Jury's verdict in Apple vs Samsung case threatens far reaching consequences

Posted:
in iPhone edited August 2014
The jurors deciding the outcome of the second Apple vs Samsung trial haven't yet returned a verdict, but their options are limited to a few possible outcomes, ranging from a fiery thermonuclear blast to a wintery new Dark Ages.

iPhone patents

Option 1: Posnerize it; Samsung wins

The first verdict the jury could potentially render is to return a decision along the lines of Judge Richard Posner's in the parallel iPhone-related patent trial between Apple and Motorola.

In that case, Judge Posner decided that, at least in the case of Apple's iPhone, patents should have no value because if they did, Motorola would be left trying to sell Google's indisputably "inferior non-Apple technology" and it would be "catastrophic" if customers had only one source to obtain Apple technology.

Judge Posner decided that Apple should essentially be forced by the government to license its technology to Motorola, which could then bargain for a "fair price" for its use. While Judge Posner's decision was overturned on appeal, the jury in the Samsung case could essentially replicate it by awarding both parties nothing, resulting in another several months of delay before the next trial.

Option 2: VirnetX-style trollin'; Samsung wins

A second outcome, only slightly worse for Apple, would occur if the jury decided to award Apple nothing while taking seriously Samsung's counterclaims for the two patents it acquired for its cynical countersuit-defense after being sued by Apple in 2011.

This would be moderately similar to the VirnetX patent troll case that Apple initially lost (pending appeal) against a Non Practicing Entity that claims it has a monopoly on the concept of using a VPN tunnel to transmit FaceTime video chats.

If jurors in the Samsung trial similarly failed to understand the nature of the patents Samsung acquired in order to present a countersuit of its own, they might return a decision that handed Samsung a relatively small amount of money while giving Apple nothing.

The amount of money Samsung asked for is small because the entire point of Samsung's countersuit was to portray all patents as worth very little, in a hopeful bid to reduce its own liability for infringement of Apple's patents.

Samsung asks for less than it paid its experts

Option 3: Money for everyone; Samsung loses

The jury might also select a more charitable possible outcome by "fairly" awarding both sides everything they asked for. In this case, Samsung would get virtually nothing and Apple would be awarded as much as $2.2 billion.

Not only would Samsung end up owing a judgement over twice as large as the first trial, but it would also be branded a serial copyist. Such an outcome would also seemingly have to blunt Samsung's enthusiasm for refusing to negotiate with Apple, because it would now be on the wrong side of over $3 billion in total damages.

Things would be slightly worse for Samsung if the jury didn't award it anything at all in its countersuit, although this would again (just like the first trial) erase Samsung's ability to claim that Apple "also lost" and "also copied" it by infringing "its" technology, too.

Option 4: Holy War; Samsung really loses

A fourth possible verdict could result in awarding Apple even more than $2.2 billion in damages. Apple is asking the jury to determine that Samsung's infringement not only occurred, but was "willful."

As a general article on the subject of willful patent infringement by Timothy M. O'Shea for Lexology noted, "A finding of willful infringement in patent litigation is the nightmare scenario that all defendants fear because it allows the patent owner to request that the judge enhance the damages, up to three times compensatory damages. 35 U.S.C. ? 284."

Trebling the $2.2 billion in damages that Apple is asking for would result in Apple taking another $6.6 billion away from Samsung Mobile, or nearly one quarter's earnings. That's a lot of money, but really only a fraction of what Samsung earned in the years following its decision to clone the iPhone 3GS in early 2010.

Samsung's "Crisis of Design" decision put an obstruction in the way of Apple's potential total iPhone sales, but it turned Samsung Mobile around from a failing phone vendor into a powerhouse of profit that has helped carry the rest of Samsung Electronics, while enabling it to prop up a wholly unprofitable series of products designed to copy Apple's other offerings, from a Galaxy-branded iPod touch clone (below) to its various copies of the iPad.

Galaxy Player


Unfortunately for Samsung, none of its other copies of Apple products have really been profitable at all. Outside of smartphones, Samsung's entire tablet and PC operations are barely breaking even. While pundits are grousing about Apple's flat iPad sales this quarter, the reality is that Apple is earning healthy profits from tablets that no other tablet shipper is capable of even approaching. That includes Samsung.

