Apple's Schiller: Samsung gained ground thanks to copycat tactics

The head of marketing for Apple says Samsung beat out rivals such as Motorola and Nokia because the latter two companies didn't copy Apple as much.

Apple executive Phil Schiller showing off the iPad Mini during a recent event. James Martin/CNET
SAN JOSE, Calif. -- It pays to copy Apple. Well, kinda.

Phil Schiller, head of marketing at Apple, testified Friday in court here that the reason Samsung gained so much market share in smartphones was because it copied Apple. That's also why Samsung flourished while other smartphone makers such as Motorola and Nokia floundered, he said.

"There is a difference," Schiller said. "One is copying. The others are not -- as much."

Along with suing Samsung, Apple also has pursued lawsuits against Motorola, HTC, and other rivals.

Samsung's attorneys, meanwhile, have argued that people sought out Samsung products because of the differences, not necessarily the similarities, to Apple's products. That includes bigger screens, 4G LTE access, Android, and other items.

Apple v. Samsung redux: What you need to know (FAQ)

"Let's talk about why consumers buy Samsung phones," Samsung attorney William Price said during his opening arguments Wednesday. "That's really the issue here. I know a lot of you folks love Apple. They make a great product. But there are a lot of people who are diehard Samsung fans. Or more appropriately, diehard Android fans."

The comments from Schiller came toward the end of his testimony Friday morning in the United States District Court for the Northern District of California in San Jose. A judge in March vacated about $450 million of an original sum Samsung was ordered to pay Apple for infringing on five of its patents. A retrial to determine new damages kicked off Tuesday with jury selection. Samsung is still on the hook for $600 million, no matter what happens in the retrial.

Earlier in his testimony Friday, Schiller said that Samsung's devices that looked like the iPhone made it "much harder" for Apple to differentiate and sell its devices. Schiller said Apple's marketing would have had even more success if Samsung hadn't released similar products.

"This was an incredibly important time," he said. "As this [infringement] has been occurring, it's harder for us to get new customers and bring them into our ecosystem."

Samsung kicks off its defense argument later Friday, and both sides should wrap up witness testimony Monday. Both companies likely will present their closing arguments Tuesday.

In the case, Apple has asked for $380 million in damages, and Samsung has said it needs to pay only $52 million.

Much of the difference between Samsung's and Apple's damages calculations comes from how much Apple should receive for royalties, and from what profit Samsung generated from the infringing devices. Both companies agree on the number of devices sold as well as the revenue Samsung generated. However, Samsung said it made a lower profit than Apple believes because of costs such as marketing.

Apple originally filed suit against Samsung in April 2011, accusing the Korean company of copying the look and feel of its products. Samsung countersued two months later over patent infringement and said it was at work on touch-screen phones with giant rectangular screens and rounded corners well before Apple showed up. The initial trial, which stretched more than three weeks in August 2012, wrapped both of those cases in one, somehow squeezing together the patent infringement issues, alongside antitrust claims, and even trade dress issues.

In August of last year, a nine-person jury sided with Apple on a majority of its patent infringement claims against Samsung. At that time, the jury awarded Apple $1.05 billion in damages , much less than the $2.75 billion sought by the Cupertino, Calif., electronics giant. Samsung, which asked for $421 million in its countersuit, didn't get anything.

However, in March Judge Lucy Koh ordered a new trial to recalculate some of the damages in the case, striking $450.5 million off the original judgment against Samsung. What that means is Samsung is still on the hook for about $600 million in damages, but a new jury has to decide how much else it owes.

The products in question include the Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform. The Prevail in particular racked up $57.9 million of the damages tally, which Koh said was a failure on the jury's part, since the device was found to infringe only on utility patents, and not on design patents.

 

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