SCH-MGMT 783

Professor R. Cannon

Apple vs. Samsung: The Great Patent War

In the recent years there has been a technological explosion within the mobile telephone
and computer tablet market. One of the most recognizable faces and perhaps the most iconic
mobile device to be released within the past decade is Apple Inc.s iPhone. While the iPhone has
been the front runner for Apples mobile devices as well as hugely successful within the
smartphone market, in the past couple of years the Android operating system, which runs all of
Samsung's mobiles devices, has grown drastically within terms of market share. The internetwork operating system also known as the iOS, which runs the iPhone and all other mobile
Apple devices, has not grown significantly in the market, and has been mostly flat. The South
Korean electronics giant, Samsung, which accounted for 39.9% of all Android shipments in the
latest quarter, was the largest contributor to the Android smartphone market share which sat at
81.0% for all operating systems, (Protalinski). In a market that is predicted to be worth 341.4
billion dollars in the next two years (Rohan), it is becoming increasingly clear that the two
biggest players in this multi-billion dollar industry are Apple Inc. and Samsung.
With the high level of competition within the smartphone and tablet industry as well as
the billions at stake, it is unsurprising that infringements of various innovative features, patents,
and trademarks have begun to pop up in the courts with increasing regularity between the two
giants. However this particular string of lawsuits has a unique twist thrown in since Apple is the
largest consumer of Samsungs component divisions, buying display screens and electronic chips

from the South Korean manufacturer. In order to grasp a strong understanding of the ongoing
and multinational lawsuits between these companies, it is important to also have a firm
understanding of intellectual property law and the possible remedies surrounding patent and
trademark infringement. Looking back at past cases that deal with intellectual property, and
various infringement suits, as well as breaking down the most recent court case and verdict
between Apple vs. Samsung in the United States, will help to explain how companies are
protected under these laws and why it is such a complicated and controversial legal battle with
potential to hold significant ramifications for the two corporations.
To begin this dissection it is important to make clear the legal definitions of vital terms
that surround this case, beginning with patents. The formal definition of a patent is that it is a
grant from the government that gives an inventor the right to exclude others from making,
selling, and using a certain invention for twenty years from the date the patent application is filed
(Clarkson et al.). This is a very straight forward definition explaining that the government gives
clear rights to a person or firm who now has the sole entitlement to the invention for a defined
amount of time. Now, moving on to what constitutes as being patentable we will turn to the
federal law which states, whoever invents or discovers any new and useful process, machine,
manufacture or composition of matter, or any new and useful improvement thereof, may obtain a
patent therefor, subject to the conditions and requirements of this title. (35 U.S.C. 101).
Essentially, in order for something to be patentable it must be novel and unobvious.
There are two distinct types of patents that one can file for; there is a design patent and a
utility patent. According to the United States Patent and Trademark Office, a utility patent is
granted to anyone who invents or discovers a useful and new process, machine, article of
manufacture or compositions of matter. A design patent differs from a utility patent and is
granted to anyone who invents an original, ornamental design for a manufactured article, it also

is only upheld for fourteen years as opposed to the twenty year period given to utility patents.
(USPTO).
At the heart of the Apple vs. Samsung court battles is the issue of patent infringement. In
the eyes of the law patent infringement occurs when a firm uses, makes, or sells anothers
patented product, process, or design without the patent owners permission. It is also important
to note that infringement can still occur whether or not all features or parts of a patented product
are used in an identical capacity (Clarkson et al.). In response to a claim of patent infringement
the accused party most likely will respond defensively in a limited number of ways: by stating
that they were simply not infringing on the patent, that the patent has expired or that it has
acquired a license for the patent. In the first U.S. trial between Apple and Samsung the claims
that Apple brought to the courts were numerous, with multiple design infringements as well as
multiple utility infringements. The infringement claims ranged from the design patent of the iOS
home screen containing a grid with icons (US Patent D604,305), to the utility patent referred to
as the tap to zoom (US Patent 7,864,163) which allows the operating system to zoom in and
center selected portions on the touchscreen (Patel). These and other patents at the core of this
case will be examined at greater depth further on.
When discussing this particular court case it is somewhat set apart from other current
patent wars cases going on today due to the fact that Apple brought claims of trade dress
infringement, which is very similar to, but somewhat lesser known than it close counterpart,
trademark infringement. A trademark by definition is a design, picture, emblem, logo, wording,
or combination of those that distinguishes goods for sale to the identity of a particular
manufacturer. Trademark law is necessary in order to prevent other firms from profiting off of
existing firms goods by either misleading consumers, making them believe they are purchasing
a particular brand of good when in fact they are not, or by diminishing the value of the brand of
good that is trademarked.

