Apple vs. Samsung: Appeals Court Overturns One Key Finding

Apple has won another major round in its global patent feud with archrival Samsung, but the latest courtroom triumph again includes setbacks and legal bruises for the Silicon Valley giant.

A federal appeals court on Monday left intact much of Apple’s nearly $1 billion patent judgment against Samsung, but overturned one key finding from the first trial in their smartphone wars that could slash nearly $400 million from the jury verdict and reshape the ongoing legal feud between the tech titans. A three-judge panel of the U.S. Federal Circuit Court of Appeals upheld a jury’s conclusion that Samsung’s smartphones and tablets violated Apple’s patent rights on the iPhone — the centerpiece of the case — but the Washington, D.C.-based court reversed the jury’s finding that Samsung devices violated Apple’s trademark rights, laws designed to protect the basic look and feel of products.

Samsung appealed a San Jose, Calif., jury’s August 2012 verdict that the South Korean tech company violated Apple’s patent or trademark rights in 23 products, such as the Galaxy S2 smartphone, as well as about $930 million in damages awarded to the iPhone maker. The case, known as “Apple I,” was the first of two trials between the feuding tech titans. Another federal jury last year found Samsung copied iPhone technology in more-recent products, but awarded $120 million in damages, a fraction of what Apple sought. That case also has been appealed to the Federal Circuit.

Monday’s appeals-court decision concluded that the simple technology at issue, such as the basic shape of an iPhone, does not fall under so-called trade dress protections that prompt consumers to consider certain products unique. The jury’s findings that were overturned could account for about $370 million of the damage award, an amount that may be carved from the overall judgment. However, the court’s decision opens the door to a retrial of that issue, meaning Apple may yet have a chance to recover much of that figure.

The overall outcome was considered a mixed bag for the two companies. But legal experts generally agreed that Apple came away with a better result, particularly because the decision upheld its chief patent claims and its method of determining what Samsung should pay.

“The vast majority of the verdict remains intact and is all but final, unless the Supreme Court gets involved, which is unlikely,” said Brian Love, a Santa Clara University law professor.

Other experts, however, noted that both sides, given their massive share of the smartphone and tablet market, don’t have that much to show for five years of legal battles.

“A few hundred million more or less changing hands between Apple and Samsung — two companies that have over the years already done business for many billions of dollars — won’t affect anyone’s market share,” patent expert Florian Mueller noted on his blog.

An Apple spokeswoman praised the ruling, saying that “it confirmed Samsung blatantly copied Apple products.” Samsung could not be reached for comment.

Both sides can ask the Federal Circuit to rehear the case with all of its judges, or appeal to the U.S. Supreme Court.

Apple, which has depicted Samsung as a “shameless” copier, did convince the appeals court to reject Samsung’s arguments that Apple did not prove that its conduct violated patent laws.

“The jury could have reasonably relied on the evidence in the record to reach its infringement verdict,” the court wrote.

Samsung, the maker of the Galaxy line of smartphones and tablets, has insisted all along that Apple’s claims have been a heavy-handed public-relations campaign to stifle competition.

The products involved in this particular case, such as the iPhone 4, are now near-relics in the tech market, flooded these days with Apple’s iPhone 6 and Samsung’s Galaxy S5. But legal experts say the latest ruling could resolve many of the same issues tied up in the ongoing cases. It also could trigger a settlement, which has eluded Apple’s and Samsung’s CEOs for years, although some experts say the losing side may first want to hear from the Supreme Court.

In seeking to overturn the jury verdict, Samsung focused on key issues, notably the fact that most of the patent violations centered on iPhone and iPad designs, not operating technologies.

Samsung’s legal team also argued that Apple’s damages award was excessive, contending the company failed to prove that Samsung’s products had any meaningful bearing on iPhone or iPad sales — the backbone of the jury’s damages calculations. But the Federal Circuit generally sided with Apple on the patent claims.

This article appeared in print in the May 19th, 2015 edition of Hamodia.