APPLE vs. SAMSUNG: SMARTPHONE PATENT WAR,

PRACTICAL IMPLICATIONS AND REPERCUSSIONS OF

SAMSUNG VERDICT WITHIN THE SMARTPHONE

INDUSTRY

Jessica H. Bui, Esq.1

I. INTRODUCTION

The smartphone industry today is characterized by a thicket of patents and an ongoing

business battle by every major smartphone manufacturer in which patents are used as leverage

against competitors to secure or increase their respective market shares while slowing

competitors’ progress.2 The conflict is part of the larger “patent wars” between technology and

software multinational corporations based in the United States, Canada, Europe, Japan, Korea,

Taiwan and China. The companies involved include Apple, HTC, Microsoft, Motorola Mobility,

Nokia, Research in Motion (RIM), and Samsung.

The current smartphone wars started in the late 2000s in part because of a long-running

feud between Apple, the world’s largest technology company by market capitalization, and

Google regarding Google’s competing Android mobile operating system (OS) and Android

phones when Google jumped into the smartphone market while former Google CEO Eric

Schmidt was on Apple’s Board of Director from 2006-2009, and in part because of the success

of Google Android as the dominant operating system (OS) in the global smartphone market

relative to Apple’s own operating system (iOS).3 The late Steve Jobs, co-founder and former

1 Jessica H. Bui, Esq. is a Patent Attorney at Bui Garcia-Zamor, an Intellectual Property law firm

located in Washington D.C. (see www.buigarcia.com). Ms. Bui received a BS in General Biological

Science with emphasis in Genetics from the University of Maryland, a MS in Biotechnology from John

Hopkins University, and a JD from the University of Baltimore. Copyright ©January 10, 2013 Bui

Garcia-Zamor. The views expressed in this paper are personal to the author alone. 2 Michael A. Carrier, “A Roadmap to the Smartphone Patent Wars and FRAND Licensing,” CPI

ANTITRUST CHRON., Apr. 2012, (http:papers.ssrn.com/sol3/papers.cfm?abstract_id=2050743). 3 Apple had an early advantage in the smartphone market because of lead-time and network effects.

Apple encouraged independent software developers to produce “apps” that could run on Apple’s iOS

system. The availability of these apps became a major feature driving consumers to purchase Apple’s

iPhones. None of the competing smartphone manufacturers had sufficient market penetration to attract

similar app development, until Google introduced the Android operating system. Google widely licensed

the Android software to a number of smartphone manufacturers, including Samsung (for free). The

emergence of Android enabled other manufacturers to compete with Apple’s iPhones. By mid-2011,

Android phones were outselling iPhones more than 2-to-1. See IDC, Android and iOS Surge to New

Smartphone OS Record in Second Quarter (Aug. 8, 2012),

http://www.idc.com/getdoc.jsp?containerID=prUS23638712 (last visited Oct. 21, 2012) (reporting Q2

2011 shipments of 50.8 million Android phones and 20.4 million iOS phones). By the middle of 2012,

however, the gap has widened; four Android phones were being sold for each iPhone. See id. (reporting

1

chairman and CEO of Apple, referred to Google’s Android phone concept as a “stolen product.”

In the Steven Jobs4 biography by Walter Issacson, Jobs promised “thermonuclear war” against

what he saw as Android’s systematic copying of Apple features.

However, Apple has not attacked Google head on;5 rather, Apple fired off a series of

lawsuits against Google-Android partners and smartphone manufacturers in part because these

smartphone manufacturers actually generate revenue and profit from those Android phones

whereas Google gives the Android operating system (OS) away for free and generates revenue

only indirectly through mobile advertising. For example, in March 2010, Apple first sued

Google-Android partner HTC for patent infringement of iPhone’s features including iOS user

interface, underlying architecture and hardware in the U.S. District Court for the District of

Delaware and the International Trade Commission (ITC).6 The conflict with HTC mushroomed

into 10 different lawsuits in various jurisdictions in the United States, United Kingdom and

Germany, and eventually settled in November 2012.7 Similarly, in October 2010, Apple also

filed lawsuits against Motorola Mobility over six multi-touch OS patents that make up much of

the signature touch-screen inventions of the iPhones.8

In April 2011, Apple then sued Google leading Android partner, Samsung for patent

infringement of user interface and design features of iPhones and iPads in the U.S. District Court

for the Northern District of California.9 However, unlike HTC, Samsung is the world’s largest

Q2 2012 shipments of 104.8 million Android phones and 26.0 million iOS phones). At the time of the

trial, Samsung was the leading producer of Android phones. See id. (“Android’s success in the market

can be traced directly to Samsung, which accounted for 44% of all Android phones shipped worldwide in

the 2nd

quarter of 2012 and totaled more than all other Android vendors’ volumes combined.”) 4 “Steve Jobs” is the authorized biography of Steve Jobs, written by Walter Issacson. The book

was released on October 24, 2011 by Simon & Schuster in the United States. 5 In its ongoing effort to build up its patent portfolio and defend Android operating system (OS)

against patent infringement lawsuits, Google purchased Motorola Mobility on August 15, 2011 for $12.5

billion, primarily for its 17,000 patent portfolio. According to Google CEO Larry Page, the “acquisition

of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable

[Google] to better protect Android from anti-competitive threats from Microsoft, Apple and other

companies...” In addition to Motorola Mobility, Google has also stockpiled patents from IBM and other

companies in late 2011. 6 Apple v. HTC, C.A. Nos. 10-166-GMS, 10-167-GMS, U.S. Dist. Ct., D. Del., 2011-1-14.

Retrieved 2 July 2012; and Apple's ITC complaint against HTC, 75 Fed. Reg. 17434, 2010-4-6. 7 Mullin, Joe, “Apple and HTC reach a sudden patent peace, but at what cost?,” ArsTechnica,

arstechnica.com, 2012-11-11. Retrieved 21 December 2012. 8 Motorola Mobility, Inc. v. Apple Inc., In the Matter of Certain Wireless Communication Devices,

Portable Music and Data Processing Devices, Computers and Components Thereof, ITC Inv. No. 337-

TA-745, 2010-10-6; Motorola Mobility, Inc. v. Apple Inc. and NeXT Software, Inc., U.S. Dist. Ct., Dist.

Del., 2010-10-8; Apple Inc. v. Motorola, Inc. and Motorola Mobility, Inc., U.S. Dist. Ct., W.Dist. Wisc.,

2010-10-29; In the Matter of Certain Mobile Devices and Related Software, ITC Inv. No. 337-TA-750,

2010-10-29; Apple v. Motorola, 337-TA-750, 2012-3-16; Apple, Inc. and Apple Sales International v.

Motorola Mobility, Inc., case 12CV0355 JLS BLM, U.S. Dist. Ct., S.D. Cal., 2012-2-10. 9 Apple Inc., v. Samsung Elecs. Co., No. 11-CV-01846-LHK, 2012 WL 3627731 (N.D. Cal. Aug.

21, 2012).

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technology company by revenues from 2009 to 2012,10

and also the world’s largest maker of

smartphones supporting Google Android as the primary operating system (OS). Samsung is also

no stranger to patent lawsuits and innovation, having one of the largest patent portfolios in the

United States and the World.11

The legal battle between Apple and Samsung is particularly

intriguing because Apple and Samsung have worked closely together for many years. Samsung

has been one of Apple’s largest suppliers of components such as memory chips and components

for all Apple’s products including iPhones and iPads, and Apple one of Samsung’s biggest

customers. Nevertheless, this symbiotic relationship between Apple and Samsung has not

deterred either company from competing head-on in the smartphone market, together winning ½

of the global market share and 90% of the profit for smartphones and tablets,12

and now using

patents as weapons to gain market share and draw product differentiations. The legal dispute

between Apple and Samsung has mushroomed into 50 different lawsuits in 10 different

countries, including four in the U.S., 12 in Germany, one in the UK, two each in France, Italy,

the Netherlands, South Korea, and Australia, and three in Spain.

On August 24, 2012, Apple won a $1.049 billion patent-infringement verdict in a jury

trial against Samsung in the United States District Court for the Northern District of California.

The jury found that Samsung had infringed on all three Apple’s user interface patents (U.S.

Patent No. 7,469,481, known as “Bounce-Back-Effect” patent; U.S. Patent No. 7,844,915,

known as “On-Screen Navigation” patent; U.S. Patent No. 7,864,163, known as “Tap-To-Zoom”

patent), and three out of four design patents that Apple had asserted. The jury rejected

Samsung’s defense that these patents were invalid. In addition, the jury found that Samsung

willful infringed five of these patents. The jury also denied all of Samsung’s infringement

counterclaims.13

This paper will focus on the lawsuits between Apple and Samsung both in the U.S. and

around the world, and explore the practical implications and repercussions of the Apple vs.

Samsung case relative to Google and other smartphone competitors within the smartphone

industry, patents and innovation, and the general public.