Trade dress is very similar to trademark, however instead of a particular emblem, picture
or wording that is used to distinguish a manufacturer, it is the image and overall appearance of a
product. Very commonly trade dress is referred to as the look and feel of the product. While
being somewhat broad, it has become a staple of intellectual property law within the United
States. When dealing with trademark and trade dress it is necessary to understand the concept of
dilution, which is a basis for infringement but is mostly reserved for famous or well-known
trademarks. The idea behind trademark dilution is that it gives the owner of the trademark the
ability to forbid others from using the trademark in a way that would lessen its uniqueness.
Before the passing of the Federal Trademark Dilution Act, protection for a trademark was
limited to related and/or competing goods. This act was a way to protect distinctive or famous
trademarks from noncompeting goods or goods that were not likely to confuse the consumer
(Clarkson et al.).
While a lot of the previously discussed legal definitions and explanations may be simple
enough to understand, it is much more difficult to truly determine who is at fault and whether or
not infringement has actually occurred. Lengthy court battles have become common in these
smartphone patent wars that have been raging between various manufacturers. The outcome of
this court case has the potential to set the tone for many patent lawsuits to come.
In a recent patent infringement case within the bio-tech industry, which concluded in
March of 2013, the Supreme Court decided in favor of a large corporation called Monsanto,
which creates genetically modified seeds capable of surviving herbicides. The court ruled that
Patent exhaustion does not permit a farmer to reproduce patented seeds through planting and
harvesting without the patent holder's permission.(Bowman v. Monsanto Co.). With the
significant advancements in the genetic modification of seeds this is seen as a staple court case
that has set where the line is drawn regarding modified seeds and exhausted patents on those
seeds. The Apple v. Samsung battle is similar in scope and has the potential to establish a basis

for the penalties of patent infringement in the smartphone and tablet age. As one law professor
expresses in a recent article, It could fundamentally change the way the patent system works in
the (technology) industries." (Mintz Aug. 2013).
There are several remedies that apply when patent infringement occurs which begin after
the patent holder sues for relief in federal court. It is common that the patent holder seeks one or
both of two main types of damages, those being lost profits and reasonable royalties. Lost profits
can be awarded if the patent holder can show causation that if not for the infringement they
would have gained additional profits. The patent holder can also seek reasonable royalties from
the infringing party, and in certain cases both damages can be awarded, for instance, lost profits
may include lost sales for which the patentee had manufacturing capacity while a reasonable
royalty may be based on additional sales which exceeded the patentee's manufacturing capacity
(Defranco). This simply states that if the infringing firm profited off of the patented product
above what the original patent holder could have gained, then both lost profits and royalties
would have the potential to be awarded.
It is also possible for the patent holder to seek an injunction against the infringers
product. However, injunctions are only awarded if the patent holder can prove that it has suffered
to an irreparable extent, and also that the injunction would not be disserving to public interest
(Clarkson et al.). A good example of protecting the public from negative effects would be the Z4
Technologies, Inc. v. Microsoft Corp. case in which it was decided to not grant an injunction
against Microsoft based on the fact that Z4 Technologies had not suffered irreparable damage
and that the injunction would have involved Microsoft Office suite software which is used
around the globe.
With the basics of patents, trademarks, and infringements described above it is time to
turn the attention onto the specifics of the Apple Inc. v. Samsung Electronics Co., Ltd. lawsuits,
with a focus on the original U.S. trial. Apple brought to court a total of four design patent claims,

