Steve Jobs started the iPhone development project in 2003," he reminded the jury, invoking the late CEO's name just once. Nevertheless he succeeded in tying the iPhone design directly to Jobs' initiative and legacy. Apple produced sketches, CAD drawings, designs, and redesigns during the trial to show how the company prepared to enter the phone market "at enormous risk."

"I was floored," he continued, "when I heard (Samsung designer) Jeeyuen Wang say they did it in three months. That represented four years of investment and R&D" at Apple, he said. By the end of his summation, he said Samsung was liable for up to $2.75 billion, not the $2.5 billion with which the trial had started out.

Samsung has sold 22.7 million phones and tablets during the period in which Apple charges it with infringement--since June 2010. (Apple lumps all Samsung models together, about 150 of them, to come up with the damages figure; in fact, it named 20 as infringing.) Samsung received $8.16 billion in revenue from all sales in the period. "The job we're asking you to do is decide how much of that $8.16 billion we should receive," said McElhinny.

Another Apple attorney, Bill Lee from the San Francisco firm of Wilmer Hale, carried the argument beyond monetary into punitive territory. What was at stake in this trial was more than whether Apple could receive damages. The system of protecting technical inventions by obtaining patents, one of the founding principles of Silicon Valley, was at stake.

"You're going to have to decide who is playing by the rules and who isn't ... If you render a judgment for Apple, you will be endorsing the American patent system," Lee said.

Lee also suggested that the jury needed to show Samsung that "you can't come in and walk over our antitrust laws." It was a somewhat obscure reference, not to patents, but to Apple's claim that Samsung has embedded its patented technology in the 3GPP cellular network standard. As such, it has gained monopoly power over a standard that cellphone manufacturers can't do without.

Furthermore, in deciding to tar its business partner Samsung (the firm supplies 26% of the iPhone's parts), Apple opted to use a wide brush. It charged Samsung with being a bad actor and not playing by the rules on disclosing patents to the standards setting process that created the 3GPP standard.

Some of that claim seemed far-fetched. But on the whole, the McElhinny/Lee team wove a straight ahead, factual narrative, tied to a chronology of how the Samsung infringement took place. In a few instances, such as the three-month crash redesign of Samsung phones, recounted by Jeeyuen Wang, a dignified young mother, the testimony of Samsung's own witnesses seemed to buttress Apple's case.

As Lee finished, McElhinny popped up again. "Samsung spent $1 billion advertising" its look-alike phones, he noted. "One way Samsung wins is if you compromise the damages. They will not change their way of operating if you just slap them on the wrist," he told the jury.

Given the task of rebutting all this and building Samsung's case was Charles Verhoeven, the good cop partner from Quinn Emanuel in Los Angeles, whose emotive, imploring voice repeatedly focused the jury's attention on facts favorable to Samsung. Because he had such a large presence in the courtroom, it was startling to see his five-foot-nine-inch, slender frame side-by-side with McElhinny's tall, robust figure.

Verhoeven at moments had been brilliant at eliciting facts contrary to an Apple witness' stated message. One such witness, bobbing and temporizing in face of persistent Verhoeven questioning, had feigned sympathy: "I'm trying to help you out here."

"Oh, I doubt that," shot back Verhoeven.

The jury, tired of the obfuscation on both sides, had laughed heartily at the unabridged sincerity, as had the judge and most of the courtroom.

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User Rank: Apprentice
8/22/2012 | 11:16:01 PM
re: Apple Closes, Urging Big Damages For Samsung
what a helpful review of recent events. i'll be looking forward to informationweek's further coverage of this topic.
User Rank: Strategist
8/22/2012 | 7:07:47 PM
re: Apple Closes, Urging Big Damages For Samsung
I expect Apple will win only a very small sum, and may not win anything. Samsung will appeal if the verdit goes against them, and likely will win in an appeals court. Apple's case could fall hard from the tree either in this verdict or a successful appeal. I love their products, but despise their method of operation and their corporate arrogance. Apparently it goes beyond Steve Jobs who many blamed for most of their dislike of Apple. While not being a fanboi of Apple, I don't have any extra loyalties to Samsung, Microsoft, or any other company. The individual device and it's usablilty and cost are what are most important to me. I will switch vendors and devices as the marketplace evolves at a given time.
User Rank: Apprentice
8/22/2012 | 6:53:11 PM
re: Apple Closes, Urging Big Damages For Samsung
Mack Knife: InformationWeek attempts to provide an analysis of the news, using its skills of observation and experience. Where we offer our thoughts (the analysis), we are trying to add a level of interpretation and meaning behind the news. In a world where news continues to come from millions (billions?) of sources (when you include social media), providing the facts is hardly enough. In this case, our author is providing his observations based on attending the trial for the past weeks (and dozens of years of experience covering similar things). This is no different than any piece you would read in, say, The New York Times or The Wall Street Journal, where there are observations and points of view shared in lengthier coverage of a major news event. (This is a nuance that is a bit different than an Op-Ed or general opinion piece where it the author may be clearly stating an opinion, or coming down on one side of an issue or another.)

Having helped guide how we would cover this trial, and having read all of the author's pieces, I would say he's been pretty balanced and in many cases has even championed some of the Samsung points of view during the trial. Likewise, where Apple has scored its points, he has duly noted that, too.

It is, however, the jury's job to decide -- in that, you're correct. But it's also our job to provide a point of view. We hope we've earned the trust of our audience to do that, even when you disagree with it, which is your right and we thank you for taking the time to voice your opinion as well (and hope you continue to do so). Having covered trials in the past, I can say that it is nearly impossible to walk out of an experience like that without having a point of view, and when emboldened by years of observation and the depth of a trial, and the many many hours of research spent preparing for it (before and during), I believe we owe that point of view to our readers.
User Rank: Apprentice
8/22/2012 | 4:32:31 PM
re: Apple Closes, Urging Big Damages For Samsung
Fact of patent law; An element of design dictated by function can't be protected by a patent. To an ordinary person (as is required by patent law), most smartphones today appear to be similar, just as most flat screen television sets appear to be similar (to an ordinary person). This similarity in design can't be protected by a patent because this element of design is dictated by function. That's the law folks!
Mack Knife
Mack Knife,
User Rank: Apprentice
8/22/2012 | 4:01:16 PM
re: Apple Closes, Urging Big Damages For Samsung
Should Information Week not declare it sides with Apple? Want proof? Here, from this very article:

"But on the whole, the McElhinny/Lee team wove a straight ahead, factual narrative, tied to a chronology of how the Samsung infringement took place"

Factual narrative? You mean the lawyer from Apple only spoke of facts and not Apple's interpretation of events?

With that statement, Information Week (no doubt having some T&C that says the opinion of those writing for it aren't its own) loses quite a bit of credibility.

Isn't it the job of the jury to decide the evidence? If Apple wins, so be it and the verdict should be accepted unless valid appeals are in order. Same for Samsung. But for Information Week to side with one or the other and pretend to be a reporter of information (Information Week) is rather disingenuous.
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