Apple Inc. (AAPL)’s failure to convert its victory in a first U.S patent trial to a ban on sales of Samsung Electronics Co. (005930) smartphones may undercut the iPhone maker’s chances of faring better in a second high-stakes showdown.
Jury selection is set to begin today in the same San Jose, California, courtroom where jurors two years ago found that Samsung infringed Apple’s patents and awarded $1.05 billion in damages. The verdict wasn’t enough to persuade a federal judge to block Samsung from selling its devices in the U.S. market, a goal that Apple identified as more important than monetary compensation. This time, Apple is targeting a newer generation of Samsung phones and seeking twice the damages.
If Apple again convinces jurors that its technology was copied, it can then try anew for a sales ban. That will prove difficult, given that U.S. District Judge Lucy Koh, who is presiding over the trial, twice rejected Apple’s request in the first lawsuit, said Brian Love, a professor at Santa Clara University Law School.
“I have to think that Apple’s primary goal was to get an injunction that would take relatively new Samsung phones off the market,” he said. “Apple needed to get out in front in the first case” with an order banning Samsung’s products and leverage that to get a similar order banning newer smartphones in the second case, he said.
Apple and Samsung continue their worldwide legal battles atop a smartphone market that was valued at $338.2 billion last year, according to Bloomberg data. Samsung had 31.3 percent of industry revenue, compared with 15.2 percent for Apple, whose share of the market has shrunk as the touch-screen interface has become commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.
With Koh’s repeated pleas for a settlement unheeded, the companies are geared up for another monthlong trial and inevitable appeals, adding new legal bills to the hundreds of millions of dollars they’ve already spent on disputes before courts and regulators on four continents. Using teams of lawyers almost identical to the cast from the 2012 trial, each side will call as witnesses a mix of company executives and industry experts to try to show that sales of its rivals products were driven by copied technology.
Apple claims that 10 Samsung products, including the Galaxy S III, infringe five patents covering a range of user-interface designs for the iOS software that powers iPhones and iPads, including features like the slide-to-unlock function, automatic spelling corrections, and the ability for a user to make a call by clicking on a phone number within a web page or e-mail instead of having to dial it separately.
Others functions Apple says are covered by its patents include searching for words in files stored in different applications and updating applications while using other features of the phone.
Apple wants Samsung to pay as much as $40 for each phone sold that uses infringing technology, for a total of $2 billion, according to court documents and comments by lawyers at hearings.
Samsung alleges that nine Apple products, including the iPhone 5 and versions of the iPad and iPod, infringe two of its patents.
One claim is that FaceTime, Apple’s video-chatting service, infringes a patent held by the Suwon, South Korea-based company. The original holder of the patent, an inventor from Tulsa, Oklahoma, may testify about the technology it covers for compressing video data so it can be sent over a cellular network, according to a court filing.
Samsung acquired the other patent at issue in the case in 2011 from Japan’s Hitachi Ltd. It covers functions related to retrieving, classifying and organizing digital images.
In the first trial, jurors found Samsung infringed six of seven Apple patents and rejected all of Samsung’s claims against Apple products. Damages against Samsung were reduced to $930 million after a retrial. Samsung has appealed that award, as well as the original infringement verdict.
This time, the patents at issue make it unlikely Apple will land the clear victory it scored two years ago, said Michael Risch, a Villanova Law School professor. The patents mainly center on the Google Inc. (GOOG) Android operating system used by Samsung devices and not the look of the smartphone itself, he said.
The professor’s speculation that the trial will focus on Android is supported by Samsung’s witness list, which names seven Google employees, at least some of them engineers who may testify about the design of Android, “including the functionality accused of infringing” Apple’s patents, according to court filings.
“This is not about Samsung knocking off the look of Apple -- this is duking it out over software functions,” Risch said. He said Samsung’s phones now look noticeably different from iPhones, which may influence how jurors view Apple’s argument that Samsung copied its ideas.
“Samsung is doing something different now,” Risch said. “The ‘Samsung knocked us off’ theme will not play nearly as well here.”
Samsung may also benefit from having a judge who has repeatedly rejected Cupertino, California-based Apple’s efforts to keep the Galaxy maker’s products off the U.S. market.
Koh, acting on orders from an appeals court, reconsidered her 2012 decision rejecting a sales ban and concluded March 11 that Apple still hadn’t marshaled enough evidence to support its request covering more than 20 devices no longer on the market.
The judge found there wasn’t a strong enough connection between Samsung’s infringement and the irreparable harm Apple said it was likely to suffer. In particular, she said Apple didn’t prove that the patented smartphone features at issue in the 2012 trial drive consumer demand for the infringing Samsung products.
To help draw that connection, Apple relied on a Web-based survey by Massachusetts Institute of Technology professor John R. Hauser designed to measure consumers’ willingness to pay for Apple’s patented smartphone features. Koh wasn’t convinced by the results.
Apple plans to again call on Hauser. This time he has expanded his survey to try to also quantify a decrease in demand for Samsung products that don’t have infringing features. After tentatively ruling in January that Apple couldn’t use Hauser’s refined survey in the second trial, Koh changed her mind in February and permitted it.
Love, the Santa Clara law professor, said the struggle Apple faces to win its ultimate objective, a sales ban, begs the question of why the company is pursuing the second case. While the products at issue are newer, they will be “relics” by the time, years from now, Apple wins any injunction, he said.
Apple has argued that a sales ban is required to stop Samsung from trying to market products that are “not more than colorably different” from those already found to have copied Apple’s technology.
Love said the litigation may serve a public relations purpose.
“It seems like there is almost a marketing aspect to the case in that Apple is trying to send a message through all this litigation that ‘We’re the true innovators in the smartphone world, and everyone else is riding our coattails,’” Love said. “If that’s their goal, it’s kind of hard to put a dollar value on that.”
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 12-630, U.S. District Court, Northern District of California (San Jose).
To contact the reporters on this story: Joel Rosenblatt in federal court in San Jose, California at