Apple Inc. v. Samsung Electronics Co.
Samsung and Apple have engaged each other in multiple of suits in various countries in the world including the United States. The two are the leading companies worldwide with regard to the sales of smartphones and tablets. Despite this success they have been engaged in countless suits in more than 11 countries. In Apple’s case against Samsung in the United States, Apple was suing Samsung for alleged patent infringement violations in a number of their electronic products. Apple also sought redress amounting to billions of dollars as damages if the court found Samsung guilt of patent violations. While Samsung won similar cases in the UK, Japan and South Korea, the jury in the United States court found Samsung liable of patent infringements and decided in favor of Apple. This paper will examine the facts of the case, the issues under contention and the rulings delivered in the United States courts. The paper will seek to explain what the case was about, why it was litigated, when it happened and how it was conducted.
Apple filed a suit against their worldwide competitor Samsung, who also happened to be their component supplier. The case was filed in the 15th of April 2011. It was filed in a district court in the State of California. The plaint alleged that Samsung while designing and producing their tablets and smartphones had violated the intellectual property rights of Apple. They alleged that Samsung products, including and not limited to Epic 4G, Nexus S and Galaxy S 4G had duplicated Apple’s designs and features and thus violated Apple protected intellectual property. They alleged that their patents, style, user interface and trademarks had been severely infringed by the continued acts of duplication by Samsung. Apple relied on well-established principles and statutes of law that govern trademark infringements, unfair competition practices and unjust enrichment laws. While in court Apple adduced evidence in support of their case that demonstrated how Samsung had violated their intellectual property. They produced pictures in court to show images of i9000 Galaxy S and iPhone 3GS. Counsel for Apple argued that these two products had substantial similarities to either indicate that the products had a common manufacturer or that one company had infringed on the style of the other. They also presented evidence to illustrate similarities in icon applications and the mode of packaging. All the same, evidence was later submitted in court to indicate that the pictures had been altered to create or enhance similarities between the gadgets. The opposing Counsel accused the Apple for adducing evidence in a court of law that was fabricated to support their case. They denied all allegations of intellectual property violations by alleging that their products were not only unique, but had also extremely distinguishable features from Apple’s electronic products. This prompted Samsung to file under federal suits, in other countries, on the same causes of action. It also filed a counter suit in the District court of Delaware and the International Trade Commission. The counter suits were filed in June of 2011.
In their 38-page long complaint narrative, Apple states that they used a lot of resources and labor in order to produce and develop iPads and iPhones. They argued, therefore, it is these products that their consumers and competitors have identified Apple with. It is thus unfair to let Samsung benefits from their designs and products rather than design their own. On the other hand, Samsung argued that it developed its gadgets independently. The case rotated around specific design patents, trade dress claims and utility patents. In the patent design claims, Apple alleged infringements on two areas. One was on its general iOS, which they claimed Samsung copied the icon layout and, the second was on the iPad. There were also allegations that Samsung had copied the rectangular design of Apple. Samsung swiftly responded by referring to the allegations as the “Apple’s black rectangular problem”. They argued that the allegations were too broad and, therefore, invalid on that account. They illustrated to the court that their design elements were not exactly what was adopted and produced by Apple. In addition, Apple also sought damages for trade dress violation. A trade dress denotes a product design which signal to the consumers that a particular product originates from a particular company or brand. An ideal model is the coke bottle. Any drink served with use of the coke bottle infers that it was made by the coca cola company. The intention of a having a trade dress rule is to safeguard customers from counterfeit products. They argued that Samsung copied it IPhone grid of icons and the distinct covers of the front face. They told the members of the jury and the court at large, that they depended on the distinct nature of their products to build their market base, customer loyalty and satisfaction. They presented data to indicate that many of their customers were confused when Samsung launched its products because they had substantial similarities with Apple’s products. Moreover, Apple also relied on the views and reviews of technology commentators and media houses. They presented evidence that demonstrated that many reviews indicated more similarities to the designs and features of Apple and Samsung than they indicated similarities. They argued that this evidence, if admitted and understood in line with evidence demonstrating consumer confusion, it illustrated that indeed Samsung had violated the intellectual property Apple and, therefore, liable for offenses of unjust enrichment, intellectual property infringement and unfair competition practices.
