On Friday, August 24, a nine member jury entered a verdict in favor of Apple and awarded almost $1.05 billion in damages. Apple filed suit against one of its largest competitors, Samsung Electronics, in April 2011, and alleged that Samsung’s Galaxy line of smartphones and tablets infringed seven of Apple’s patents covering the iPhone and iPod products. In turn, Samsung countersued alleging that Apple infringed Samsung’s patents covering various wireless software components of its products. After more than a year of highly contentious litigation and following a trial that began at the end of July and lasted the better part of August, the jury deliberated for less than three days before delivering the verdict in favor of Apple.
Prior to trial, Apple received a significant e-discovery victory when the court sanctioned Samsung for its failure to preserve emails after Samsung should have anticipated the lawsuit by Apple. The court determined that Samsung had a duty to preserve evidence as of August 23, 2010, and while Samsung issued a litigation hold and provided instructions detailing how to save emails using its email system, Samsung failed to disable the auto-delete function of its email system, which automatically deleted all emails every two weeks in Samsung’s Korean offices. The court ordered that, as part of the sanctions, the jury would be allowed to draw an adverse inference against Samsung and that the jury would be told to presume that relevant evidence was destroyed and that the lost evidence was favorable to Apple.
The court also entered pretrial preliminary injunctions against Samsung barring the sale of the Galaxy Nexus phone and the Galaxy Tab 10.1 in the United States. Moreover, the court delivered various ruling for and against both parties on various in limine motions. One ruling against Samsung appeared to be very significant: Samsung took issue with the court’s ruling that, because Samsung failed to disclose in time contentions that Samsung’s designs were in development before the iPhone, Samsung was precluded from using slides containing images of the Samsung designs. This particular issue surfaced again during the afternoon while opening statements were being made when a press release issued saying that “the excluded evidence would have established beyond doubt that Samsung did not copy the iPhone design” and that “fundamental fairness requires that the jury decide the case based on all the evidence.” Counsel for Apple raised this issue with the judge claiming that the release was an attempt to influence the jurors. The court ordered that counsel for Samsung disclose who authorized the release and also required that one of the lead attorneys, John Quinn, file an affidavit about his involvement in the release. Quinn complied with the court’s order and disclosed that Samsung did not issue the press release but was responding to press inquiries about the issue. Quinn acknowledged that he authorized the press statement but declared that the purpose was not to influence the jury. Apple filed a motion for sanctions, which was ultimately denied by the court; however, the judge indicated that the issue may be investigated further following trial.
Apple established at trial its theory that Samsung had ripped off the unique design features of the iPad and iPhone and infringed certain utility patents. Apple focused on comparisons between Samsung’s phones from 2006 to its newer smartphones from 2010. Also, Apple relied on internal documents from Samsung comparing Samsung’s products with the iPhone hardware. Apple called one of its design veterans as its first witness, who described how Apple’s design team discussed most of their work at the kitchen table and how they were constantly questioning one another as designs were suggested and developed until they agreed on a final product. Apple also called a former employee who designed icons for the original Macintosh computers to opine on the confusion with the icons and layouts on screens of various Samsung phones. Furthermore, Apple relied on a marketing expert who opined that people don’t associate Samsung touchphones as groundbreaking technology and based such an opinion in part on Samsung internal documents that described the iPhone as a competitive threat. Moreover, Apple called its patent portfolio director who described the company’s licensing strategy and stated that he could count on one hand the number of instances wherein Apple entered into a license for a company to use its design patents.
On the other hand, Samsung maintained the position that Apple had no right to claim a monopoly on certain design features that were not revolutionary. Samsung’s theory to demonstrate non-infringement was to get the jury to focus on the specific legal requirements relating to each of Apple’s patents. Samsung called one its designers who testified that she did not rely on Apple designs to create icons for the Galaxy smartphone lines. Samsung also went on the offensive by attempting to prove that Apple’s products use certain Samsung features for mobile devices, such as the process for emailing photos and the technology relating to easily finding photos in an album. Samsung called an expert who testified that the iPhone and iPad violated three of Samsung’s patents. Moreover, Samsung attempted to demonstrate that Apple’s patents were invalid due to developments in technology that existed before Apple claimed to have invented such technology.
The significance of this trial must be underscored. As a threshold matter, the trial may serve as a precursor to Apple’s global patent war against Google, which was an “extra” in this litigation because Samsung’s smartphones run on Google’s Android operating system. As a reminder, Steve Jobs vowed that he is “willing to go thermonuclear war on this.” Also, this trial served as a gateway that uncovered some of Apple’s secret world. Apple moved to keep under seal many documents and trial exhibits that contained competitively sensitive information, such as financial data and proprietary market research including customer surveys. The court granted some of the motions that related to production capacity, source code and licensing agreements; however, the court denied most of the motions regarding financial data and marketing. The court rationalized the decisions by explaining that “because Apple updates its product lines relatively frequently, it is not obvious that historical profit, profit margin, cost, or unit sales data for past products would provide competitors with an advantage over future products.” The court determined that there was a strong interest in making the data public due to the total amount of damages on the line.
What’s next? The jury’s verdict was favorable to Apple in every way but one: the jury decided that the Samsung Galaxy Tab 10.1 did not infringe Apple’s patent covering design elements on the iPad. This decision by the jury was contrary to a decision made by the court prior to trial. As mentioned above, the court entered a preliminary injunction barring Samsung from selling the Galaxy Tab 10.1 in the United States. Following the verdict, Samsung filed a motion requesting that the court dissolve the preliminary injunction order on the grounds that there is no proper basis for maintaining the injunction based on the jury’s verdict. However, because the jury also decided that the Galaxy Tab 10.1 infringed some of Apple’s software patents, the issue may be more complicated. Moreover, the court is within its rights to overrule the jury’s decision and issue a ruling that the Galaxy Tab 10.1 does, in fact, infringe Apple’s design patent. Also, the jury found that Samsung willfully infringed the patents, and thus, the court must decide how much to increase the damages award, which could be up to three times. Finally, and perhaps most importantly, the question remains whether the court will issue a permanent injunction against Samsung, and if so, what would be the extent of the injunction, i.e. would an injunction cover only those products identified by Apple in this lawsuit or any/all current and future similar products.