Apple’s Krall Leads Samsung Win in Jobs’ Global Smartphone War

Photographer: SeongJoon Cho/Bloomberg

An Apple Inc. iPad 2 and iPhone 4S smartphone, left, and a Samsung Electronics Co. Galaxy Tab 10.1 tablet computer and Galaxy S III smartphone are arranged for a photograph in Seoul. Close

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Photographer: SeongJoon Cho/Bloomberg

An Apple Inc. iPad 2 and iPhone 4S smartphone, left, and a Samsung Electronics Co. Galaxy Tab 10.1 tablet computer and Galaxy S III smartphone are arranged for a photograph in Seoul.

If Apple Inc. (AAPL)’s patent litigation is the “thermonuclear war” over smartphone technology and design that co-founder Steve Jobs pledged to his biographer, Noreen Krall is its field marshal.

Krall has become a familiar sight in courtrooms around the world as Apple’s chief litigation counsel. Her greatest victory came Aug. 24, when a California jury ordered Samsung Electronics Co., the biggest smartphone maker, to pay Apple more than $1 billion for infringing patents related to the iPhone.

“There is no historical precedent for what Noreen Krall is doing,” said John Thorne, who ran Verizon Communications Inc.’s intellectual-property team before joining Kellogg Huber in Washington this year. “Good generalship produces results like Noreen has gotten. She’s mastering big decisions, like which law firms to hire, how to manage resources, how much of Tim Cook’s time to take.”

Krall, 47, and her boss, General Counsel Bruce Sewell, have amassed a team of lawyers from inside Apple and some of the top U.S. law firms to fight Samsung, HTC Corp. (2498) and Google’s Motorola Mobility unit over Google’s Android mobile operating system and the smartphones and tablets that run on it.

The fight is central to Apple’s identity under Cook, who succeeded Jobs as chief executive, as it got 46.4 percent of its sales from the iPhone last quarter and 26 percent from the iPad. The iPhone generated $47 billion in sales last fiscal year and the iPad $20.1 billion.

Apple and Samsung together make more than half of the smartphones sold in the world. Samsung is the biggest player in the global market and Apple dominant in the U.S. The companies are vying for increased share of a market that Bloomberg Industries said grew 62 percent to $219 billion last year.

Mastering Chessboard

Krall’s job includes understanding the patent rules and court procedures in more than three dozen jurisdictions, making sure arguments are consistent, providing feedback and keeping her team motivated. She observes her lawyers’ arguments from benches or public seating in the back of courtrooms, leaving with them at the end of the day.

In San Jose, Krall sent a note to junior members of the team to thank them for their work even before the verdict was announced.

Mark Chandler, general counsel for Cisco Systems Inc. and an acquaintence of Krall’s, said people in her position have to be “masters of the chessboard” with “an almost paranoid capability to see ahead and around corners.”

Kristin Huguet, a spokeswoman for Apple, said Krall and other officials wouldn’t comment for this story.

Litigation Newcomers

Apple didn’t have much of a history of litigation when it hired Krall. It had fended off suits by patent owners who don’t make products and tried to shut down bootleg accessories.

Its first big test, and what it has called the beginning of the so-called smartphone wars, was a suit filed in 2009 by Nokia Oyj (NOK), then the world’s largest handset maker. The companies settled in June 2011 with a payment and royalties to Nokia while not giving the Finnish company access to some of the patents on features that make the iPhone unique.

After Android was adopted for devices made by Samsung, Motorola and HTC, Apple decided to use the courts to stop what Jobs and other executives considered illegal copying of its technology. HTC was the first company to sell a phone that ran on Android in 2008, and Jobs was irate over a version that came out in January 2010 with a touchscreen he called a rip-off, according to Walter Isaacson’s biography.

Apple had been preparing for a fight. It hired Sewell, then Intel Corp.’s top lawyer, in 2009 and then Krall in March 2010, the same month the Cupertino, California-based company filed its first lawsuit against HTC.

‘Action Mode’

Krall, a New York native, was trained as an electrical engineer. Two of her daughters are in college pursuing engineering degrees.

She earned a law degree from the University of Denver while working at International Business Machines Corp., the largest owner of U.S. patents, in the late 1990s. One of her jobs after finishing law school was to shepherd ideas through the application process at the U.S. Patent and Trademark Office. She’s the listed agent on more than 100 IBM patents, according to data from the office’s website.

Before moving to Apple, Krall spent five years managing Sun Microsystems Inc.’s 14,000 patents as chief intellectual- property counsel.

Like Apple, Sun had little history of litigation, until NetApp Inc. filed a patent-infringement suit in 2007 over data- storage technology. The lawsuit created “an opening for Noreen to go into her action mode,” said Greg Papadopoulos, who was Sun’s chief technology officer and worked with Krall for about five years.

‘Legal 2.0’

She made lawyers and engineers collaborate, something that doesn’t always happen at tech companies, to understand how the technology worked and evaluate the strengths and weaknesses of the patents, Papadopoulos said. Sun countered with its own claims, and the companies settled.

“I call her Legal 2.0 for her ability to take legal strategy to another level,” said Papadopoulos, now with the venture-capital firm NEA in Menlo Park, California. “In many cases, the legal counsel is looking at a case purely through legal reasoning. You can’t do that. You have to understand the technology. She knows how to find the right people and she knows how to think about it.”

Her role at Sun became “a little bit of a limiting environment because we didn’t have that offensive mindset,” Papadopoulos said. “She had a lot of ideas: Here’s what’s happening to us. Here’s where we can be more assertive.”

Obstacles Ahead

Krall joined an Apple team that viewed Android device makers as a threat to its core business of selling distinctively designed consumer electronics at a premium price and with industry-leading profit margins.

By releasing similarly designed devices, Samsung and others undermine what Apple’s products are worth to customers, Apple’s lawyers argued during the San Jose trial.

There have been some setbacks. Krall’s team lost cases against Samsung in Tokyo and the U.K., and against Motorola Mobility in the U.S. Apple is also facing limits on sales of its products in Samsung’s home country of South Korea.

Most of the cases around the globe are in their early stages, and no U.S. patent verdict greater than $200 million has ever been upheld on appeal, according to data compiled by Bloomberg.

Still, the verdict in San Jose vindicates Apple’s strategy of using its intellectual property to force competitors to make products that are different from its own, said Colleen Chien, an assistant law professor at Santa Clara University in California.

Unwelcome Adversary

Krall is a founding member of a group of female intellectual-property lawyers called the Chipsters that puts on events to share tips on being powerful women and mothers in male-dominated Silicon Valley.

A finalist this year for the annual Global Counsel Award for intellectual-property lawyers, selected by corporation lawyers and law-firm partners, she’s a shoo-in for next year, said Thorne, the former Verizon lawyer.

“There was a running joke at Sun that we were really glad she’s on our side,” Papadopoulos said. “We’d never want to be on the other side.”

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net.

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Tom Giles at tgiles5@bloomberg.net;

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