10 “Samsung Beats HP to Pole Position,” Financial Times. Retrieved 28 January 2010. 11

Samsung Electronics Co., is ranked 2nd

in the United States for seven (7) consecutive years, from

2006-2012 (see www.uspto.gov) and has over 100,000 patents in the fields of flash memory, system LSI,

mobile phones and other major products (see Samsung Patent Report 2012). 12 See IDC, Android and iOS Surge to New Smartphone OS Record in Second Quarter (Aug. 8,

2012), http://www.idc.com/getdoc.jsp?containerID=prUS23638712 (last visited Oct. 21, 2012). 13

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1B, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed/). Cnet. Retrieved December 20, 2012; also see Amended Verdict Form, Apple Inc.,

v. Samsung Elecs. Co., No. 11-CV-01846-LHK (N.D. Cal. Aug. 21, 2012)

(http://cand.uscourts.gov/fileliberary/1079/Amended%20%Jury%20Verdict.pdf).

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II. THE APPLE vs. SAMSUNG CASE

Lawsuits in the U.S.

On April 15, 2011, Apple filed a complaint in the United States District Court for the

Northern District of California alleging that several of Samsung Android phones and tablets

infringed on Apple’s patents and trademarks. Specifically, these products included Nexus S,

Epic 4G, Galaxy S 4G, and Samsung Galaxy Tab. In addition to patent infringement claims,

Apple’s complaint also included false designation of origin, unfair competition, and trademark

infringement under federal laws, as well as unfair competition, common law trademark

infringement, and unjust enrichment under state laws.14

In its complaint, Apple alleged that

“instead of pursuing independent product development, Samsung had chosen to slavishly copy

Apple’s innovative technology, distinctive user interfaces, and elegant and distinctive product

and packaging design, in violation of Apple’s valuable intellectual property rights.”15

Apple also

claimed that as of March 2011, 108 million iPhones and 19 million iPads had been sold. In

addition, Apple spent more than $2 billion in advertising its products between fiscal years 2007

to 2010.16

Apple calculated that financial damages incurred by Apple and profits wrongly

gained by Samsung total to $2.5 billion which Apple claimed that Samsung ought to pay.17

In response, on April 28, 2011, Samsung filed counterclaims in the Northern District of

California alleging ten counts of patent infringement against Apple (after filing lawsuits in South

Korea, Japan, and Germany against Apple on April 21, 2011).18

These ten counts did not include

a reply to Apple’s lawsuit, and thus, setting the tone that Samsung was prepared to strike back

instead of just defending itself against Apple’s complaint. In the complaint, Samsung stated that

from 2005 to 2010, it spent $35 billion on research and development, and obtained 28,700 US

patent, 5,933 of which are related to telecommunications, implying that they had many more

than just ten claims against Apple, and that Samsung was equally if not more inventive than

Apple in making and designing their own products.19

Samsung’s counter-attacks included

14

“Apple Inc. v. Samsung Electronics Co. Ltd. et al.”

(http://cand.uscourts.gov/lhk/applevsamsung). United States District Court, Northern District of

California. Retrieved December 20, 2012. 15

Wall, Michael (July 28, 2012). “Apple vs. Samsung: case overview for the patent trial of the

century” (http://www.brighthand.com/default.asp?newsID=19124&news=samsung+apple+lawsuit+case).

Brightland. Retrieved December 20, 2012. 16

Patel, Nilay (April 29, 2011). “Samsung sues Apple for infringing 10 patents: a closer look.”

(htt://www.theverge.com/2011/04/29/samunsg-sues-apple-infringing-10-patents/). The Verge. Retrieved

December 20, 2012. 17

Wall, Michael (July 28, 2012). “Apple vs. Samsung: case overview for the patent trial of the

century” (http://www.brighthand.com/default.asp?newsID=19124&news=samsung+apple+lawsuit+case).

Brightland. Retrieved December 20, 2012. 18

Patel, Nilay (April 22, 2011). “Samsung countersues Apple in Korea, Japan, and Germany, but

not the US…yet.” (htt://www.theverge.com/2011/04/29/samunsg-countersues-apple-in-korea-japan-

germany/). The Verge. Retrieved December 20, 2012. 19

Patel, Nilay (April 29, 2011). “Samsung sues Apple for infringing 10 patents: a closer look”

(htt://www.theverge.com/2011/04/29/samunsg-sues-apple-infringing-10-patents/). The Verge. Retrieved

December 24, 2012.

4

allegation that Apple infringed its 3G wireless patents and that Apple ought to royalties of 2.4%

of all sales of devices using Samsung’s iOS technology.20

First U.S.Trial

From the time this lawsuit started on April 15, 2011 to April 2012, Apple and Samsung

continued to hurl a series of claims and counter-claims regarding infringement allegations.

However, because Judge Lucy H. Koh21

restricted that both sides are allotted 25 hours to present

their respective cases, the issues at trial were greatly reduced.22

Specifically, Apple alleged

Samsung of infringing on three of its utility patents (U.S. Patent Nos. 7,469,481; 7,844,915; and

7,864,163) and four design patents (U.S. Patent Nos. D504,889; D593,087; D618,677; and

D604,305). Apple also alleged that Samsung had diluted its trade dresses relating to Apple

iPhone. In response, Samsung accused Apple of infringing on five of its utility patent (U.S.

Patent Nos. 7,675,941; 7,447,516; 7,698,711; 7,577,460; and 7,456,893) and one design patent

(U.S. Patent No. D504,899), of which the design patent was at the heart of Samsung’s argument.

Samsung also accused Apple of violating antitrust law by monopolizing markets related to

Universal Mobile Telecommunication System (UMTS) standard.23

However, even with reduced claims and restricted time allotted, the first trial lasted more

than three weeks and involved many complex technical issues and massive amount of evidence.

The jurors had a daunting task of working through hundreds of pages of technical information to

determine which devices infringed or not infringed on which claims, especially when Apple

accused about two dozens of Samsung products infringing on their patents.24

Apple’s Case

Throughout trial, Apple kept its story simple. Apple told just one story, which was

essentially the same from the beginning of the lawsuit: Apple invested greatly in developing and

marketing iPhones and iPads, and as the result, Apple products and designs became the

20

Macari Matt (July 30, 2012). “Apple vs. Samsung: the complete guide to a billion-dollar trial”

(htt://www.theverge.com/2012/07/30/apple-vs-samsung-trial-guide/). The Verge. Retrieved December 24,

2012. 21

Judge Lucy H. Koh is the first Asian American United States District Court Judge in the Northern

District of California, and the first District Court of Korean descent in the United States. Judge Koh was

nominated by President Barack Obama on January 20, 2010, confirmed by the Senate on June 7, 2010,

and received her commission on June 9, 2010. Previously, she served as an Assistant United States

Attorney and then as litigation partner at McDermott Will & Emery representing technology companies in

patent cases. 22

Id. 23

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1B, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed/). Cnet. Retrieved December 20, 2012. 24

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1 billion, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed-on-apple-patents/). CNET Online. Retrieved January 6, 2013.

5

benchmark for competitors and consumers.25

Instead of fairly competing, Samsung copied

Apple patented products and designs. Apple asked for a $2.525 billion award for financial

damages in its trial brief. Apple claimed that it incurred lost profits of $500 million due to sales

of Samsung products that infringed on Apple’s patents, and a $2 billion Samsung’s wrongful

profits associated with infringement on Apple’s patents.26

Apple also chose to reduce its complaint to utility and design patents that are relatively

straightforward and fairly easy to understand. Specifically, the claims of U.S. Patent No.

7,469,481 are directed to Apple’s famous iOS “Scrollback” or “Bounce-Back-Effect” patent,

where a background texture is displayed when a user scrolls beyond the edge of a document or

webpage. As for Apple’s “On-Screen Navigation” patent, U.S. Patent No. 7,844,915, its claims

are directed to determining when a user is using one finger to scroll versus two or more fingers to

zoom. The claims of Apple’s “Tap-To-Zoom” patent, U.S. Patent No. 7,864,163, are directed to

tapping to zoom a screen on an area with multiple content areas displayed.27

As for Apple’s

design patents, they are also very simple. Two of them are directed to an iPhone, one on an iPad,

and one on general iOS icon layout on a screen. However, trying to prove that about two dozens

of Samsung products, including Galaxy S, SII, Epic 4G, Captivate, Vibrant, Infuse 4G, Droid

Charge, and Galaxy Tab 10.1, infringed these utility and design patents during trial were not as

simple.28

Apple was required to demonstrate that each of Samsung’s accused products contain

elements that infringed at least one claim in Apple’s patents. This was definitely a simpler task.

