Apple v. Samsung -- Sorry, but it's not over yet
The smartphone giants settled their patent suits outside the US. But that may mean they'll pay even more attention to Apple's home turf.
Apple and Samsung may have buried the legal hatchet overseas, but that doesn't mean they're ready to end the war.
The mobile giants late Tuesday said they agreed to drop all litigation outside the US in their long-running war over smartphone and tablet patents, but they'll continue to pursue their existing cases in the US. They also said the agreement doesn't involve any licensing arrangements.
Apple and Samsung had been battling for more than three years in nine countries outside the US, including the UK, Germany, and Australia.
The settlement raises hopes that the long-running legal battle between Apple and Samsung will soon be over -- not just the partial truce the companies reached outside the US. But legal experts say a settlement may not happen anytime soon and litigation between the two could drag on for years. Still, they also say both Apple and Samsung are likely losing their zeal for battle.
"It seems like even in the US, the fight between the companies is getting smaller," said Michael Carrier, a professor at the Rutgers School of Law. "Both companies are realizing that litigation is not bringing the rewards they thought they would get."
The legal fight between Apple and Samsung is about more than money, though damages are something both sides continue to spar over. What's really at stake is the market for mobile devices. Apple, the No. 2 smartphone maker, now gets two-thirds of its sales from the iPhone and iPad tablet. South Korea-based Samsung is the world's largest maker of smartphones. Both want to keep dominating the market for smartphone and tablets, which totaled about 1.2 billion devices in 2013 -- especially as they face new rivals in emerging markets, including Xiaomi in China.
Going back to the beginning
Apple and Samsung have been in court since April 2011, when Apple filed a patent-infringement lawsuit in the Northern District of California accusing Samsung of copying the look and feel of its iPhones and iPads. Steve Jobs served as Apple CEO at the time, though he went on medical leave in January 2011 and officially handed over the top job to Tim Cook in August.
The fight against Samsung and Google's Android operating system was personal for Jobs, who died in October 2011. He told biographer Walter Isaacson that Google's Android operating system, which powers Samsung's smartphone, was a "stolen" product that borrowed heavily from Apple's iOS mobile software for the iPhone and iPad. Jobs said he wanted Apple's technology protected.
"I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong," Jobs told Isaacson, who repeated his remarks in his 2011 Jobs' biography. "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."
But Cook hasn't taken the lawsuit as personally, and there have been signs of thawing several times. In April 2012, about three months before the first suit went to trial, Cook said during an earnings call that he "always hated litigation" and that he'd "highly prefer to settle versus battle."
Even so, the case proceeded, and a jury sided with Apple and awarded it $1.05 billion in damages in August 2012 (but the amount was lowered to $930 million in a damages retrial the following year). Apple brought a second suit against Samsung over patents related to software features such as "slide to unlock." The second case, which involved newer devices like the Galaxy S3, went to trial in late March 2014. The second verdict was more mixed for the companies, with Apple winning some claims but losing others. The jury also ruled Apple infringed one of Samsung's patents.
The companies have held talks over the past several years, typically during court-ordered mediation. But those discussion haven't resulted in any settlements, at least in the US. Cook and Samsung mobile chief JK Shin attended a full day of mediation during the first week of February, but they didn't reach an agreement, according to a court document filed later that month. The second trial proceeded as planned, and a jury reached its verdict at the beginning of May.
In total, Samsung has been ordered to pay Apple $1.05 billion for infringing several patents, while the latest trial also saw Apple ordered to pay Samsung $158,400 for infringing one patent.
At the same time Apple has been fighting Samsung, it also has reached settlements with many of Samsung's Android rivals in the smartphone market, including HTC in November 2012 and Motorola Mobility in May 2014. In June, Apple and Samsung dropped their appeals at the US International Trade Commission.
Even though the initial trials are over, neither side has seen any money. And there hasn't been a clearcut victor. Samsung wasn't found to infringe all of Apple's patents, and Apple was awarded much less than it asked for, particularly in the 2014 trial. (Apple had wanted $2.2 billion for Samsung's accused infringement of five patents, but it received less than 6 percent of that total.)
In addition, neither company has been successful in banning its rival's products from sale in the US, a move that would have a material impact on their sales.
While the companies have had limited success in courts, the trials, which revealed sensitive information, have been a boon to market watchers and rivals. Apple and Samsung are two of the most secretive companies in the technology industry, with little known about the inner workings of their operations or about executives' private comments -- until the recent patent cases.
Each side presented damning evidence during the trials about its rival and used its competitor's words, taken from emails and internal presentations including competitive analysis and marketing documents, against it. That included Jobs' determination to launch a "holy war" against Google's Android mobile operating system, which powers Samsung's smartphone, and a plan by a Samsung executive to use Jobs' death in 2011 as a marketing opportunity.
Still in motion
Motions continue in the most recent trial, which ended in early May. Once those finish, the companies are expected to appeal the decision. They'll also continue their appeals of the first trial from 2012 -- Samsung is trying to get damages reduced, while Apple is asking for more.
Their legal wrangling will eventually have to cease. The question is how it will end: the companies may simply exhaust the appeals process, sign a cross-licensing pact, or come to some other form of settlement.
There's also no knowing when the end will come.
"Calmer heads will prevail, and both sides will realize they achieved something," said Pierre R. Yanney, a patent attorney and partner at Stroock & Stroock & Lavan. "Apple got a victory of sorts and money; Samsung has to pay a lot less than they might have. At some point, both sides will realize that the certainty of a settlement is better than the uncertainty of future legal proceedings."