Patent Remedy Trial - Samsung No Longer Denies it Willfully Copied Apple but Doesn't Think it's a Big Deal

By Tony Rizzo November 14, 2013

As all things always do in business, the difference between right and wrong ultimately comes down to a matter of dollars. It is certainly true that Apple won its patent lawsuit last year - the one in which it became utterly clear that Samsung willfully copied the original iPhone 3 shape and general design. Samsung did this because it believed it had no other choice in order to remain in the smartphone game.

For years it had battled with Nokia, always delivering a step behind Nokia in design, but somehow always managing to add its own little twists - just enough to make devices "the same but different." When the iPhone was released BlackBerry was at the height of its game and both Nokia and Samsung were competing not only for the wallets of consumers but also trying to find ways to compete with BlackBerry for the wallets of enterprise users. Both companies were stuck in a 2007 full keyboard design battle as part of the device mix, trying to match up with BlackBerry while also trying to one-up each other.

At the time the fairly rampant copying was simply part of the general game. Nokia added a full keyboard so Samsung did the same. Samsung added a certain feature, so Nokia had to follow. The bottom line was that for better or worse, there were only certain ways to do certain things (where are you going to put a full keyboard? Where are you going to put the thumbwheel for scrolling?). When BlackBerry came out with the home button rollerball the design scheme changed again and everyone moved to it, When Samsung delivered a touch button instead of a rollerball, BlackBerry followed. We toss Microsoft and its old Windows Mobile OS into the mix here as well as being part of this culture.

No patent wars ensued, no essential patent demands were made in the billions of dollars - it was just the simple way things were done then. Design copy (and hopefully some minor one-upmanship) was simply part of the game. And it was this mentality that Samsung relied on when the then revolutionary iPhone 3 hit the scene and swiftly began to dominate the market and completely redefined mobile device technology.

To its credit, Samsung quickly realized it was "screwed" so to speak. It went through a now fairly well-known "Crisis of design" stage (this emerged from an internal Samsung memo that ended up as evidence in the original trial - which Samsung strenuously tried to keep it out of the trial) where it knew it had nothing in hand that could even remotely compete with the iPhone. What to do? Simple: cheat copy, sort things out and ask for forgiveness later and move on to dominate the world. The latter certainly wasn't a given, and the former was simply part of the mobile phone device culture of the time. The strategy seemed sound with one exception.

Apple had no interest or intention of playing by the old rules of the mobile phone industry. And in fact Steve Jobs himself made this quite clear on the day of the original iPhone announcement when he said in a loud and clear voice to his worldwide audience - "Oh yeah, we've patented the hell out of it." Samsung didn't quite get the message then but Jobs certainly made it clear when he followed up by saying he'd use every dime of Apple's cash in hand if he had to in order to wage thermonuclear war over Apple's patents.

This last statement applied more directly to Android but Samsung was clearly in its sights as well. Fortunately Apple didn't have to dive too deeply into its cash, but wage patent war it certainly did. To Apple its designs are key to everything it does, and there was simply no way in hell Samsung was going to escape cleanly with a "beg for forgiveness" strategy later on for its blatant design copying. Apple had changed the rules of the game - forever. A sad offshoot of all of this of course has been the now ongoing "mobile patent wars" being waged now between most of the key mobile players.

The Final Original Patent War Chapter

In any case, the final chapter in the Samsung-Apple original copying patent lawsuit is now being written as the parties gather in court one more time for the retrial to settle on the final costs that Samsung will incur as the final remedy for their blatant copying. It should be interesting!

Samsung no longer denies it did what it did. It did in fact willfully infringe on the iPhone 3 design. Samsung simply doesn't think it did anything all that wrong (that old school mobile device mentality has hard to break), it claims that it did not in fact profit all that much from stealing the design, and it doesn't believe that Apple either lost very many sales because of Samsung's own devices or was otherwise truly harmed either financially or from a marketing perspective.

Samsung's attorney Bill Price told the jury as much.

Apple's attorney, Harold McElhinny, on the other hand, had this to say: "…this trial is about a single question: what damages must Samsung pay Apple for violating its intellectual property rights. Samsung sold 10.7 million infringing products. Samsung, the company that broke the law, took in $3.5 billion. You will decide how much of that $3.5 billion will be returned to Apple."

What does Apple think it is owed? Here is the breakdown on what Apple wants:

  • $113 million in lost profits for 360,000 iPhones the company claims it believes it would have sold without competing against Samsung's copied devices;
  • $231 million in improper profits collected by Samsung on its own sales;
  • $34 million in patent royalties for the intellectual property Samsung infringed.

That adds up to $379 million - which, truth be told, in today's age of hundreds of billions of dollars in aggregate revenue across the industry seems like a drop in the bucket. But - and here is the big but - the real issue here is just how much value the court (and the jury) place on the value of the patented technology and how far courts will let infringing parties go. In other words, will Samsung get away with begging for forgiveness later with a slap on the wrist or will it incur the full punishment? We ourselves certainly hope for the latter here - what Samsung did is completely inexcusable - regardless of the type of culture that previously existed among mobile device competitors.

Whatever dollars are ultimately awarded, they will be on top of the $560 million in damages Apple was awarded in the original trial that is not part of the new retrial outlined here.

McElhinny further said to the jury that, "Our star witness is going to be Samsung. We are asking you render a verdict that makes Apple whole for the injury Samsung has caused."

Well, as noted earlier, Samsung no longer denies the charges. It cheated. Bill Price said, "This is a case not where we're disputing that the 13 phones contain some elements of Apple's property…" but "that doesn't mean Apple gets to come in here and ask for a windfall…for more than it is entitled." Samsung doesn't think its cheating is worth much. Here is Samsung's reckoning:

  • Samsung claims it did not earn anywhere near $3.5 billion on the infringing devices;
  • Samsung claims it only earned $52 million;
  • That is what Apple should get in damages;
  • Samsung believes it should pay nothing at all to Apple for lost profits;
  • It believes it should pay Apple all of $28,000 for patent royalties.

It is all hilariously funny - in the endgame here Samsung still clings to its earlier cultural roots, and of course believes it only deserves a minor "slap on the wrist" - that begging for forgiveness is all that is necessary here.

Samsung needs to pay the full price to Apple for its patent transgressions. The company has continued to skirt the law and has exhibited untoward behavior in how it believes patents should be wielded. Recently we also highlighted Samsung's bad patent licensing behavior with Nokia - an entirely different transgression. Samsung needs to get the message that it is no longer 2007.




Edited by Stefania Viscusi

TechZone360 Senior Editor

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