Samsung asks judge to halt Apple damages retrial

Attorneys for the Korean electronics giant say a US Patent Office ruling -- that an Apple patent might not be valid -- "calls into question the entire jury verdict in this trial."

CNET
SAN JOSE, Calif. -- Samsung on Wednesday asked a judge to halt the Apple damages retrial, currently under jury deliberation, after the US Patent and Trademark Office said an Apple patent might not be valid.

According to court documents, the Patent Office questioned whether Apple patent No. 7,844,915, also known as "pinch to zoom," is a valid patent. The '915 patent covers technology that can distinguish whether a user is scrolling with one finger versus using several touch points at once for a pinch-to-zoom action.

The Patent Office has been re-examining the claims of the '915 patent, and Apple recently responded to the agency's questions. However, in the document filed by the Patent Office on Wednesday, the group said that it "respectfully disagrees" with Apple's claims about the technology and that Apple's arguments "are not persuasive."

The Patent Office comments don't invalidate the '915 patent but mean that Apple will have to provide more information and argue for the validity of the patent.

In the meantime, Samsung has filed an emergency motion with Judge Lucy Koh to stay the case.

"This PTO decision calls into question the entire jury verdict in this trial," Samsung said in its filing. "During its presentation, Apple made a deliberate decision not to separate the damages between the different asserted patents. Therefore, it will be impossible to determine what allocation of damages belong to the invalid '915 patent versus the other patents."

Apple declined to comment.

Check out closing arguments from Apple and Samsung.

Koh said in court Wednesday afternoon -- a session called to answer a jury question about calculating Apple's lost profits -- that Apple typically would have 10 days to respond to Samsung's motion to stay. However, Samsung attorneys asked for a faster response. An Apple attorney said the company will respond by the end of the day Wednesday.

The motion comes a day after Samsung requested a mistrial for what it deemed to be racist comments made by an Apple attorney during closing arguments. Koh denied the request.

Samsung also made a similar motion-to-stay request in April following other Patent Office actions. At that time, Koh denied the request. However, she said the company could renew its motion if the Patent Office issued a "final office action" that found a particular claim of the '915 patent invalid and if it doesn't reopen the prosecution of the '915 re-examination following Apple's response to the final office action.

A jury last year ruled that Samsung had infringed on five Apple patents related to the iPhone's design and functionality. A judge earlier this year vacated about $450 million of the original award and ordered a new jury to convene to recalculate the damages for patent infringement. Along with the newly awarded amount soon to be decided by the jury, Samsung also is on the hook for about $600 million in damages from the first trial.

This time around, Apple asked for $380 million in additional damages. Samsung argued that it owes Apple only $52 million. The two disagreed on the amount of royalties, lost Apple profits, and Samsung's profits. What the two agreed on was that Samsung sold 10.7 million infringing devices, generating $3.5 billion in revenue.

A jury of six women and two men currently is deliberating in a courthouse here how much in additional damages Samsung owes Apple for infringing its patents. The '915 patent in question is the only one for which Apple can collect money for lost profits. That's a big issue in determining how much the Cupertino, Calif., company is owed for the infringement.

Apple says it should receive $114 million in lost profits, but Samsung believes it deserves nothing. Michael Wagner, an accountant and lawyer hired by Samsung, said there's no evidence from either company that shows consumers bought Samsung devices because they liked the pinch-to-zoom feature.

Disputing the '915 patent
The Patent Office has been re-examining the '915 patent since May of last year amid the request of an "anonymous third party." In July of this year, the Patent Office issued a final office action rejecting all claims of the patent. Apple had until September 26 to file its response. It requested an extension -- which Samsung called an act of "bad faith" and stall tactic -- and ultimately issued its response October 28. The Patent Office then filed its ruling Wednesday.

Samsung noted in its motion to stay that the Patent Office action "is the examiner's final word regarding the validity of the '915 patent." Apple will have to appeal the decision, as it is certain to do.

Samsung asked the court to hear the motion immediately, before the jury completes its deliberations. That's unlikely to happen as the jury has continued to deliberate and as Apple won't have to respond until later Wednesday.

