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You are here: MacNN Forums > News > Tech News > Apple vs. Samsung, Day One: Apple asks for $2B in damages

Apple vs. Samsung, Day One: Apple asks for $2B in damages
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Apr 2, 2014, 05:54 AM
A bit of juror trouble was ironed out, last-minute issues decided, opening arguments heard and the first witness called on the opening day of the second Apple-Samsung patent trial, which began on Tuesday in San Francisco. Judge Lucy Koh, who oversaw the first trial, is again in charge as the two companies present their cases over a different set of patents -- five from Apple, two from Samsung -- that each says are being infringed by the other.

On pretty much every other topic, however, the two sides vehemently disagree. Apple says that its patents, particularly the "slide to unlock" patent, was key to getting the public to accept touchscreen phones, and a true game-changer. It is asking the jury for over $2 billion in punitive damages, as well as "reasonable license fees" on the patents that were copied or are still being infringed, based on the sales of the devices (most of which are off the market now). Apple's Phil Schiller laid out in detail how each one of the patents was an original invention of the company.

Samsung, on the other hand, is countersuing using two patents that are not of its own work -- they were purchased from another company in 2012 after the first patent battle, specifically to be used as weapons in court. One of the two patents, Apple's attorney pointed out, is so old that it has expired. It is asking for only $6 million in total for damages from Apple for the patents, and appears to be saying that while it didn't copy the patents Apple said it did, even if it had done their value would only be around $40 million or so, not $2 billion.

The trial began with a surprise, as two of the selected jurors were excused by Judge Koh, after passing through the rigorous examination process. One was said to have fallen ill, while the other decided (after having been asked about it during the examination process) that serving on the jury would impose a serious financial hardship after all.

The jury is now composed of four men and four women, only one of whom (a manager at IBM) has any technical background. One of the jurors professes not to even own a cellphone, and had no idea what an iPad even was -- calling himself a "tech dinosaur." The must be at least six members of the jury by the time they begin deliberations, or a mistrial will be declared.

Following the kerfuffle with the jurors, Apple attorney Harold McElhinny started the case formally with his opening statements. He opened his remarks by asking simply "where were you on January 9, 2007?" and then proceeded to show the court the video of Steve Jobs introducing the iPhone as the revolutionary device that it was at the time. Following that, he spoke slowly and thoughtfully, careful to couch any technical terminology in terms the jury would be sure to understand.

The introduction of the iPhone, he said, "moved the world from a physical keyboard, to tapping on an interactive glass face." In some places repeating almost verbatim points he made in the previous trial, he produced an actual patent form, and told the jury that the "slide-to-unlock" patent, one of the patents in-suit, solved the problem of "pocket dialing" that had been common before then.

"The evidence in this case will be that Samsung copied the iPhone, and it also took many other Apple inventions that had not yet appeared in Apple products," McElhinny said. "Samsung did not stop with competitive intelligence," he added, saying that Samsung at the time "simply did not have a product that could compete successfully against the iPhone." Charts presented at that point, some of which were used in the first trial, graphically illustrated how smartphones looked and worked in at the time of the iPhone's introduction in 2007, and how they looked and worked after that.

"Samsung went far beyond the world of competitive intelligence, and they crossed into the 'dark side' of copying" he told the court. Showing the jurors a memo from Samsung President JK Shin that urges management to "make something like an iPhone" at the end of a highly-notated feature-by-feature comparison of the iPhone and Samsung's designs, McElhinny declared that "this not competitive intelligence -- this is cut-and-paste copying of a patented invention. Copying the iPhone was literally built into the Samsung development process."

Potentially bolstering Apple's case for sales injunctions on infringing products, the Apple attorney noted that Samsung initially turned off universal search (the ability of the phone to search both its own files and the Internet simultaneously), another of Apple's patents, when it was first sued by Apple over the feature -- but then turned it back on when customers complained. McElhinny said that Samsung had sold more than 37 million of the infringing products named in the suit in the US, and lost profits on the reckoning that at least 10 percent of the people who bought the infringing Samsung phones would have bought iPhones if Samsung hadn't copied Apple's technologies and features.

