Bloomberg News

Apple-Samsung Jury Is Seated in $2 Billion Patent Trial (1)

April 01, 2014

Apple Inc. (AAPL:US)’s and Samsung Electronics Co. (005930)’s opening arguments in a $2 billion trial over smartphone technology will be heard today by a jury that includes a retired International Business Machines Corp. software systems manager, a medical billing administrator and a community service officer.

The jury of six women and four men was chosen yesterday in the same San Jose, California, courtroom where jurors two years ago found that Samsung infringed Apple’s patents and awarded $1.05 billion in damages. With U.S. District Judge Lucy Koh’s repeated pleas for a settlement unheeded, the companies are geared up for another monthlong trial and inevitable appeals, adding new legal bills to the hundreds of millions of dollars they’ve already spent on disputes before courts and regulators on four continents.

While screening prospective jurors for possible bias, the judge voiced concern that a man who claimed to own 1,000 shares of Apple is too invested in the company to be able to serve impartially. That led to a discussion of how to handle jurors who disclosed holdings of stock in Google Inc. (GOOG:US), whose Android operating system is used to power Samsung smartphones and is central to Apple’s patent-infringement allegations.

“This isn’t Apple versus Google, it’s Apple versus Samsung,” Bill Lee, a lawyer for Apple, argued to Koh, who ultimately decided to dismiss the Apple investor and at least three other jurors who hold shares in one or both companies.

Smartphone Market

Apple and Samsung continue their worldwide legal battles atop a smartphone market that was valued at $338.2 billion last year, according to data compiled by Bloomberg. Samsung had 31.3 percent of industry revenue, compared with 15.2 percent for Apple, whose share of the market has shrunk as the touch-screen interface has become commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.

Using teams of lawyers almost identical to the cast from the 2012 trial, each side will call as witnesses a mix of company executives and industry experts to try to show that sales of its rival’s products were driven by copied technology.

Apple claims that 10 Samsung products, including the Galaxy S3, infringe five patents and is seeking about $2 billion in damages, according to a court filing. Samsung alleges that nine Apple products, including the iPhone 5 and versions of the iPad and iPod, infringe two patents. Samsung seeks about $6.9 million in damages, according to a court filing.

Apple rose 0.3 percent to $538.15 at 9:58 a.m. New York time in Nasdaq Stock Market trading. Samsung fell 0.3 percent to 1,339,000 won in Seoul.

First Trial

In the first trial, jurors found Samsung infringed six of seven Apple patents (AAPL:US) and rejected all of Samsung’s claims against Apple products. Damages against Suwon, South Korea-based Samsung were reduced to $930 million after a retrial. Samsung has appealed that award, as well as the original infringement verdict.

Apple was unable after the 2012 verdict to persuade Koh to order a ban on the sale of Samsung’s infringing products in the U.S., a goal that the iPhone maker has said is more important than monetary compensation. Koh, acting on orders from an appeals court, reconsidered her decision and concluded March 11 that Apple still hadn’t marshaled enough evidence to support its request covering more than 20 devices no longer on the market. If Apple again convinces jurors that its technology was copied, it can then try anew for a sales ban.

Jurors Chosen

The jurors chosen yesterday for the trial include a woman from Bosnia and Herzegovina who’s employed as a store clerk and whose husband lost his job as a security officer; an unmarried woman from Vietnam who’s an accounting clerk at a college as well as a grocery store cashier; and a single mother of three children from Mexico who works as a business services specialist for the Monterey County government.

Also chosen was the retired IBM manager, who said he oversaw developers at a software division that sought to patent inventions and was responsible for profit-and-loss statements and providing technical direction. He also gave a deposition in a lawsuit accusing Compuware Corp. of copying IBM’s code, a case that settled before trial.

“Someone with that kind of background is likely to be influential on a jury,” Mark Lemley, a professor at Stanford Law School who isn’t involved in the case, said in an e-mail. “The question is, in which direction.

‘‘IBM was known for aggressively patenting software, but software engineers themselves don’t tend to think highly of software patents,’’ Lemley said. ‘‘So both sides might see him as a potential ally.’’

Tessera Employee

Samsung won the judge’s permission to dismiss one prospective juror over Apple’s objection, a woman who worked for Tessera Technologies Inc. in the early 2000s and recalled that the company had been involved in litigation with Samsung.

Another juror excluded at Samsung’s request, with no opposition from Apple, told the court she grew up in Cupertino, California, where Apple is based, and now works on international tax issues at Ernst & Young LLP. She said during questioning that she has an affinity for Apple stemming from the company’s involvement in her community.

Also dismissed was a LinkedIn Corp. software engineer who said his company provides products for both Apple and Samsung. He acknowledged knowing some of the history of their patent disputes, adding that he views the patent system as ‘‘fairly broken” and that “neither company is a favorite of mine.”

“Both of them have been bullies with their patent libraries,” he told the judge. Asked if he could fair to both, he replied, “It’s hard to say.”

The case is Apple Inc. v. Samsung Electronics Co., 12-cv-00630, 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 editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Stephen Farr


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