Apple Vs. Samsung Trial: What's At Stake - InformationWeek
12:43 PM
Eric Zeman
Eric Zeman

Apple Vs. Samsung Trial: What's At Stake

The smartphone giants have been preparing for this IP battle, which kicks off July 30, for more than 14 months. Here's what they want.

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Apple sued Samsung in the U.S. back in April 2011, accusing the company of "slavishly copying" the design and technology in products such as the iPhone and iPad. Apple charged that Samsung's smartphones and tablets stole their appearance from Apple's products, which predated many of Samsung's.

"Samsung cannot change the central fact that its products are strikingly similar to Apple's patented designs," said Apple in its briefs.

Samsung responded by filing lawsuits of its own in Germany, the U.K., and Korea. Then Samsung went to the U.S. International Trade Commission, and so did Apple. Where Apple's initial complaints focused on trade dress and design elements, Samsung's lawsuits pertained to wireless networking and other technologies.

[ A German court bans Samsung from selling the Galaxy Tab 7.7 across the EU. Read more at Apple Wins EU Ban Of Smaller Samsung Tablet. ]

The two companies have been trading barbs, filing paperwork, seeking injunctions, and appealing decisions ever since. Though the scope of the battle between Apple and Samsung is far greater than just the U.S. market, next week's trial, which will be held in San Jose and presided over by Judge Lucy Koh, could produce consequences for both companies in the U.S. and beyond.

As things stand today, Samsung is not allowed to import its Galaxy Tab 10.1 tablet into the U.S., thanks to an initial injunction filed at Apple's request. Samsung was also blocked from importing its Galaxy Nexus smartphone, but that injunction was waived temporarily ahead of the trial.

So what's going to happen next week? Both companies get 25 hours of time to present testimony to the 10-person jury, which will then decide the fate of these two smartphone giants.

Apple is seeking $2.5 billion in damages, which includes a wide array of factors such as lost income, unjust enrichment, royalties, and more. Samsung hasn't offered a dollar amount, but its underlying patents could be worth hundreds of millions in licensing fees if they are found to be valid and Apple is found to be violating them. Samsung is looking for 2.4% of the total sales price of each infringing device, which Apple says is "multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios." The average selling point of the iPhone (forget the contract pricing, we're talking raw retail) is about $600.

If Samsung wins its 2.4% claim, Apple could have to fork over $14 for each iPhone. Apple sold 26 million of them in the last quarter alone. That's $375 million for the devices sold just in the last three months.

The possible outcomes of the trial are numerous. Samsung could be exonerated of copying Apple, and Apple could be exonerated of violating Samsung's patents. Or they could both be found guilty. More important than the actual legal ramifications will be the economic ones tied to any punishment meted out by the court.

Judge Koh has indicated time and again over the last year her frustration with the two companies. It's impossible to tell what final rulings she might make once the jury delivers a verdict. (Earlier this year, a Chicago judge tossed completely a trial between Apple and Motorola over patents. Judge Posner argued that neither company could prove damages and cancelled the trial.)

One thing is certain, however: the future competitiveness landscape of the smartphone market is at stake. Apple and Samsung together own 54% of the worldwide smartphone market in terms of device sales, and 90% of the profits. The financial devastation that can be wrought on either or both companies is significant. If Apple wins based on its trade dress and design complaints, it could impact other trials that are yet to get underway.

With billions of dollars in sales up for grabs, Apple and Samsung both want their share, no matter the cost to their competitors.

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User Rank: Strategist
7/31/2012 | 11:46:21 AM
re: Apple Vs. Samsung Trial: What's At Stake
You're kidding, right? Or you're just too young to actually know what really happened. Apple visited Xerox PARC in the late 1970s and saw the GUI and mouse concepts, among other things. They incorporated much of what they saw into the Lisa (and later the Mac) as well as the Apple II line. The Lisa project began in 1978; Apple visited PARC in 1979; and the Lisa went on sale in January of 1983, but had obviously been in prototype stage for many months (years?) prior to that.

Windows, on the other hand, was Microsoft's response to the Lisa and Macintosh. Microsoft announced its Windows project in November of 1983 -- 11 months after Apple already had a shipping product. The "windows" project wasn't initiated until 1981 - by which time Apple already had prototype of the Lisa running, according to various Apple history books, interviews, etc. Most accounts explain that Jobs showed Bill Gates a Lisa prototype (so that MS could develop software for it) and Gates returned to Redmond and declared that MS had to develop its own windowing interface for its DOS operating system.

As for Apple "making up for their innovation losses during their infancy," the company is the most valuable company in the world, by a wide margin. Yes, it learned lessons from its past. That's only prudent. But with a value of roughly $600 BILLION -- more twice that of Microsoft -- Apple has more than recuperated any losses from earlier on.

Please, don't waste folks' time commenting on things about which you obviously don't have the facts straight.
User Rank: Apprentice
7/27/2012 | 7:10:46 PM
re: Apple Vs. Samsung Trial: What's At Stake
'Apple coppied Window's GUI concept'? You cannot be serious! The first Mac was sold in January of 1984 and the first version of Windows was published in November of 1985.
User Rank: Apprentice
7/27/2012 | 3:05:25 PM
re: Apple Vs. Samsung Trial: What's At Stake
Apple has always been insecure. They are making up for their innovation losses during their infancy. Lest we forget that Apple copied Window's GUI concept.
User Rank: Apprentice
7/26/2012 | 5:24:17 PM
re: Apple Vs. Samsung Trial: What's At Stake
Say, rather, that Apple is still hotly pursuing Steve Jobs' oft-repeated goal of mortally wounding Android, and Samsung is responding in kind.

There's plenty of greed (and disdain for the public) on both sides of this fiasco.

The nearest equivalent would be Ford suing Chevrolet because Chevy also uses a brake pedal and four wheels (oh, yeah, and clear glass for the windows), and Chevy countersuing because of Ford's use of pistons and rubber tires).

A pox on both of their houses (though extra for Apple because of Jobs' crusade to bury Android by means other than providing a better product at a fair price).
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