Samsung’s Case

At trial, Samsung claimed that it spent billions on research and development and had

entered the mobile market decades before Apple. Samsung also claimed that it owned thousands

of patents, some of which cover standardized technologies, such as 3G cellular networking

which Apple products infringed on. In contrast, Apple was a relatively new player in the mobile

market and used Samsung’s research without paying for it. Samsung also claimed that Apple

enter the mobile market via industry-standard cross-licensing agreements instead of starting from

scratch. Samsung accused Apple of being anticompetitive for using patents to block Samsung

products instead of fairly competing in the market.29

Samsung also argued that these patents are

not valid because their claims are too vague and broad. Samsung also asked for $421 million in

its countersuit that Apple products infringed on their patents.30

However, Samsung was faced to

25

Macari Matt (July 30, 2012). “Apple vs. Samsung: the complete guide to a billion-dollar trial”

(htt://www.theverge.com/2012/07/30/apple-vs-samsung-trial-guide/). The Verge. Retrieved January 5,

2013. 26

Macari Matt (July 30, 2012). “Apple vs. Samsung: the complete guide to a billion-dollar trial”

(htt://www.theverge.com/2012/07/30/apple-vs-samsung-trial-guide/). The Verge. Retrieved January 5,

2013. 27

Id. 28

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1 billion, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed-on-apple-patents/). CNET Online. Retrieved January 6, 2013. 29

Id. 30

Id.

6

rebut Apple’s defense under the legal doctrine of patent exhaustion31

which states that you only

get one bite at the apple. In other words, Apple’s defense was simply that Samsung was trying to

double dip on licensing fees at Apple's expense. Apple argued that the wireless baseband chips in

iPads and iPhones were purchased from companies like Qualcomm and Intel. Thus, Apple was

expected to argue that Samsung already got payment from Qualcomm and Intel for licensing the

patents that Samsung was accusing that Apple infringed on. Samsung cannot turn around and

demand payment from Apple for those same chips that Apple bought from Qualcomm and Intel.

In sum, Apple’s defense was that Samsung's enforceable patent rights relative to those

components are now “exhausted” and used up.32

Samsung was faced with a difficult task of

rebutting this argument.

Verdict of First Trial

A nine-person-jury awarded Apple $1,049,393,540 in damages on August 24, 2012. The

jury found Samsung infringed on most of Apple patents infringement claims. The jury also

found willful infringement on five of six patents. In addition, the jury found Samsung diluted

Apple’s registered iPhone, iPhone 3, and “combination iPhone” trade dress on some products.

Although the jury found Samsung did not violate antitrust law by monopolizing markets related

to UMTS standard, it found no Apple infringement of Samsung utility patents, and thus did not

award Samsung any damages.33

Specifically, the jury found Samsung infringed on Apple’s

utility patents that cover iPhone’s user interfaces including “Bounce-Back-Effect” as claimed in

U.S. Patent No. 7,469,481, “On-screen Navigation” U.S. Patent No. 7,844,915, and “Tap-To-

Zoom” U.S. Patent No. 7,864,163. The jury also found Samsung infringed on Apple’s design

patents that cover iPhone’s features the “home button, rounded corners and tapered edges” as

recited in the claims of U.S. D593087, and “On-Screen Icons” as recited in the claims of U.S.

D604305.34

Damaging Information Revealed During First Trial

As often occurred in public trials, highly confidential information of both Apple and

Samsung were revealed. Evidence was introduced to show that Apple was secretly planning to

develop mini iPads. Apple’s highly detailed financial records were revealed far beyond what

31

Quanta Comp. v. LG Electronics, 553 U.S. 617 (2008), the U.S. Supreme Court unanimously

reaffirmed the validity of the so-called “patent exhaustion” (or 1st sale) doctrine, holding that patentees

have little or no power to restrict what a purchaser does with a product after the first sale. The Court also

noted that a patentee’s rights are exhausted against a buyer when the patentee sells a patented product to

the buyer, and more importantly, against parties who later buy the product from that buyer, provided that

the buyer is authorized to sell the product. 32

Macari Matt (October 31, 2011). “Apple harmonizes its patent defenses against Samsung”

(http://www.theverge.com/2011/10/31/2522418/apple-brings-proven-defense-strategy-to-its-u-s-case-

against-samsung). The Verge. Retrieved January 5, 2013. 33

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1 billion, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed-on-apple-patents/). CNET Online. Retrieved January 6, 2013. 34

Burnette, Ed (August 25, 2012). “The verdict is in: Samsung vs. Apple”

(http://www.zdnet.com/the-verdict-is-in-samsung-vs-apple-7000003163/). Zdnet Online. Retrieved

January 6, 2013.

7

companies typically make available to the public. As for Samsung, damaging internal

documents were uncovered revealing that Samsung conducted research on Apple devices while

designing its software icons as well as general features. The most damaging evidence was

internal reports containing side-by-side comparison of Galaxy smartphones and Apple iPhones,

and proposals of how to make the Galaxy devices even more similar to Apple devices.35

Injunction of US Sales during First Trial

Even before the trial started, Samsung was faced with Apple’s motion seeking

preliminary injunction in the U.S. on July 1, 2012 to block sales of Samsung smartphones, such

as Infuse 4G and Droid Charge. Apple claimed that sales of Samsung smartphones caused

irreparable harm to Apple. However, on December 2, 2011, Judge Lucy H. Koh denied Apple’s

motion for preliminary injunction stating that although Apple had established a likelihood of

success at trial on the merits of Apple’s alleged infringement claims, Apple had not established

that it could overcome Samsung’s arguments that the Apple’s alleged patents are valid.36

Apple appealed Judge Koh’s ruling, and won. On May 4, 2012, the U.S. Court of

Appeals for the Federal Circuit reversed the ruling and ordered Judge Koh to issue an

injunction.37

Thus, on June 12, 2012, a preliminary injunction was granted and Samsung was

prevented from making, using, offering to sell, selling, or importing into the U.S Samsung

Galaxy Nexus and any of its technology making use of the disputed patents. At the same time,

the court ordered Apple to post a bond in the amount of $95.6 million in the event that Samsung

prevailed at trial, which Samsung did with regard to the Galaxy Nexus devices.38

Galaxy Nexus

was found not infringing on Apple’s patents as a result of the trial.

On October 11, 2012 the Federal Circuit granted Samsung’s motion to remove the

preliminary injunction after the first trial.39

35

Lowensohn, Josh (August 24, 2012). “Jury awards Apple more than $1 billion, finds Samsung

infringed” (http://news.cnet.com/8301-13579_3-57500159-37/jury-awards-apple-more-than-$1b-finds-

samsung-infringed-on-apple-patents/). CNET Online. Retrieved January 6, 2013.

36 Levine, Dan (December 3, 2011). “U.S. judge rejects Apple bid to halt Galaxy sales”

(http://www.reuters.com/article/2011/12/03/us-apple-samsung-ruling-idUSTRE7B206D20111203).

Reuters. Retrieved January 5, 2013. 37

Bieneman, Charles (May 14, 2012). “The Software Intellectual Property Report”

(http://swipreport.com/preliminary-injunction-for-apple-in-patent-fight-against-samsung/). RSS Online.

Retrieved January 6, 2013. 38

Lowensohn, Josh (June 29, 2012). “Judge Oks Apple injunction on Samsung’s Nexus phone”

(http://news.cnet.com/8301-1035_3-57464191-94/judge-oks-apple-injunction-on-samsungs-nexus-

phone/). CNET Online. Retrieved January 6, 2013. 39

Bartz, Diana (October 11, 2012). “Update 3-U.S. court clears Samsung phone, hands Apple

setback” (http://www.reuters.com/article/2012/10/11/apple-samsung-patent-

idUSL1E8LBG4G20121011). Reuters. Retrieved January 6, 2013.

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Verdict Delivered but Trial Not Over

Apple Continues to Fight

Based on the jury verdict, Apple filed a motion for permanent injunction on August 31,

2012 seeking to ban all sales of the Samsung products cited as infringed on Apple’s patents.

However, this motion was denied by Judge Koh on December 17, 2012 ruling that Apple had not

proven irreparable harm.40

In order to be eligible for injunctive relief, the prevailing party

(Apple) must show that it will suffer irreparable harm in absence of an injunction. Under the

irreparable harm doctrine, proof of the nexus between the infringement and the irreparable harm

must be established, i.e., infringement of the particular features or designs by Samsung protected

by Apple patents must have caused the loss of Apple’s market share. Unlike infringement and

damages, issues relating to injunctive relief are viewed as equitable issues, and thus are decided

by a judge instead of a jury.

