Apple Juror Credits Witness for Outmatching Samsung

Apple Inc. (AAPL) won more than $290 million from Samsung Electronics Co. (005930) in a do-over damages trial by relying on the same tactics it used in a 2012 victory -- and a witness who jurors said tipped the balance in Apple’s favor.

The federal jury of six women and two men, after a week-long trial in San Jose, California, yesterday restored most of the amount cut from a $1.05 billion verdict in favor of the iPhone maker last year over copying of technology used in smartphones.

Apple used the same lead lawyers, arguments, and witnesses for this trial as it did last year, with the exception of a new damages expert to replace a witness who died. Jurors said after the verdict that the new expert, Julie L. Davis, a Chicago-based certified public accountant, provided clear evidence they could use to arrive at their damages sum and was unflappable on the stand.

“Ms. Davis was on it,” jury forewoman Colleen Allen, a former U.S. military medic who served a tour in Afghanistan and now runs a mobile blood-collecting business, said in an interview. Davis was a “superstar witness” who remained steady “even when she was cross-examined,” Allen said.

U.S. District Judge Lucy Koh cut $410.5 million from the first verdict in March after finding it was flawed because jurors miscalculated the period that the infringement occurred for 13 Samsung devices. In the retrial, Apple sought to restore $380 million of the amount cut, while Samsung recommended that the jury award $52 million.

Global Battle

The world’s top two smartphone makers have spent hundreds of millions of dollars in legal fees on claims of copying each other’s features in a global battle to dominate the market. Apple, which initiated the legal fight in 2011, had 13 percent market share in the third quarter of this year, while Samsung had 31 percent, according to IDC, a research firm based in Framingham, Massachusetts.

Apple rose 1.2 percent to $521.14 yesterday in trading in New York. Samsung gained 0.7 percent to 1.45 million won at the close of trade in Seoul.

“The negative sentiment was all factored in when Apple won $1.05 billion against Samsung last year.” said Lee Seung Woo, an analyst at IBK Securities Co. “The Samsung-Apple patent issue has been going on for some time, I don’t expect the verdict will have an impact on sales of Samsung products or on the company’s brand image.”

Fifth-Largest

On its own, yesterday’s verdict is the fifth-largest jury award in the U.S. in 2013, according to data compiled by Bloomberg. It’s the largest jury award this year in a patent case. Total damages owed by Samsung now stand at $930 million.

Lauren Restuccia, a spokeswoman for Suwon, South Korea-based Samsung, said the company is disappointed with the verdict, “which is based in large part on a patent that the U.S. Patent and Trademark Office has recently deemed invalid.”

“While we move forward with our post-trial motions and appeals, we will continue to innovate,” Restuccia said in an e-mail.

The verdict includes a breakdown for damages for the 13 Samsung devices covered by the retrial, including almost $100 million for Samsung’s Infuse 4G. None of the devices covered by the trial are currently sold by Samsung.

‘Butted Heads’

Allen, the forewoman, said jurors “butted heads” on $178 million that Samsung argued should be subtracted from profits of more than $230 million that the companies agreed was attributable to the infringing products.

Davis argued “absolutely none of it should come out,” Allen said, referring to the $178 million, and Samsung didn’t provide sufficient evidence to rebut Apple’s expert, to make its case that the entire amount should be deducted for its operating costs. Jurors agreed to take the “middle of the road” and cut half of that amount, Allen said.

Another juror, Barry Goldman-Hall, concurred that Davis’s testimony was key when asked about decisive evidence presented at trial.

“For most of us it was Julie Davis,” he said in an interview. “She offered us a lot of information” to determine how much of the $178 million and what royalties should be awarded to Apple, he said. Samsung attempted, and failed, to block Goldman-Hall from being seated on the panel after he disclosed during jury selection that his cousin’s employment with Samsung ended “under bad circumstances.”

Juror’s Cousin

The cousin “didn’t have a favorable opinion of Samsung, and I heard a lot from him about that,” Goldman-Hall told the court. Goldman-Hall, a mental health therapist, said he was a “shoulder to cry on, a good listener” for his cousin, and felt like “he was treated very poorly.”

Koh rejected Samsung’s request to remove Goldman-Hall from the jury, telling lawyers that he said he would be fair and that “Samsung would not be behind because of his cousin’s experience.”

In closing arguments, Apple lawyer Bill Lee of WilmerHale, employing a tactic from the 2012 trial, urged jurors to focus on documents that he said revealed Samsung’s motive for copying, including a Samsung executive’s e-mail lamenting that the company was experiencing a “crisis of design” due to competition from the iPhone.

‘Emotional’ Argument

Bill Price of Quinn Emanuel Urquhart & Sullivan LLP, an attorney for Samsung, told jurors to resist Apple’s “emotional” argument. In his opening and closing arguments, Price argued Apple sought a “windfall” of damages based on its attempt to patent “beautiful and sexy,” when in fact the patents at issue are “very narrow.”

While Koh rejected Apple’s bid after the 2012 verdict for a U.S. sales ban on infringing Samsung devices, a federal appeals court on Nov. 18 cleared the way for the iPhone maker to pursue an injunction targeting some of its rival’s products.

The U.S. Court of Appeals for the Federal Circuit in Washington said that Apple can tailor its request to focus on infringement of patents covering smartphone features, such as multitouch technology, that were at issue in the 2012 trial. The company can’t block Samsung products for infringing patented designs, according to the opinion.

The jury’s damages verdict yesterday concludes the first U.S. patent-infringement trial between the two companies. Another trial is scheduled to go before Koh in March. That case covers technology in newer smartphones, including Apple’s iPhone 5 and Samsung’s Galaxy S III.

“For Apple, this case has always been about more than patents and money,” Kristin Huguet, a spokesman for Cupertino, California-based Apple, said by phone interview after the verdict. “It has been about innovation and the hard work that goes into inventing products that people love. While it’s impossible to put a price tag on those values, we are grateful to the jury for showing Samsung that copying has a cost.”

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

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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