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Apple’s $1 Billion Verdict Against Samsung Left Intact

Apple Inc. (AAPL)’s $1.05 billion damages award against Samsung Electronics Co. (005930) from its patent-infringement trial in San Jose, California, was left intact after a judge denied Apple’s bid to increase the award.

U.S. District Judge Lucy Koh in San Jose yesterday declined to increase the award after she found Samsung’s infringement wasn’t willful. The ruling was one of many post-trial decisions Koh issued yesterday denying both companies’ bids for a new trial and leaving largely untouched the jury’s finding in August that Samsung infringed six mobile-device patents.

“The court will not speculate as to how, precisely, the jury calculated its damages award,” Koh wrote in her ruling. It is “reasonable to assume” that the award is “intended to compensate Apple for losses stemming from all of the violations the jury found.”

Jurors decided Aug. 24 at the end of a trial that Samsung should pay the $1.05 billion for infringing the six Apple patents. Apple, which lost its bid to block U.S. sales on 26 of the Galaxy maker’s devices, failed to establish that consumer demand for Samsung products was driven by technology it stole, Koh ruled earlier.

Koh rejected Apple’s argument that jurors erred by finding Apple’s trade dress, or how a product looks, for the iPad and iPad 2 wasn’t protectable. The judge also denied Apple’s request that she overrule jurors’ conclusion that Samsung’s Galaxy Tab 10.1 didn’t infringe one patent covering the design of Apple’s iPad tablet computer. She found that two claims, or elements, of Samsung’s patent covering data transmission over wireless systems were invalid.

Photographer: Ian Waldie/Bloomberg

A man uses a Samsung Electronics Co. Galaxy S III smartphone to record a video outside the Apple Inc. store on George Street in Sydney, Australia. Close

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Photographer: Ian Waldie/Bloomberg

A man uses a Samsung Electronics Co. Galaxy S III smartphone to record a video outside the Apple Inc. store on George Street in Sydney, Australia.

Samsung Loss

The judge also denied Samsung’s request for a new trial. Samsung spokesman Adam Yates declined to comment on any of Koh’s rulings, including whether the Suwon, South Korea-based company would attempt to make any new arguments based on the ruling that the infringement wasn’t intentional.

Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, also declined to comment on the rulings.

Koh also rejected Samsung’s argument that Apple’s patents may be “indefinite,” meaning that its claims, or elements, aren’t particular enough in describing the technology they covers.

Samsung rose 2.2 percent today in Seoul. Apple fell as much as 0.7 percent in trading in New York before rising as much as 1 percent to $462.60.

‘Slavishly Copying’

Samsung and Apple, which together make about half of the smartphones sold worldwide, have each scored victories in their patent disputes fought over four continents since Apple accused Asia’s biggest electronics maker of “slavishly copying” its devices. The companies are competing for dominance of a global mobile-device market estimated by Yankee Group at $346 billion this year.

At a Dec. 6 hearing, Koh had said that the original award “is not authorized by the law” on some of the products at issue, and that the jury’s method for calculating damages was potentially flawed.

“If there is enough evidence in the record to justify that damage award then that verdict should be upheld,’ Harold McElhinny, a lawyer for Apple, argued to the judge.

Kathleen Sullivan, a lawyer for Samsung, contended at the hearing that the damages should be reduced by more than $600 million. Sullivan said that while the jury’s calculations were precise, the nine-member panel was hampered by a verdict form that, against Samsung’s wishes, wasn’t ‘‘particularized” enough to permit jurors to properly arrive at damages on a product-by-product basis.

Reverse Engineer

“You should reverse engineer” to make sure the damages are “causally connected to the evidence,” Sullivan told the judge.

The patent disputes began when Samsung released its Galaxy smartphones in 2010. Apple co-founder Steve Jobs, who died Oct. 5, 2011, initiated contact with Samsung over his concerns that the Galaxy phones copied the iPhone, according to testimony from the trial in August.

Jobs later vowed to wage “thermonuclear war” to prove that phones running on Google Inc. (GOOG)’s Android operating system copy the iPhone. Samsung devices use Android.

Apple’s 2011 suit claimed Samsung products infringe four design patents and three utility, or software, patents. While finding infringement of six patents, the jury concluded that Samsung didn’t infringe one patent covering the design of Apple’s iPad tablet computer.

Apple argued Samsung bet that the benefits of using intellectual property from the iPhone and iPad would outweigh the money damages the jury awarded. Apple urged Koh to increase the damages by $536 million and approve the sales ban because Samsung took market share from Apple by “deliberately copying the iPhone design,” according to a court filing.

Flooding Market

Apple, in court filings supporting a sales ban, claimed that Samsung started flooding the U.S. market with infringing products at the critical juncture when customers are moving to smartphones and developing “platform loyalty” that has diminished the base of iPhone users.

The iPhone maker has asked a full panel of judges at the U.S. Court of Appeals for the Federal Circuit in Washington to review two appeals seeking to block sales of Samsung products that Apple says violate its patents.

A three-judge Federal Circuit panel said in October that Samsung could continue selling its newest Galaxy Nexus smartphone while battling patent-infringement claims by Apple. To obtain an order that would block sales, Apple must show that the patented search feature under dispute drives consumer demand for the product, the panel said.

The San Jose case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).

The appeals in Washington are Apple Inc. v. Samsung Electronics Co., 13-1129, and Apple Inc. v. Samsung Electronics Co., 12-1507, U.S. Court of Appeals for the Federal Circuit (Washington).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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