August 2012

In a verdict that would have warmed the heart of the late Apple CEO Steve Jobs, a federal jury handed Apple a resounding legal victory in its bitter patent war with Samsung, ordering the South Korean tech giant to pay more than $1 billion in damages for "willfully" copying the iPhone and iPad.

Legal experts say the jury's finding of willful infringement enables Apple to seek to triple the billion-dollar damage award, already believed to be an unprecedented judgment in a patent trial. The verdict also sends a threatening message to Samsung and other Apple competitors in the mobile-phone and tablet industry that use Google's Android operating system, potentially making it harder for them to compete with Apple in the multibillion-dollar industry. Ticking off one by one the findings in a 20-page verdict, the jury said that a wide range of Samsung smartphones and its Galaxy tablet trampled on Apple's patent rights. The jury in particular found Samsung's Fascinate, Epic 4G and Galaxy S II smartphones were rogue products that warranted more than $100 million each in damages for copying the iPhone, although the panel spared Samsung much punishment for infringing the iPad. At the same time, the jury rejected Samsung's counterclaims that Apple infringed some of its wireless technology patents. Legal experts were quick to say Apple got just about everything it could want from the much-anticipated verdict.

The aftermath of Apple-Samsung might be good for the tech world and for digital product consumers the world over.

In the cold light of day, and in design offices and far from the courtroom, it may even spur dramatic innovations in mobile tech. In some sense it doesn't matter that Samsung's lost, and may owe Apple billions and face import restrictions on some of its products. Yes, if it all goes badly for Samsung, it'll feel the pain (at least a little--its billions in global revenues will help soften the blow). But the more important point is that both parties are now incentivized to behave differently. One can even argue that they're now predisposed to innovate like they've never done before. It's not just Samsung either. All of Apple's smartphone peers, be they Android or Windows Phone makers, may feel the need to keep very clear of the look, feel and functionality of Apple gear. They do want to stay in business, you see. Finally, in terms of the legal core of the suit itself it's even possible Samsung and Apple may agree with the position of Google's public policy director Pablo Chaves, and decide that the current patent system (particularly in terms of software) is critically broken--and actually is counter-productive for encouraging innovation. Even Apple's execs will be aware that despite "winning" this suit, there's an unavoidable negative air surrounding a case like this. And to avoid similar cases happening in the future, one solution would be to change the patent system itself. Lobbying does work, and these firms have deep pockets. Call us overly optimistic if you will, but this is a very high-profile case between some of the biggest companies in the world. The overall outcome, if it does spur innovative thinking, may be great for us as consumer. Think of the weird and wonderful devices that we'll get to see as both Apple and Samsung try to outsmart each other and out-design each other in the future.

The federal court jury’s decision in a smartphone patent lawsuit between Apple and Samsung is expected to alter the dynamics of the highly competitive mobile phone industry.

For Samsung, which lost on almost every count in the closely watched trial and was ordered to pay more than $1 billion in damages, the implications are more obvious. It will have to be cautious in how it designs products to avoid being accused of imitating Apple. Other makers may become more cautious, too. Google, which makes the Android software that runs at the core of Samsung phones, will clearly feel an impact through its hardware-making partner. Microsoft, however, which is attempting to enter the market with new software, will feel less of an effect, industry experts said. Things could get tougher for Google or any phone maker using its Android software. Android phones are the most common smartphones on the market today. Samsung is the world’s largest maker of smartphones and it has been quickly gaining market share. Collectively, the various Android phones from Samsung and other makers easily outsell Apple’s iPhones. While Google is not involved in this case, Apple was clearly going after Android all along, said Robert P. Merges, professor of law and technology at University of California Berkeley School of Law.

Apple’s sweeping court victory over Samsung cements its dominance of the wireless industry and could force carriers, and even Google to re-evaluate their product plans and strategies.

Interviews with jurors and legal experts reveal that the verdict in the patent dispute did much more than order the South Korean company to pay $1.05 billion to its Silicon Valley rival. The nine jurors here also sent a signal that companies need to be much more careful in incorporating basic design elements in their electronic devices, particularly those affecting the way gadgets look and feel. The verdict, which comes just weeks before Apple is expected to unveil its next iPhone, could complicate matters for wireless carriers already contending with Apple's market power. Apple has reaped more than $156 billion in iPhone-related revenue since 2007 and is now the world's most valuable company. Patent lawyers predict the jury's decision will likely ratchet up an already heavy flow of patent suits in the tech sector, and could open new ground for litigation. More courtroom warfare could raise costs to makers of smartphones and tablets and reduce the number of gadgets on the market—increasing prices to consumers, some lawyers and market watchers say. More companies are likely to emulate Apple's approach of using the court system to defend the shape and style of their products, said Alan Fisch, an intellectual-property lawyer at Kaye Scholer LLP who isn't involved in the case.