Bits Blog: Judge Slashes Jury Award in Apple-Samsung Case

Jo Yong-Hak/Reuters Apple’s iPad, left, and Samsung’s Galaxy tablet.

8:45 p.m. | Updated

A federal judge on Friday weakened the blow from Apple’s legal victory in a patent case against Samsung, lopping more than 40 percent off the damages a jury awarded Apple last year.

The ruling did not shift the case — one of the most closely watched in the high-tech industry — in Samsung’s favor. While Apple has lost other skirmishes against Samsung in courts around the world, the jury award in this case has been the biggest victory for either side so far.

Even at a reduced level, these would be among the highest damages in a patent dispute.

The judge ordered a new trial to recalculate a portion of those damages, leaving open the possibility that some of them could be restored.

She also indicated that Apple was entitled to additional damages for sales of Samsung products that have occurred since the jury’s decision last summer, which could further swell the amount Apple is owed by Samsung.

Tech companies around the world are waging legal battles over patents as they compete for supremacy in the lucrative smartphone market. Apple and Samsung are the most prominent combatants in that war; the two companies divide most of the profits in the surging mobile phone market.

Samsung has soared to the No. 1 spot in the smartphone business in recent years, but Apple says that it is, in part, because the company has swiped many of Apple’s ideas.

In her review of the jury’s decisions, which originally awarded Apple more than $1 billion for patent violations by Samsung in its mobile products, Judge Lucy H. Koh of the United States District Court in San Jose, Calif., knocked those damages down by $450 million, to $599 million. The new trial will determine how much of the $450 million, if any, should be restored.

“It will be years before the parties exhaust all of their litigation avenues and options,” said Alan M. Fisch, an intellectual property lawyer with Fisch Hoffman Sigler in Washington, who is not involved in the case. “Still, some form of patent cross-license between the two would not be an unsurprising final result.”

None of Judge Koh’s opinion changed the jury’s finding that Samsung violated a series of Apple patents in its smartphone and tablet products. But the judge took issue with how the jury calculated the damages Apple was entitled to from the Samsung devices named in the case, more than two dozen of them in all.

In her 27-page opinion, Judge Koh said that the jury failed to follow her instructions in calculating damages for a certain class of patents, known as utility patents.

She also decided in Samsung’s favor in a dispute between the two parties over when Apple notified Samsung that it was infringing Apple’s intellectual property. Evidence of such notice dates are important because they help determine how hefty the damages are in a court case, once the party being notified is found guilty of infringement.

Judge Koh chided Apple for using an expert in the case who used an “aggressive notice date” — meaning, an early one — to calculate damages.

“The need for a new trial could have been avoided had Apple chosen a more circumspect strategy or provided more evidence to allow the jury or the court to determine the appropriate award for a shorter notice period,” she said in her ruling.

Steve Dowling, a spokesman for Apple, declined to comment.

In a statement, Adam Yates, a Samsung spokesman, said that the company was pleased with the judge’s decision and that it intended to seek further review of the remaining award.

Apple and Samsung, meanwhile, continue to fight ferociously in the smartphone market, where Samsung has steadily worked its way to the No. 1 position over the last few years. In the fourth quarter, Samsung accounted for 29 percent of global smartphone shipments, while Apple accounted for 21.8 percent, according to IDC.

Mark A. Lemley, a professor at Stanford Law School, called the judge’s decision “an extremely careful and thorough opinion on a very difficult and interrelated set of issues.”

Mr. Lemley predicted that Samsung would eventually win some reduction in the original $1 billion award, but “almost certainly” less than the $450 million that Judge Koh reduced it by on Friday.

“We’ll need a new trial to figure that out,” said Mr. Lemley, who has done legal work in the past for Google, maker of the Android operating system involved in the Samsung case and others. “Judge Koh has encouraged both sides to appeal first. That may clarify some questions, but it is unlikely to prevent a new trial, just delay it some.”

U.S. Disavows Patent at Center of Apple-Samsung Dispute

The United States Patent and Trademark Office has decided that one of the smartphone patents at the center of the legal dispute between Apple and Samsung Electronics — which resulted in a jury award to Apple of $1.05 billion — should never have been granted.

The patent office decision is an initial ruling, in a document dated Oct. 15, and filed electronically on Monday, and probably will be challenged by Apple. It affects the patent for Apple’s “rubber-banding” or “bounce” feature, which makes the digital page bounce when a user pulls a finger from the top of the touch screen to the bottom.

If the patent office ruling withstands challenges by Apple, it could be used to roll back the $1.05 billion in damages in the California case and strengthen Samsung’s hand in settlement talks with Apple, said James E. Bessen, a lecturer at the Boston University School of Law. The patent office’s action, patent specialists say, shows that the office, and not only courts around the world, will be an important front in the smartphone patent wars. These legal clashes mainly pit Apple against companies that use Google’s Android software for smartphones, including Samsung, HTC and Motorola Mobility, which Google acquired last year.