As a result, he said, Apple will ask for more than $2 billion in damages -- twice the amount it requested in the first trial -- in an effort to dissuade Samsung from continuing to copy its patents, along with reasonable royalties owed for the existing infringing devices. McElhinny took pains to tell jurors that, while Samsung will attempt to paint the case as really being an attack on Android and Google -- since some of the features copied from Apple are present on other Android phones -- that Apple is singling Samsung out because "it was the one that decided to copy [Apple's technologies so closely], and profited from copying, not Google."

Samsung's John Quinn also made his opening statement, part of which was hurried through in order to beat a noon lunch deadline. "I'm going to prove to you ... that yes, Apple is a great company. But they don't own everything. They don't own the only way to search on phones." His argument was that Apple's patents, in other forms, are in devices other than just Samsung's.

Quinn mentioned that one of the patents in the lawsuit, supposedly infringed by the Galaxy Nexus, wasn't part of Samsung's software but is part and parcel of all recent versions of Android. From this, he told the court that the entire case is just part of the late Steve Jobs' "holy war" on Android, which Jobs believed was "stolen" from Apple. One reporter in the courtroom tweeted a joking summary of Quinn's arguments: "Quinn: Google Google Google Google Google. Android is Google! Google Google."

He called Apple's $2 billion damages claim "a gross, gross exaggeration," but then appeared to admit some culpability on Samsung's part by quoting an expert hired by Samsung that suggested that damages of $40 million would be more appropriate. After saying that Samsung will prove in the course of the trial that Google engineers (rather than Samsung) "did not copy Apple," he ended the first part of his statement by saying that Apple was "trying to gain from you in this courtroom what it has lost in the marketplace," a reference to Android's larger (but not totally clear) marketshare.

Following the lunch break and a dispute between the two sides over what documents might be made public, Quinn resumed his opening by telling the jury of Android's creation. Though Google had been working on a version of Android well before the iPhone came out, Apple had had started about a year earlier in its own fledgling mobile platform (work was said to have started on what became iOS in 2004). The Android that was initially developed in 2005 bore no resemblance to post-iPhone versions, and even Google's own engineers have admitted they changed direction sharply once they saw what Apple had accomplished in the iPhone.

Quinn conflated the punitive and actual damages Apple is seeking with royalties for past infringement, claiming that figure -- that represents a cost of about $33 per infringing Samsung smartphone sold -- would turn phones that used all 3,500 of Apple's smartphone patents into devices costing $28,000 each. Furthering the shaky math analogy, he told the jury that smartphones cost "$199 at the high end" without mentioning that this was a subsidized price, and used the figure to try and discredit the Apple witness who came up with the "$33 per phone" damages formula. He also omitted that the Apple patents in the case were not required to be licensed at all -- none of them are standards-essential, which is governed by FRAND licensing rules.

McElhinny, in his earlier speech, promised the jury that it would see internal Samsung documents that "proved" that it knew it was deliberately copying Apple's patents, and that by 2010 the company felt it had no choice but to copy Apple in order to compete. Samsung, the only handset maker accused of copying Apple hardware and software patents, is also the only cellphone maker other than Apple to turn a consistent profit on smartphones -- a connection that Apple lawyers will likely infer is partially responsible for its success.

The opening arguments, which largely reiterated points made in the first trial, then gave way to testimony from Apple's marketing SVP Phil Schiller, who himself largely repeated his remarks from the first patent trial. Apple won that initial encounter, scoring a final damages penalty of $941 million, though the verdict is presently being appealed by Samsung. In the first trial, all of Samsung's counterclaims were thrown out by the jury due to prior art. In this latest trial, Judge Koh threw out one of Samsung's original five patents for the same reason, and found that Samsung had infringed on one of Apple's five patents -- a fact Apple will be able to mention in court.

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