In its motion for permanent injunction, Apple alleged three irreparable injuries: (1) loss

of market share; (2) loss of downstream and future sales; and (3) injury to Apple’s ecosystem. In

denying Apple’s motion, Judge Koh stated that although Apple had proven injuries, it failed to

prove the causal nexus between specific infringement and the irreparable harm. In fact, Apple’s

proof was “simply too general” and did not present any analysis of alleged harm on a claim-by-

claim or even a patent-by-patent analysis. Thus, Judge Koh denied injunctive relief.41

Although this is a major victory for Samsung, Apple had the right to appeal this decision

to the Federal Circuit,42

and then to the Supreme Court even as the district court continues to

decide additional post-verdict motions.43

In addition to seeking permanent injunction, on September 21 and 22, 2012, Apple filed a

motion seeking an additional $707 million, alleging that was an interest amount of Apple’s

40

Order Denying Motion for Permanent Injunction by United States District Court Northern

District of California. (http://www.scribd.com/doc/117196813/Apple-Denied-Motion-for-Permanent-

Injunction). (December 17, 2012). Retrieved January 6, 2013. 41

Id. 42

On appeal, the Federal Circuit endorsed Koh’s articulation and application of a nexus

requirement. See Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1324 (Fed. Cir. 2012) (we hold that

the district court was correct to require a showing of some causal nexus between Samsung’s infringement

and the alleged harm to Apple as part of the showing of irreparable harm. To show irreparable harm, it is

necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product

cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented

feature. If the patented feature does not drive the demand for the product, sales would be lost even if the

offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be

shown if sales would be lost regardless of the infringing conduct.) 43

Levine, Dan (January 7, 2013). “Analysis: Apple bid for Samsung Sales ban faces skeptical

court” (http://money.msn.com/business-

news/article.aspx?date=20130107&feed=OBR&id=15966739#scptid). Money. Retrieved on January 7,

2013.

9

damages. Apple met with Judge Koh for a hearing on December 6, 2012 on this post-trial

motion together with Samsung who filed a separate motion seeking for a new trial.44

Samsung also Continues to Fight

In addition, to show that it is still in the fight, Samsung issued a statement after the

verdict which states:

“Today’s verdict should not be viewed as a win for Apple,

but as a loss for the American consumer. It will lead to fewer

choices, less innovation, and potentially higher price. It is

unfortunate that patent law can be manipulated to give one

company a monopoly over rectangles with rounded corners, or

technology that is being improved every day by Samsung and other

companies. Consumers have the right to choices, and they know

what they are buying when they purchase Samsung products. This

is not the final word in this case or in battles being waged in courts

and tribunals around the world, some of which have already

rejected many of Apple’s claims. Samsung will continue to

innovate and offer choices for the consumer.” 45

Samsung then filed a motion for a new trial on September 21, 2012 in San Jose,

California. Samsung argued that the verdict was not supported by evidence or testimony.

Samsung also argued that the judge imposed limits on testimony time and the number of

witnesses prevented Samsung from receiving a fair trial. Finally, Samsung argued the jury

verdict was unreasonable.46

A hearing was held with Judge Koh on December 6, 2012 on this

motion, in which Apple also attended due to a separate motion filed on September 21 and 22,

2012 requesting an additional $707 million in interest.47

On October 2, 2012, Samsung requested the San Jose district court to overturn the August

24, 2012 jury verdict and grant Samsung a new trial. Samsung claimed that the jury foreman,

Velvin Hogan, was biased and deceitful during voir dire. This appeal was filed based primarily

44

Alan, F. (December 6, 2012). “Apple and Samsung returned to court for hearing in front of Judge

Koh” (http://www.phonearena.com/news/Apple-and-Samsung-return-to-court-for-hearing-in-front-of-

Judge-Koh_id37363). Phonearena.com. Retrieved January 6, 2013. 45

Burnette, Ed (August 25, 2012). “The verdict is in: Samsung vs. Apple”

(http://www.zdnet.com/the-verdict-is-in-samsung-vs-apple-7000003163/). Zdnet. Retrieved January 6,

2013. 46

Ellas, Paul (September 22, 2012). “Apple, Samsung demand changes to $1B verdict”

http://news.yahoo.com/apple-samsung-demand-changes-1b-verdict-210635615--finance.html). Yahoo

News. Retrieved January 6, 2013. 47

Alan, F. (December 6, 2012). “Apple and Samsung returned to court for hearing in front of Judge

Koh” (http://www.phonearena.com/news/Apple-and-Samsung-return-to-court-for-hearing-in-front-of-

Judge-Koh_id37363). Phonearena.com. Retrieved January 6, 2013.

10

on interviews given by the jury foreman, Velvin Hogan, after the verdict.48

Samsung claimed

that during the jury deliberation process, the jury foreman improperly introduced incorrect and

erroneous standards. Samsung also claimed that bias should be presumed in this case because

the jury foreman deliberately concealed his lawsuit with Seagate Technology during voir dire

when he gave an incomplete answer regarding prior lawsuits. Seagate was the jury foreman’s

former employer and had strategic relationship with Samsung. The jury foreman was forced to

file bankruptcy as a result of being sued by Seagate. Samsung alleges that the juror foreman lied

because he wanted to secure a seat on the jury. However, Samsung’s request was denied. 49

On December 17, 2012 by Judge Koh denied Samsung’s request stating that “the

integrity of the jury system and the Federal Rules of Evidence demand that the Court not

consider Mr. Hogan’s post-verdict statements concerning the jury’s decision-making process.”

Thus, Judge Koh concluded that since the district court cannot consider inadmissible statements

when considering whether or not to hold an evidentiary hearing, the court cannot grant Samsung

a hearing because Samsung had not provided proper evidence.50

Reexamination of Apple’s “Software” Patents

One unexpected outcome after the trial was that on October 15, 2012, the U.S. Patent and

Trademark Office (USPTO) tentatively invalidated all the claims of Apple’s bounce back patent,

U.S. Patent No. 7,469,381 in a non-final office action during a reexamination proceeding.51

Several weeks later, on December 3 and 19, 2012, the USPTO also rejected all the claims of

Apple’s “On-Screen Navigation” patent, U.S. Patent No. 7,844,91552

and Apple’s “Tap-To-

Zoom” patent, U.S. Patent No. 7,864,163.53

However, Apple has been given opportunities to

48

(October 3, 2012). “Samsung claims jury foreman misconduct tainted Apple case”

(http://www.bloomberg.com/news/2012-10-03/samsung-claims-jury-foreman-misconduct-tainted-apple-

case/” Bloomberg. Retrieved January 6, 2013. 49

Koh, Lucy, District Judge (December 17, 2012). “Apple Inc. v. Samsung Electronics Co., Ltd, et

al.” Case No.: 11-CV-01846-LHK. 50

Id. 51

See USPTO non-final Office Action issued on October 15, 2012 on Apple’s “bounce back”

patent, U.S. Patent No. 7,469,381 (Application No. 90/012,304 filed on May 23, 2012) in which all

claims were rejected in view of new prior art. Specifically, claims 1-16, 8-12, 16, 19 and 20 were rejected

under 35 U.S.C. §102(b) as being anticipated by Lira, PCT Publication No. WO 03/081458; claims 7 and

13-15 were rejected under 35 U.S.C. §103(a) as being unpatentable over Lira; and claims 1-5, 7-13, and

15-20 were rejected under 35 U.S.C. §103(a) as being unpatentable over Ordering, U.S. Patent No.

7,786,975. 52

See USPTO non-final Office Action issued on December 3, 2012 on Apple’s “On-Screen

Navigation” patent, U.S. Patent No. 7,479,949 (Application No. 90/012,308 filed on May 24, 2012) in

which all claims were rejected in view of new prior art. Specifically, claims 1, 2, 4-8, 11, 14-17, 19, and

20 of the ‘949 patent were rejected under 35 U.S.C. §102(b) as being anticipated by Wakai, U.S.

Publication No. 2002/0036618; claim 3 was rejected under 35 U.S.C. §103(a) as being unpatentable over

Wakai in view of Geaghan, U.S. Publication No. 2003/0063073; and claims 9, 10, 12, 13 and 18 were

rejected under 35 U.S.C. §103(a) as being unpatentable over Wakai in view of Pallakoff, U.S. Publication

No. 2005/0012723. 53

See USPTO non-final Office Action issued on December 19, 2012 on Apple’s “Tap-To-Zoom”

patent, U.S. Patent No. 7,844,915 (Application No. 90/012,332 filed on May 30, 2012) in which all

11

explain to the USPTO Examiner why the claims should be patentable (valid) in view of newly

cited prior art. According to the USPTO statistics, Apple will have about 11% chance that all the

claims will be confirmed, 42% chance that all the claims will be canceled and invalided, and

47% chance that all the claims will survive the re-examination with new claims changes.54

Generally, the USPTO determinations of unpatentability in reexamination, if affirmed by the

Federal Circuit, would “trump” district court rulings of no invalidity. Thus, the USPTO could

find Apple’s patents invalid, even after the District Court for the Northern District of California

has upheld their validity.55

As such, the USPTO reexamination decision could negatively impact

the ruling of this trial.

Second U.S. Trial

On February 9, 2012, Apple requested a preliminary injunction against the Samsung

Galaxy Nexus for infringing four of Apple’s newly acquired patents as well as filed a suit against

Samsung.56

Simultaneously, Apple filed a complaint against Samsung asserting that 17 more of

Samsung products infringe on eight of Apple’s patents.57

claims were rejected in view of new prior art, including Hillis, U.S. Patent No. 7,724,242; Hill, U.S.

Publication No. 2005/0057524; Ullmann et al., U.S. Patent No. 6,677,965; Makus, U.S. Patent No.