The patent office ruling was first reported Tuesday by Florian Müeller, a patent analyst and blogger based in Germany.

The decision to invalidate the Apple patent was made under longstanding procedures for re-examining previously granted patents.

Under the America Invents Act, which was passed last year, the post-grant review process is being strengthened and applies to patent re-examination requests filed after Sept. 16.

Patent specialists say the new rules will make it more likely that courts will wait until the patent office has finished studying whether a patent should be invalidated. And the new law gives the director of the patent office the power to order that a patent be re-examined.

“The patent office now has the opportunity to actually take the lead rather than following the courts,” said Arti K. Rai, a professor at Duke University School of Law and a former external affairs administrator at the patent office. “This has the potential to be a really important way to try to curb the problems with existing patents.”

A major problem, according to patent specialists, is that the patent office grants patents too easily in the first place. That is particularly the case, they say, with certain kinds of patents, including those on software. Unlike pharmaceuticals, where a single clearly defined molecule can be the patented invention, software patents often describe digital concepts carried out in code. In software, the boundaries are less clear, and innovation tends to be step-by-step, building on years, sometimes decades of work.

Big technology companies, patent specialists say, have exploited the complexity and uncertainty of software to amass large portfolios of patents.

Frontline patent examiners, working under tight time pressure, they say, tend to be outmatched by wealthy companies when patents are filed. But post-grant review affords another, more painstaking look. “It gives the patent office the ability to focus on the patents that really matter,” said Colleen Chien, an assistant professor at the Santa Clara University Law School.

The patent office’s re-examination team issued its invalidation decision on patent 7,469,381. It was one of the six patents that formed the basis of the jury verdict against Samsung in a federal court in San Jose, Calif.

The patent is at the center of Apple’s intellectual property strategy in smartphones and tablets of patenting user-experience software. Upon review, the patent office determined that the idea and the bounce feature had been invented earlier, even if the pointing device was not a finger on a touch screen.

Before the California trial, Samsung had made a change to sidestep the Apple patent on its newest smartphones. The same finger stroke brings a blue glow at the bottom of the screen, not a bounce.

This week, Samsung filed a copy of the patent office’s initial invalidation ruling on the Apple patent with the judge in the California case, Judge Lucy Koh. Samsung has asked that Judge Koh overrule the jury. And the company is appealing the entire verdict.

The Android camp has filed other requests to re-examine Apple smartphone patents with the patent office.

In a statement, Allen Lo, Google’s deputy general counsel, said: “The patent office plays a critical role in ensuring that overly broad patents cannot be used to limit consumer choice. We appreciate the care the patent office has taken in re-examining dubious software claims."

Apple did not respond to an e-mail request for comment.

Bits Blog: Design and Drama Mark First Day in Apple-Samsung Trial

Michael Nagle/Getty Images

Apple’s hallowed design process was the topic of the first witnesses the company called in its high-profile court case against Samsung over smartphone patents.

In his testimony before a jury in a federal courthouse in  San Jose, Calif., Christopher Stringer, a longtime Apple industrial designer, provided a colorful account of the secretive methods by which Apple conjures up products like the iPhone and iPad. His testimony is part of an effort by Apple to show that Samsung swiped Apple’s patented inventions for use in its own electronics devices.

Wearing an all-white suit, Mr. Stringer, who was instrumental in crafting the first iPhone and iPad, described his job in poetic terms. “My job is to imagine objects that don’t exist and guide the process that brings them to life,” he said in a British accent.

The day concluded, though, with expressions of frustration by an Apple lawyer, Harold McElhinny, and the judge in the case, Lucy H.  Koh, over the public release by Samsung of evidence that Judge Koh had ordered excluded from the case. Samsung’s lawyer, John Quinn, had argued that the evidence would help it show that the iPhone was inspired by Sony product designs.

Mr. McElhinny called the release an “intentional attempt to pollute the jury.”

Judge Koh demanded to know who on Samsung’s legal team had authorized and drafted the press release and asked to speak with Mr. Quinn, who was nowhere to be found. Samsung’s legal team said he was headed to a dinner in Los Angeles.

In his testimony earlier, Mr. Stringer said that Apple’s design team consists of 15 or 16 designers who work around a small kitchen table, a sharp contrast to Samsung’s 1,000 designers.

Asked whether Apple had factored manufacturing costs or component requirements into the design of the iPhone and iPad, Mr. Stringer came across as indignant. He testified that Apple’s designers were in full control of the design process and made all decisions based purely on design.

“The world had never seen anything like this — there were legions of phones available — but none satisfying. This broke new ground. It was more than a phone,” Mr. Stringer testified.

He called the iPhone a “cultural icon.” The iPad, he said, was a “breathtakingly simple device.”

