Bloomberg News

Apple Wins Ruling Keeping Samsung Case on Track for Trial

March 09, 2013

Apple Inc. (AAPL:US) won a court ruling keeping its second patent case against Samsung Electronics Co. (005930) in San Jose, California, on track for a 2014 trial after losing a bid to dismiss a lawsuit claiming the iPhone maker improperly collected and shared customers’ personal information.

U.S. District Judge Lucy Koh yesterday ruled against putting the second patent case on hold. At a hearing last month, Koh expressed skepticism about the need for both cases to proceed, especially while the August verdict in the first case is being appealed. Apple objected to delaying the case, while Samsung supported it.

The second patent lawsuit was filed last year and covers technology in newer smartphones made by both companies, including Samsung’s Galaxy S III and Apple’s iPhone 5. On March 1 Koh reduced a jury’s $1.05 billion damages award to Apple in the first case by $450.5 million.

The jury, in a case that was part of a legal battle for the global smartphone market, based its award for 14 Samsung products on an incorrect legal theory, Koh ruled. Koh denied Apple’s request to ban sales of infringing Samsung devices as Samsung denied copying Apple devices. Both companies have filed appeals.

In a separate lawsuit in federal court in New York, Apple may learn this month whether Chief Executive Officer Tim Cook will be required to testify in a U.S. Justice Department lawsuit over e-books pricing.

E-Book Lawsuit

The U.S. sued Apple and a group of book publishers last year, claiming they conspired to raise prices for electronic books in violation of U.S. antitrust law. Cook’s possible testimony was disclosed yesterday in a brief order by U.S. District Judge Denise Cote in Manhattan, who is overseeing the case.

In a three-sentence order, Cote set a telephone conference for March 13 after the U.S. asked her in a letter on March 6 for “assistance in settling a discovery dispute” with Cupertino, California-based Apple over Cook’s deposition. The March 6 letter wasn’t part of the publicly available court file.

Apple is the only defendant remaining in the case. Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan unit, CBS Corp. (CBS:US)’s Simon & Schuster, Lagardere SCA (MMB)’s Hachette Book Group, Pearson Plc (PSO:US)’s Penguin unit and News Corp. (NWSA:US)’s HarperCollins settled with the government.

‘Disturbed’

In the customer privacy lawsuit that is also before Koh in San Jose, the judge said in a ruling that she was “disturbed” to learn that in its court filings seeking dismissal of the case, Apple relied on documents that it was required to have disclosed to opposing lawyers and didn’t.

Calling the company’s conduct “unacceptable,” Koh said “the court cannot rely on Apple’s representations about its compliance with its discovery obligations.”

Ashlie Beringer, a lawyer for Apple, said at a Feb. 28 hearing that it had produced all required documents, yet the company was still reviewing e-mails of Steve Jobs and other senior executives three days later, the judge said.

Apple’s claim that the executives weren’t actively involved in the data collection issue is “surprising in light of the e- mail showing that Steve Jobs, then Apple CEO, personally demanded that Apple software engineers immediately design and release a software update” to remedy the problem, Koh wrote in her ruling.

IPhones, IPads

Customers allege in their complaint that Apple collected information on their locations through iPhones and iPads, even after the device’s geo-location feature was turned off. In the Jobs e-mail that Koh referenced, the company’s late co-founder directed engineers to fix a “bug” that overrode users’ setting of the location services to off, according to the ruling.

Beringer said at a March 5 hearing before U.S. Magistrate Judge Paul Grewal that it was a “mistake” for the company not to produce e-mails from Jobs, Phil Schiller, its marketing chief, and Scott Forstall, the former head of mobile software, in violation of Grewal’s November order. Grewal is helping Koh with the case.

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment on the privacy case ruling. Dowling didn’t immediately respond to an e-mail seeking comment on the patent case ruling.

Tom Neumayr, another Apple spokesman, declined to comment on the order in the e-books case.

Lauren Restuccia, a spokeswoman Suwon, South Korea-based Samsung, didn’t immediately respond to an e-mail sent after regular business hours seeking comment on the patent ruling.

The earlier patent case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, and the case scheduled for trial in 2014 is Apple Inc. v. Samsung Electronics Co., 12- cv-00630, U.S. District Court, Northern District of California (San Jose).

The privacy case is In re Apple Inc. iPhone/iPad Application Consumer Privacy Litigation, 11-md-02250, U.S. District Court, Northern District of California (San Jose). The e-books case is U.S. v. Apple Inc., 12-cv-02826, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net

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


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