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Apple win does little to change tide of smartphone wars

  • File - Samsung was ordered to pay just over $1 million, far below the $2 billion that Apple had sought.

Apple Inc.’s $120 million verdict against Samsung Electronics Co. in a smartphone technology trial may not give the mobile device giants any more incentive to end their four-year global legal battle.

The jury in San Jose, California, after hearing almost four weeks of evidence in the companies’ second U.S. trial, found May 2 that Samsung infringed two of four Apple patents it considered and that Apple infringed one of two Samsung patents.

The trial revolved around whether Samsung, the maker of Galaxy phones, used features in Google Inc.’s Android operating system that copied the iPhone manufacturer’s technology. The verdict sets the stage for each company to seek an order banning U.S. sales of some of its competitor’s older devices.

“They’re each looking for that knockout punch and they don’t seem to be able to find it,” said Susan Kohn Ross, a lawyer with Mitchell Silberberg & Knupp in Los Angeles who has been monitoring the cases.

“They sort of feel they are on an even keel and need to keep punching,” she added.

The world’s top two smartphone makers have spent hundreds of millions of dollars in legal fees on battles across four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg.

Samsung, based in Suwan, South Korea, had 31 percent of industry revenue, compared with 15 percent for California-based Apple, whose share of the market has shrunk as the touch-screen interface has become more commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.

While Apple’s iPhone altered how consumers looked at smartphones, the company has been less successful in fending off what it considers copycats since filing its first smartphone-related patent suit, against HTC Corp., more than four years ago.

In addition to the earlier jury verdict, Apple won an import ban at the U.S. International Trade Commission against some of Samsung’s older phone models. Samsung won an import ban on some versions of the iPhone 4 and iPad 2, only to have it vetoed by President Barack Obama’s administration.

In December 2012, Apple was able to reach an agreement in which HTC agreed not to make “cloned” copies of the iPhone. It’s had less luck with its suits against Samsung or Motorola Mobility, which Google bought in 2012.

While last week’s verdict is the eighth-largest jury award in the U.S. this year, it was a narrow victory for Apple. Even if Apple persuades the judge to issue an injunction halting sales, most of the 10 devices it sought to ban during the trial are no longer sold by Samsung in the U.S.

Apple wanted Samsung to pay as much as $40 for each phone sold that uses infringing technology, for a total of $2.19 billion. Samsung argued that the jury should award no more than $38.4 million for any infringement damages.

From the start, Samsung cast the iPhone maker’s case as a bid to displace Google as the leading supplier of smartphone operating systems and limit consumer choice.

The verdict “doesn’t slow down Samsung at all” because the implied royalty rate is so low that Samsung doesn’t need to worry about paying it, said Kevin Rivette, a 3LP Advisors LLC partner.

“It was absurd for Apple to ask for $2 billion,” he added. “That was a case of ‘Am I going to laugh now or laugh later?’”

Apple might have considered the trial a win if the verdict amounted to more than $10 per phone, he said.

The iPhone maker was awarded $930 million in the first U.S. trial in San Jose against Samsung two years ago, though it did not get what it considered more important than the money – an order barring sales of infringing Samsung phones.

“It is hard to view this outcome as much of a victory for Apple,” said Brian Love, an assistant professor at the Santa Clara University School of Law. He added that the amount of damages “probably doesn’t surpass by too much the amount Apple spent litigating this case.”

The jury rejected Apple’s claim on the patent it counted as the most valuable of the group, one that enables updating of applications while other features of the phone are in use. Apple also lost its claim over a patent that allows a user to perform a “universal” search for information with a single click.

“The most important outcome of the case is the message that small, user interface component patents are not justifying gigantic damage awards,” Michael Risch, a professor at Villanova University’s law school, said.

Samsung’s newest smartphones, the Galaxy S4 and S5, were not covered in the case. Samsung is counting on the S5, which went on sale on March 27 in South Korea, to maintain its global lead, competing with Apple for high-end shoppers and with Chinese producers such as Xiaomi Corp. that target budget buyers.

 
A version of this article appeared in the print edition of The Daily Star on May 05, 2014, on page 6.
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Summary

Apple Inc.'s $120 million verdict against Samsung Electronics Co. in a smartphone technology trial may not give the mobile device giants any more incentive to end their four-year global legal battle.

The jury in San Jose, California, after hearing almost four weeks of evidence in the companies' second U.S. trial, found May 2 that Samsung infringed two of four Apple patents it considered and that Apple infringed one of two Samsung patents.

In addition to the earlier jury verdict, Apple won an import ban at the U.S. International Trade Commission against some of Samsung's older phone models.

Even if Apple persuades the judge to issue an injunction halting sales, most of the 10 devices it sought to ban during the trial are no longer sold by Samsung in the U.S.

Apple wanted Samsung to pay as much as $40 for each phone sold that uses infringing technology, for a total of $2.19 billion. Samsung argued that the jury should award no more than $38.4 million for any infringement damages.


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