two dealing with the iPhone, one connected to their tablet, the iPad, and one focusing on their
operating system, the iOS and its overall icon layout. On the iPhone device the front speaker,
front face and the covering glass (US Patent D618,677), as well as the home button, rounded
corners and front edge border (US Patent D593,087) were the patents allegedly infringed upon.
On the iPad it was the rounded edges, thin bezel, and edge-to-edge front glass (US Patent
D504,889), while the previously mentioned overall layout of the icons (US Patent D604,305)
was brought forward for the iOS infringement (Macari).
Apple also claimed that Samsung had infringed on three utility patents dealing with the
function of the interface on the iOS devices. The first patent is referenced as the bounce back
patent, which introduced a background texture when scrolling beyond the edge of a webpage or
document on the device (US Patent 7,469,381). Along with that patent is the tap to zoom
patent, which allows the operating system to zoom on a screen area with multiple content areas
displayed (US Patent 7,864,163). The last utility patent brought forward by Apple is the ability
of the device to determine when a user is using one or two fingers on the touchscreen (US Patent
7,864,163) (Macari).
Apple also claimed that Samsung had infringed upon their trade dress, specifically the
federal trade dress registration on one of their iPhones. As previously mentioned in order to
prove trademark or trade dress infringement, Apple will have to show that consumers were
confused by the appearance and feel of the product and believed they were purchasing a different
brand than what they actually received. Apple went after this specifically, bringing up evidence
from Best Buy stores in which customers supposedly returned Samsung Galaxy tablets having
mistaken them for Apples iPad 2 (Scott).
In total, the allegedly infringing products manufactured by Samsung that Apple sought
out were numerous, amounting to twenty-five different devices, including the popular Galaxy S
phone and Galaxy tablet. Before the trial began Apple sought out preliminary injunctions against

some of the infringing Samsung products. This injunction was initially denied due to the fact that
Apple could not prove it had suffered irreparable harm as a result of the infringement on the
valid patents. It is important to note that one patent infringement was indeed deemed likely to
have caused irreparable harm to Apple because of the lack of competitors on the market for the
particular patent, however injunction was not granted since the patent may have been invalid due
to prior art (Bohn). Prior art is all of the information available to the public before the claim of a
patents originality. Apple appealed this initial ruling and the appeals court overturned the judges
finding and ordered the judge to grant an injunction preventing Samsung from manufacturing,
selling, and importing into the U.S. any devices infringing on the disputed patent (US Patent
8,086,604), which included the Samsung Galaxy Nexus (Lowensohn Jun. 2012).
The damages sought after by Apple for the infringements were a combination of lost
profits and disgorgement. The legal definition of disgorgement is the return of illegally or
unethically gained profits. In this case Apple claimed Samsung had infringed on their patents and
gained substantial profits from this activity. Apple sought five-hundred million dollars from lost
profits and two billion dollars disgorgement.
Samsung countersued Apple, accusing the corporation of infringing on five patents of its
own. Two of the patents are essential for 3G operation and Samsung claims it extended a
reasonable offer for the use of these patents to Apple. However, Apple paints a different picture
saying that Samsung asked for 2.4% of the entire selling price of the iPad and iPhone for these
patents, which amounted to about $14.40 per device. Apple claimed that in this way Samsung
acquired monopoly power through using this standard setting deceit by utilizing these patents
to squeeze unfair rates from its competitors (Macari).
The three other patents Samsung accused Apple of infringing on were utility patents
dealing with the function of the devices. The first is involved with transmitting e-mails with
photos through the devices camera (US Patent 7,577,460), another being the ability to switch

