Friday, August 24, 2012, 07:44 pm PT (10:44 pm ET)
Apple v Samsung jury validates American patent system, raises new questions for the future of techThe complex verdict reached by the jury in the Apple vs. Samsung case sends a strong message about a willingness of a jury to enforce U.S. patents against flagrant infringement while at the same time rejecting patent claims that lack strong support, particularly when it comes to prior art.
Utility patents were a minor win
There are various elements of the complex verdict. First, Apple scored a series of wins across its utility patents (which describe specific, novel user interface features). This is particularly notable because Apple perviously failed in its efforts to protect the original Macintosh user interface via copyright claims, in the era before software patents.
Apple's "look and feel" lawsuits of the late 1980s were initially successful in stopping competitors, up until Apple's primary case against Microsoft collapsed when a judge liberally interpreted an agreement between Apple and Microsoft (licensing a variety of Apple's Mac UI elements to Windows 1.0) to include all future versions of Windows, essentially opening up the floodgates for Microsoft to copy the Macintosh user interface verbatim after Apple's appeals ran out in 1994.
After a tech industry eternity of 18 years, Apple has now proven itself capable of winning significant protections on patented elements of its iOS in court, adding to a series of much smaller, recent patent victories.
However, despite proving that utility patents can effectively be used to block competitors from infringing on significant, specific features, Apple's big win didn't come from utility patents. In fact, had Apple only won its infringement claims related to utility patents, it wouldn't have made much progress at all.
That's because it is relatively easy for Samsung (or other vendors) to simply drop or sufficiently modify accused features that infringe upon utility patents, risking only relatively minor damage claims from the patent owner.
This makes it incredibly expensive for Apple to attempt to protect its products via utility patents, because it must wage lawsuits for months only to arrive at rather dismal results, even if it wins.
It's particularly notable that the jury only found infringement by Samsung on specific models; clearly, all Samsung has to do to avoid infringement of Apple's specific utility patents is to deliver a software update.
However, the message the jury sent is clear: Samsung wasn't just found guilty of infringement, it was charged with willful infringement on all of those utility patents. WIth that now a matter of record, Apple has the option to pull out other patents against Samsung that are more complex and difficult to argue, but also far more difficult for Samsung to evade through software patches.
Design patents were Apple's big win
Much more significant (in terms of damages it can claim) are Apple's wins related to three of its four design patents asserted in the case. The vast majority of the $1.05 billion in damages Samsung must pay come from infringing those design patents.
That's because under U.S. law, infringement of design patents triggers not just damage claims from lost profits or dilution of a brand (both quite difficult to prove), but potentially also the right for the patent holder to demand the profits the infringer has collected in the process of infringing those design patents.
Notably, the jury found Samsung infringing upon three design patents describing the iPhone, but not infringing Apple's D'889 patent related to iPad, very likely for some of the same reasons earlier cases have arrived at the same decision: that Apple's iPad design patent was undermined by two instances of prior art, and that Samsung made some discernible design changes to avoid infringement.
It's also noteworthy that while Samsung was found to be willfully infringing Apple's utility patents, it was not found to be willfully infringing its design patents, a decision the jury likely arrived at because in several cases, Samsung took steps to avoid overt infringement.
More wins for Apple trade dress
While Apple hasn't previously had spectacular success in defending patented software features of the Mac or iOS, it has previously won significant rights to protect its trade dress.
In 2000, Apple won global rights to stop knockoff versions of its then-new iMac, including eMachines' eOne and the Daewoo E-Power. Those cases were fought using trade dress claims rather than design patents.
As a result of this jury's latest decision, Apple is likely to devote more efforts to spelling out and officially registering its trade dress claims, as it won "protectable" claims only over specific instances of its trade dress.
Apple had also unsuccessfully tried to argue for protection of unregistered trade dress elements, just because of the widely recognized nature of its famous iOS devices. This didn't result in convincing the jury that those additional, unregistered trade dress claims were worthy of protection however.
No luck for scattershot patent claims
While Apple won a strong affirmation for some of its strongest patent claims (this case was limited to a total of just eight Apple patents), the same was not true for the six patents Samsung tried to apply in its "offense as the best defense" strategy.
