Apple wins $1 billion award in patent case

A federal jury in San Jose, Calif., says Korea's Samsung Electronics violated multiple Apple patents for its iPhone, including design, rubber banding and tap-to-zoom. Apple shares jump to record levels after hours. Google falls back.

By Charley Blaine Aug 24, 2012 7:09PM
Updated: 10:24 p.m. ET

A federal jury in San Jose, Calif., ruled today that South Korean electronics giant Samsung's smartphones violated at least six patents held by rival -- and partner -- Apple (AAPL). The jury ruled that Samsung should pay $1.05 billion in damages. 

The nine-member jury ruled that Samsung had violated Apple patents for the iPhone's and iPad's rubber-banding and tap-to-zoom features, graphic user interface and design. The violations occurred on multiple Samsung devices.

The jury found for Samsung on a small number of the devices, however, but said Apple did not have to pay damages.

The verdict -- which came much sooner than expected -- could lead to an outright ban on sales of key Samsung products and will likely solidify Apple's dominance of the exploding mobile computing market.

Samsung called the verdict "a loss for the American consumer" and said it plans to appeal. It may be years, in fact, before the final judgment is entered and any money changes hands.

The outcome of the legal battle between two companies that sell more than half the world's smartphones and tablets will reverberate around a mobile industry struggling to make headway against the pair. It also could affect Google (GOOG), whose Android operating system and user interface is used in phones made by Samsung and other manufacturers.

Apple had sought more than $2.5 billion in damages. Although it did not get that amount, The Wall Street Journal noted, the award was bigger than Samsung had estimated and will still rank among the largest intellectual-property awards on record.

Article continues below.
Apple shares rose $11.73, or 1.8%, to $764.95 after hours, theoretically a new intraday high. The shares had finished up 59 cents at $663.22 in regular trading. Google was down $5.63, or 0.8%, to $673 after hours. It had climbed $1.83 to $678.63 in regular trading.

While the ruling won't affect any of the companies' latest products, it could shape how smartphones and tablets are designed and the fortunes of companies that make them.

During the trial, Apple and Samsung considered much of the evidence so sensitive that their lawyers fought to exclude them from the case, arguing they would divulge corporate secrets or weren't relevant, the Journal said.

The jury deliberated for three days, fewer than many had expected for such a complex case. Jurors --two women and seven men -- were required to fill out a 20-page verdict form with answers to more than 700 questions relating to the particulars of the case. They had been given 100 pages of instructions by U.S. District Judge Lucy Koh.

The California verdict is the first in a wave of legal cases in the United States involving smartphone patents to reach a jury trial. The case has a high profile because Apple and Samsung are the two biggest makers of smartphones in the world. They also are partners, with Samsung manufacturing many of the components used in iPhones.


Apple had asked for damages for what it said was Samsung’s violation of a handful of patents related to the physical design and software functions of the iPhone and the iPad. Samsung had demanded that Apple pay it $422 million for its own patent violations.


Lawyers from both sides presented internal emails, drew testimony from designers and experts and put on product demonstrations and mock-ups to convince the jury.


At times, their questions drew testimony that offered glimpses behind the corporate facade, such as the margins on the iPhone and Samsung's sales figures in the United States.


From the beginning, Reuters said, Apple's strategy was to present what it thought was chronological evidence of Samsung copying its phone.

Juxtaposing pictures of phones from both companies and internal Samsung emails that specifically analyzed the features of the iPhone, Apple's attorneys accused Samsung of taking shortcuts after realizing it could not keep up.


Samsung's attorneys maintained Apple had no sole right to geometric designs such as rectangles with rounded corners. They called Apple's damage claim "ridiculous" and urged the jury to consider that a verdict in favor of Apple could stifle competition and reduce choices for consumers.


The fight began last year when Apple sued Samsung in multiple countries, accusing the South Korean company of slavishly copying the iPhone and iPad. Samsung countersued. 


The companies are rivals, but also have a $5 billion-plus supply relationship. Apple is Samsung's biggest customer for microprocessors and other parts central to Apple's devices.

 

This afternoon's decision came after a South Korean court held earlier today that Apple and Samsung had violated each other's patents. The court ordered Samsung to stop selling 10 products including its Galaxy S II phone and banned Apple from selling four different products, including its iPhone 4.


The three-judge panel said Apple infringed two Samsung technology patents, while Samsung violated one of Apple’s patents. The court awarded small damages to both companies and said they must halt sales of the infringing products in South Korea.


Critically, however, none of the banned products are the latest models of Samsung or Apple devices.


The Korean court also ruled that there was "no possibility" that consumers would confuse Samsung and Apple smartphones, the Journal noted. And Samsung’s smartphone icons don’t infringe on Apple’s patents.

VIDEO ON MSN MONEY

555Comments
Aug 24, 2012 7:35PM
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Apple Sucks...... They're mad because Samsung makes a product that is better.  I'm so sick of iPhone and iPad crap I can't even put into words.  But this is proof that the one with the most money wins.  Apple needs to recognize that competition is out there and they just need to learn how to compete instead of acting like a bunch of cry babies.  You've made more than enough money, let someone else make a little bit.
Aug 24, 2012 7:29PM
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I don't have a side in this fight, but I wonder if the average person who is picked for jury duty is capable of determining whether or not a complicated patent has been violated.
Aug 24, 2012 8:35PM
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I'm buying a new Samsung phone now... screw Apple!
Aug 24, 2012 9:11PM
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What this solidifies is my absolute REFUSAL to ever buy an Apple product. Are you f**king kidding me?? Samsung "steals" from Apple and has to pay them $1B+ but Apple "steals" from Samsung and doesn't have to pay anything?? Seriously??

