Bloomberg News

Apple Award Cut With New Trial for Some Samsung Products

March 02, 2013

Apple Inc. (AAPL:US)’s $1.05 billion victory against Samsung Electronics Co. (005930) in a patent-infringement case was cut about 45 percent by a judge who ordered a new trial on damages for some Samsung products after finding the jury erred.

U.S. District Judge Lucy Koh in San Jose, California, yesterday reduced the jury’s damages award by $450.5 million. The jury based its award for 14 Samsung products on an incorrect legal theory, Koh ruled, saying the companies should consider appealing her ruling before any trial begins.

A witness for Apple whose testimony the jury relied on “presented a theory that the court had ruled legally impermissible,” Koh said in her ruling. The judge said that despite her explicit instruction that the theory couldn’t be used, “the amount of the award made plain that the jury had applied the impermissible theory anyway.”

Koh, who had previously rejected Apple’s bid to ban U.S. sales on 26 of the Galaxy maker’s devices, also denied the iPhone maker’s request to increase the jury’s award, saying the amount Samsung owed was heavily disputed and the jury wasn’t bound to accept either side’s damages estimate. The jury’s award for 14 other products stands at $598.9 million, she said.

“This is an extremely careful and thorough opinion on a very difficult and interrelated set of issues,” Stanford Law School professor Mark A. Lemley said in an e-mail. “Samsung will get some reduction in the award, but almost certainly less than $450 million -- we’ll need a new trial to figure that out.”

‘Delayed’ Trial

The two companies have shown “no sign of giving an inch, and I’m not sure that will change now,” Lemley added. “My guess is that you’ll see appeals that will clarify some things, but that just means the trial will be delayed for a while.”

Samsung and Apple, the world’s two biggest smartphone makers, have each scored victories in patent disputes fought over four continents since Apple accused Asia’s biggest electronics maker of “slavishly copying” its devices. The companies, competing for dominance of a global mobile-device market estimated by researcher Yankee Group at $346 billion in 2012, are fighting over patents even as Apple remains one of Samsung’s biggest customers.

Apple, based in Cupertino, California, is entitled to additional damages for sales of infringing products that weren’t considered by the jury, Koh ruled, saying she intends to calculate the amount beginning on Aug. 25, the day after the jury reached its verdict. As the case has been appealed, Koh said she would delay considering evidence of actual post-verdict sales and pre-judgment interest until the appeals are completed.

Jury Erred

The jury appears to have erred by awarding damages on Samsung profit for products that infringed only utility patents, which isn’t legally permitted, Koh said. In addition, portions of the damages awarded for patent infringement were excessive because they may have included compensation for infringement before Samsung was on notice that Apple owned the intellectual property, Koh said.

The 14 products requiring a new damages trial are: the Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish and Transform, according to the ruling.

Steve Dowling, a spokesman for Apple, said the company had no comment on the ruling.

Adam Yates, a spokesman for Suwon, South Korea-based Samsung, didn’t immediately respond to an e-mail yesterday seeking comment on the ruling.

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 kgullo@bloomberg.net; 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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