Samsung noted in its filing that courts typically consider three factors when deciding whether to issue a stay -- the stage of the case, whether a stay will simplify the court proceedings, and whether a stay would "unduly prejudice or present a clear tactical disadvantage" to the other party.

The company argued that the "overriding factor weighing in the factor of a stay is the prejudice in light of the determination by the PTO."

"It would be unjust to have damages evaluated and awarded on a patent found to be invalid by the PTO," Samsung said. "Indeed, it may be an abuse of discretion not to issue a stay... Apple should not be permitted to waste the court's and Samsung's time. A stay is, therefore, warranted."

Duking it out in court
Apple and Samsung made their final pitches to the jury in the United States District Court for the Northern District of California on Tuesday. Apple attorneys Bill Lee and Harold McElhinny argued that Samsung's patent infringement significantly harmed the company. Apple made a big investment and took huge risks when building the first iPhone, they said. As a result, Apple should receive higher damages, the attorneys argued.

"Apple can never get back to where it should have been in 2010," Lee said.

Samsung attorney Bill Price, meanwhile, argued that Apple's patents are limited and that no one sought out Samsung's devices because of Apple's patented technologies.

"Apple has tried to mischaracterize these patents so they are the iPhone," Price said. But "these patents are very narrow...Apple doesn't own beautiful and sexy."

When closing arguments had ended, Price asked Koh to declare a mistrial because of what it called "racist" comments made by an Apple attorney. Koh declined to declare a mistrial but did instruct the jury not to consider race, location, or other factors when deliberating.

The Apple lawyer, Harold McElhinny, had warned jurors during his closing statement that the entire San Francisco Bay Area and US economy would suffer if Samsung wasn't adequately fined for its infringement. He compared the situation to US TV makers who went out of business because they didn't protect their intellectual property from foreign companies. Now the majority of TV manufacturing takes place abroad, he said. Samsung, which is based in South Korea, is currently the world's biggest TV maker by a wide margin.

The retrial to determine the additional damages Samsung owes Apple kicked off last Tuesday with jury selection, followed by opening arguments Wednesday. Witnesses who took the stand included Phil Schiller, Apple's head of marketing; and several expert witnesses who calculated the total damages owed.

For most, the damages retrial was a case of "Groundhog Day." No new revelations emerged during the testimony, and most witnesses also took the stand during the last trial more than a year ago. Apple's witnesses argued Samsung's copycat devices hurt the company, while Samsung argued that people seek out its devices more for their differences than similarities to Apple gadgets.

Judge Lucy Koh presides over Apple's patent infringement case against Samsung last year. Vicki Behringer
Not at issue in this case was whether Samsung infringed Apple's patents. The judge instructed the jury that a previous jury already decided Samsung infringed, and that they shouldn't revisit that issue. The sole consideration in the retrial was money -- just how much Samsung owes Apple for infringing its patents.

Apple arrived at the $380 million amount based on lost profits of about $114 million, Samsung's profits of about $231 million, and reasonable royalties of approximately $35 million. Apple estimates it would have sold 360,000 devices if Samsung hadn't released infringing rivals.

Samsung, meanwhile, said Apple shouldn't receive any money for lost profits, $52.7 million for Samsung's profits, and royalties of only $28,452 because the patents have limitations.

History of Apple v Samsung
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.

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

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, Koh in March ordered a new trial to recalculate some of the damages in the case, striking $450.5 million off the original judgment against Samsung.

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.

Even with a verdict now reached for damages, the Apple versus Samsung saga continues. There are likely to be appeals galore, and another patent trial starts in March. The upcoming trial in 2014 deals with a newer set of devices from both companies, as well as different patents. The case has since grown to include a multitude of products including Samsung's Galaxy S3 and Note 2, along with a counterclaim that targeted Apple's iPhone 5.

Updated at 11:30 a.m. PT and 2 p.m. PTwith additional Patent Office comments and background information on the '915 patent. Added Koh's comments and Apple's plans to respond Wednesday at 1:30 p.m. PT.
 

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