Apple says copying at root of $2 billion Samsung case

Bloomberg

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Apple Inc.’s lawyer told a jury at a $2 billion trial that Samsung Electronics Co. made itself a dominant player in the smartphone industry only by copying the iPhone maker on “feature after feature” over several years.
In 2007, when Apple introduced the iPhone, Samsung had only 5 percent of the U.S. mobile handset market and didn’t even offer a touch smartphone, attorney Harold McElhinny said.
Now, having elected to methodically “copy feature after feature after feature of the iPhone” in its own devices, Samsung is the world’s leading seller of smartphones powered by Google Inc.’s Android operating system, Apple’s lawyer said.
Apple and Samsung each presented two hours of closing arguments today after almost four weeks of testimony at their second U.S. trial over dueling claims of patent infringement. U.S. District Judge Lucy Koh in San Jose, California, then handed the case off to the jury to begin deliberations.
The latest case follows battles across four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg. Samsung had 31 percent of industry revenue, compared with 15 percent for Apple, whose share of the market has shrunk as the touch-screen interface became more commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.
2010 confrontation
McElhinny, reprising a theme from the companies’ 2012 trial in which Apple won $930 million in damages, said Samsung continued manufacturing “version after version” of the infringing phones, even after Apple met with Samsung in 2010 to confront the company.
Samsung has since driven almost every competitor, including those using Android, out of the market, he said. “The only products that are selling are Apple products and Samsung products that infringe Apple products,” McElhinny said. “It is literally a two-horse race.”
Bill Price, a lawyer for Samsung, began today by telling jurors that McElhinny used the word “copy” frequently to “get you angry.” The evidence presented at trial shows that Apple doesn’t “practice,” or use, three of the five patents it’s asserting, he said.
The Samsung lawyer displayed a slide that read “NEVER IN THE IPHONE” for three of the patents and “NOT IN THE IPHONE NOW” for a fourth.
‘Can’t copy’
“You can’t copy something from the iPhone if it’s not in the iPhone,” Price said. While a company may be entitled to damages if it proves infringement of patents it doesn’t practice, that’s not the case with the iPhone, he argued.
“Samsung didn’t copy it, Google didn’t copy it,” Price said. “You can’t copy it if it isn’t there.”
Samsung’s success is explained by the fact that it makes the best hardware for Android -- an “open” and “independently developed platform” developed by Google “right up the street,” Price said, referring to the search engine company’s nearby headquarters in Mountain View, California.
Apple claims 10 Samsung devices, including the Galaxy S3, infringe five of its patents. The patents cover 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.
Other functions
Other 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 $2.19 billion.
If Cupertino, California-based Apple wins an infringement verdict, it can ask for a court order barring U.S. sales of Samsung products, which the iPhone maker has said is more important than monetary damages. After the 2012 trial, which involved earlier models of smartphones and tablets, Apple failed to win such an order.
Samsung’s newest smartphones, the Galaxy S4 and S5, aren’t on trial. Samsung is counting on the Galaxy S5, which went on sale March 27 in South Korea, as its marquee device to maintain its global lead competing with Apple for high-end shoppers and with Chinese producers including Xiaomi Corp. that target budget buyers.
Apple devices
Samsung contends that four Apple devices, including the iPhone 5 and versions of the 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 for compressing video data so it can be sent over a cellular network. The other patent at issue in the case covers functions related to retrieving, classifying and organizing digital images. Samsung seeks $6.2 million in damages.
During the trial, each side put on technical evidence about what its patents cover and how its technology was copied. The companies also called on expert witnesses to dispute the value of the other’s patents, and presented the jury with internal e-mails and other documents to show the frustration executives faced as they competed for market share.
With most of Apple’s infringement claims relating to functions that rely on Android, Samsung cast the iPhone maker’s case as a bid to displace Google as the leading supplier of smartphone systems and limit consumer choice.
Google engineers
Samsung called several Google engineers as witnesses to bolster the point that it didn’t need to copy Apple’s technology for the software on its phones.
Apple tried to keep the jury’s focus on its contention that Samsung, not Google, made the decision to use patent-infringing features to sell more than 37 million smartphones and tablets.
Samsung argued that the iPhone maker’s multibillion-dollar damages demand is inflated, while Apple countered that the Galaxy maker chose to present low-value patents at trial -- which were purchased, and not awarded to the company -- to low-ball potential damages in the case.
Both sides today addressed the biggest surprise of the trial -- when Apple put on evidence last week showing that Google is backing Samsung’s legal defense, after revealing that the Galaxy maker in 2012 had denied seeking indemnification from anyone.
Samsung “lied to us under oath,” McElhinny told jurors. “At the end of the day, Google should not be an issue for you.”
Samsung’s ‘credibility’
It’s more an issue of Samsung’s “credibility,” the lawyer said, adding that any “secret indemnity agreements will take care of themselves.”
Samsung’s lawyer, Price, told the jury Apple knew about the indemnification all along and chose not to ask witnesses about it.
Under a ruling by the judge, jurors aren’t allowed to base their decision on whether Samsung is liable for patent infringement on whether the company was dishonest about the indemnification agreement. Jurors can, however, consider indemnity in deciding whether Google witnesses at the trial were biased.
The case is Apple Inc. v. Samsung Electronics Co., 12-cv-00630, U.S. District Court, Northern District of California (San Jose).

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