A substantial blow to Samsung's current strategy of copying its competitors might likely result in an abandonment of the company's increasingly less profitable IT and mobile business altogether in order to focus on its other businesses, including chip components, networking gear, TVs and appliances.

That would particularly be the case once Apple files its third lawsuit against Samsung, arguing another batch of patents and targeting its Galaxy S4 flagship for the first time.

Option 5: Thermonuclear; Samsung really, really loses

On top of a finding of willful infringement, Samsung's worse case scenario would also involve sales bans of all of its infringing products and every substantially similar product variant that also infringed Apple's patents.

A sales ban would interrupt Samsung's entire "copy & cash out" strategy, forcing it to scramble to change how its products work before it could begin selling them again.

While FOSS Patents blogger Florian Mueller has argued that Samsung could easily 'design around' Apple's patents, doing so would still involve some slight effort; otherwise, Samsung would already be doing this across the board rather than spending millions of dollars to pay experts to have the opinion that it doesn't need to do anything and that it owes Apple nothing. Winning a sales injunction against HTC in 2012 caused that company to eventually reach a settlement with Apple, rather than spend the time required to develop workarounds that might (or might not) work to lift the injunction.

Winning a sales injunction against HTC in 2012 caused that company to eventually reach a settlement with Apple, rather than spend the time required to develop workarounds that might (or might not) work to lift the injunction. The carrot of negotiation proved far more tasty than the injunction stick for HTC, and the same decision would very likely be reached by Samsung, were Judge Koh to not preclude the use of such a stick.

However, in the original Samsung case, despite Apple being exonerated from Samsung's accusations and winning its infringement claims against Samsung, Judge Koh still refused to grant Apple a sales injunction against Samsung's infringing products, ruling that Samsung could keep selling its infringing products because she wasn't convinced that they "caused irreparable harm" to Apple in a way that couldn't be addressed in the form of monetary damages, even though years will pass before Samsung will ever have to worry about actually paying those damages.

In the meantime, Samsung can continue to profit from those infringing device sales and work on various fronts to further shave down its potential damages and perhaps even successfully invalidate one or more of Apple's patents using a series of creative strategies that might mean it never has to pay anything at all.

Justice streamlined for speedy delay

As long as Judge Koh insists on a series of scaled down trials that each pare down the evidence Apple can present and streamline the patent claims it can raise in order to speed the cases through the courts as cheaply as possible, without ever allowing Samsung to feel any impact of its actions beyond some transient embarrassment, it's in Samsung's vested interests to keep clogging the court's docket with a series of objections, delay tactics and appeals to ensure that nothing even slows down its use of Apple as a cost-free, outsourced research and development arm.

The way Judge Koh is orchestrating a streamlined and efficient agenda of non-stop legal wrangling that hasn't really accomplished anything over the last three years but permit Samsung to continue the infringment it started in 2010 without obstruction, the first two options seem to be a possible outcome of the second trial.

In one of those scenarios, the jury might find infringement or not in some way, but they would ultimately come to the conclusion that Apple is only owned some inconsequential few millions in damages or perhaps nothing at all. Samsung would then be set free to drop any charade of pretense that it creates anything original in its own products going forward.

This all happened before

This would be similar to the 1992 decision that, based on a technicality, dismissed Apple's "Look and Feel" case against Microsoft and cleared the way for Microsoft to take everything Apple had created for its own use, for free.

Microsoft subsequently felt so liberated from intellectual property claims that it turned around and also appropriated every element it cared to from Steve Jobs' NeXT Software as well, then signed its own name on the resulting artwork: Windows 95.

Win95 Win98


The result wasn't just that Apple and NeXT were cheated and that Microsoft was given both credit and cash for having "developed" Windows. That one ruling also set into motion a decade long domination of technology by a company that now had zero respect for other's work, an age of anarchy where Microsoft grabbed everything it wanted and then paid after the fact by offering the attorneys of ruined competitors a few hundred million to settle their claims, after having inhaled all the profits.