6,757,673; Japanese Pub. No. 2000-163031 to Nomura; International Publication No. WO 03/081458 to

Lira; and Dean Harris Rubine, “The Automatic Recognition of Gestures” CMU-CD-91-202, December

1991. Specifically, claims 1, 5-8, 12-15 and 19-21 were rejected under 35 U.S.C. § 102(e) as anticipated

by Hillis; claims 2, 9 and 16 were rejected under 35 U.S.C. § 103(a) as unpatentable over Hillis and Lira;

claims 3, 4, 10, 11, 17 and 18 were rejected under 35 U.S.C. § 103(a) as unpatentable over Hillis in view

of Makus; claims 1, 5-8, 12-15 and 19-21 were rejected under 35 U.S.C. § 103(a) as unpatentable over

Nomura and Rubine; claims 2, 9 and 16 were rejected under 35 U.S.C. § 103(a) as unpatentable over

Nomura, Rubine and Lira; and claims 3, 4, 10, 11, 17 and 18 were rejected under 35 U.S.C. § 103(a) as

unpatentable over Nomura, Rubine and Makus.

55

In re Baxter, Int’l Inc., 678 F.3d 1357, 1366 (Fed. Cir. 2012), the Court of Appeals for the

Federal Circuit held that the USPTO can invalidate a patent during reexamination that had been upheld

during litigation. Specifically, Baxter International won a patent infringement suit against rival Fresenius

USA in early 2007, convinced the Federal Circuit to uphold the validity of claims in Fresenius USA, Inc.

v. Baxter Int’l, Inc., 582 F.3d 1288 (Fed. Cir. 2009) and on March 16, 2009 obtained a final judgment for

more than $23.5 million dollars. Between 2006 and 2010, the USPTO reexamined Baxter’s patent. The

Board of Appeals at the USPTO, even after consideration of the Federal Circuit decision, found Baxter’s

invention obvious and invalidated its patent. Nevertheless, the Federal Circuit affirmed the Board

decision that the same claims previously affirmed are invalid as obvious. Different result is based on a

different evidentiary standard used in reexamination proceedings and patent infringement actions. In an

infringement action, the standard of proof for invalidity is “clear and convincing” evidence. In contrast,

in USPTO reexamination, the standard of proof is substantially lower at “a preponderance of the

evidence” and there is no presumption of validity. 56

Melanson, Donald (February 10, 2012). “Apple seeks injunction against Samsung in California

with newly acquired patents” (http://www.engadget.com/2012/02/10/apple-seeks-injunction-against-

samsung-in-california-with-newly/). Engadget. Retrieved on January 8, 2013. 57

Gorman, Michael (February 16, 2012). “Apple v. Samsung: Cupertino’s latest complaint alleges

17 devices infringe 8 of its patents” (http://www.engadget.com/2012/02/16/apple-v-samsung-cupertinos-

latest-complaint-alleges-17-device/). Engadget. Retrieved on January 8, 2013.

12

Global Battle

The Apple-Samsung global war is extraordinarily huge. This global battle started on

April 15, 2011 when Apple filed lawsuit in U.S., and Samsung filed countersuits in Seoul,

Tokyo, and Mannheim, Germany on April 22, 2011. By the summer of 2011, Samsung also

filed suits in Britain High Court of Justice, in the US District Court for the District of Delaware,

and with the ITC all in June. By August 2011, 19 litigations in 9 countries were filed by both

Apple and Samsung.58

By October 2011 this battle expanded to ten countries. By July 2012, 50

lawsuits around the globe with billions of dollars in damages claimed between them. While

Apple won in US, Samsung won in South Korea, Japan and UK.59

South Korean Battle

The South Korean lawsuit began in April 22, 2011 when Samsung filed a complaint

against Apple in the Seoul Central District Court a week after Apple sued Samsung in the U.S.

court. Samsung alleged that Apple infringed on five of Samsung utility patents. Samsung

claimed that Apple infringed on Samsung’s wireless technology that connects mobile phones to

personal computers for wireless data transfer. On the same day that Samsung filed a complaint in

Korea, it also filed a complaint in Tokyo and Germany on June 22, 2011.60

On August 23, 2012, Samsung scored a victory in South Korea. The Seoul Central

District Court ruled that Samsung did not copy Apple iPhone design. The judge stated that

because both Apple and Samsung have their respective logos on the back of each iPhone and

each Galaxy, it would be difficult to argue that consumers would confuse the iPhone with the

Galaxy.61

With regard to the utilities patents, the South Korean Court ruled that Apple infringed on

two of Samsung’s wireless patents, and that Samsung violated Apple’s bounce-back patent. The

Court ordered Apple to pay Samsung 40 million won ($35,400), and Samsung to pay Apple 25

million won. These fines were small because the compensation sought by both parties was small

due to the small market in South Korea. The judge also banned sales of four of Apple products,

including the iPhone 4 and iPad 2, and ten of Samsung products which included the Galaxy S II.

This, however, did not affect the latest-generation of Apple’s iPhone 4S or Samsung’s Galaxy

58

Meyer, David “Apple sues Samsung in the UK over Android” (http://www.zdnet.com/apple-sues-

samsung-in-the-uk-over-android-4010024342/) Zdnet. Retrieved on January 4, 2013. 59

Mueller, Florian (July 24, 2012). “Apple seeks $2.5 billion in damages from Samsung, offers

half a cent per standard-essential patent” (http://www.fosspatents.com/2012/07/apple-seeks-25-billion-in-

damages-from.html). Retrieved on January 4, 2013. 60

Yang, Jun (April 22, 2011). “Samsung sues Apple on patent-infringement claims as legal dispute

deepens” (http://www.bloomberg.com/news/2011-04-22/samsung-sues-apple-on-patent-infringement-

claims-as-legal-dispute-deepens.html). Bloomberg. Retrieved on January 2, 2013. 61

Kim, Miyoung (August 24, 2011). “Samsung Electronics Co.’s flagship Galaxy smartphone looks

very similar to Apple’s iPhone, but the South Korean firm has not violated the iPhone design, a Seoul

court ruled on Friday” (http://www.reuters.com/article/2012/08/24/us-samsung-apple-court-

idUSBRE87N03J20120824). Reuters. Retrieved January 2, 2013.

13

S3. 62

In addition, this victory was short lived because the very next day Samsung got struck

down in the U.S. court with a $1 billion fine.

Japan Battle

On April 22, 2011, Samsung filed a complaint against Apple in Tokyo Court, accusing

Apple of infringing on two of its patents after Apple initiated a lawsuit against Samsung on April

15, 2011 in the U.S. In response, Apple filed a series of lawsuits against Apple alleging that

Samsung infringed on its patents.63

On August 31, 2012, the Tokyo District Court ruled in favor of Samsung. The Court

ruled that Samsung’s Galaxy smartphones did not infringe on an Apple patent relating to

synchronizing music and video data with servers.64

The presiding Tokyo judge also ordered

Apple to pay Samsung’s legal fees. At the same time, the Tokyo judge denied Apple’s request to

ban eight models of Samsung’s Galaxy products in Japan. This was a major win for Samsung

after losing the U.S. lawsuit earlier that month, in which Apple won a $1.05 billion verdict.

Right after this ruling, Samsung shares rose as much as 1.6 percent after this decision, reversing

earlier losses after the U.S. verdict a week earlier.65

German Battle

When the lawsuits filed in Germany on April 22, 2011, Samsung did not expect that so

many of its own products to be banned in Germany before beating Apple in the German Court.

Because Germany is the largest economy is Europe, a series of lawsuits and countersuits were

filed in Germany by both Samsung and Apple, as well as other giant smartphone players, such as

Motorola. In April 8, 2012, New York Times ran an article calling German courts the epicenter

of patent battles.66

The first strike against Samsung in Germany was from the Landgericht Court in

Dusseldorf on August 9, 2011. This court granted Apple’s request for an EU-wide preliminary

injunction banning the sale of Galaxy Tab 10.1 throughout European Union, with the exception

of the Netherlands. The German Court claimed that Samsung infringed on two of Apple’s

62

Id. 63

Id. 64

Worstall, Tim (August 31, 2012). “Links 31 Aug: Samsung beats Apple in court, Apple sues

Samsung again” (http://www.forbes.com/sites/timworstall/2012/08/31/links-31-aug-samsung-beats-apple-

in-court-apple-sues-samsung-again/). Forbes. Retrieved on January 2, 2013. 65

Yasu, Mariko (August 31, 2012). “Apple lose patent lawsuit against Samsung in Japan”

(http://www.bloomberg.com/news/2012-08-31/apple-loses-japan-patent-lawsuit-against-samsung-over-

devices.html). Bloomberg. Retrieved on January 2, 2013. 66

O’Brien, Kevin (April 8, 2012). “Apple lose patent lawsuit against Samsung in Japan”

(http://www.nytimes.com/2012/04/09/technology/09iht-patent09.html?pagewanted=all&_r=0). New York

Times. Retrieved on January 2, 2013.

