Apple-Samsung Copy Case Hinges on Cheech, Chong Test

Apple Inc. (AAPL)’s claim that Samsung Electronics Co. (005930) copied the design of the iPhone may hinge on what a U.S. trade judge today described as the “Cheech and Chong test.”

“Does it look like it, feel like it, smell like it?” U.S. International Trade Commission Judge Thomas Pender said at the beginning of Apple’s patent-infringement trial against Samsung, referring to a routine in which the comedy duo identified dog feces.

Apple contends Samsung’s phones and Galaxy Tab tablet computer copy designs on the look and front face of the iPhone, and they also infringe patents related to the user interface and headset plugs. The Cupertino, California-based iPhone maker is asking the ITC to block imports of Samsung products that violate Apple’s patent rights.

“Not content to copy the overall design and interface, Samsung has copied the smallest detail of the iPhone,” Apple lawyer Harold McElhinny of Morrison & Foerster told the judge in opening arguments today in Washington. “Samsung copied our original and iconic design.”

Samsung is Apple’s biggest adversary in the iPhone maker’s challenge to the growth of devices that run on Google Inc.’s Android operating system. Together, Samsung and Apple made more than 49 percent of all smartphones sold worldwide in the first quarter, with Samsung edging out Apple in that period for the title of world’s biggest manufacturer of the devices, research analyst Gartner Inc. said May 16.

Apple’s patent-infringement claim against Samsung, accuses its Suwon, South Korea-based rival of copying inventions related to touch-screen devices, headset detection and the look and shape of the iPhone. Photo: Chris Ratcliffe/Bloomberg Close

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Apple’s patent-infringement claim against Samsung, accuses its Suwon, South Korea-based rival of copying inventions related to touch-screen devices, headset detection and the look and shape of the iPhone. Photo: Chris Ratcliffe/Bloomberg

Jobs’ Warning

When the late Apple founder Steve Jobs unveiled the iPhone in 2007, he warned rivals that it was protected by more than 200 patents, McElhinny said. Apple’s inventions have been displayed in museum shows and even been the subject of a book, he said.

“Samsung cannot overcome the originality of Apple’s design,” McElhinny said.

Samsung, which has its own patent-infringement claims against Apple that are scheduled to come to another trial at the trade agency next week, contends it came up with its own ideas and designs through decades and more than $3.5 billion spent on research.

“Samsung has been in this industry, building and innovating to the point where Apple could enter the market,” Samsung lawyer Charles Verhoeven of Quinn Emanuel told the judge. “We are anything but an also-ran trying to copy Apple’s technology.”

The rectangular shape with a wide touchscreen was just one of many designs developed by Samsung and other smartphone makers before the iPhone, he said.

“Samsung is also known for its designs,” Verhoeven said. “We’ve been recognized worldwide and compared favorably” to Apple.

Seeking Break

Pender is scheduled to hear testimony through June 6 and release his findings Oct. 5. ITC Judge James Gildea, who is scheduled to hear Samsung’s case beginning June 4 through June 15, is expected to release his determination on Sept. 14. Apple’s infringement claims against Samsung over other patents is set for a July trial in federal court in San Jose, California.

Meetings over the past two years, most recently ones involving Apple Chief Executive Officer Tim Cook and Samsung CEO Choi Gee Sung, have failed to resolve a standoff that spans 10 countries on four continents. Each side is looking in court for some break, such as an order blocking the rival’s products from the U.S., that would give them an advantage in settlement talks.

“This about brinkmanship and bargaining position,” said Rodney Sweetland, a patent lawyer with Duane Morris in Washington who specializes in ITC cases. “They both have too much to lose and too much to gain to not make a settlement.”

First Trial

Apple’s claim against Suwon, South Korea-based involves six patents including ones covering inventions related to touch- screen devices, headset detection and the look and shape of the iPhone. Apple is seeking to block imports of Samsung’s Galaxy Tab tablet computer and phones including the Nexus, Captivate, Indulge, Infuse and Sidekick.

Samsung’s claims against Apple involve five patents including one that allows users to view documents in a touch- sensitive screen and two covering industry standards for ways to boost high-speed data transmission. It targets the iPad, iPod touch and different versions of the iPhone including the most recent iPhone 4S.

Continuing Escalation

“It looks like neither company can find common ground, even though Tim Cook said he’s not really interested in litigation,” said Will Stofega, an analyst at IDC in Framingham, Massachusetts.

In an April 24 conference call with analysts, Cook said he would prefer to reach a settlement, as long as it doesn’t put Apple at a disadvantage.

“We just want people to invent their own stuff,” Cook said. “And so if we could get some kind of arrangement where we could be assured that’s the case and a fair settlement on the stuff that’s occurred, I would highly prefer to settle versus battle.”

Samsung, which makes more than a dozen smartphone models, shipped 42.2 million smartphones in the first quarter, while Apple sold 35.1 million iPhones, IDC reported May 1. Smartphone shipments worldwide surged 43 percent.

Smartphone Profits

The growth is adding to the bottom line for both companies. Samsung, Asia’s biggest consumer-electronics maker, said first- quarter profit jumped 81 percent to 5.05 trillion won ($4.5 billion) after earnings at the mobile business almost tripled. Chinese demand for the iPhone helped Apple boost its fiscal second-quarter profit 94 percent to $11.6 billion.

Even as they battle in courts around the world, Apple remains Samsung’s biggest client. Apple accounted for 7.64 percent of Samsung’s revenue, buying chips and displays, according to data compiled by Bloomberg.

Apple has been able to force Samsung to delay the release or alter its Galaxy products in some countries, including Australia and the Netherlands. There’s more at stake in the U.S., because the trade agency -- which will issue final decisions in both cases in January and February -- has the authority to stop products at the U.S. border.

In the meantime, Apple is pursuing an order to block sales of the Galaxy Tab 10.1 while the San Jose case is pending.

Battles like those between the smartphone makers aren’t unusual -- similar contests occurred when the sewing machine and the telegraph were new, U.S. Patent and Trademark Office Director David Kappos told a House Judiciary subcommittee on May 21. He was asked whether the Apple and Samsung fight will stifle innovation.

“I do not believe that it’s a sign that there’s anything at all wrong with the innovation environment in the U.S.” Kappos said. “It’s a byproduct of a very healthy overall innovation environment. These things happen; they sort themselves out over time. What’s going on here is just a natural ebb and flow of technology development.”

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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