Jury rules for Apple in $1 billion patent case against Samsung

Samsung Electronics' Galaxy S III, right, and Apple's iPhone 4S are displayed at a mobile phone shop in Seoul, South Korea, Friday, Aug. 24, 2012. After a year of scorched-earth litigation, a jury decided Friday that Samsung improperly copied the innovative technology used by Apple to create its revolutionary iPhone and iPad.
Ahn Young-joon | AP
Samsung Electronics' Galaxy S III, right, and Apple's iPhone 4S are displayed at a mobile phone shop in Seoul, South Korea, Friday, Aug. 24, 2012. After a year of scorched-earth litigation, a jury decided Friday that Samsung improperly copied the innovative technology used by Apple to create its revolutionary iPhone and iPad. Buy Photo
Posted Aug. 25, 2012, at 5:55 a.m.

Apple won a sweeping victory in its landmark patent dispute against Samsung when a Silicon Valley jury ruled Friday that a series of popular smartphone and tablet features — from the rounded rectangle shape to the way screens slide and bounce to the touch — are proprietary Apple innovations.

The nine-person jury overwhelmingly sided with Apple’s claims that Samsung had infringed on valid patents when it copied those and other design elements while seeking to compete against the wildly popular iPhone and iPad. The jury rejected claims that Apple had infringed on several of Samsung’s patents.

Damages totaled $1.05 billion — less than half of the $2.5 billion that Apple requested — but the impact on Samsung’s business practices and those of other electronics manufacturers stands to be more profound if the ruling survives a likely appeal.

Together, Apple and Samsung control more than half of the fast-growing smartphone market, and both are major players in tablets, as well. The ruling has no immediate effect on the sale of either company’s products, but Apple has requested injunctions against the sales of products found to infringe on its patents.

“While a billion [dollars] is significant, Samsung has the balance sheet to cover it,” said Demetrios Anaipakos, a patent lawyer. “What’s more substantial is an injunction. If Samsung is required to pull devices off the market, that will be much more expensive.”

The speed and decisiveness of the ruling, which came after just three days of deliberations, startled observers who had been bracing for a long wait as the jury worked its way through an uncommonly detailed set of questions involving several features and dozens of individual devices.

The jury found infringement by Samsung in six of seven patents raised by Apple in the suit. In five cases, the infringement was willful, the jury said. Shares of Apple, already the most highly valued U.S. company, jumped in after-market trading on news of its victory.

“Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer,” Samsung said Friday night after the ruling. “It will lead to fewer choices, less innovation, and potentially higher prices. 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.”

Apple had no immediate comment.

The ruling could lead to higher licensing fees, which companies pay one another to use proprietary technology. Such higher costs could eventually raise consumer prices and send more profits to Apple should it choose to license its technology.

“Clearly Apple is the winner here in financial terms, with things coming from licensing down the road,” said Al Hilwa, a technology analyst with International Data Corp.

He predicted the net effect would be price hikes for consumers. “Someone has to swallow these licensing fees,” he said.

Hilwa said Apple’s victory also stands to raise the value of patents held by other companies, including Microsoft and Research In Motion, maker of BlackBerry devices, whose fortunes have fallen as swiftly as the iPhone’s have risen. Many companies have been buying up vast troves of patents in recent years, both to prepare for legal battles and to collect licensing fees should the patents hold up in court.

Many analysts considered the fight in a federal court in San Jose, not far from Apple’s headquarters in Cupertino, Calif., to be the most important in the proliferating patent war among technology companies.

Those battles have played out in the Britain, Germany and Australia. Also Friday, a court in South Korea, where Samsung is based, sided with that company in a lawsuit dealing with similar issues, finding that Apple had infringed on Samsung patents in addition to patent infringement on Samsung’s part.

A subtext throughout the federal case was the nature of innovation itself.

Apple submitted evidence showing internal Samsung communications in which executives openly fretted about the design advancements of the iPhone. Samsung countered with arguments that consumer product manufacturers routinely adopt each other’s best ideas, and that some iPhone features were pioneered on devices from other manufacturers, including Samsung itself.

Analysts had predicted that a Samsung victory might have caused future generations of smartphones, tablets and other electronic products to increasingly mimic Apple products because rival manufacturers would feel freer to appropriate popular features.

Instead, Apple’s victory, if upheld, will make other companies wary of hewing too closely to the look and feel of its devices.

This is especially true for products running on Google’s Android operating system, which offered a popular alternative to Apple’s mobile operating system and was eagerly adopted by Samsung and other manufacturers.

Apple’s co-founder and former chief executive, the late Steve Jobs, was so enraged by what he saw as similarities between his products and those powered by Android that he called it “grand theft” and threatened “thermonuclear war” to protect the distinctiveness of Apple products through patent lawsuits, according to his biography, “Steve Jobs,’ by journalist Walter Isaacson.

“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank to right this wrong,” Jobs said in the book, published shortly after his death in October. “I’m going to destroy Android because it’s a stolen product.”

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