between photo and image display modes (US Patent 7,456,893). The last patent allowed the
device to play music in the background through a mp3 player while displaying what music was
being played on the home screen (US Patent 7,698,711) (Tannock). Samsung sought to shift the
attention to Apple in terms of patent infringement and make the case less black and white for the
jury.
The verdict of the U.S. trial was handed down on August 24, 2012 and was favorable to
Apple. The jury had determined that Samsung wilfully infringed upon most of Apples patent
claims as well as diluted its trade dress with respect to two versions of the iPhone. US Patent
D504,889 which is the design patent for rounded edges, thin bezel, and edge-to-edge front glass
on the iPad was one of the few patents determined not to be infringed upon by Samsung
(Burnette). In total it was that deemed twenty eight Samsung products violated six Apple patents
(Arthur 2013). The jury also came to the verdict that Apple had not infringed upon any of the
patents claimed by Samsung. The most damning evidence against Samsung during the trial were
internal documents from the company that were brought to light containing information that
Samsung had looked to the iPhone for cues when designing various devices (Lowensohn Aug.
2012).
Initial damages were awarded to Apple by the jury to the sum of 1.05 billion dollars.
Apple again sought an injunction against the infringing devices which was subsequently denied
by the judge who also decided the jury had miscalculated about four hundred million of the 1.05
billion dollars awarded to Apple and ordered a retrial for the damages owed, with 639 million
dollars undisputedly owed to Apple (Arthur). The preliminary injunction placed upon the
Samsung Galaxy Nexus was lifted on October 11, 2012 since it was not one the devices found to
infringe upon Apples patents (Bartz and Levine).
Shortly after the verdict controversy arose, the jury was criticized for being to Apple
friendly and questions began to arise regarding the long term effects of this case on the

smartphone industry moving forward. Many initially criticized this complex patent case for
essentially being over the heads of your average jurors, however when being interviewed one
juror, Manuel IIagan, stated this of the jury foreman Velvin Hogan, Hogan was jury foreman.
He had experience. He owned patents himself so he took us through his experience. After that
it was easier. (Sandoval). This generated significant controversy since the jury was instructed to
make a decision based on the explanations they were given of the law in court, rather than their
own understanding of the law.
During the damages retrial, Samsung did not deny that it had used some of Apples
technology, however it argued that the 380 million dollars that Apple was seeking for this
particular infringement was too high, Samsung argued that it should only pay about 52 million. It
was determined that Samsung would pay Apple 114 million dollars for lost profits, 35 million
dollars in reasonable royalties and 142 million dollars from Samsungs profits. This would bring
the overall total Samsung owed Apple in damages to about 930 million dollars (Williams). This
quote from the Wall Street Journal will help to put this number into perspective for the two
corporations, $930 million total amounts to about 12% of Apple's most recent quarterly profits
and about 14% of Samsung's latest income, (Wakabayashi). As of now this number is still not
solidified as Apple has recently asked the courts for Samsung to pay 22 million dollars to cover a
part of their legal fees and other various expenses such as reproducing the materials for the court
case (Mintz Dec. 2013).
Samsung is in the processing of appealing this case to the U.S. Federal Circuit Court of
Appeals with a focus on the jury foreman from the first trial. The jury foreman allegedly had
been sued years ago by Seagate Technology Inc. which supposedly has a significant relationship
to Samsung; Samsung argues they should have been allowed to explore that particular lawsuit in
depth before the trial. There is also a second court battle on the horizon between these two
companies involving the newer line of products from Samsung. This lawsuit will include the

