SAN JOSE, Calif. — Jurors heard opening statements and a first round of testimony in Federal Court Tuesday as part of an ongoing battle royale between Apple and Samsung. Attorneys for the mobile giants contested the use of patented technology in the iPhone and devices such as the Galaxy S II, alleging that each infringed the other's intellectual property.
Following a $290 million award last year, Apple is seeking $2 billion in damages for the illegal use of five software patents. Samsung seeks approximately $6.9 million for the use of two patents related to Face Time and photo cataloging.
“Copying the iPhone is literally built into Samsung’s development process… They chose to use our inventions because they believed those inventions were fundamental to having a successful product,”
Apple attorney Harold McElhinny said, alleging Samsung has sold 37 million infringing phones and tablets in the United States. “Samsung went far beyond the world of competitive intelligence and crossed into dark side of intentional copying.”
McElhinny and his partner produced Samsung internal documents dating back to 2008, which identified the iPhone as “the standard.” Samsung Galaxy and Nexus development slides were consistently compared to iPhone products, which allegedly led to the use of IP for the slide to unlock functions, quick links, and universal search, among others.
In defense, Samsung attorney John B. Quinn called the allegations a “gross, gross exaggeration and an insult to [juror] intelligence," noting that some of the technology in question isn’t used in current iPhone models. Although the Apple team preemptively denied allegations, Quinn claimed Apple is using the Korean company as a scapegoat in a battle against Google and its Android operating system.
“Apple is a great company, but they don’t own everything… They’ve vastly overstated the scope of these patents. These are very narrow software patents, which cover one way to have a feature that can be done more than one way,” Quinn said.
Quinn cited internal Apple documents, including an October 2010 email from the late Steve Jobs, which listed a “holy war with Google” among the company’s agenda items. The same email said Apple was “in danger of hanging on to the old paradigm too long," and needed to catch up to Microsoft, Android, and Google’s cloud services.
To that end, Samsung alleged that Apple infringed on patents for transmitting compressed video footage over a cellular connection in its FaceTime application, as well as patents for organizing videos and pictures in a photos application. Apple denied the relevance of those patents, claiming the technology and components are no longer necessary.
Samsung is seeking $6.78 million in restitution for its video compression patent and $158,400 for its image organizing patent. The drastic difference in Apple’s financial demands rests largely on a study conducted by MIT professor John Hauser, which focused on lost profits and the price users would pay for the additional features of Apple’s five patents.
“It’s probable that if Samsung hadn’t been able to sell 37 million phones and tablets, some of those consumers would have purchased an Apple product, and we’re entitled to recover lost sales,” McElhinny said. “We say under 10% of users would have bought a product; Samsung says not one would have.”
Hauser’s study suggests that people who purchased a $149 smartphone would pay nearly $150 more for Apple’s capabilities, which would justify Apple’s royalty request. Quinn and others have questioned the legitimacy of the study and its methods, adding that many participants didn’t realize their phones already had comparable technology.
Apple attorneys also suggested a reasonable royalty for the patent infringements, charging Samsung an average of $33 per phone, with a $40 charge for higher-end devices using all five patents. Apple claims to have 3,500 patents, Quinn said, and at $8 each (based on the royalty fee for five patents), creating a smartphone would be 140 times the price of an average handset today. The royalty is excessive, he concluded.
“It's not these kinds of small features that Apple is suing over that make people want to buy a phone,” said Quinn. “Large screens, replaceable batteries, a high-quality camera, speed, and use of styluses are the things that distinguish products.”
Still, patent expert Florian Mueller said it’s unlikely that Apple would receive its $2 billion claim. Mueller citied last year’s Apple v. Motorola case, where a Federal Circuit chief judge told Motorola that it was "crazy" to demand $300 million in damages from Apple over "one patent in a crowded field" -- and Apple is now demanding an average of $400 million per patent.
“Apple's enforcement is legit, but… it failed to establish that Samsung's way of competing with Apple is substantially unlawful,” Mueller wrote in an email exchange. “There's no question that Apple is harmed by competition from Samsung, but it couldn't show that any of the infringements identified by the 2012 jury were really key to Samsung's success.”
In the past four years Apple has brought litigation against various Android device makers without a commercially relevant win, Mueller continued. “That is a big part of Apple's problem: While it appears to have revolutionized the market singlehandedly, it's simply standing on the shoulders of giants as far as technical inventions are concerned.”
— Jessica Lipsky, Associate Editor, EE Times