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December 19, 2012
Apple-Samsung Judge Weighs Damages After Rejecting Ban
By Karen Gullo & Joel Rosenblatt - 2012-12-19T05:01:01Z
Apple Inc. (AAPL) awaits a judge’s decisionon its request for additional damages against SamsungElectronics Co. (005930) for patent infringement after the iPhone makerlost its bid to block U.S. sales on 26 of the Galaxy maker’sdevices.
Apple failed to establish that consumer demand for Samsungproducts was driven by technology it stole, U.S. District JudgeLucy H. Koh in San Jose, California, said in her Dec. 17 ruling.While a jury found Samsung infringed six Apple patents, it isn’tin the public interest to ban Samsung’s devices because theinfringing elements constituted a limited part of Samsung’sphones, Koh said.
The jury said Aug. 24 at the end of a trial that Samsungshould pay $1.05 billion. Apple asked Koh to increase thedamages by $536 million, while Samsung says they should bereduced by more than $600 million. Koh, who held a hearing onthe matter Dec. 6, has yet to issue a ruling.
“There’s not going to be any knockout punches betweenthese two competitors,” Carl Howe, a Yankee Group analyst, saidin a phone interview. “Injunctions can be knockouts. This isgoing to be a war of money.”
Samsung and Apple, the world’s two biggest smartphonemakers, have each scored victories in their patent disputesfought over four continents since Apple accused Asia’s biggestelectronics maker of “slavishly copying” its devices. Thecompanies are competing for dominance of a global mobile-devicemarket estimated by Yankee Group at $346 billion this year. Apple Products
Hours after Koh’s ruling on the sales ban, Samsung, whichfaces an antitrust probe by European regulators, said it willhalt efforts to block sales of Apple products in Europe. Thedevelopments in the U.S. and Europe may move the companiescloser to settling their global litigation.
“There will be some settlement of some sort and all thisstuff is just going to dictate who’s going to provide a bit moremoney than the other,” said David Long, a patent lawyer withDow Lohnes PLLC in Washington who’s not involved in the case.“All this court stuff is just posturing.”
After the verdict in San Jose, Apple argued Samsung betthat the benefits of using intellectual property from the iPhoneand iPad would outweigh the money damages the jury awarded.Apple urged Koh to approve the sales ban and award additionaldamages because Samsung took market share from Apple by“deliberately copying the iPhone design,” according to a courtfiling. Jury’s Calculations
Kathleen Sullivan, a lawyer for Samsung, contended at theDec. 6 hearing that the damages should be reduced by more than$600 million. Sullivan said that while the jury’s calculationswere precise, the nine-member panel was hampered by a verdictform that, against Samsung’s wishes, wasn’t “particularized”enough to permit jurors to properly arrive at damages on aproduct-by-product basis.
“You should reverse engineer” to make sure the damagesare “causally connected to the evidence,” Sullivan told thejudge.
Koh said at the hearing that while the jury was precise andconsistent in calculating infringement damages for 28 differentSamsung products, the method used by the panel may have beenmistaken.
“If there is enough evidence in the record to justify thatdamage award then that verdict should be upheld,’ Harold McElhinny, a lawyer for Apple, argued to the judge. Galaxy Smartphones
The patent disputes began when Samsung released its Galaxysmartphones in 2010. Apple’s Jobs, who died Oct. 5, 2011,initiated contact with Samsung over his concerns that the Galaxyphones copied the iPhone, according to testimony from the trialin August.
Jobs later vowed to wage ‘‘thermonuclear war” to provethat phones running on Google Inc. (GOOG)’s Android operating systemcopy the iPhone. Samsung devices use Android.
Apple’s 2011 suit claimed Samsung products infringe fourdesign patents and three utility, or software, patents. Whilefinding infringement of six patents, the jury concluded thatSamsung didn’t infringe one patent covering the design ofApple’s iPad tablet computer.
In weighing the sales ban request, one test that Kohconsidered was whether Apple has been harmed by theinfringement, and whether customers buy Samsung devicesspecifically because they have features patented by Apple.Apple’s evidence doesn’t establish that its three design patentscover a feature that drives customer demand, Koh said. Appledoesn’t have patents for certain iPhone features, such as thegeneral concept of a two-finger pinch or flick. ‘Consumer Demand’
“Though evidence that Samsung attempted to copy certainApple features may offer some limited support for Apple’stheory, it does not establish that those features actually droveconsumer demand,” she said.
An injunction would prevent consumers from gaining featureson Samsung phones because a few such features infringed Apple’spatents, Koh said.
“The potential for future disruption to consumers would besignificantly greater if this court were to issue an injunction,and such disruption cannot be justified,” she said.
Only three of the 26 products that Apple sought to block inthe U.S. are still being sold, according to Samsung: the GalaxyS II by T-Mobile, Galaxy S II Epic and Galaxy S II Skyrocket. 2014 Trial
Newer smartphones made by both companies, includingSamsung’s Galaxy S III and the iPhone 5, already have been addedto a related lawsuit in which Apple and Samsung accuse eachother of copying products. That case is also before Koh and isscheduled for trial in 2014.
Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, said in an e-mail that the company declined tocomment on the Dec. 17 ruling by Koh.
Samsung said in an e-mailed statement it was pleased thejudge denied “Apple’s move to limit consumer choice” indenying the sales ban. The Suwon, South Korea-based company saidit would review the court’s orders before deciding whether totake “further measures.”
The latest decision implies that the total damages awardisn’t likely to go higher and may even be reduced, according toLee Sun-Tae, an analyst at Seoul-based NH Investment &Securities.
“The final ruling on the penalty isn’t likely to beoverturned,” Lee said.
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California(San Jose).
To contact the reporters on this story:Karen Gullo in San Francisco at email@example.com;Joel Rosenblatt in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story:Michael Hytha at email@example.com
▫ Apple, Samsung head back to court on Thursday
▫ Apple, Samsung resume epic patent battle
▫ At key Apple-Samsung hearing, judge talks lower damages
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