Apple May Try to Beat Record $1 Billion Samsung Verdict
Apple Inc. (AAPL) is set for a replay of a court fight against Samsung Electronics Co. (005930) in which the iPhone maker may seek to recoup more than the $411 million in damages a judge cut from a $1.05 billion jury award in 2012 over patents.
A jury was selected today in San Jose, California, for a retrial over how much Samsung should pay for infringement of Apple’s intellectual property. The original verdict in August 2012, which was the year’s largest in the U.S. at the time, was found by a judge to be flawed because jurors miscalculated the period that the infringement occurred for some of the 28 Samsung devices on trial. Opening arguments are scheduled for tomorrow.
U.S. District Judge Lucy Koh will instruct jurors that the previous nine-member jury found Samsung infringed five valid Apple patents and that their “sole job” in the retrial is to determine the amount of damages Samsung must pay for the infringement of 13 Samsung products. While Apple hasn’t said how much it will seek, this jury’s revision of the damages to properly account for the infringement may result in more than the $410.6 million subtracted from the previous award, according to Carl Howe, an analyst with Yankee Group.
“The argument at this point is simply about how much Samsung must pay Apple,” Howe said. “In my view, there is no chance that the penalties assessed will be small; the argument is just over whether they will be big or huge.”
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In global battles before courts and trade regulators, the world’s two top smartphone manufacturers are spending hundreds of millions of dollars in legal fees on claims of copying each other’s features. Apple, which initiated the legal fight in 2011, is seeking to limit the Galaxy maker’s increasing share of the U.S. smartphone market, where Cupertino, California-based Apple is No. 1 and Samsung No. 2.
Koh concluded in March that the original jury may have overstated damages by basing its calculations on incorrect dates for when Suwon, South Korea-based Samsung was first on notice that its products infringed Apple’s patents. She also found that the jury mistakenly awarded damages on profits for some Samsung products that infringed only utility patents, which isn’t legally permitted.
Adam Yates, a spokesman for Samsung, and Kristin Huguet, a spokeswoman for Apple, declined to comment on the retrial.
The judge has said in court filings that evidence at the retrial should “hew as closely as possible to that presented at the original trial -- with the exception of the corrected notice dates.”
While Koh has blocked the companies from presenting exhibits or witnesses that weren’t admitted at the first trial, one difference is that Apple will rely on a different damages expert after the death in December of Terry Musika, its expert at the first trial.
Musika, a certified public accountant, presented damages figures to the 2012 jury based on an assertion that Samsung knew as of Aug. 4, 2010, that it was infringing Apple patents, according to Koh’s March 3 ruling.
For two of the patents at issue in the retrial, the evidence supports a notice date 10 months later than what Musika relied on, Koh said in the March ruling. The original award “may have contained some amount of excess compensation” because of the early notice dates, Koh said.
Apple’s new damages expert is Julie L. Davis, a Chicago-based CPA who, according to a court filing, has worked on more than 300 intellectual property disputes. Samsung will rely on the same damages expert, Michael Wagner, who at the original trial rebutted Apple’s damages estimates.
In a repeat of a pretrial dispute from 2012, Samsung objected to the retrial jury being shown images of Apple’s iconic co-founder, the late Steve Jobs, introducing the iPhone in 2007.
“The gratuitous video of Mr. Jobs has no evidentiary value and has been proposed by Apple in order to turn the trial into the popularity contest that the court has prohibited” in a previous ruling, Samsung said in a court filing.
Koh ruled that the video is “not unduly prejudicial” and is relevant because it shows demand for the iPhone and its patented features, specifically the way an iPad or iPhone screen seems to bounce when a user scrolls to the end of a file.
A jury of six women and two men was selected today after six hours of interviews with 34 prospective jurors. The panel includes a nurse, a Stanford University medical researcher, a Stanford property manager whose father in-law is a patent attorney, a pharmacist for Costco Wholesale Corp. (COST), a retired English teacher and a mental health therapist who said he consoled a cousin whose job with Samsung ended “under bad circumstances.” The judge allowed that juror to be seated over Samsung’s objection.
Among those who didn’t make the final cut was a Belgian engineer who does smartphone systems testing for Apple. Also dismissed was a woman who said she worked for an Apple store 10 years ago, owns 300 shares of Apple stock and buys all of the company’s latest products.
As the retrial gets under way, Apple may call as a witness its marketing chief, Phil Schiller, according to a court filing. The company may also solicit live testimony from Scott Forstall, its former head of mobile-software who left in October 2012 after an executive reorganization by Apple Chief Executive Officer Tim Cook.
Samsung’s most senior executives who may be called to testify are Min-Hyouk Lee, a vice president of the mobile design group, and Justin Denison and Tim Sheppard, who are vice presidents at the company’s Samsung Telecommunications America unit, according to a court filing.
For the jury picked to hear the retrial, there will be one more big difference from the 2012 trial. The original panel was given 109 pages of instructions, and tasked with answering more than 600 questions following a three-week trial that produced dozens of exhibits and 50 hours of argument and testimony.
The damages retrial is expected to last seven days and the verdict form requires the jury only to calculate damages for 13 different products and tally them up.
The 2012 jury was presented with a “complex matrix” that “encouraged them to make judgments about the how and why of the damages,” Howe said. The verdict form for the retrial “gets to the nub of the matter much more clearly and doesn’t leave room for equivocation,” he said. “Put down a dollar amount and that’s what the award will be.”
In a separate jury trial in Los Angeles federal court that also started today, Apple faces claims by a California inventor that a patent he holds covers key features of the iPhone.
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).
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