A jury's conclusion that Samsung stole the innovativetechnology used by Apple to create its revolutionary iPhone and iPad could meanfewer smartphone options for consumers to choose from, analysts said.
Apple Inc.'s $1-billion (€800-million) legal victory sends a warning to othercompanies manufacturing similar devices, the biggest marketplace threat toApple.
A federal jury's found Friday that Seoul-based Samsung Electronic Co. stoleApple's technology to make and market smartphones using Google's Androidsoftware.
"Some of these device makers might end up saying, 'We love Android, but wereally don't want to fight with Apple anymore,'" said Christopher Marlett,CEO of MDB Capital Group, an investment bank specializing in intellectualproperty. "I think it may ultimately come down to Google having toindemnify these guys, if it wants them to continue using Android."
That's if the verdict stands. Samsung, the global leader among smartphonemakers, vowed to fight. Its lawyers told the judge it intended to ask her totoss out the verdict.
"Thisdecision should not be allowed to stand because it would discourage innovationand limit the rights of consumers to make choices for themselves," Samsunglead lawyer John Quinn said. He argued that the judge or an appeals courtshould overturn the verdict.
Apple lawyers plan to formally demand Samsung pull its most popular cellphonesand computer tablets from the U.S. market. They also can ask the judge totriple the damages from $1.05 billion to $3 billion.
U.S. District Judge Lucy Koh will decide those issues, along with Samsung'sdemand she overturn the jury's verdict, in several weeks. Quinn said Samsungwould appeal if the judge refuses to toss out the decision.
Apple Inc. filed its patent infringement lawsuit in April 2011 and engaged thecountry's highest-paid patent lawyers to demand $2.5 billion from its topsmartphone competitor. Samsung Electronics Co. fired back with its own lawsuitseeking $399 million.
The jury on Friday rejected all Samsung's claims against Apple, but alsodecided against some of Apple's claims involving the two dozen Samsung devicesat issue.
It found that several Samsung products illegally used such Apple creations asthe "bounce-back" feature when a user scrolls to an end image, andthe ability to zoom text with a tap of a finger.
The U.S. case was the latest skirmish in a global legal battle between the twotech giants. Its outcome is likely to have ripple effects in the smartphonemarket. Other device makers relying on Android, the mobile operating systemthat Google Inc. has given for free to Samsung and other phone makers, may bemore reluctant to use the software and risk getting dragged into court.
During closing arguments, Apple attorney Harold McElhinny claimed Samsung had a"crisis of design" after the 2007 launch of the iPhone, andexecutives were determined to cash in illegally on the success of therevolutionary device.
Samsung's lawyers countered that it was legally giving consumers what theywant: smartphones with big screens. They said Samsung didn't violate Apple'spatents and alleged innovations claimed by Apple were created by othercompanies.
Samsung said after the verdict that it was "unfortunate that patent lawcan be manipulated to give one company a monopoly over rectangles with roundedcorners."
"This is by no means the final word in this case," Quinn said in astatement. "Patent law should not be twisted so as to give one company amonopoly over the shape of smartphones."
The jurors' determination that Samsung took Apple's ideas probably matters moreto the companies than the monetary damages, Marlett said.
"I don't know if $1 billion is hugely significant to Apple orSamsung," Marlett said. "But there is a social cost here. As acompany, you don't want to be known as someone who steals from someone else. Iam sure Samsung wants to be known as an innovator, especially since a lot ofAsian companies have become known for copying the designs of innovators."
Apple and Samsung combined account for more than half of global smartphonesales. Samsung has sold 22.7 million smartphones and tablets that Apple claimeduses its technology. McElhinny said those devices accounted for $8.16 billionin sales since June 2010.
Samsung's Galaxy line of phones run on Android, and ISI Group analysts viewedthe verdict as a blow to Android as much as Samsung.
If Android lose any ground in the mobile computing market, that would hurtGoogle, too. That's because Google relies on Android to drive mobile traffic toits search engine and services to sell more advertising.
Google entered the smartphone market while its then-CEO Eric Schmidt was onApple's board, infuriating Apple co-founder Steve Jobs, who considered Androidto be a blatant rip-off of the iPhone's innovations.
After shoving Schmidt off Apple's board, Jobs vowed that Apple would resort to"thermonuclear war" to destroy Android and its allies.
The Apple-Samsung trial came after each side filed a blizzard of legal motionsand refused advisories by the judge to settle the dispute out of court. Legalexperts and Wall Street analysts had viewed Samsung as the trial's underdog.Apple's headquarters is just 10 miles from the San Jose courthouse, and jurorswere picked from the heart of Silicon Valley, where Jobs is a reveredtechnological pioneer.
A verdict came after less than three days of deliberations, surprisingobservers who expected longer deliberations because of the case's complexity.
While the issues were complex, patent expert Alexander I. Poltorak has said thecase would likely boil down to whether jurors believed Samsung's products lookand feel like Apple's iPhone and iPad.
Samsung's lawyers argued that many of Apple's claims of innovation were eitherobvious concepts or ideas stolen from Sony Corp. and others. Experts calledthat line of argument a high-risk strategy because of Apple's reputation as aninnovator.
Apple's lawyers argued there is almost no difference between Samsung productsand those of Apple, and presented internal Samsung documents they said showedit copied Apple designs. Samsung lawyers insisted that several other companiesand inventors had developed much of the Apple technology at issue.
Apple and Samsung have filed similar lawsuits in South Korea, Germany, Japan,Italy, the Netherlands, Britain, France and Australia.
"Thisis not the final word in this case or in battles being waged in courts andtribunals around the world, some of which have already rejected many of Apple'sclaims," Samsung said in its statement.
Samsung won a home court ruling earlier Friday in the global patent battleagainst Apple. Judges in Seoul said Samsung didn't copy the look and feel ofthe iPhone and ruled that Apple infringed on Samsung's wireless technology.
But like the jury in California, South Korean judges said Samsung violatedApple's technology behind the "bounce-back" feature. Both sides wereordered to pay limited damages.
The Seoul ruling was a rare victory for Samsung in its arguments that Apple hasinfringed on its wireless technology patents. Samsung's claims previously wereshot down by courts in Europe, where judges ruled that Samsung patents must belicensed under fair terms to competitors.
The U.S. case is one of some 50 lawsuits among myriad telecommunicationscompanies jockeying for position in the burgeoning $219 billion market forcomputer tablets and smartphones.