Apple Wins $1.05 Billion In Samsung Patent Case

Rather than risk a loss similar to Samsung's, rival smartphone makers will now likely give the Apple iPhone design a wide berth, legal experts say.

Charles Babcock, Editor at Large, Cloud

August 24, 2012

6 Min Read

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know (click image for larger view and for slideshow)

Left alone with a complex task and millions of dollars of testimony from expert witnesses and patent law gurus in mind, the jury in the Apple vs. Samsung patent case took just three days to deliver a verdict. Jurors came down heavily on the side of Apple, saying the Korean company had willfully infringed four design and three utility patents at stake in the trial. The total bill comes to $1.05 billion that Samsung owes for the infringement.

In what must be a bitter pill for the Korean company, the jury also said Apple had not infringed any of the five patents on which Samsung had countersued. Regardless of which side won the jury trial, attorneys for both companies indicated during the trial that they were putting evidence on the record for an appeal.

"This is a resounding victory, not for only Apple and its intellectual property portfolio, but also designers and design rights in general. This verdict strengthens strengthens Apple's design identity, which has arguably has been watered down as each new Apple-like device hit the market," said attorney Christopher Carani, chairman of the American Bar Association's design rights committee.

By winning this case, Apple will force competitors to come up with their own distinctive designs. Rather than face the prospect of another Apple suit, rival phone makers will give the iPhone design a wide berth--yielding more space around its design elements than perhaps necessary, Carani predicted.

Samsung had tried to show that it had not copied Apple's design ideas or, alternatively, that the patents that it infringed if infringement had occurred were invalid. Apple had been seeking between $2.5 and $2.75 billion in damages.

Apple's Strategy

While some legal experts had expected the jury to take a week or more to digest the complicated case, the jury began deliberating the case on Wednesday morning and finished on Friday.

The jury also held that all of Apple's disputed patents were valid. It declined to award damages for Apple's claimed harm at the hands of a Samsung monopoly, a charge stemming from Samsung's success in getting technology covered by two of its patents into the 3GPP standard for wireless networks.

The jury of seven men and two women, all drawn from the San Jose area, seemed to harbor no doubt that Apple had invested heavily in establishing the identity, unique characteristics, and user interface of both the iPad and iPhone. Apple's legal team also convinced them that Samsung had infringed Apple's trade dress, the general impression and presentation of a product that's gained a distinctive identity in the marketplace.

To that end, Apple put professors in marketing and market research on the stand to establish that it is one of the most successful practitioners of trade dress in modern business history. One of them said he uses Apple as an example of the craft in his marketing course. Even Michael Wagner, a Samsung witness and accounting expert who tried to diminish Apple's damage claims, conceded that a J. D. Power survey showed that Apple was number one in design when it came to smart phone purchases.

Apple built a convincing narrative into its case--that Samsung had sought to revive its flagging fortunes when it found itself falling behind in the smart phone marketplace. Wherever Apple's legal team could, it used Samsung's own competitive analysis documents to cite, in Samsung's words, "a crisis in design" relating to Samsung lagging behind the iPhone. A key Samsung designer, Jeeyuen Wang, testified she suffered lost time with her newborn child when Samsung staged a three month push to revise designs and get new models into the marketplace.

No Slap On The Wrist

Apple's attorneys Harold McElhinny, Bill Lee, Michael Jacobs, and Rachael Kravens argued that Samsung needed to be hit with heavy damages, not "a slap on the wrist," in a decision on the case. McElhinny argued that giving Apple some damages and Samsung some damages at the same time would "compromise" the necessary lesson of the case.

Other Apple officials explained how Apple had spent four years in the design and mockup phase, leading to the launch of the iPhone in January, 2007. Apple invested $1 billion in marketing and advertising the iPhone after its launch.

Justin Denison, chief strategy officer for Samsung Telecommunications America, testified that Samsung had invested $1 billion in marketing and advertising its Galaxy S III and related smart phones. Apple used that information against Samsung by saying it was promoting another company's "ripped off" design without the research and development expense.

Samsung is a supplier to several major telecommunications carriers and Samsung officials said they were under pressure after the iPhone's launch to produce models that they could sell against the iPhone. Samsung produces many phones that do not have the iPhone's rounded corners and big screen look, in addition to those phones found guilty of infringing in this case.

Among the phones being considered in this case, a total of 24 smart phones were found guilty of infringing, with only the Galaxy Ace, the Intercept, and the Replenish escaping some or most of the claims. The Galaxy S III and its many variants and successors were held to have infringed most of Apple's patent claims. One of them, the Fascinate, was held accountable for a total $143 million in damages.

Samsung's own attorneys seemed to have a sense of foreboding as the trial neared its end. Charles Verhoeven, speaking for Samsung in his closing argument, charged that Apple had wildly inflated the damage claims through a highly paid expert. "We don't think Samsung should have to pay any damages," he said, then devoted a good measure of his closing argument time to trying to reduce the total Samsung might have to pay. If the jury decided in favor of Apple, he added, "please use your common sense," he pleaded at the end.

Meanwhile, Apple's Bill Lee pointed out that Samsung had made $8 billion in revenue during the period for which Apple was charging infringement. "Do they get a 'get out of jail' card free?" he challenged the jurors.

Some of the claims against Samsung's two tablets, the Galaxy Tab 7 and Galaxy Tab 10.1, were dismissed by the jury. Apple's suit was filed in April 2011. Jury selection got underway July 30, and testimony was taken through the first three weeks of August.

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About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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