Apple

Apple vs. Samsung, the Sequel


Apple v. Samsung gets under way in a courtroom in Northern California today, where the parties will present their arguments in a long-running dispute over smartphone and tablet patents.

There’s a good reason for the déjà vu you’re sensing. The trial comes just a year and a half after what we’ll call Apple v. Samsung I, a patent case in which a jury sided with Cupertino. The jurors found that Samsung (005930:KS) had infringed on several key iPhone and iPad technology and design patents, and they rejected Samsung’s claims against Apple (AAPL)—awarding the U.S. company $1 billion in damages. But the judge hearing the case, Lucy Koh of the federal district court in San Jose, denied Apple’s motion to ban the Samsung devices from the market.

That first case and its outcome have spawned more than 50 other actions, including countersuits, new lawsuits, claims in international jurisdictions, disputes over damages, and more. Apple v. Samsung II is a new trial over different patents, but Apple, at least, is after the same thing—halting sales of Samsung Galaxy products.

The case is largely notable for both sides’ determination to keep fighting, rather than settling their differences and negotiating licensing deals. “There’s no killer patent in play at this trial,” says Florian Mueller, a patent analyst in Germany. “The patents here cover limited sets of features. They can be worked around.”

Here’s a quick cheat sheet on the second case and what the issues mean for the companies and consumers.

Apple started this.
In April 2011, the company filed the first lawsuit claiming patent and trademark infringement. Samsung countersued about a week and a half later in California, and also filed suits in courts in Seoul, Tokyo, and Mannheim, Germany. The litigation frenzy hasn’t let up since—both sides have spent more than a billion dollars on the matter.

This trial covers some current-generation Samsung and Apple devices.
That makes it unlike the previous case, which was ultimately a fight over patents used in products no longer on the market.

The patents at issue in this trial are only about technical components, not design features, so what the phones look like isn’t under consideration.
Apple claims Samsung is infringing on five of its patents, including ones for features such as the iPhone and iPad slide-to-unlock function, as well as several others, some of which rely on Google’s (GOOG) Android operating system.

Samsung, meanwhile, alleges that Apple’s iPhone 5 and versions of the iPad and iPod infringe on two of its patents covering video chat and how photos are organized.

Google isn’t officially a party to this trial, but it’s a key player in both sides’ arguments.
The trial is expected to focus on Android, as Bloomberg reports. “This is not about Samsung knocking off the look of Apple—this is duking it out over software functions,” one law professor said. And Google executives will be called to testify.

This isn’t about the money.
Apple is seeking $2 billion in damages, but booting arch rival Samsung from the U.S. market would be a far bigger prize. Apple asked for this in the first trial, but Judge Koh twice rejected the request. That suggests winning an injunction this time will be difficult, Bloomberg reports. “I have to think that Apple’s primary goal was to get an injunction that would take relatively new Samsung phones off the market,” professor Brian Love of Santa Clara University Law School said. “Apple needed to get out in front in the first case.”

Samsung, for its two patents, is asking for $7 million in damages. “There’s a pretty sharp disconnect between what Apple thinks its patents are worth and what Samsung thinks its patents are worth. That does suggest a real asymmetry here,” says Stanford Law School professor Mark Lemley.

Apple doesn’t concede defeat easily.
Go back about 26 years, when Apple sued Microsoft and Hewlett-Packard for copyright infringement of a graphical user interface for a computer. It lost at the trial court and took it all the way to the Supreme Court, which denied the appeal. “They really did take the position, not ‘We want money,’ but ‘We want to prevent you from making and selling this product,’” says Lemley. Even as Apple lost on most of its claims, “they fought it to the bitter end,” he says.

The cases’ effect on the market is minimal.
Although Apple won almost $1 billion from Samsung in the last trial, that doesn’t seem to have had an effect on the marketplace. As Lemley points out, it’s a price either company can live with. Even if Apple gets the $2 billion it’s asking for this time, without a product ban, this court duel will remain more akin to sniping at the margins.

“We’re not going to see an outcome that’s a game changer for the industry,” says patent analyst Mueller. “I don’t think that either party is going to have decisive leverage over the other party when the trial is over.”

Kessenides is an associate editor for Bloomberg Businessweek.

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Companies Mentioned

  • 005930:KS
    (Samsung Electronics Co Ltd)
    • $1338000.0 KRW
    • -10000.00
    • -0.75%
  • AAPL
    (Apple Inc)
    • $94.72 USD
    • 0.78
    • 0.82%
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