Court ruling: Samsung violated Apple patents, has to pay more than $1B

Apple is always involved in some kind of legal battle with other companies, especially Samsung. It shouldn’t come as a surprise because Apple has $40 billion or so in its bank account, which can be easily wasted on these law suits. Apple Inc. had filed a patent infringement claim against Samsung in April 2011 and hired some of the highest paid patent lawyers in the country. Apple demanded a total sum of $2.5 billion from the South Korean smartphone giant. In response to Apple’s claim, Samsung Electronics Co. had fired back with its own lawsuit seeking $399 million.

A federal jury in San Jose late Friday has rejected all the claims made by Samsung against Apple. The verdict is in favor of Apple, and the jury has found the South Korean phone maker guilty of infringing multiple Apple’s patents, and has instructed Samsung to pay the Cupertino based technology giant more than $1 billion in damages. This ruling actually rewrites the rules for mobile technology patent disputes. Apple was also seeking to ban Samsung devices from being sold in the US, however, the judgment didn’t speak about that. Just after the news broke, Apple shares immediately rose by 1.8% to $675.04 in after-hours trading.

It should be noted that $1.05 billion in damages is incidentally the largest surviving verdict in patent history ever. There were two larger verdicts which were apparently reversed, according to Stanford University law professor Mark Lemley.

“It’s a huge win for Apple,” says Lemley, who specializes in technology. “But this is one lawsuit among 50 in the smartphone market, and Apple’s real target may be the Android ecosystem.”

Apple’s claims involved about two dozen Samsung devices, however, the court declined to award the whole $2.5 billion reimbursement which Apple was seeking. This is a sad moment for Samsung as it recently surpassed Apple as the world’s largest seller of smartphones, and this ruling will force it to go back to the drawing board so that it doesn’t infringe any of the Apple patents.

The feature or patent for which Samsung was found guilty is the screen bounce-back patent which is used when user scrolls to an end image. Samsung has reportedly infringed this patent on all phones and tablets. Samsung has also infringed the patent 915 which deals with pinch and zoom, which is found on all but three devices! The above features are actually basic features of the open source Android mobile operating system, and Samsung’s legal defeat should actually be seen as a blow to Android as manufactures which are relying on Android will be more as reluctant to make use of the operating software as there is a risk of being dragged into the court.

“Some of these device makers might end up saying, ‘We love Android, but we really don’t want to fight with Apple anymore,” said Christopher Marlett, CEO of MDB Capital Group, an investment bank specializing in intellectual property.
Samsung said in a statement: “Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer.”

Apart from the patent infringements that were mentioned earlier, Samsung was found guilty of violating the design patent for the front of the iPhone for all the phones from the firm, except one. South Korean mobile giant was also found violating home screen patent with all the phones in its lineup. One patent which Samsung was not found guilty is the Apple iPad patent that covers its design.

“If Apple patents are upheld long-term, it will force the industry toward innovation and differentiation,” says Gartner analyst Michael Gartenberg. “That’s not a bad thing for the market and for consumers.”

While making the closing statement, Apple attorney Harold McElhinny said that Samsung was going through a “crisis of design” back in 2007, just after the launch of iconic iPhone. He claimed that Samsung was determined to unlawfully cash in on the success of iPhone. Samsung’s lawyers countered those statements saying that it just gave what the consumers were asking for, smartphones with bigger screen.

Going back, Samsung had previously claimed that it had evidence which strongly suggests that Apple itself somewhat copied or was directly inspired by Sony-style designs. Samsung hoped to use this information against Apple, however, the company’s secret weapon turned out to be worthless when Apple countered Samsung’s claim by showing off an early iPhone concept called “Purple” which dated back to 2005, whereas the Nishibori design which Sammy was talking about was developed in March 2006, almost a year after Apple’s Purple. Ironically, Apple ‘iPurple’ was actually white in color.

If you have been tracking Apple vs Samsung stories carefully, U.S. District Court Judge Lucy Koh chaired the San Jose courtroom last month, where in which she bestowed Apple a preliminary injunction which could actually force Samsung’s Galaxy Tab 10.1 tablet off the American shelves.

“I think she’s going to grant an injunction and a fairly broad one,” says Lemley, indicating Samsung’s Galaxy Tab 10.1 could be yanked from the market.

Apple just wanted to pull $2.5 billion from Samsung and have its products off the shelves so that it can conduct monopoly in the smartphone atmosphere. To back its claims, Apple presented hundreds of pages of documents, and many testimonies from executives, scientists and engineers, which reinforced Apple’s claims that Samsung was involved in copying iPad and iPhone.

Analysts believed that damages could be tripled as the jurors found Samsung “willfully” infringed on patents. Apple’s attorney said that folks from Samsung had met Google and talked about the issue, and the search engine giant had actually recommended the company to make changes to the design of its Galaxy line of devices, for which Samsung allegedly declined.

Samsung lawyer Charles Verhoeven, in his closing statements, shot back that the documents don’t show what Apple claims. “It’s a shell game for counsel trying to mislead you,” he said. “They have to prove to you with their evidence that consumers will be deceived, there’s a likelihood of deception. This doesn’t meet the burden of proof.”

Samsung is in point of fact acting as a proxy for Google as all the devices in question are actually running Google’s software, and verdict will have major implications on patent cases which Apple is involved in across the world.

Apple and Samsung are fighting similar legal battles in around eight other countries, including South Korea, Japan, Italy, the Netherlands, Germany, Britain, France and Australia, and some of these countries have already ruled in favor of Samsung and said that it doesn’t infringe any of Apple’s patents. Earlier on Friday, Samsung had something to cheer about as it partially won a home court ruling in a legal war against Apple. It’s a rare case where ruling is in favor of Samsung, though partly. Judges in Seoul understood that Samsung hadn’t copied any of Apple’s devices in terms of look and feel of iPhone, in fact it ruled against Apple saying that it was indeed infringing some of the Samsung’s patents relating to wireless technology. The Seoul court did agree that Samsung devices violated an Apple patent for the ‘bounce-back’ gesture used for webpage and document scrolling, and the three-judge panel declared a sales ban on four Apple products, including the iPhone 4 and iPad 2, and imposed fines on both companies.

Samsung in the meantime released a 5 minute long video called “Galaxy S III Design Story” which explains the development process of its Galaxy S3 flagship handset, in turn showing off its innovation capability.

The US computer tablets and smartphones is a $219 billion market and this case is one of the 50 lawsuits that are currently being fought. What are your thoughts on this outcome? Is the verdict a loss for smartphone consumers? Shout in the comment section!

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