 

If I were Samsung I would halt the production lines of Apple components, dump everything on the assembly line into a big incinerator and tell them, "If Apple wants to keep working with us, their  costs just quadrupled."

 

The total value of an Apple i-phone is about $3 labor, $2 parts, $1 shipping and $594 marketing.

 

I hope Samsung tells them to shove it or, at the very least, appeals this decision. Yes this will stifle competition.

 

I guess they'll sue HP next. After all, my laptop has "rounded corners".

Aug 24, 2012 7:40PM
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Apple is slipping. When are they going to sue all grocery stores for using the word Apple in their produce department? I think Steve Jobs patented the planet so we all owe him money. Well except he's dead......awwwww too bad
Aug 24, 2012 9:52PM
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Well if this is the case, then I guess Apple better pay Microsoft a huge sum of money for stealing the tablet PC which Bill Gates originated in 2000.
Aug 24, 2012 8:24PM
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Amazing for a company that stole the entire Macintosh Interface from XEROX.   
Aug 24, 2012 10:00PM
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"

The companies are rivals, but also have a $5 billion-plus supply relationship. Apple is Samsung's biggest customer for microprocessors and other parts central to Apple's devices."

 

Sounds like Samsung has Apple by the Bytes if you ask me. I don't think it's smart to f*&k with the hand that evidently feeds you. No CPU's, no iproducts......HAIL TO THE DROID!!

Aug 24, 2012 11:20PM
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It amazes me that in 1999 Stevo convinced Sun and Oracle to help convince the government that Microsoft was monopolizing the consumer market by forcing individuals to purchase their Windows based computers.  In addition they had to stop putting key microsoft softwared into their computers which they felt minimized fair competition.  The Government agreed and Microsoft lost.  Many were happy.

So here we are 12 years later, and Apple is the monopoly but no one challenges them.  The earn a patent on a "rectangular phone with rounded corners".  Really?  Is that not every phone?  I think I will go to the US patent office and patent "round".  Then sue everyone that makes round opjects.  Maybe a triangle and box while I am at it.

Icons on a phone.  Really?  Apple has a patent on icons? 

So here is food for thought.  Palm.  Remember them?  Their Patent portfolio is one of the largest in the world.

Let's see what apple is using.

Orientation and dependency for apps. Palm.  In other words, I can rotate the phone and take a picture in landscape mode.

PDA.  Patent to Palm.

Multitouch.  Palm.

Ambient dimming.  Palm.  Dynamic brightness range for portable computer displays based on ambient conditions.

Touch screen.  Patent to Palm.

Type to search.  Patent to Palm. Method and appartus for accessing a contacts database and telephone services.

Pulling up names by typing in initials.  Palm.

Conference call.  Palm.

And the grand daddy of them all...

Smart phone. Patent to Palm. Integrated Handheld computing and telephony system and services.

So how is it that Apple got away with these and hundreds more of Palm Patents?  It is because Palm was too small.  Apple would destroy them in court with costs, something Palm could not afford. 

HP is probably going to sit out for a while then hit everyone hard.  They spent 2 billion for Palm patents.  Soon it will be Apple that is losing in court.

PS.  Let's not forget that it was Apple that single handidly destroyed the portable CD player market and introduced sub par quality music to the masses.  Music is enjoyable in its real form.  Mp3 and ipod music is so horible I won't use it.  I prefer CD, LP and Flac.

 

Aug 24, 2012 10:04PM
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I hope Samsung stops manufacturing components for Apple and partners up with Nokia and every other phone company in the world, except for Apple. I hope Samsung comes out on top and wipes their bum with Apple. I have had 3 iPhone's and they have all crapped out on me. Samsung are the only ones that have ever lasted me on full 2 year cellphone contract before being able to upgrade to a new phone and they always work flawlessly! And I hope Google never does a darn thing for Apple either! 
Aug 24, 2012 7:49PM
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I for sure will never, ever, ever, ever buy an Apple product, never, everrrr. This patent crap is way out of wack and needs to be reconsidered in our government.  Any time a business, like Apple, makes their biggest money off of whining that somebody looks like them, it's an abused system that Lawyers search out and take advantage.  Whinny little bitches.
Aug 24, 2012 8:18PM
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This means that apple can pay $0.01 more per hour to the employees assembling the devices.
Aug 24, 2012 8:40PM
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Products will never evolve with Apple and it's minons around. Anytime a new device is created Apple calls foul. If anyone should cry foul it should have been Palm, Nokia and Microsoft back in time!

 

 

 

Aug 24, 2012 8:26PM
Aug 24, 2012 8:07PM
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Thumbs up if you think msn is getting paid for the spam in the comment sections of their stories.
Aug 24, 2012 8:43PM
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so wait the jury and the case were in San Jose..right next door to Apple. They wouldn't be biased or anything...sheesh.
Aug 24, 2012 8:08PM
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**** you apple... I will never buy any of your products again!!!
Aug 24, 2012 9:55PM
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I use to drink the apple koolade, but then grew up and realized the Android is much better, and gives you so many more options, and does not rob you!
Aug 24, 2012 10:15PM
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California juries have an impressive history of letting murderers go free, but somehow having a similar design to another product gets you a $1.05 billion penalty, and potential bans from doing business in the country. If you ever need an incompetent jury for any of your legal proceedings, head to California.
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