The jury found no infringement by Apple in any of Samsung's asserted patents. That's a strong blow against the concept of trying to defend against infringement by simply throwing up hailstorm response of counterclaims, particularly ones as weak as those Samsung asserted.
Of course, both Apple and Samsung have plenty of other patents they could bring to subsequent trials, even if these were among the two company's strongest. At the same time however, Samsung has lost big in its gamble of letting the courts decide the terms of its contractual obligations with Apple (even if its damage claims might be lowered on appeal).
It has also been found to have willfully infringed upon Apple's patents, setting the stage for more complex trials arguing followup claims, if Samsung decides to keep litigating rather than start negotiating.
More negotiations, fewer lawsuits
The jury's verdict will likely have the effect of encouraging Apple and Samsung to work together as amicably as possible in the future, as Apple attempted to do in 2010 when it first approached the company in the effort of working out a patent licensing agreement.
As the "most sued company on earth," Apple knows enough about the court system to seek to avoid trials if at all possible. Having won a major case against Samsung, Apple will likely be emboldened to negotiate future issues armed with a track record that spells out the potential dire consequences of losing to the iPhone maker in court.
After losing its "look and feel" copyright case with Microsoft in the early 1990s, Apple subsequently resolved its remaining issues with the company in a win-win agreement brokered by Steve Jobs, who famously introduced the détente by saying:
"We have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job."
Apple has since worked to broker a series of agreements involving intellectual property claims with Microsoft, Creative, Nokia and many others. Samsung has been the first major competitor/business partner to attempt to play hardball with Apple in the patent business, and its very significant loss in doing so will likely cause other vendors to rethink their legal strategy as well.
Principal among these is Google's Motorola subsidiary, which has attempted to assert the same type of "offense as the best defense" strategy as Samsung did in its own high stakes gamble to force Apple into expensive licensing of the company's standards essential patents that were previously committed to Fair, Reasonable and Nondiscriminatory (FRAND) terms.
The goal of these types of claims (previously attempted by Nokia before it backed down and came to a mutually acceptable agreement with Apple) is to force Apple to give up its proprietary patent rights in exchange for the ability to build standards-compatible devices.
This strategy has not only failed miserably in the Samsung case, but is also under new scrutiny by the standards bodies themselves and by antitrust regulators who are actively investigating the conduct of Samsung and Motorola with regard to their alleged FRAND patent abuse, both in U.S. and in the E.U.
What remains to be seen
While the jury has answered its questions, there are many questions that remain to be answered. First: how much impact will Samsung experience in going back to its pre-infringing designs?
While Apple's case argued the story that Samsung was struggling to build Android devices up until it hit its "crisis of design" moment in 2010 and embarked upon a three month intense copying effort, Samsung has since established itself as a major brand and Apple's primary competitor in high end smartphones.
It's certainly not clear that customers will abandon the firm just because it stops making devices that look like the iPhone. At the same time, for a company that earned half as much as Apple in the last quarter despite selling twice as many phones, the loss of over $1 billion is a significant sting.
Will Samsung blaze a more original path as Motorola, HTC, LG and Nokia have, or will it simply tweak its designs based on what it has learned in defending itself against Apple's patents, and continue to be the Android licensee known for making devices that most closely resemble Apple's?
Additionally, what will the result of Samsung's decisions have on its bottom line? And will other companies emulate its "how close can we be without getting sued" strategy, given that it paid off fairly well, particularly relative to the moribund sales seen by the more original Motorola, HTC, LG and Nokia?
Further, will Apple continue its efforts to take its business away from Samsung to further punish the company for double-crossing it in the way court documents have shown it did, starting in 2007 and continuing with intensity from 2010 to today? What effect will that have on Samsung?
Additionally, what about Samsung's claims that a win for Apple would result in fewer options and higher prices for consumers? So far, Apple has been effective in pushing down prices in smartphones and tablets, to the point that smartphones are more affordable than ever.
At the same time, Apple has also effectively demonstrated that the majority of the market (and certainly the premium end of the market) actually wants to buy the same thing, not a huge variety of wildly different models.
None of these questions can be answered by a jury, but the jury's verdict has set in motion a new set of rules that will dictate how the tech industry operates in America, even if the courts in Samsung's native Korea beat it to the punch with a much weaker affirmation of patent rights mixed with an approval of Samsung's anti-FRAND standards essential patent strategy.
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