Another cardinal cause of action at the trial related to allegations of utility patent violations. This was mainly concerned with the interface elements found in the smartphones of the two companies. They alleged that their ‘scroll back’ functions and themes had been copied by Samsung manufacturers who changed a few elements but retaining the effects and the intention of the invention. This cause of action was mainly concerned with the part where a person scrolls to the end of a document and beyond that a background theme appears.
The jury trail occurred in July 30th 2012 and proceeded up to September 7th 2012. The verdict of the jury was delivered to court on the 24th of August 2012. The verdict favored Apple. The verdict found that Samsung had intentionally, and with sufficient knowledge of their actions, violated the utility and design patents of Apple. The verdict also found Samsung guilty of trade dresses violations with regard to the iPhone. In this regard, the men and women of the jury awarded Apple in terms of damages and redress reliefs a whopping $ 1.049 billion. In addition, the jury declined to grant Samsung any of their prayers for either a declaration or damages in their counter suit. According to the jury in this United States district court in California, Samsung was guilty of infringing on the patents on the iPhone with regard to the ‘On-Screen Icons’, the ‘Tap to Zoom’ feature and the ‘On-Screen navigation’ feature among others. However, the jury also found that Samsung had not violated on the alleged iPad features that regard design patents.
Following this verdict, a team of Apple lawyers swiftly moved to court requesting an injunction against the continual sale of Samsung products that were found to have infringed on the intellectual property of Apple. However, their motion was denied by the Presiding Judge Koh. The court ruled that such a decision will have far more harsh business consequences than desired. Moreover, it would serve to deny American consumers the services offered by Samsung that were not found to infringe on the intellectual property of Apple. This was a significant relief to Samsung because it would not only lose its customers in the United States, but would also any business associations that has made among market leaders in the county. The court exercised judiciary restraint to rule in Apple’s favor because of the severe injuries that would be caused to the Samsung business empire. In the injunction, Apple sought orders to compel the United States government to block the sale of the Droid Charge and the Infuse 4G smartphones. Judge Koh ruled that there were extremely little merits on the Apple’s claims even though they had established a prima facie case against Samsung. The learned judge posited that Apple had not demonstrated that they could overcome their burden of proof and also counter rebuttal evidence by Samsung with regards to the ownership and validity of their patents. However, after the ruling Apple lawyers appealed Koh’s ruling. After hearing the case, the appellate court arrived at a finding that the learned judged had erred in his judgment. The appellate court, therefore, ordered judge Koh to issue an injunction to order the United States government to prevent Samsung electronics from making any more sales of the smartphones in dispute. Following this orders, the trial court granted a preliminary injunction in June 2012. The order prevented Samsung from using, making, selling or importing all gadgets that were under controversy. When Apple failed to succeed in proving that Samsung’s Galaxy Nexus had contained infringed patents from Apple’s iPhones, Samsung sought court orders to quash the injunctions that had partly paralyzed their smartphones business in the United States. Consequently, the court of appeal agreed on October of 2012 that the injunction be lifted and Samsung should continue with the Smartphone business. On October 23rd of 2012, things started looking bright for Samsung. The Patent and Trademark office of the United States momentarily invalidated the some of the patents that Samsung was accused of violating. This act substantially affected the ruling of the trial court.
This massive amount of damages awarded to Apple makes this case not only a pace setter in intellectual property law, but also a crucial cases with regard to business practices. It illustrates the harsh consequences that can be incurred in the course of trade in cases of fierce competition in the market with each player intending to outsmart the other, whether on the market or in court. Numerous critics and commentators have analyzed the cases propagating convincing arguments that are either pro-Apple or pro-Samsung. There has been a lot of interest in the case because it can set an extremely crucial precedent that will determine the levels of competition in various interests in the market. While the case may be mainly concerned with smartphones, the consequences will be felt throughout the entire business fraternity. This is mainly because all most all manufactured and developed products on sale are governed by intellectual property law. This branch of laws seeks not only to protect developers and manufacturers business, but also to enable consumers identify specific protects and relate to the manufacturer.