Galaxy S III mobile device which is one of Samsungs highest selling phones with over 50
million units sold (Kim). Apple filed for this new lawsuit in August 2012 with an expected start
date of March 2014 (Mintz Dec. 2013).
As mentioned the trials taking place within the United States are not the only court battles
ensuing between these two entities. As of July 2012 there were fifty ongoing lawsuits throughout
the world between them. While the trial in the U.S. is without a doubt a huge win for Apple, they
have also lost a significant number of court cases in other countries to Samsung. In South Korea
Apple was found to have infringed on two of Samsungs wireless patents with Samsung
infringing on one of Apples, the bounce back patent. The South Korean courts instructed
Apple to pay $35,300 to Samsung, while Samsung was ordered to pay Apple $22,000
(Bonnington). These numbers are obviously greatly below the $930 million verdict in the U.S.
and have virtually no effect on the two technological giants.
While the two companies continue to sue each other for millions or billions of dollars it is
not necessarily just the money from damages that these two are after. As stated previously,
Samsung and Apple are the two biggest players in a thriving industry, by getting injunctions on
the others products, and by declaring infringement to produce bad publicity on the other, these
companies can gain an edge of competition and increase their overall sales. Looking at the
decision in the British court system in which it was required for Apple to print a disclaimer on
their website and in the media stating that Samsung did not copy the iPad (Arthur 2012), it is
clear that persuading the public that Samsung was or was not copying the iPad was the main
focus of the case, not pursuing monetary damages.
A lot of industry analysts are taking a look at the possible ramifications of Apples U.S.
win and how that verdict could affect not only the manufacturers, but the consumers as well.
According to one author, The biggest losers here are consumers. If the verdict stands, then the
costs of the judgment will be reflected in the cost of mobile devices, (Chicago Sun-Times). The

article then goes on to discuss the possibility that other manufacturers of smartphones will need
to purchase permission from Apple to create phones and in turn will pass down that fee to the
consumer. It is also possible that Apple will now further pursue litigation against other android
operated devices. With this win against Samsung, as well as another fairly significant defensive
win against HTC, a company which also creates android devices, the stage is set for Apple to get
an even greater boost over the competition (Duncan).
Another view being taken within the smartphone and electronics industry is that
companies like Samsung will be forced to undergo design and utility shifts on their devices
which will allow them to continue making similar smartphones without infringing on current
patents. According to one analyst, Larger implications will be for the other vendors who will
have to carefully look at their designs post-verdict, (Miller). By performing these shifts, other
smartphone and tablet manufacturers will be able to continue selling phones after changing
certain features and designs that could be determined to infringe upon other companies patents.
While this may be cause for concern for other vendors, it could end up being a big win for the
consumers since companies will be forced to become more innovative and provide a greater
variety for those wishing to purchase new devices, (Miller).
While Apple won this verdict and appears to be in position to gain some ground on the
android devices on the market, it has also suffered legal setbacks of its own. In June of 2013 the
International Trade Commission ruled that Apple had infringed upon a patent related to a 3G
method to transmit data. The ban was to be put in place on the iPhone 4 and iPad 2 3G models
that run specifically on networks operated by AT&T and T-Mobile. However, the White House
stepped in to lift the ban in August 2013 reasoning that the patent Apple infringed was now a
widely held standard technology and that banning the products would be disruptive to the
economy (OBrien).

Beginning in the late 2000s the amount of patent infringement lawsuits between
smartphone manufacturers has grown exponentially. In such a booming industry that involves
significant number of similar products with many of the same features, it is not difficult to
understand why these court battles are occurring with such frequency. While the Samsung trial is
the latest and one of the largest lawsuits for Apple, the California based company alone has been
involved in litigation with other smartphone tech companies including HTC and Motorola in the
past couple of years. This most recent court ruling has clearly made an impression in the tech
industry and may change the way companies produce their phones with respect to avoiding
patent infringements. This verdict also has the strong possibility to influence how consumers
view the different devices available from each manufacturer.
There appears to be no end in sight for these battles that rage between Apple and
Samsung. While there is significant and constant speculation as to which technological giant will
end up gaining the edge, it has surely not been decided with just one court verdict. Apple may
seem to have gotten the upper hand with this most recent ruling, but taking a closer look it
appears that the company has simply won a battle in a very large war.

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