14

interface patent. Although this was a temporary ban, it took immediate effect in Germany.67

This was a major win for Apple and a huge setback for Samsung.

Samsung immediately requested a hearing accusing Apple of tampering with the

evidence. Samsung managed to compel the German Court to rescind the EU-wide injunction.

Thus, the ban was only applicable in Germany and lifted throughout Europe outside Germany on

August 11, 2011.68

Samsung faced another setback when it was forced to remove its Galaxy Tab 7.7 tablet

on a display from a booth fair during an IFA electronic fair in Berlin on September 2, 2011

shortly after Apple received an injunction against the tablet on September 9, 2011.69

Less than a

week later, the German Court ruled that Samsung Galaxy Tab 10.1 infringed on Apple’s patents

and upheld ban barring Samsung local unit from selling Galaxy Tab 10.1 in Germany. However,

retailers in Germany would still be able to sell the tablets by selling off existing stock or get new

supplies directly from South Korea. Thus, this sale ban had no real consequences. Samsung

remained strong in this fight and appealed this ruling. 70

On January 17, 2012, Apple sued Samsung in Germany claiming that Galaxy 2 infringes

on Apple’s patents.71

On March 2, 2012, the Mannheim Court dismissed both Samsung and

Apple suits involving the slide-to-unlock technology on their smartphones.72

On March 16,

2012, the Mannheim Court suspended a separate lawsuit in which Apple accused Samsung of

infringing on its slide-to-unlock patents.73

Germany then gave a ruling on July 24, 2012,

67

King, Rachel (August 9, 2011). “Apple secures injunction against Samsung Galaxy Tab in E.U.”

(http://www.zdnet.com/blog/btl/apple-secures-injunction-against-samsung-galaxy-tab-in-e-u/54459).

Znet. Retrieved on January 2, 2013.

68 Foresman, Chris (August 9, 2011). “Apple secures injunction against Samsung Galaxy Tap in

E.U.” (http://arstechnica.com/apple/2011/08/apples-worldwide-court-battles-against-samsung-where-

they-stand-and-what-they-mean/). Arstechnica. Retrieved on January 2, 2013.

69 Moyer, Edward (September 4, 2011). “Samsung pulls Galaxy Tab 7.7 tablet from IFA booth”

(http://news.cnet.com/8301-13579_3-20101414-37/samsung-pulls-galaxy-tab-7.7-tablet-from-ifa-booth/).

Cnet. Retrieved on January 2, 2013.

70 Macari, Matt (January 17, 2012). “Apple files new patent case against Samsung in Germany” (

70).

The Verge. Retrieved on January 2, 2013.

71 “A German court on Friday dismissed two cases brought by Apple Inc. and Samsung Electronics

against each other as part of a global battle for dominance in the market for smartphones and tablet

devices” (http://www.reuters.com/article/2012/03/02/us-apple-samsung-idUSTRE8210JN20120302)

Reuters (March 2, 2012). Retrieved on January 2, 2013.

72 Id.

73 “Update 1- German court delays Apple’s slide-to-unlock lawsuit”

(http://www.reuters.com/article/2012/03/16/samsung-apple-idUSL5E8EG18920120316) Reuters (March

16, 2012). Retrieved on January 2, 2013.

15

granting Apple a ban on Samsung Galaxy Tab 7.7, a 7-inch tablet. This ruling came from the

Duesseldorf Higher court.74

Samsung appealed this ruling.

75

Samsung finally received a victory in the Mannheim Regional Court on September 21,

2012. This court ruled that Samsung did not infringe on Apple’s touch-screen patent.

Coincidently, this court also ruled against Apple on a different case against Motorola on the

same patent, thus giving Samsung a double taste of winning after a series of losses.76

On December 18, 2012, a day after Samsung received a victory ruling by a U.S. court

rejecting Apple’s request for a ban on sales of Samsung’s smartphones in the U.S., Samsung

announced that it would drop attempts banning sales of Apple iPhones and iPads in Europe,

including Germany as well as France and Italy, Great Britain, and the Netherlands. However,

Samsung was silent as to whether or not it will continue to seek compensation for damages.77

French and Italian Battles

After a German court ruled that Samsung could not directly sale its Galaxy Tab 10.1

tablet in Germany in September 9, 2011, Samsung official declared that it will aggressively seek

preliminary injunction against it rival, Apple, in two large European markets, i.e., France and

Italy, blocking sales of its new iPhone 4.78

However, by December 18, 2012, Samsung publicly announced that it was dropping

attempt to ban sales of Apple’s iPhones and iPads in Europe, including France and Italy, as well

as Germany, Great Britain, and the Netherlands. This announcement came a day after Samsung

received a victory ruling by a U.S. court rejecting Apple’s request for a ban on sales of

Samsung’s smartphones in the U.S. However, Samsung was silent as to whether or not it will

continue to seek compensation for damages.79

74

“Apple’s worldwide court battles against Samsung: where they stand and what they mean”

(http://www.telegraph.co.uk/technology/samsung/9423424/German-courts-grant-Apple-ban-on-Samsung-

Galaxy-Tab-despite-High-Court-cool-ruling.html). Telegraph. (July 24, 2012). Retrieved on January 2,

2013. 75

Meyer, David “Apple sues Samsung in the UK over Android” (http://www.zdnet.com/apple-

sues-samsung-in-the-uk-over-android-4010024342/). Zdnet. Retrieved on January 4, 2013. 76

Yang, Jun (September 21, 2012). “Apple loses German court ruling against Samsung in patent

suit” (http://www.bloomberg.com/news/2012-09-21/apple-loses-german-court-ruling-against-samsung-in-

patent-suit.html). Bloomberg. Retrieved on January 2, 2013. 77

“Samsung drops attempt to ban Apple sales in Europe”

(http://www.reuters.com/article/2012/12/18/us-apple-samsung-idUSBRE8BH06620121218). Reuters.

Retrieved on January 4, 2013. 78

Sang-Hun, Choe (October 5, 2011). “Samsung wants courts in 2 nations to bar iPhone”

(http://www.nytimes.com/2011/10/06/technology/samsung-to-seek-block-on-iphone-in-

europe.html?_r=0). New York Times. Retrieved on January 3, 2013. 79

“Samsung drops attempt to ban Apple sales in Europe”

(http://www.reuters.com/article/2012/12/18/us-apple-samsung-idUSBRE8BH06620121218). Reuters.

Retrieved on January 4, 2013.

16

Dutch Battle

When the German court granted Apple’s request for an EU-wide preliminary injunction

banning the sale of Galaxy Tab 10.1 throughout European Union in August 24, 2011, a court in

Hague followed suit and banned three of Samsung smartphones in the Netherlands. Samsung

immediately declared that it would appeal, especially since it received a losing ruling without

given an opportunity to fight.80

In addition, on September 26, 2011, Samsung asked the German

court for an injunction on sale of Apple’s iPhones and iPads on the ground that Apple did not

have licenses to use Samsung’s 3G mobile technologies. Samsung’s request was denied on

October 14, 2011 on the ground that 3G was an industry standard, and that Samsung was

obligated to offer Apple licenses under “fair, reasonable and nondiscriminatory” or FRAND

terms. The Netherlands court added that Samsung could file a separate injunction request if no

agreement could be reached after Samsung made Apple a reasonable offer for a license fee.81

However, Samsung officially announced that it would drop attempts banning sales of Apple’s

iPhones and iPads in Europe, and Netherlands on December 18, 2012, a day after Samsung

received a victory ruling by a U.S. court rejecting Apple’s request for a ban on sales of

Samsung’s smartphones in the U.S.82

Australian Battle

On July 26, 2011, Apple filed a lawsuit against Samsung in Australia 3 days after it got

hold of the US version of Galaxy Tab 10.1 tablet on July 22, 2011. Apple claimed that due to

the imminent release of Samsung Galaxy Tab 10.1 in Australia, it requested the Australian court

to make a speedy ruling, banning Samsung from promoting, taking pre-orders, shipping to sales

channels or even generating interest in the new Galaxy tablet until the infringement suit was

resolved. After a hearing shortly after, the Australian court suggested that Samsung would be

penalized heavily if its tablets were deemed infringing on Apple’s design patents. This hearing

resulted in an agreement which states that Samsung would restrict the sales of its Galaxy tablet in

Australia and would also give Apple sample devices and source code of devices.83

As a result,

Samsung Galaxy Tab 10.1 sales were halted in Australia on August 2, 2011.84

80

“Apple wins key German patent case against Samsung” (http://www.independent.co.uk/life-

style/gadgets-and-tech/apple-wins-key-german-patent-case-against-samsung-2352133.html ). The

Independent (September 9, 2011). Retrieved on January 3, 2013. 81

“Dutch court refuses to ban iPhone, iPad sales”

(http://usatoday30.usatoday.com/tech/news/story/2011-10-14/samsung-apple-patent/50771524/1). USA

Today (October 14, 2011). Retrieved on January 8, 2013. 82

(http://www.reuters.com/article/2012/12/18/us-apple-samsung-idUSBRE8BH06620121218).

