Apple Closes, Urging Big Damages For Samsung - InformationWeek

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8/22/2012
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Apple Closes, Urging Big Damages For Samsung

Sending patent case to the jury, Apple says Samsung willfully copied iPhone and iPad, and Samsung says Apple fears competition.

Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
Apple iPhone 5 Vs. Samsung Galaxy S III: What We Know
(click image for larger view and for slideshow)
In San Jose, Calif., Tuesday, attorneys made closing arguments in the Apple vs. Samsung trial. It took Judge Lucy Koh two hours to read aloud the list of instructions on how the jury should decide the trial's separate issues before the case was sent to the jury.

At the end of the reading, the seven men and two women were newly minted experts in U.S. patent law and/or staggered by the task that lies in front of them. Before their task is done, they will have filled out a 70-page form dealing with the issues in the case. One observer, Ted Smith, a coordinator for the International Campaign for Responsible Technology, shook his head in disbelief at the end. "This is the kind of case that shouldn't go to a jury," he said. Rather it should be decided by a panel of judges well-versed in patent law.

But the two parties failed in an arbitration attempt to come to any agreement. At the judge's direction, the CEOs of the two firms consulted again with the same result. One side or the other wants the case to go to a jury verdict, and many observers believe that it's Apple, playing for a stunning blow from a jury chosen from a populace steeped in the legend of Steve Jobs.

The stakes have grown with the evolution of the case. Apple attorneys had opened with charges that Samsung copied it and infringed specific industrial design and utility patents. The task of making those charges stick in a closing statement fell to Harold McElhinny of the San Francisco law firm of Morrison Foerster (a.k.a. Big Mac of Mofo, in the gallery's shorthand). McElhinny stands six feet two and is solidly built.

In closing, he gave a straight-ahead narrative of Samsung suffering from the iPhone's competition, then gathering its design experts from three different plants in Korea to do a crash project of duplicating the iPhone's features in its Galaxy line. With multiple iPhone-like models, he said, Samsung began to thrive.

[ Learn more about how testimony wrapped up. See Samsung Gets In Last Word Against Apple. ]

"Steve Jobs started the iPhone development project in 2003," he reminded the jury, invoking the late CEO's name just once. Nevertheless he succeeded in tying the iPhone design directly to Jobs' initiative and legacy. Apple produced sketches, CAD drawings, designs, and redesigns during the trial to show how the company prepared to enter the phone market "at enormous risk."

"I was floored," he continued, "when I heard (Samsung designer) Jeeyuen Wang say they did it in three months. That represented four years of investment and R&D" at Apple, he said. By the end of his summation, he said Samsung was liable for up to $2.75 billion, not the $2.5 billion with which the trial had started out.

Samsung has sold 22.7 million phones and tablets during the period in which Apple charges it with infringement--since June 2010. (Apple lumps all Samsung models together, about 150 of them, to come up with the damages figure; in fact, it named 20 as infringing.) Samsung received $8.16 billion in revenue from all sales in the period. "The job we're asking you to do is decide how much of that $8.16 billion we should receive," said McElhinny.

Another Apple attorney, Bill Lee from the San Francisco firm of Wilmer Hale, carried the argument beyond monetary into punitive territory. What was at stake in this trial was more than whether Apple could receive damages. The system of protecting technical inventions by obtaining patents, one of the founding principles of Silicon Valley, was at stake.

"You're going to have to decide who is playing by the rules and who isn't ... If you render a judgment for Apple, you will be endorsing the American patent system," Lee said.

Lee also suggested that the jury needed to show Samsung that "you can't come in and walk over our antitrust laws." It was a somewhat obscure reference, not to patents, but to Apple's claim that Samsung has embedded its patented technology in the 3GPP cellular network standard. As such, it has gained monopoly power over a standard that cellphone manufacturers can't do without.

Furthermore, in deciding to tar its business partner Samsung (the firm supplies 26% of the iPhone's parts), Apple opted to use a wide brush. It charged Samsung with being a bad actor and not playing by the rules on disclosing patents to the standards setting process that created the 3GPP standard.

Some of that claim seemed far-fetched. But on the whole, the McElhinny/Lee team wove a straight ahead, factual narrative, tied to a chronology of how the Samsung infringement took place. In a few instances, such as the three-month crash redesign of Samsung phones, recounted by Jeeyuen Wang, a dignified young mother, the testimony of Samsung's own witnesses seemed to buttress Apple's case.

As Lee finished, McElhinny popped up again. "Samsung spent $1 billion advertising" its look-alike phones, he noted. "One way Samsung wins is if you compromise the damages. They will not change their way of operating if you just slap them on the wrist," he told the jury.

Given the task of rebutting all this and building Samsung's case was Charles Verhoeven, the good cop partner from Quinn Emanuel in Los Angeles, whose emotive, imploring voice repeatedly focused the jury's attention on facts favorable to Samsung. Because he had such a large presence in the courtroom, it was startling to see his five-foot-nine-inch, slender frame side-by-side with McElhinny's tall, robust figure.

Verhoeven at moments had been brilliant at eliciting facts contrary to an Apple witness' stated message. One such witness, bobbing and temporizing in face of persistent Verhoeven questioning, had feigned sympathy: "I'm trying to help you out here."

"Oh, I doubt that," shot back Verhoeven.

The jury, tired of the obfuscation on both sides, had laughed heartily at the unabridged sincerity, as had the judge and most of the courtroom.

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