Industry stakeholders have argued that the jury verdict was too friendly and favorable to Apple. There have been bothering concerns of the immediate impact of the verdict. First and foremost, consumers of Samsung’s android smartphones will have to dig more into their pockets than before. This is because in order to have permission to produce and sell the phones Samsung will require a license from Apple. This will cause a tremendous amount of money that has to be recovered through sales. Therefore, price of these phones will have to go up. Another concern raised regarding the case relates to the knowledge and expertise of the jury about the patent system. It has been an acknowledged fact the jury at the trial were highly ignorant of how a patent system work. They, therefore, decided on the basis of who told his story best regardless of whose story was right.
The revelation that the jury foreman, Velvin Horgan, was a patent holder only served to fuel the controversies around the verdict. In later interviews after delivering the verdict, he admitted of having used his knowledge of the patents to guide the jury to the decision. This is against a well-founded principle of law that governs the conduct of jury members. The law requires that the jury determines a case according to the position of the law as are directed by the presiding judge. Therefore, the jury is not supposed to determine cases according to how they perceive the law. The patents law in the United States uses the principle used to award damages in tort. This is that the purpose of the remedy is to put the injured person in a position that he or she would have been if the tortuous act had not been committed. Therefore, the intention of the patent law is to put the plaintiff in a position that he would have been if the patent infringement had not occurred in the first. On the contrary, subsequent interviews of the members of the jury indicated their desire to award punitive damages. This is inconsistent with the law and, therefore, an unacceptable practice and precedent. Samsung later claimed that there was massive jury tempering. They also claimed that members of the jury were not given sufficient time to read their instructions on how to determine the case. The more than $ 1 billion Apple award in terms of damages given by a jury who had less than 3 days of going through the facts of the case, issues and principles of law cannot stand a competency test.
The two leading technological companies have been embroiled in legal battles in which they allege infringement of intellectual property rights. The legal disputes have not only been confined to the United States but have now spread up to 11 countries. By mid of the year 2012, the two companies were engaged in excess of 50 law suits. The legal tussles were instigated by the fierce competition in the lucrative consumer mobile communications market and started following the launch of smart phones by both of the companies. Apple brought an action in April 2011 against its competitor Samsung in a United States District Court over what it termed an infringement of its patent rights by Android phones and tablets which were manufactured by Samsung. The American company, Apple Inc. submitted evidence to the court of image comparisons of smart phones with a view to convincing the judges that the same were similar to its products and as such an infringement. It was however found out that the same images presented as evidence were tampered with, and as such misleading.
Samsung later brought a counteraction a week later in South Korea, Japan and Germany alleging infringement of its patents by Apple. It is instructive that the American company, Apple Inc. only won the legal battles in the United States but lost in South Korea, Japan and the UK against Samsung. An examination of the rulings reveals that Apple only won in the United States and lost in the other countries. South Korea is home to Samsung Electronics and is not a large market for Apple’s products. The judges in the case in South Korea ruled that Samsung did not copy Apple’s rectangular shaped smart phones effectively making the case that a company cannot monopolize generic design features. It may well be the case that Apple Inc. won in its home country, United States so as to maintain the control of the huge market but was unable to do the same in the other countries.
References
Miller, R. L. (2012). Fundamentals of Business Law: Summarized Cases. New York: Cengage Learning.
Miller, R. L., & Cross, F. B. (2012). The Legal Environment Today: Business in Its Ethical, Regulatory, E-commerce, and International Setting. New York: Cengage Learning.
Spinello, R. (2013). Cyberethics: Morality and Law in Cyberspace. New York: Jones & Bartlett Publishers.