Reuters. Retrieved on January 4, 2013. 83

Hopewell, Luke (October 13, 2011) Apple blocks Samsung Galaxy 10.1 in Australia”

(http://www.zdnet.com/apple-blocks-samsung-galaxy-10-1-in-aus-1339319626/ ). Zdnet. Retrieved on

January 4, 2013. 84

Schneider, Joe (August 1, 2011) “Apple lawsuit puts Samsung Tablet sales in Australia on hold”

(http://www.bloomberg.com/news/2011-08-01/apple-seeks-to-block-samsung-from-selling-tablet-in-

australia.html). Bloomberg. Retrieved on January 4, 2013.

17

Samsung countersued on September 17, 2011 claiming that Apple infringed on seven of

Samsung’s patents.85

On October 12, 2011, an Australian court issued a preliminary injunction

against Samsung Galaxy Tab 10.1 in Australia, and thus preventing Samsung from the 2011

holiday sale.86

Samsung appealed and in November 2011, the Australian appeals court

overturned Apple’s injunction of Samsung Galaxy Tab 10.1 tablet. However, the court ordered

that the ruling be stayed until Apple had the opportunity to appeal this ruling.87

On December 8,

2011, the ban on the Galaxy Tab 10.1 tablet was lifted in Australia.88

The Australian battle continued when Samsung counter-sued Apple in Australia after

having to delay the Galaxy Tab 10.1 launch. Samsung complaint was filed with a Federal Court

of Australia in New South Wales, claiming that Apple infringed seven of its patents related to 3G

networking on Apple’s 3rd

and 4th

generation iPhones and iPad 2 devices. Samsung also

attempted to block the sales of Apple’s iPhone 4S in Australia.89

On February, 3, 2012, Apple

retaliated by adding 278 claims in 22 of its Australian patent to its complaint which originally

covered only 3 patents.90

At the beginning of the trial in July 2012, the Australian court declared

that the patent dispute between Apple and Samsung is “ridiculous” and might be best settle in

mediation.91

However, it is unlikely that Apple and Samsung will enter mediation discussions,

especially since they had already gone down that path during the U.S. trial with no success. The

outcome of this case is expected early this year.92

85

Reisinger, Don (September 17, 2011) “Samsung fires back at Apple in Australia, report says”

(http://news.cnet.com/8301-13506_3-20108148-17/samsung-fires-back-at-apple-in-australia-report-

says/). Cnet. Retrieved on January 8, 2013. 86

Ricker, Thomas (October 12, 2011) “Apple wins injunction halting Galaxy Tab 10.1 sales in

Australia” (http://www.theverge.com/2011/10/13/2487233/apple-wins-injunction-halting-galaxy-tab-10-

1-sales-in-australia). The Verge. Retrieved on January 8, 2013. 87

Patel, Nilay (November 29, 2011). “ Apple’s Australian Samsung Galaxy Tab 10.1 ban

overturned for now” (http://www.theverge.com/2011/11/29/2599188/apples-australian-samsung-galaxy-

tab-10-1-ban-overturned-for-now/in/2297513). The Verge. Retrieved on January 4, 2013. 88

Pyett, Amy (December 8, 2011) “An Australian court on Friday lifted a ban on the sale of

Samsung Electronics’ Galaxy tablet computer in the country, adding to a U.S. legal victory for the South

Korean technology firm in its bruising battle with Apple Inc.”

(http://www.reuters.com/article/2011/12/09/us-apple-samsung-australia-idUSTRE7B801Z20111209).

The Verge. Retrieved on January 8, 2013. 89

Whitetaker, Zack (October 13, 2011) “Apple wins Samsung Galaxy tablet in Australia”

(http://www.zdnet.com/blog/btl/apple-wins-samsung-galaxy-tablet-ban-in-australia/60619). Zdnet.

Retrieved on January 4, 2013. 90

Keene, Jamie “Apple broadens Samsung lawsuit in Australia to 278 claims across 22 patents and

10 devices” (http://www.theverge.com/2012/2/3/2768122/apple-broadens-samsung-lawsuit-

australia/in/2297513). The Verge. Retrieved on January 4, 2013. 91

Schneider, Joe “Australia Judge class Apple-Samsung dispute over 3G ‘ridiculous’”

(http://www.bloomberg.com/news/2012-07-22/samsung-and-apple-global-patent-fight-moves-to-

australia-trial.html). Bloomberg. Retrieved on January 4, 2013. 92

Taylor, Josh “Oz Apple-Samsung judge threatens to hear case on Xmas day”

(http://www.zdnet.com/au/oz-apple-samsung-judge-threatens-to-hear-case-on-xmas-day-7000003384/).

Zdnet. Retrieved on January 4, 2013.

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The British Battle

Samsung sued Apple on June 29, 2011 in the High Court of Justice, Chancery Division in

the United Kingdom (UK) for a declaration that its Galaxy tablets were not too similar to

Apple’s products. Apple filed a countersuit against Samsung in the UK court on September 14,

2011.93

On July 9, 2012, British Judge Colin Birss ruled that Samsung’s Galaxy Tab 10.1, Tab

8.9 and Tab 7.7 do not infringe Apple’s design patent, after making a backhanded comment that

Samsung’s Galaxy tablets were not “cool” enough to be confused with Apple’s iPad.94

This

ruling has effect throughout European Union. Apple appealed but the Court of Appeal of

England and Wales upheld the lower court judgment on October 18, 2012.95

This was a big

victory for Samsung because the German court gave the opposite ruling on the same patent.

One other outcome of this case was that, on July 18, 2012, the British court ordered

Apple to publish an announcement on their website a disclaimer stating that Samsung did not

copy the iPad. Apple appealed; however, the British Court of Appeals upheld the lower court

ruling.96

III. PRACTICAL IMPLICATIONS & REPERCUSSIONS OF THE APPLE

vs. SAMSUNG CASE

The practical implications and repercussions of the Apple v. Samsung case are enormous

both short term and long term, not only for the smartphone industry but also the patent law and

innovation in the United States.

The obvious is that market shares of Apple stocks rose almost 2% and Samsung stumble

almost 8% the day after Samsung verdict on August 24, 2012.97

One other short term

implication is that innovative phone startups will likely have a difficult time raising funding

because investors are concerned of being sued.

93

Meyer, David “Apple sues Samsung in the UK over Android” (http://www.zdnet.com/apple-

sues-samsung-in-the-uk-over-android-4010024342/). Zdnet. Retrieved on January 4, 2013. 94

Chellel, Kit “Samsung wins U.K. Apple ruling over ‘not as cool’ as Galaxy Tab”

(http://www.bloomberg.com/news/2012-07-09/samsung-wins-u-k-apple-ruling-over-not-as-cool-galaxy-

tablet.html) Bloomberg. Retrieved on January 4, 2013. 95

Worstall, Tim “Apple Finally Posts the Correct Apology: Hurrah!”

(http://www.forbes.com/sites/timworstall/2012/11/03/apple-finally-posts-the-correct-apology-hurrah/)

Forbes. Retrieved on January 4, 2013. 96

Id. 97

Saeronmi Shin & Jun Yang (August 26, 2012). “Samsung Shares Fall After Apple Wins $1

Billion Verdict” (hhttp://www.bloomberg.com/news/2012-08-27/samsung-shares-fall-after-apple-wins-1-

billion-verdict.html); and Brian Bondus (August 27, 2012). “Apple’s Stock Soars After Samsung Verdict”

(http://www.newsy.com/videos/apple-s-stock-soars-after-samsung-verdict-lifts-nasdaq/).

19

For Apple, the $1.05 billion in damages the jury awarded Apple and the prospects of

triple damages for willful infringement are relatively insignificant compared to Apple’s nearly

$120 billion in cash and investments. However, the verdict is an endorsement of Apple's legal

strategy which focuses on Apple’s distinctive industrial design, software platforms, and user

interfaces, also known as “Apple’s unique user experience intellectual property” that which

makes Apple brand identity and keeps Apple in the marketplace. Equally importance is Apple’s

“playbook for success”98

which consists of four main features: (1) a top down understanding of

the importance of design in the consumer’s purchasing decision; (2) a top-tier industrial design

team to create appealing designs that drive product demand and, in turn, create an insatiable

desire to copy and emulate its products; (3) a sophisticated design patent acquisition program;

and (4) the desire to invest significant effort and resources to enforce and defend product design.

While the verdict is being appealed, the ruling still marks an important symbolic victory for

Apple against Google’s Android. Competitors will think twice about embracing the Android

ecosystem, and will be forced to alter their software (i.e., user interfaces) and hardware to ensure

unique designs relative to Apple products which could lead to lengthen product cycles and higher

development cost. As a result, Apple’s pricing umbrella could be sustained longer and Apple’s

products could be sold more over time. However, Apple would need to promote the view that

Apple was just protecting its innovation and IP and work to reinforce its image as an innovator;

otherwise, there could be a backlash from consumers and the public.