Microsoft did this to IBM's OS/2; Lotus SmartSuite; Novell NetWare; WordPerfect; BeOS; Sun Java; AOL's Netscape; and even came back to Apple for a second helping by blatantly stealing QuickTime code in the San Francisco Canyon case. All were efforts by one company to stop competition, kill consumer choice and thwart innovation from challenging its position as the PC profit syphon.

An open world without IP

Microsoft didn't halt innovation via intellectual property claims; it did so by ignoring intellectual property. Samsung today is working to do the very same thing, but the result will be different. Rather than having the world's profits monopolized by a software company, Samsung wants to own everything from chip production to the software platform to finished devices.

Apple, of course, wants to do the same thing. The difference is that Apple is doing the work to deserve it. Samsung has only ever taken the product ideas of others, which is why it was selling a BlackBerry knockoff unashamedly called the "BlackJack" when Apple unveiled the iPhone and changed the mobile game.

Samsung BlackJack knockoff


If the court, and in this case, the jury tasked with making a landmark decision, determines that competition is best preserved by rendering patents worthless so that one company can take over through copying rather than building a great original product, the world will be left a place where foreign conglomerates that allow a small number of people to own vast swaths of different industries will compete on a level that American companies (which are prevented from doing the same thing via antitrust laws) can't.

We will live through another Microsoft-like decade of scant innovation apart from predictable speed blips and worthless feature bloat, one where the open source community will achieve its fantasy only to realize that under the rule of a conglomerate, openness will be as valuable as Linux was under the PC industry controlled by Windows.

There will be no capital available to innovators, because there will be no potential payoff for the work they do. It was venture capitalism that kept NeXT a contender long enough for Apple to acquire its technology and build an assault to counter the power of Microsoft in the late 1990s.Even Google has to be hoping that Samsung will lose this case, because if it doesn't, there will be no real market left for the advanced robotics and self driving car intellectual property that it is currently investing its shrinking web ad profits to develop

In a world where patents and technology are worthless, the only hope for defanging a new Microsoft would be the community efforts that banded together to create a series of inconsequential stabs at copying Windows while infighting amongst themselves like Gnome & KDE GNU/Linux did.

Even Google has to be hoping that Samsung will lose this case, because if it doesn't, there will be no real market left for the advanced robotics and self driving car intellectual property that it is currently investing its shrinking web ad profits to develop.

Which choice will the jury make?

Judging from the clarification questions the jury has asked the court so far, it's hard to say what they are thinking. Their questions about Steve Jobs, the involvement of Google, when the patents involved in the cases were selected and the response by Samsung to Apple's claims might suggest that the jury was completely bamboozled by Samsung's scattershot defense of contradictory circles of flawgic.

It's also possible that the irrelevant questions were asked for entertainment value or personal edification, and that the jury actually understands that it is serving in a patent infringement trial, rather than acting as a focus group providing feedback on a possible new Silicon Valley TV drama.

One possible consolation is that this second Apple vs Samsung trial may prove to be nothing more than the short, exposition-heavy sequel that strings together "A New Hope" and a future "Return of the Jedi," and that we'll have to wait another two years for this story to get wrapped up.
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Comments

  • Reply 1 of 88
    kilimanjarokilimanjaro Posts: 189member

    Such a thoughtful of every possible outcomes, I wish the best for Apple.

  • Reply 2 of 88
    SpamSandwichSpamSandwich Posts: 31,094member
    Dilger really has no business writing opinion pieces that require subtlety, rather than multiple hammer blows to the subject.
  • Reply 3 of 88
    dasanman69dasanman69 Posts: 12,980member
    Dilger really has no business writing opinion pieces that require subtlety, rather than multiple hammer blows to the subject.

    But subtlety is boring; hammer blows make for a much more interesting read. ;)
  • Reply 4 of 88
    Quote:

    Originally Posted by SpamSandwich View Post



    Dilger really has no business writing opinion pieces that require subtlety, rather than multiple hammer blows to the subject.

    Nothing but one man's opinion. If you don't like Daniel's writing, don't read it.

  • Reply 5 of 88
    MacProMacPro Posts: 18,216member
    I don't know if I can watch ... I think I will have to hide under the covers till it's all over ... too scary.