Mr. Stringer was particularly blunt about Samsung. “We’ve been ripped off by everyone, Samsung in particular,” said Mr. Stringer. “We’re offended.”

When asked whether he paid attention to what competitors were doing, he said “on occasion” and “very rarely.”

Later, a lawyer for Samsung showed an e-mail dated Jan. 19, 2011, from Mr. Stringer to another Apple employee that seemed to undercut his earlier comment about watching rivals: “Paul, I need your latest summary of our enemies for an ID brainstorm on Friday,” the e-mail read. “If you have any more data beyond this please could you update the chart? I wonder if there’s anything worth noting about the HP/Palm leak.”

The e-mail contained a spreadsheet listing the core features and dimensions of iPhone competitors.

Asked again whether he  paid attention to Apple’s competitors, Mr. Stringer said: “We were interested in understanding the feature sets of our competitors.”

Apple’s lawyer had one follow-up question: “Was that used to design some new Apple product?” Mr. Stringer responded: “Absolutely not.”

One other witness from Apple, Philip Schiller, the company’s senior vice president of worldwide marketing, briefly took the stand before the court adjourned for the day. He was asked about influences on the company’s products.

“We don’t use any customer input in the new product process,” Mr. Schiller said. “We never go and ask the customer, ‘What feature do you want in the next product?’ It’s not the customer’s job to know. We accumulate that information ourselves.”

Mr. Schiller is expected to testify again on Friday.

Apple-Samsung Trial Highlights Tricky Patent Wars

A jury will be asked to sort through all that to settle a dispute between Apple and Samsung Electronics beginning Monday in a federal court in San Jose, Calif.

The jury trial is the latest phase in a global campaign of smartphone patent litigation that began more than two years ago. The legal clashes mainly pit Apple against rival smartphone makers whose handsets are powered by Google’s Android software, notably Samsung, HTC and Motorola Mobility, which Google bought last year. Dozens of lawsuits and countersuits have been filed in courtrooms around the world.

Yet the escalating patent battle is more than just legal maneuvering. Patents can be powerful tools for determining the rules of engagement for major companies in a fast-growing industry like smartphones.

Patents are declarations of invention that are often easily obtained from government patent examiners, but their real value — their validity and strength — is determined in court.

A few significant rulings in favor of one side or the other, industry and patent experts say, could shape the competitive landscape in smartphones and a sister industry, tablet computers. Court decisions, they say, can provide the basis for negotiating the terms and cost of licensing and cross-licensing of patents — or for keeping certain patented features exclusive to one company.

“Once you determine who is the genuine innovator, and in what technologies on the product, you reset the playing field,” said Kevin G. Rivette, a Silicon Valley patent consultant and former vice president for intellectual property strategy for I.B.M.

But to bring a real shift in the marketplace, Mr. Rivette added, one side must have “strong patents, not incremental ones.”

That issue is much debated, and litigated, in the smartphone arena.

Apple scored some points in June. Judge Lucy H. Koh, who will also preside over the jury trial that begins this week, issued a preliminary injunction against Samsung, ordering it to stop selling its Galaxy Nexus smartphone in the United States.

Judge Koh found that Samsung had infringed on an Apple patent for a “universal interface,” which broadly describes crucial ingredients found in Siri, Apple’s question-answering application (though the patent itself was filed by Apple before it acquired Siri in 2010).

But the power of smartphone patents in general suffered a blow in another federal court in June.

Richard A. Posner, a prominent federal appeals court judge in Chicago, dismissed a case involving Apple and Google’s Motorola Mobility subsidiary. In his “pox on both of your houses” ruling, Judge Posner ridiculed Apple’s broad claims for its user-experience patents and Motorola’s claim that Apple should pay it a rich royalty on its basic communications patents. Both companies are appealing that ruling.

Fierce patent battles in new industries have been the rule for more than a century, from the steam engine to semiconductors. The lessons of history are decidedly mixed.

Sometimes, patent warriors can hold off rivals for years, as the Wright brothers did in the airplane business — though the cost in time, money and innovative energy diverted was daunting even then. In 1912, Wilbur Wright wrote, “When we think what we might have accomplished if we had been able to devote this time to experiments, we are very sad.”

In smartphones, some analysts say, the sheer number of patents and the speed of innovation in product development undermine the power of patents. Because a smartphone combines many communications and computing technologies, as many as 250,000 patents may touch the device, according to estimates by RPX, a patent licensing company.

“You necessarily litigate individual patents, but there are thousands of patents behind the ones in court,” said Mark A. Lemley, a patent expert at the Stanford Law School. “That complexity and the speed of innovation may well make it easier to invent around the patent system in smartphones.”

Indeed, for its new Galaxy models, Samsung developed an alternative to one of the Apple-patented features cited in this week’s trial.