Friday, August 24, 2012

Apple's billion-dollar win over Samsung is a huge breakthrough -- but it's not thermonuclear

A California jury just handed Apple a near-complete victory on its own claims and awarded it more than $1 billion in damages, and rejected all of Samsung's claims. With most of the infringement having been established to have been willful, the jury essentially concluded that Samsung is a reckless copycat and, since some of the infringement is Google's responsibility, basically agreed with Steve Jobs's claim that Android is a stolen product.

Apple CEO Tim Cook was absolutely right not to settle prior to this verdict. He showed strong leadership, and we will probably see much more of that before all is said and done between Apple and the Android camp.

Here's the (final) jury verdict:

12-08-24 Apple-Samsung Amended Jury Verdict

Samsung will undoubtedly try to convince Judge Koh that the jury should be overruled, and I wouldn't rule out minor adjustments by the judge, but all in all, this liability finding is going to stand and the appeals court will also treat it with significant deference. After Judge Koh's order on Samsung's motion to overrule the jury, I will update my list of valid Apple and Microsoft patents that Android-based devices have been found to infringe. The most recent such finding (which did not appear on the original list) was the Mannheim Regional Court's decision that Motorola's Android-based devices infringe on a Microsoft file system patent. That one was number 12. Prior to today's verdict (again, I will await Judge Koh's post-verdict decision), courts in different jurisdictions had found Android-based devices to infringe seven valid Apple software patents, two valid Apple design patents, and three valid Microsoft patents. That list already included (because of earlier decisions, such as on a preliminary injunction motion) some of the patents the jury found valid and infringed, but the list will grow, probably to 15 patents (if not more).

Even if the court upheld all of the jury's liability findings (not unlikely) and granted Apple injunctive relief against Samsung over all of them (not easy to achieve, but possible; a hearing has been set for September 20), and if such injunction was not stayed by the appeals court (a stay is possible but not a given), Samsung would not be forced out of the U.S. market as a result of this litigation. Samsung can and will design around Apple's design patents, and it can and will have to work with Google to engineer around Apple's software patents. Its products may, as a result, be less appealing, but they are still going to be marketable.

This ruling is not thermonuclear on its own, but in its aftermath, we will not only see a lot of wrangling over a judgment as a matter of law to overrule the jury and over injunctive relief but there will also be, even more importantly, a push by Apple to enforce many more design patents and utility (hardware and software) patents against Samsung. Since Samsung has been found to have infringed intentionally and recklessly (partly on its own, partly in conjunction with its "partner in crime", Google), the United States District Court for the Northern District of California will adjudicate more of Apple's asserted patents in the future. In particular, Apple has the right to reassert all of the patents it dropped ahead of this trial in an effort to narrow the case. Apple's legal team -- in-house lawyers as well as the law firm managing its offensive claims, Morrison & Foerster, with a team led by Harold McElhinny and Michael Jacobs -- made just the right picks to focus on slam dunks for this trial. Some of the patents that were temporarily withdrawn are harder to enforce, but they could do much more damage to Samsung, and we will see them resurface soon. Also, Apple has a second California lawsuit going, which was filed in February over eight more patents, which are on average also more impactful than the ones the jury found Samsung to infringe. And courts around the globe will hear and read about a finding that Samsung knew full well what it was doing -- a fact that was clearly established by Apple's mountain of evidence. I wrote more than two weeks ago that "Samsung can hardly explain away all of Apple's smoking guns for intentional copying".

Today's verdict also shows that the only country in which Samsung can score any serious win with its own patents -- some of which are standard-essential and the rest of which isn't impactful -- against Apple is Korea. Samsung already lost three German lawsuits against Apple (four more will go to trial between mid-September and mid-October, and I'll attend all those trials) and it lost in France and Italy. In the Netherlands, it will only receive a tiny amount of damages -- but not an injunction. Samsung has now lost on all of its offensive claims against Apple in California.

A Wilmer Hale team, led by IP litigation superstar Bill Lee, did a really superb job defending Apple against Samsung's patents. But Samsung cannot blame its own lawyers from Quinn Emanuel. Samsung has to blame itself for building its success on an infringing software platform and for deciding to copy Apple's designs. And Samsung has to realize that its own patent portfolio is next to worthless in its fight against Apple. Yes, next to worthless.

Samsung cannot rely on Google in any way. More than a year ago, Google announced its merger agreement with Motorola Mobility and promised to defend Android. So far, the deal has given Google hardly any leverage against Apple, Microsoft and others. A couple of hours before the California verdict was read, the ITC remanded an investigation of a Motorola complaint against Apple -- with only one (non-standard-essential) patent left -- to a judge. Google cannot stop Apple. It is now on the run and will have to scramble to make software changes to Android.

Samsung has issued a statement that claims this jury verdict is a loss for consumers. But things are more complex than that. There can be no reasonable doubt that Samsung and Google have engaged, and continue to engage, in "copytition" (competing through copying) rather than wholly-independent creation. Somewhere the courts have to draw the line and afford some degree of protection to innovators. I don't always agree with Apple's claims, and I don't like all of Apple's patents, but the kind of disregard for other companies' intellectual property that Samsung and Google effectively propose is certainly not the answer.

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