    Great article by the way.
  • Reply 6 of 88
    revenantrevenant Posts: 496member

    i hope something happens.  it was totally proven that the phone industry was changed by apple's device- and if you can copy and only get a slap on the wrist- then what the hell is the point of trying to innovate?  

  • Reply 7 of 88

    My guess is Option 4 is most likely the outcome. Rational sense would make that happen. I'd say common sense, but their seems to be a lack of that today. I don't see a product ban happening - forcing that seems more trouble than its worth.

  • Reply 8 of 88
    irelandireland Posts: 17,584member
    Nothing but one man's opinion. If you don't like Daniel's writing, don't read it.

    I hate when people respond like you just did. You're not making a point. Besides, you only find how what he wrote after reading it.
  • Reply 9 of 88
    rob53rob53 Posts: 2,028member

    In some ways, I wonder why Apple Legal doesn't hire Daniel for these trials. He always comes up with more historical and pertinent information than we hear from court proceedings. Has anyone found a writer on Samsung's side who has anywhere near as much understanding and information as Daniel? Probably doesn't exist.

  • Reply 10 of 88
    toysandmetoysandme Posts: 205member

    This is a great article. Excellent refresher too on the historical aspects as well.

  • Reply 11 of 88
    MacProMacPro Posts: 18,216member
    rob53 wrote: »
    In some ways, I wonder why Apple Legal doesn't hire Daniel for these trials. He always comes up with more historical and pertinent information than we hear from court proceedings. Has anyone found a writer on Samsung's side who has anywhere near as much understanding and information as Daniel? Probably doesn't exist.

    Excellent point.
  • Reply 12 of 88
    MacProMacPro Posts: 18,216member
    toysandme wrote: »
    This is a great article. Excellent refresher too on the historical aspects as well.

    I love the historical refreshers too. I lived a lot of it in my own business life as an Apple dealer from the late 1970s to 1990's but there are obviously many missing links. I confess I had not realized till reading this, Gates stole from NeXT as well as Apple. It's a wonder Steve could even look at Gates without wanting to rearrange his face.
  • Reply 13 of 88
    Quote:
    Originally Posted by Ireland View Post





    I hate when people respond like you just did. You're not making a point. Besides, you only find how what he wrote after reading it.

     

    Point taken. I like Daniel's "you're-wrong-here's-why" approach to writing about Apple. It is powerful and serves as an antidote to the senseless drivel that flies around the so-called 'news media' like monkey shit at a zoo. 

  • Reply 14 of 88
    b9botb9bot Posts: 238member
    Thermonuclear is the only way Apple will get true justice. Samsung is a lying, cheating, copycat, no morales kind of company. They even lie in court any chance they get. Let the bomb drop that should have dropped years ago already.
  • Reply 15 of 88
    inklinginkling Posts: 731member
    undefined
  • Reply 16 of 88
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by AppleInsider View Post

    Trebling the $2.2 billion in damages that Apple is asking for would result in Apple taking another $6.6 billion away from Samsung Mobile, or nearly one quarter's earnings.

     

    Okay, I keep seeing this and I figured it was just a misspelling. But apparently it’s an actual word in this case? Since when? … SINCE THE FOURTEENTH CENTURY?! What about ‘tripling’? How’s that not better? Stop making me think of music every time I see that word; it’s all I’ll ever think.

     

    Option 5: Thermonuclear; Samsung really, really loses


     

    Option 6: Samsung double super loses; The United States allies with North Korea and declares war on the South.

     

     One possible consolation is that this second Apple vs Samsung trial may prove to be nothing more than the short, exposition-heavy sequel that strings together "A New Hope" and a future "Return of the Jedi," and that we'll have to wait another two years for this story to get wrapped up.


     

    But The Empire Strikes Back was the best of all nine of them!

     

    Originally Posted by SpamSandwich View Post

    Dilger really has no business writing opinion pieces that require subtlety, rather than multiple hammer blows to the subject.

     

    Reminds me of a joke.

