The Korea Herald: Samsung, Apple on edge over U.S. ruling

One of the most-watched legal decisions in IT history is due in the United States on Thursday (local time), as a trial hearing is scheduled to rule on whether Samsung Electronics really did infringe Apple Inc.’s crucial designs for its smart devices and must pay Apple over $1 billion for the damages inflicted.

The case has dragged on for over a year, and in August, a California court reached a verdict for Samsung to compensate Apple for patent infringement. Both the amount and implications were painful for Samsung, which is anxious to overcome Apple in the high-end electronics market.

The ruling sent Samsung reeling; the Suwon-based company’s legal team has been looking at the case from every possible angle, including jury misconduct.

A number of recent rulings on other patent litigations, such as between HTC and Apple, not to mention the U.S. patent office’s invalidation of Apple’s “bounce-back” patent ― for an animation which produces a rubber-band effect when a user scrolls past the end of a window ― were also included in motions filed by Samsung and are expected to be used as ammunition at Thursday’s hearing.

However, considering that the jury system forms the backbone of the U.S. legal system, it seems unlikely for Judge Lucy Koh, who will be the sitting judge, to completely reverse the initial verdict, legal experts say.

At most, the judge may want to shrug off some of the burden in siding with Apple and call for a reduction in the damages awarded.

“Every trial court has the option to adjust the monetary awards made by juries. Typically, this means that the jury damage awards are lowered. Judge Koh has this option, and the parties have asked her to do so. In patent cases with large jury verdicts, it is not unusual for the judge to reduce the damages award. But even if reduced, the award is still likely to be large,” said Jorge Contreras, co-chairman of the National Conference of Lawyers and Scientists.

Other scenarios include Samsung appealing to the Ninth Circuit Court of Appeals, or the two sides eventually sitting down for a settlement if some of the more popular devices from either side become banned from the markets in any ensuing court rulings that may follow Thursday’s hearing.

Reduced damages

Reducing the damages seems to be the most likely and safest path for the judge to pursue, experts say.

“My prediction is that the court will uphold the verdict in favor of Apple but may reduce damages that Samsung has to pay. I think there are some issues with the verdict the jury reached but it is difficult to reverse jury verdicts,” said Michael Carrier, a professor of law at Rutgers University who is concurrently an advisor to the American Antitrust Institute.

The most prominent issue with the jury that ruled on the patent case was the foreman, Velvin Hogan, who turned out to have an extensive technological background as an electrical engineer. More importantly, he was involved in a lawsuit with Seagate, a company that Samsung has close ties to. Hogan reportedly filed the suit against Seagate more than 10 years ago after he was fired from his job at the company.

Citing bias and juror misconduct, Samsung had filed for the court to throw out the verdict. Hogan claimed no misconduct, as the court requires potential jurors to disclose any litigation they were involved in within the last 10 years.

Another angle that Samsung will work from is the recent confidential patent license deal reached between Apple and HTC.

Last month, the two sides reached a settlement for their outstanding patent disputes that includes a 10-year agreement under which the companies will license each other’s current and future patents.

Judge Koh, however, ruled this week that patents covered under the agreement will not be sealed, meaning they will be made public.

Samsung has been claiming that Apple’s willingness to license patents indicates that Samsung has not caused irreparable harm to the company, and that monetary remedies may indeed be considered adequate.

The U.S. patent office’s invalidation of Apple’s bounce-back patent also may affect the trial, as the patent was one of the main points of the litigation between Samsung and Apple. It also was a major contributor in handing Apple the favorable verdict in August, meaning the damages may be reduced on the invalidation.

Appeals from Apple and Samsung

No matter how Judge Koh rules in this trial, observers say both Apple and Samsung are likely to appeal to a higher court, as both sides have indicated they will not back down.

Samsung has been gearing up for a full-out war at the expense of becoming sidelined from Apple’s supply chain, which experts believe was intentional on both sides.

Samsung, for its part, has been looking to diversify its clientele for a while now, so the loss of some business from Apple should not send real jitters through the Korean tech behemoth, industry watchers say.

The impact of Apple’s decision to stop using Samsung as a source for critical components such as applied processor chips and displays, therefore, is expected to be minimal.

In fact, “Samsung might sever the relationship before Apple does,” said Chung Yoon-sung, research director of DisplaySearch Korea in a report.

LCD panels will be the easiest to drop, the report said, because Samsung no longer needs Apple for its LCD business.

“Samsung is not among the iPhone 5 panel suppliers. Samsung Display is focusing on AMOLED for mobile phones, and Apple does not intend to adopt AMOLED for the iPhone in the near future. Therefore there is little impact,” the report said.

Given the rapidly changing dynamics of the relationship between the two IT giants, it is almost certain this case will be appealed, according to Contreras.

He added that while there is the possibility of the damages being raised, since the jury had found that Samsung had “willfully” infringed Apple’s patents, meaning the judge can award punitive damages up to three times the amount of actual damages plus attorneys’ fees, the likelihood is small.

“I would be surprised if Judge Koh awarded significant enhanced damages in this case,” Contreras said.

Industry sources predicted that the judge would not attempt to take such a risk, especially when Samsung was armed with what many saw to be extensive evidence and facts that could prove damaging for Apple.


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