Clash of the Titans:  The $1.05 Billion Verdict That Shook The World

Rasheed McWilliams, Partner at Adli Law Group P.C.

The Decision

On August 24, 2012, in one of the most closely followed patent infringement cases of the last decade, Apple Inc. was victorious in its patent infringement lawsuit against its chief competitor in the smartphone market, Samsung Electronics Co.   The nine member jury awarded what will become, if it stands on appeal, the largest patent infringement verdict in history finding that Samsung infringed each of the asserted utility patents and three of the four asserted design patents.  This verdict also has to potential to be enlarged because the jury also found that Samsung’s infringement was willful, which allows the Court to potentially triple the damages awarded.

Samsung has indicated that it will fight the jury verdict, which leaves it with two options at this point.  Samsung will likely file for a judgment notwithstanding the verdict (JNOV), which allows the Court to reverse or amend the jury’s verdict.  Although often requested, JNOV motions are rarely granted by the courts because the jury is the bedrock of the American legal system.  JNOV motions are only granted where the Court finds that no reasonable jury could have reached the given verdict based on the evidence presented in the case.  If Samsung fails to overturn the verdict on its JNOV motion, it will have to file an appeal with the Federal Circuit, the federal appellate court that handles patent matters, or ultimately the U.S. Supreme Court.  The complexity of the case, numerous objections made at trial, and the decision making process of the jury make this case ripe for appeal and potentially review by the Supreme Court.

The Coming Clash of the Titans

Although the case and trial was drawn out for a number of years, this case is just the first major battle in the war between Apple and Google for operating system supremacy.  Apple founder Steve Jobs memorably stated that he would declare thermonuclear war on the competing Android operating system, created by Google, which he felt was a complete rip-off of Apple’s technology found in its iOS operating systems.  To date, this war has consisted of Apple filing patent infringement lawsuits all over the world against Google’s partners who manufacture the actual hardware, such as Samsung and HTC.  The previous skirmishes have seen mixed results for Apple, which include a win against HTC at the U.S. International Trade Commission and a  loss against HTC in the UK.

With the return of a jury verdict in Apple’s favor in the Samsung case, it is likely that the next front in this war will be a direct attack on Google.  Many have speculated that one of the main motivations behind Google’s acquisition of Motorola Mobility was its formidable war chest of defensive patents that could be asserted to counter any direct attack by Apple.  Antitrust authorities will be paying close attention to Google’s use of the Motorola Mobility patents in countersuits because many are what is known as FRAND patents or patents covering technology essential to the smooth operation of an entire industry.  FRAND is an acronym for “fair, reasonable and non-discriminatory,” which is the way in which such industry essential patents must be licensed.  Microsoft and Apple have already raised issues with the Federal Trade Commission regarding Motorola Mobility’s use of its FRAND patents.

The Impact

This decision has resulted in Samsung’s share price falling precipitously, however, there should not be too much business disruption created by the decision.  The next fight Samsung faces is convincing the Court that Apple is not entitled to a preliminary injunction banning the sale of eight of its smartphones.  If this injunction is granted, it will take some of Samsung’s popular models off of the market.  It is likely that Samsung has been working on design around phones that should start appearing on the market in short order.

The other potential winner in this fight is Microsoft, who are the makers of the rival Windows Phone operating system.  Historically, Microsoft has held very little market share with Windows Phone smartphones, however with the increased risk of using the Android operating system due to the Samsung verdict, it is likely that Microsoft’s share of the smartphone market will increase as more hardware manufacturers diversify their offerings.  On a side note, Microsoft and Apple have a patent licensing deal granting Microsoft the license to use, but not to clone the technology claimed in the patents asserted in the Samsung case.

Conclusion

As the idiom goes, “Crime doesn’t pay.”  Theft, whether of cash or intellectual property, does not pay in that it costs society and deprives the owner of what is rightfully their property.  If you have been a victim of intellectual property theft give us a call and your company can be the star in its own clash of the titans.

http://www.ipfrontline.com/depts/article.aspx?id=27505&deptid=7

http://americanlegaljournal.com/copyright-and-trademark/clash-of-the-titans–the-%241.05-billion-verdict-that-shook-the-world.html