Bloomberg News

Apple Wins More Than $1 Billion Against Samsung in Trial

August 24, 2012

Apple, Samsung Infringed Each Other’s Patents, Seoul Court Says

An Apple Inc. iPhone 4S smartphone, left, and a Samsung Electronics Co. Galaxy S III smartphone are arranged for a photograph in Seoul. Photographer: SeongJoon Cho/Bloomberg

Apple Inc. (AAPL:US) won a verdict of more than $1.05 billion after jurors found Samsung Electronics Co. (005930) infringed six of seven patents for mobile devices in the first lawsuit to go before a U.S. jury in a fight for dominance of the global smartphone market.

Apple won less than half of what it sought in damages from the federal court jury, though the computer maker may see its verdict tripled by the judge. Samsung avoided a finding of damages for antitrust law violations or breach of contract.

The nine-member jury in San Jose, California, rejected Samsung’s patent counterclaims against Apple and its request for damages. The jury, which delivered its verdicts today, also determined that all of Apple’s patents at stake in the trial were valid. Apple also won findings that Samsung devices infringe its trade dress, or how a product looks.

“Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer,” Samsung said in an e- mailed statement. “It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.”

Samsung said the verdict wasn’t the “final word” in the case or in courts and tribunals around the world.

Apple, based in Cupertino, California, sued Samsung in April 2011, and Samsung countersued as part of a battle being waged on four continents over a smartphone market valued at $219.1 billion according to Bloomberg Industries. The companies have also sued each other in the U.K., Australia and South Korea.

Apple Rises

The jury addressed more than 600 questions in its verdict. Apple sought $2.5 billion to $2.75 billion for its claims that Suwon, South Korea-based Samsung infringed four design patents and three software patents in copying the iPhone and iPad. Samsung’s demand for as much as $421.8 million in royalties was based on claims that Apple infringed five patents.

Apple rose 1.8 percent to $675 at 7:32 p.m. New York time after the close of trading on the Nasdaq Stock Market.

Jurors found that Samsung didn’t infringe one patent covering the design of Apple’s iPad tablet computer. Apple’s claims related to that patent specifically targeted Samsung’s Galaxy Tab 10.1.

Apple seeks in the case to make permanent a preliminary ban it won on U.S. sales of the Tab 10.1 and extend the ban to Samsung smartphones. U.S. District Judge Lucy Koh, who presided over the trial, will consider the injunction request later.

‘Huge Gap’

“There’s a huge gap between the verdict and reality,” said Kevin Restivo, an IDC analyst in Toronto.

“Samsung is not likely to cede the smartphone market leadership to Apple or anyone else in the short term,” Restivo said. “Short of an injunction, meaning no sales of a Galaxy- series smartphone around the world, that’s not going to change.”

Apple said during the trial that at least 28 Samsung products infringed its patents. Jurors were required to specify which of three corporate entities -- the Samsung parent company and two U.S. units -- was responsible for each infringement and the damages Samsung owed for each infringing device.

Jurors found infringement by all 21 Samsung devices that Apple claimed had copied its so-called rubberbanding technology, the way an iPad or iPhone screen seems to bounce when a user scrolls to the end of a file.

‘Value Originality’

“The mountain of evidence presented during the trial showed that Samsung’s copying went far deeper than even we knew,” Kristin Huguet, a spokeswoman for Apple, said in an e- mailed statement. “At Apple, we value originality and innovation and pour our lives into making the best products on earth. We make these products to delight our customers, not for our competitors to flagrantly copy.”

The patent disputes began when Samsung released its Galaxy smartphones in 2010. Apple co-founder Steve Jobs, who died Oct. 5, initiated contact with Samsung over his concerns that the Galaxy phones copied the iPhone, according to trial testimony.

Samsung and Apple are the world’s two largest makers of the high-end handheld devices that blend the functionality of a phone and a computer. They are battling each other in courts even as they are bound by commercial deals involving components supply. Apple accounts for about 9 percent of Samsung’s revenue, making it the company’s largest customer, according to a Bloomberg supply-chain analysis.

Phone Sales

In the second quarter of this year, consumers worldwide bought 406 million mobile phones, compared with 401.8 million in the same period last year, with Samsung and Apple shipping almost half of those phones, according to IDC, a research firm based in Framingham, Massachusetts.

Samsung extended its lead over Apple during the second quarter, shipping 50.2 million mobile phones, representing 32.6 percent of the market, compared with 26 million units, or 16.9 percent of the market, for Apple, according to IDC.

Both sides have had legal victories. Apple won a U.S. court order on June 29 blocking sales of Samsung’s Galaxy Nexus smartphone, the first smartphone to use Google Inc. (GOOG:US)’s Android 4.0 operating system. The product has remained on the market as Samsung appeals the order to the U.S. Court of Appeals for the Federal Circuit in Washington.

In November, Samsung won a battle in an Australian court that allowed customers to buy Samsung’s rival to the iPad.

A Seoul court earlier today ordered each company to stop selling some smartphones and tablets in South Korea and pay damages after ruling that they infringed each other’s patents.

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 reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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