Samsung’s Copyright Infringement Went Even Deeper than Apple Knew

Sep 11, 2012

By Kerrie Spencer, staff writer – September 11, 2012

In one of the most significant copyright infringement cases in recent history, Samsung Electronics was handed a massive defeat in court for infringing on six Apple patents. The initial cost to Samsung is $1.05 billion in damages and an injunction on the sales of Samsung products. The subsequent cost to Samsung? Immeasurable. (1)(3)(4)

The Apple/Samsung case has dragged on in court for well over a year, with nine jurors hearing evidence from both companies involved: Apple Inc. (Apple) and Samsung Electronics Co. (Samsung). What did come as a surprise to the legal community and Samsung in particular was that the jury found they were in violation of six of Apple’s seven patents, meaning all seven patents were found to be valid despite Samsung’s efforts to have them thrown out of court.

The decision came back in 22 hours, a rare occurrence in patent infringement trials but particularly in this one. The evidence was seemingly endless, the case had a high number of infringement claims and it involved multiple experts. Both sides incurred substantial legal fees.

As with many cases of this nature, Samsung countersued, suggesting that Apple had infringed on five of Samsung’s patents and was seeking $399 million in damages. (2) The court found Apple to be in violation of none of Samsung’s patents. With culpability determined, the only remaining decision was the extent of the damages. Apple asked the court for $2.5 billion. While the company only received $1.05 billion, it is still considered one of the largest intellectual property awards on record. (1)

Samsung responded to the verdict by suggesting consumers would ultimately be the ones to suffer, as they will have fewer options at higher prices (coined the “Apple Tax”) and a dampening of future innovation as companies fear costly lawsuits.

Samsung now needs to find the money to compensate Apple for their copyright infringement, an infringement that went way deeper than even Apple was aware of prior to filing a lawsuit. A spokesperson for Apple said, “The mountain of evidence presented during the trial showed Samsung’s copying went far deeper than even we knew.” (1) For instance, several Samsung products illegally used Apple’s “bounce-back” feature when a user scrolls to an end image. Other products used the ability to zoom text with a tap of a finger. (2)(3)

The most telling revelation was the jury finding that Apple’s patents were willfully infringed upon by Samsung, which means they did it on purpose, with the intention of ripping Apple off. This bad behavior now leaves them open to a judge tripling Apple’s damages. (1)(2) It is obvious that riding on the intellectual property of another has significant consequences.

What is also interesting to note is that Apple stuck to the hard facts in its case by primarily relying on patents relating to the physical design of its iPhones and iPads. More often than not, in suits of this nature, technology giants make a case based on utility patents, which is a patent that cover the way a products works, not how it looks. (1)(2)(3)

What’s next? Apple has quickly filed a motion seeking a preliminary injunction against Samsung products. This process involves Apple responding to a request by the judge and outlining what products they want covered/contained in that injunction. It is important to note that this current ruling does not affect Samsung’s newest product, but it does affect 28 other Samsung products.

This devastating blow to Samsung could change how their tablets and smartphones are designed, something that may impact the company’s bottom line. The one patent that the jury said was not violated was the shape of Samsung’s mobile device—no one should have a monopoly on a rectangle with rounded corners.

This ruling affects Google as well, a development which some view with surprise. However, because Apple is in a war with Google over their attempts to squash the Android operating system used by Samsung and other mobile device manufacturers, it makes sense that it could impact the Internet giant as well. Google has not commented on this ruling, and it may not. Sometimes it is better to wait and see what happens next before making a move. As the ruling stands, Apple may do well in defending its market share and profits. As for consumers, they will still have choices as companies are forced to innovate in new ways.

Market share is a huge issue for smartphone makers, with global earnings from products expected to reach $207.6 billion in 2012 and $252.7 billion in 2013. (1) Those are staggering numbers, and if Samsung is now forced to take a backseat in the market by not producing “me too” mobile devices, Apple could dominate. Is an appeal in the works? Chances are that will happen. There is a lot of money involved, and neither company wants to concede their position. Additionally, Samsung likely wants the damage award reviewed.

On the surface, this case is about one company ostensibly ripping off another by using their technology without their permission and making money off their ideas. However, another issue lurks deeper: should these types of complex patent infringement cases be decided by a jury? One only has to look at the various patent infringement cases on the dockets across the nation to see that courts are getting clogged with them.

Consider the Apple versus Motorola case, which was tossed out of court because the judge stated the patent system was in total chaos. (2) Does the judge have a valid point? Many think so. The more litigation there is, the more the consumer pays for a product. That aside, what about the patent system? If it is in chaos, what does the government intend to do about it?

Perhaps they intend to do nothing and wait for this landmark case to be appealed and ultimately reach the Supreme Court. (2) One thing is certain: patent infringement in the software industry must be looked at under a high-powered microscope. This is the 21st century. It is becoming increasingly difficult to apply outdated laws to today’s technological world.