Jury Deliberating With $1B at Stake in Apple-Samsung Trial

SAN JOSE, Calif. (CN) – Apple went last in closing arguments Friday afternoon as they tried to convince an 8-person jury to award them more than $1 billion in damages resulting from Samsung’s infringement of three design patents related to the original iPhone.

Samsung argued that Apple incorrectly calculated damages and should be required to pay only $28 million of the profits it made from selling millions of its smartphones during a two-year period from 2010-2012.

The jury will deliberate over the nearly billion dollar discrepancy with a verdict anticipated early next week.

The week-long trial has been entirely focused on the matter of damages, as a jury already determined that 18 of Samsung’s smartphones released during the period infringed three design patents.

Those patents covered the black front face of the iPhone, the steel rim that encases it (referred to as a bezel) and the grid-like array of icons that appears on the homepage of the iPhone.

Apple has maintained all along that congressional statutes covering design patents stipulate that holders of design patents that are infringed are entitled to the total profits of the products that used the design.

“The statute is written so that when someone does that, when someone is found to have infringed, they don’t profit,” Apple said.

Apple says Samsung was struggling to sell phones when it released the iPhone in 2007, marking a triumphal foray into the phone market. At only a 10 percent market share, this declined to 5 percent in 2010, when Samsung released the Galaxy Series, many of which were found to infringe on Apple designs.

Samsung tells a different story of technological superiority and marketing genius that accounted for their rise to 20 percent market share in the years immediately following the release of its smartphone line.

“Apple doesn’t mention our amazing inventions — amoled display screens, 4G connectivity, deals with all four major carriers,” said John Quinn, attorney for Samsung.

Quinn acknowledged Samsung used design elements from the iPhone but characterized those features as minor and narrow.

“Apple is seeking all the profits from those phones, the profits from the inventions, the features that Apple didn’t have because of these small narrow design elements applied to the phones,” Quinn said.

The case hinges on a concept in patent law called the article of manufacture, which means any product created by hand or machine.

Apple is arguing the article of manufacture in the case is the entire phone, and that the three patents in the case are inextricable from the entirety of the phone. Therefore, it believes it should be entitled to all the profits from the 18 infringing phones sold over the two-year period.

Apple attorney Joseph Mueller demonstrated Apple’s theory by holding up the black front face component at issue, noting it’s transparent when removed from the phone.

“Use your common sense,” he told the jury. “The component can’t embody the design if it doesn’t even have it. You need to put it together with the rest of the phone for it to be black.”

Samsung, though, repeatedly argued that the patents at issue only cover the glass front face and the grid display icon, which are only components of an overall complex machine with complicated interdependent features.

“Obviously, the glass front face and the bezel is different from the phone itself,” Quinn said, adding that the smartphone is conceptually distinct from the three design patents held by Apple.

As such, Samsung says it should only pay damages that relates to the components of the phone at issue, which when subtracting costs would amount to $28 million.

Samsung also maintains that even if the jury does agree with Apple’s position that the entire phones and not just the components are the relevant article of manufacture, that Apple’s accounting is egregious.

Both parties agree Samsung raked in about $3.3 billion in revenue related to the 18 phones. But Apple says the only costs that should be factored in are those directly attributable to the production of the phone.

Samsung says any accounting should factor in the cost of sales, marketing, research development and general administration costs.

Thus, it arrives at a number closer to $370 million, even if the jury sides with Apple on the article of manufacture question.

Ultimately, the jury is expected to deliver an answer next week.

 

 

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