     

    Two guys are on a golf course about to play a round. One of them happens to have a huge silverback gorilla with him. So he says to the other guy, “How about a wager? $100 to the winner and you play against my gorilla here.” The second guy agrees, thinking this should be a cakewalk. The first man sets up the tee and the gorilla swings back and HOOM, off it goes like a bullet and PLOP right on the green.

     

    Well, the second man, jaw agape, just pulls out his wallet and pays the first man immediately. “That was incredible!” he says. “It must have been a 500 yard shot! After something like that, I couldn’t possibly match up with his putting!”

     

    The first man replies, “I don’t imagine so. His putting is the same: 500 yards.”

     

    Originally Posted by digitalclips View Post

    It's a wonder Steve could even look at Gates without wanting to rearrange his face.

     

    That’s buddhism for you. When it comes time to rearrange faces and eat vegan, make sure you’re not out of vegan.

  • Reply 17 of 88
    pdq2pdq2 Posts: 270member

    Another vote for "great article". (This _is_ an Apple-centric website; if you want perfectly even-handed analysis, you may have come to the wrong place).

     

    I tend to think Option #3 is most likely, although I think due to human nature, the jury will probably pare down the $2.2B. Koh won't find (or allow) willful infringement damages (although I don't know how anyone _couldn't_ classify this as anything other than"willful" on the part of Samsung). Samsung and part of the press will call this a mixed, see?-everyone-does-it verdict, but (I hope!) the message will be sent with this second multi-million-to-billion dollar judgement that Samsung (and the smaller players) can't just copy-Apple-as-usual with impunity any more.

     

    On the other hand, if the gangster boss of Samsung (Lee Kun-Hee) plays to form and still refuses to change his behavior, I would imagine we'll see a round three...

  • Reply 18 of 88
    d4njvrzfd4njvrzf Posts: 797member
    Quote:
    Originally Posted by AppleInsider View Post



    Microsoft didn't halt innovation via intellectual property claims; it did so by ignoring intellectual property. Samsung today is working to do the very same thing, but the result will be different. Rather than having the world's profits monopolized by a software company, Samsung wants to own everything from chip production to the software platform to finished devices.



    [...]

    We will live through another Microsoft-like decade of scant innovation apart from predictable speed blips and worthless feature bloat, one where the open source community will achieve its fantasy only to realize that under the rule of a conglomerate, openness will be as valuable as Linux was under the PC industry controlled by Windows.

     

    When did MS ever halt innovation? Let's look at just a few of the developments in software during the era of Windows.

     

    -MIT created the first network-transparent windowing system in the form of the Unix X Server. It is only appropriate that the first operating system to treat local and remote resources as equals have the first display server that does the same thing.

     

    -The birth of Apache, the first widely-available commercial-grade webserver. Apache servers powered by Linux would go on to power the internet.  Linux/Unix-based platforms have dominated every sector besides the desktop computing market: web servers, mainframes, embedded devices, and high-performance computing (Linux powers over 90 percent of the Top500 supercomputers). Their success has been directly correlated with how technically informed their users are. For a long time, Linux/Unix-based systems were the obvious choice if you wanted a secure, high-performance, multiuser operating system.

     

    -The development of GCC, the first widely-available C compiler. It has since been ported to dozens of architectures and is still the de facto compiler for many of them.

     

    -Java. While not necessarily the best option for consumer-facing desktop applications, it has become an industry standard for web server applications. Any web app that you interact with has a good chance of being powered by Java. 

     

    -Windows finally catches up to Unix in terms of security with Vista in 2006. 

  • Reply 19 of 88
    stevenozstevenoz Posts: 227member

    Crossing my fingers for Steve Jobs (a victory would help him rest better in peace) and Apple....

     

    Good article.

  • Reply 20 of 88
    benjamin frostbenjamin frost Posts: 7,203member
    Thanks DED for yet another Exocet blasting away at the Samsung bullshit in preparation for its recycling in deforested areas.

    I love your delineation of options 4 and 5. With the Holy War, there is retained an element of mercy, whereas Thermonuclear is no holds barred.

    Such an entertaining article! I love your imagination. Truly, AI is lucky to have you. You make the pain of Samsung and Google's evils so much more bearable.
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