For Samsung, the verdict will not create any meaningful interruption. Apple’s user

interface patents (U.S. Patent No. 7,469,481, known as “Bounce-Back-Effect” patent; U.S.

Patent No. 7,844,915, known as “On-Screen Navigation” patent; U.S. Patent No. 7,864,163,

known as “Tap-To-Zoom” patent), and design patents are relatively easy to “design around.”

Samsung has already made software modifications to design around Apple’s patented software

features. Samsung already employs an accomplished industrial design team that has received

many design accolades, including at the prestigious 2012 International Design Excellence

Awards from the Industrial Designers Society of America.99

Samsung is also a prolific user of

the U.S. design patent system. For example, Samsung is on pace for 500 U.S. design patents this

year.100

With such talents and resources, Samsung could create products that are unique in their

own rights and are distinctively different in visual appearance from Apple. Ultimately, however,

Samsung is more likely to begin constructive patent cross-licensing negotiations with Apple.

Nevertheless, Samsung has already explored ways to reduce its reliance on Google’s Android

after Google acquired handset maker, Motorola Mobility, including developing an alternative

Linux-based operating system for smartphones.101

98

Canari, Christopher (September 1, 2012). “Apple verdict: set to stifle or spur innovation?”

(http://edition.cnn.com/2012/08/29/business/opinion-carani-apple-samsung/index.html). CNN. Retrieved

on January 7, 2012. 99

Id. 100

Id. 101

Roger Cheng (December 31, 2012) “Samsung to sell first Tizen smartphone next year: Tizen is

an alternative Linux-based operating system seen as a more open platform that will rival Google’s

Android and Apple’s iOS” (http://news.cnet.com/8301-1035_3-57561316-94/samsung-to-sell-first-tizen-

smartphone-next-year-report-says/). Cnet.

20

For Google, the claims involved between Apple and Samsung relate to only user

interfaces and designs, and “don’t relate to the core Android operating system.” Nevertheless,

competition between Apple and Google has grown fierce, ranging from competing online

mapping services and mobile ad platforms to media stores and cloud storage. However, having

acquired Motorola Mobility – which was meant to give it a big patents war chest, Google is fully

prepared to combat Apple’s infringement claims; ironically at the same time, however, Google is

also inviting Apple for further scrutiny, especially in view of media reports circulated within the

smartphone industry that Google and Motorola Mobility are working on a top-secret “X Phone”

designed to compete with Apple as well as Samsung.102

Regardless, Google will have to

increase software spending to update Android and help its partners to steer clear of Apple’s

patent claims. Other reports have also surfaced that Google has been making overtures to Apple

for peace.103

The new Apple CEO Tim Cook, who is not emotionally involved with Google,

would likely welcome peace gesture from Google and settle the dispute with Google over the

Android operating system for smartphones.

For other competitors such as Apple’s old rival Microsoft and Microsoft’s key partner,

Nokia, the $1.05 billion jury verdict and any subsequent settlement could result in public

relations and investment victory. Microsoft Windows Phone operating system has not gained

traction in the marketplace since late 2010.104

The problem has been simple: There are too few

Windows Phone users to make it an attractive platform for developers, and without developer

interest, users shy away from a platform that is lacking in quality apps.105

In order to reach

critical mass, Microsoft needs some group of stakeholders to turn away from Android as their

go-to alternative to the iPhone. Legal trouble for Android might be just the turning point for

Microsoft and Nokia. Similarly, Blackberry maker Research in Motion (RIM) will also likely to

benefit from the Samsung verdict for these same grounds.

As for the long term implications, skeptics believe that the Samsung verdict will hurt and

stifle innovation, and thus result in fewer product choices and higher prices in the U.S. and the

world. Many skeptics are even critical of the U.S. patent system, especially, software patents

which has been severely attacked from multiple stakeholders within the IT industry.

Nevertheless, the patentability of software has now been firmly established in the U.S.106

102

Balaji Sirdharan (December 22, 2012). “Google and Motorola Are Working On A Top-Secret

“X-Phone” (http://www.businessinsider.com/google-and-motorola-x-phone-2012-12). Business Insider. 103

“Google and Apple Making Peace? CEOs in Talks on Patent Issues”

(http://www.cnbc.com/id/48847122/Google_and_Apple_Making_Peace_CEOs_in_Talks_on_Patent_Issu

es). CNBC. Retrieved 30 August 2012. 104

“Who Really Lost the Apple vs Samsung Case? You Did. The Patent Verdict is Great News for

Microsoft, Nokia, and Research in Motion but Bad News for Telecoms and You.”

(http://www.slate.com/articles/business/moneybox/2012/08/apple_vs_samsung_verdict_a_win_for_micro

soft_nokia_and_research_in_motion_and_a_loss_for_google_telecoms_and_consumers_.html). Slate.

Retrieved 27 August 2012. 105

Id. 106

Software was not recognized as a patentable “process” until the Federal Circuit’s en banc

decisions in Arrhythmia Research Technology Inc. v. Corazonix Corp., 958 F.3d 1053 (Fed. Cir. 1992)

21

Others believe that the verdict should be viewed as a victory for consumers, engineers

and designers, patent rights, and the U.S. patent system as a whole. The verdict of this case will

force as well as challenge designers and engineers to be creative and come up with newer

designs while steering away from Apple’s design. This can be viewed as a great opportunity for

designers and consumers alike because the so desirable Apple’s design of today will be old in the

future. As for other smartphone makers, this can also be viewed as an opportunity to be creative

with licenses, as well being creative and innovative in making new products. Design patents107

will be strengthened and will have a more prominent role in a patent portfolio of every

smartphone manufacturer in order to protect the design elements in conjunction with the

functional elements of new products.

Many observers are confident that the U.S. patent system will sort things out properly,

pointing to the re-examination proceedings that are available at the U.S. Patent & Trademark

Office (USPTO) to challenge the validity of software patents, such as Apple’s user interface

patents (U.S. Patent No. 7,469,481, known as “Bounce-Back-Effect” patent; U.S. Patent No.

7,844,915, known as “On-Screen Navigation” patent; U.S. Patent No. 7,864,163, known as

“Tap-To-Zoom” patent).

In a keynote address delivered at the Center for American Progress on November 20,

2012, David Kappos,108

Under Secretary of Commerce for IP & Director of the USPTO, offered

a strong defense of software patents and the so-called smartphone “patent wars,” noting that

patent protection for software-implemented innovations is well-deserved and the volume of

patent litigation in the smartphone industry was a sign that the patent system was working as

intended. Addressing those who claim the U.S. patent system is broken and software patents

stifle innovation, Mr. Kappos said, "Give it a rest already.” Mr. Kappos also touted several new

provisions of the America Invents Act109

(AIA) enacted into law on September 16, 2011,

including post-grant review and transitional program for covered business method patents that

and In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994). Similarly, business methods were not recognized as

patentable “processes” until the Federal Circuit’s en banc decision in State Street Bank & Trust Co. v.

Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998). Since then, both the U.S. Supreme Court

and the Federal Circuit have tightened the standard for granting software patents. For example, in In re

Nujiten, 500 F.3d 1346 (Fed. Cir. 2007), the Federal Circuit held that signal claims are

no longer statutory. In Bilski v. Kappos, 130 S. Ct. 3218 (2010), the Supreme Court held that the

“machine or transformation” (otherwise, known as “MoT”) test is not the exclusive test for determining

an eligible process under 35 U.S.C. §101. Nevertheless, the “MoT” test remains the safe harbor test for

determining an eligible process under 35 U.S.C. §101. 107

In contrast to utility patents, design patents protect only the appearance or ornamental

aspects of a useful article of manufacture, not its functional aspect; see 35 U.S.C. §171. A

design patent covers, for example, the shape or body features of Apple’s iPhone, iPod, or iPad. Design

patents last for fourteen (14) years after issuance; see 35 U.S.C. §174. 108

See “An Examination of Software Patents” by David Kappos on November 20, 2012 (see

www.uspto.gov/news/speeches/2012/kappos_CAP.jsp). 109

See “An Overview of Patent Reform Act of 2011: Navigating the Leahy-Smith America Invents

Act (AIA) Including Effective Dates for Patent Reform”, authored by Hung H. Bui, Esq., published on

Northeast Asian Law Review Vol. 5, 2011, Northeast Asian Law Center, Hongik University, Seoul,

Korea.

22

allow the USPTO to weed out low-quality software and business method patents. Even more

recently, on January 3, 2013, the USPTO announced that it was seeking to form a partnership

with the software community to enhance the quality of software-related patents.110

Hopefully,

these efforts will enhance the quality of software-related patents, and the future of competition in

the smartphone industry will be more vibrant and will promote even more innovations.

110

See “Request for Comments and Notice of Roundtable Events for Partnership for Enhancement

of Quality of Software-Related Patents.” Federal Register Vol. 78, No. 2, January 3, 2013.