Apple Wins $120 Million From Samsung in Smartphone Patent Case

Friday, 02 May 2014 09:01 PM

 

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Apple Inc., after seeking $2 billion in damages, won only $120 million from Samsung Electronics Co. in a jury trial over smartphone technology.

The verdict sets the stage for the iPhone maker to seek a judge’s order banning U.S. sales of its rival’s devices that infringed its patents. The jury also found that Apple infringed one Samsung patent, awarding it $158,000 in damages.

“It is hard to view this outcome as much of a victory for Apple,” Brian Love, an assistant professor at the Santa Clara University School of Law, said in an e-mail. “This amount is less than 10 percent of the amount Apple requested and probably doesn’t surpass by too much the amount Apple spent litigating this case.”

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The eight-person jury, which heard almost four weeks of evidence in the companies’ second U.S. trial, announced its verdict Friday in federal court in San Jose, California, after three full days of deliberations. Jurors found that Samsung infringed two of the four Apple patents it considered in a case, which revolved around whether the maker of Galaxy phones used features in Google Inc.’s Android operating system that copied the iPhone maker’s technology.

Other functions Apple alleged are covered by its patents include updating applications while using other features of the phone and automatic spelling corrections. A finding that Samsung infringed the auto-correction patent was issued by U.S. District Judge Lucy Koh before the trial.

The world’s top two smartphone makers have spent hundreds of millions of dollars in legal fees on battles across four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg.

Market Share

Samsung had 31 percent of industry revenue, compared with 15 percent for Apple, whose share of the market has shrunk as the touch-screen interface has become more commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.

Apple claimed 10 Samsung devices, including the Galaxy S3, infringe five of its patents. The patents cover a range of user- interface designs for the iOS software that powers iPhones and iPads, including features like the slide-to-unlock function, searching for words in files stored in different applications, and the ability for a user to make a call by clicking on a phone number within a Web page or e-mail instead of having to dial it separately.

Apple wanted Samsung to pay as much as $40 for each phone sold that uses infringing technology, for a total of $2.19 billion. Samsung argued that the jury should award no more than $38.4 million for any infringement damages.

Earlier Trial

Apple, based in Cupertino, California, was awarded $930 million in the first U.S. trial between the two companies two years ago in the same court. In that case, which involved earlier models of smartphones and tablets, Apple failed to win an order barring sales of infringing Samsung phones, which the iPhone maker has said is more important than monetary damages.

Samsung’s newest smartphones, the Galaxy S4 and S5, weren’t on trial in the second case. Samsung is counting on the Galaxy S5, which went on sale March 27 in South Korea, as its marquee device to maintain its global lead competing with Apple for high-end shoppers and with Chinese producers including Xiaomi Corp. that target budget buyers.

Samsung contended that five Apple devices, including the iPhone 5 and versions of the iPod, infringe two of its patents. One claim was that FaceTime, Apple’s video-chatting service, infringes a patent held by the Suwon, South Korea-based company for compressing video data so it can be sent over a cellular network.

Patent Issues

The other patent at issue in the case covers functions related to retrieving, classifying and organizing digital images. Samsung sought $6.2 million in damages.

During the trial, each side put on technical evidence about what its patents cover and how its technology was allegedly copied. The companies also called on expert witnesses to dispute the value of the other’s patents, and presented the jury with internal e-mails and other documents to show the frustration executives faced as they competed for market share.

From the start, Samsung cast the iPhone maker’s case as a bid to displace Google as the leading supplier of smartphone operating systems and limit consumer choice.

Samsung called several Google engineers as witnesses to bolster the point that it didn’t need to copy Apple’s technology for the software on its phones.

Apple tried to keep the jury’s focus on its contention that Samsung, not Google, made the decision to use patent-infringing features to sell more than 37 million smartphones and tablets. Apple’s lawyers reminded the jury several times that Google wasn’t a defendant.

Samsung argued that the iPhone maker’s multibillion-dollar damages demand is inflated, while Apple countered that the Galaxy maker chose to present low-value patents at trial — which were purchased, and not awarded to the company — to low-ball potential damages in the case.

The biggest surprise of the trial came at the end, when Apple put on evidence showing that Google is backing Samsung’s legal defense, after revealing that the Galaxy maker in 2012 had denied seeking indemnification from anyone.

Apple argued that Samsung was being dishonest, while a Samsung lawyer told the jury Apple knew about the indemnification all along and chose not to ask witnesses about it.

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© Copyright 2014 Bloomberg News. All rights reserved.

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