July 25, 2014

Why Apple Will Win!

The “patent trial of the century” between Apple and Samsung began on Monday in federal district court in San Jose, California. The press coverage has been extensive, probably far greater than any previous patent trial. The press has dutifully reported that Apple is seeking over $2 billion in damages, which can be trebled, and an injunction barring the sale of certain Samsung smart phones and tablets in the United States, which undeniably would increase Apple’s market share. However, very little has been written on how the case involves far more than Samsung’s alleged infringement of a number of highly technical patents. Apple’s litigation strategy reflects Steve Job’s core belief that Apple’s intellectual property was ripped off by its competitors. Indeed, from the beginning of this case, Apple has sought to turn what could otherwise have been a boring patent trial involving highly technical matters into an inquiry as to whether Samsung flagrantly copied the “look and feel” of the iPhone and iPad. In other words, Apple is likely to be successful if the trial comes down to simply a referendum on whether Samsung ripped off Apple’s intellectual property rights. Considering the similarity of the Apple and Samsung products, Samsung may have a difficult time convincing the jury that deciding the issue is not that easy and the similarity of the products can be explained away.

Apple’s claims against Samsung are far broader than simply a claim for infringement of highly technical computer software or hardware patent. Apple has also asserted claims of infringement of a number of design patents as well the trade dress of the iPad and iPhone. Apart from providing Apple with the basis for being able to tell the jury the “story” how Samsung allegedly ripped off Apple, it also involves claims that a jury can readily decide through a side-by-side comparison of the products in question without having to understand highly technical matters. That is not to say, that Samsung does not have a defense to Apple’s claims, but the design patents claims may give the jury a reason to avoid getting bogged down in complex technical details that they may or may not fully understand. As Judge Richard Posner recently wrote in an article about the shortfalls of the patent system, “judges have difficulty understanding modern technology and jurors have even greater difficulty.” It is one of the particularities of the U.S. patent system that, regardless of the complexity and technical nature of the patents, the jury ultimately determines the plaintiff has established that the defendant infringed its patents. It is commonly believed that the failure of a jury to fully understand the claims inures to the benefit of the defendant, in this case, Samsung.

There are two general categories of patents that can be obtained from the United States Patent and Trademark Office, utility patents and design patents. Utility patents are the most common type of patents and generally involve the way an invention is used and works and may be granted to anyone who invents a new and useful method, process, machine, device, or any new and useful improvement of the same. A utility patent may be awarded for a computer software invention. In this case, Apple is asserting that Samsung infringed three Apple technical utility patents involving features of a multi-touch user interface.

While design patents are litigated far less frequently than utility patents, infringement of a design patent may be far easier for a jury to understand. A design patent protects only the ornamental appearance of an invention, not its utilitarian features. Inventions can have both function and ornamental characteristics and the United States Patent and Trademark Office can award a design and utility patent for the same invention. The general test for infringement for a design patent is relatively simple: whether the alleged infringer’s product designs appear substantially the same as the patentee’s designs? While a patentee can buttress its evidence of the similarity of designs through the testimony, for example, of industry observers, consumers, and business partners, using their own eyes through a side by side comparison a jury can often decide for themselves if the products are substantially the same. It certainly does not depend on understanding highly complex technical matters.

Apple has accused Samsung of infringing a tablet design patent and graphical user interface patent for the iPhone. By asserting infringement of the design patents, Apple will be in a position, arguably, to present to the jury evidence that Samsung intentionally copied the appearance of the iPad and iPhone. According to Apple, Samsung’s success of its smart phones is owed to the deliberate and flagrant copying of Apple’s products “Samsung’s documents show that the similarity of Samsung’s products is no accident, or, as Samsung would have it, a ‘natural evolution.’ Rather, it results from Samsung’s deliberate plan to free-ride on the iPhone’s and iPad’s extraordinary success by copying their iconic designs and intuitive user interface.” In short, the jury, without heavily relying on expert testimony can decide this issue.

Further, in addition, to asserting infringement of design and utility patents, Apple is also asserting that Samsung has infringed the trade dress of the iPad and iPhone. Trade dress refers to whether a consumer associates the non-functional features of a product with a particular manufacturer or source. Here Apple’s claims of trade dress infringement by Samsung will permit Apple to introduce evidence regarding the iPhones’ and iPads’ extensive and highly favorable coverage by the media and industry analysts. Moreover, Apple asserts that it will present evidence of “actual confusion,” which means that consumers mistook Samsung’s products for Apple’s. Such testimony is generally considered highly persuasive to a jury.

Even if Apple were to lose on its utility patent claims, it could still be entitled to billions of dollars in damages if it were to prevail on the design patent and trade dress claims. In that regard, Apple is seeking Samsung’s total profits of over $2 billion for the sale of the allegedly infringing devices. Apple is also seeking lost profits of about $500 million. Moreover, Apple is also seeking that the court make permanent its preliminary injunction prohibiting Samsung from selling the Galaxy Tab 10.1 in the United States.

After being sued by Apple for patent and trade dress infringement, Samsung brought counterclaims against Apple asserting that Apple infringes on Samsung’s patents that cover the inner workings of cellphones. In comparison to Apple’s broad claims of copying, Samsung’s claims are far more complicated and difficult for the jury to understand for a variety of reasons. First, Samsung’s infringement claims against Apple involve technical patents. Two of Samsung’s patents involve “standards-essential patents,” which protect inventions that incorporated into broader technology that an entire industry has agreed to use. For example, these are patents that cell phone makers must use to communicate over specified telecommunications networks and therefore the patentee has committed to licensing to anyone on fair, reasonable and non-discriminatory terms (acronym “FRAND”), as required by the standards setting organizations as a condition of the technology being deemed essential to compliance with the standard.

Samsung alleges that it offered to license to Apple on fair terms two standard-essential patents but that Apple refused and used the technology for its iPhones anyway. In response, Apple claims that the trial will deceive how Samsung deceived the international body responsible for creating the relevant standards “to slip its patents into the standard and illegally monopolize technology markets.” In addition, just last month, appellate judge, Richard Posner, sitting by designation in an Apple patent infringement lawsuit with Motorola held that remedies for claims of infringement of a standard essential patent are limited. While Judge Posner’s decision is not binding on Judge Koh, the presiding judge in the Apple-Samsung litigation, it does provide an opinion of a very influential federal appellate judge and his conclusion on this issue should not be discounted.

The Apple-Samsung trial is expected to take a month. Both sides are expected to offer evidence supporting their claims and defenses from a variety of sources. Much of the evidence will be highly technical and despite, the best efforts of the attorneys on both sides to make the technical details comprehensible to a jury, the outcome may come down to simply whether the jury believes with its own eyes that Samsung copied the appearance of the iPhone and iPad.

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