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Apple and Samsung finally settle their patent dispute

The two companies have been fighting over patent infringement since 2011 and took their case all the way to the Supreme Court.

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Apple and Samsung's long-running patent infringement battle saw its last trial in May in San Jose, California.

Shara Tibken/CNET

The long-running patent battle between Apple and Samsung is finally over.

The two phone giants on Wednesday notified a district court in San Jose, California, that "they have agreed to drop and settle their remaining claims and counterclaims in this matter." Judge Lucy Koh, of the Northern District of California, signed the order dismissing all suits with prejudice, which means another case can't be filed on the same claim. 

The terms of the settlement are unclear. 

Apple and Samsung have been fighting over the designs and functionality of their smartphones and tablets since 2011. For the companies, the long-running battle was about more than money. What was really at stake was the market for mobile devices. 

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"This settlement marks the official end of the 'smartphone patent wars,'" said Brian Love, an assistant professor at the Santa Clara University School of Law. "So, it seems like an opportune time to ask: After almost a decade of litigation, what was accomplished? I'd say very little."

He noted that Apple received hundreds of millions of dollars from Samsung, but it never succeeded in taking Samsung products off the market. And since the first suit was filed, the market share for Android, the software powering Samsung's phones, has soared. This year, about 85 percent of all smartphones shipped in the world will run Google's Android, according to IDC. The remaining 15 percent will run Apple's iOS software.

Apple referred CNET back to a comment from May:

"We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers," the company said. "This case has always been about more than money. Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple."

Samsung declined to comment. 

Patent battle

The original Apple v. Samsung trial in 2012 captivated Silicon Valley and the tech industry because it exposed the inner workings of two notoriously secretive companies. It was just one of many cases around the world as the rivals sparred both in the marketplace and in the courtroom. The two companies settled their international lawsuits in 2014 but have been battling in US courts as recently as May. 

The devices at issue in the case, though, haven't been sold for years and predate Samsung's meteoric rise in mobile phones. Apple and Samsung also had another case pending that related to newer devices, like 2012's Galaxy S3. 

The initial trial in 2012 awarded Apple $1.05 billion in damages for Samsung's infringement. But Samsung appealed the case, leading to two damages retrials and a hearing at the Supreme Court over how design patent damages can be decided. 

Samsung argued that the elements it infringed were just a minor part of the phone and that it should only have to pay damages for what infringes, not for the entire device. Here's an easier way to think about that point of view: If a company owns a patent on just a car's cup holder, it shouldn't be able to collect the profit from the entire car. But Apple argued that its three design patents, while covering merely cosmetic aspects of iPhones, were the key to making the phones look good and work well. It argued they couldn't be separated from the entire device and that its damages should total all of Samsung's profits from its infringing phones. 

The Supreme Court agreed with Samsung and said design patent damages could be based on a segment of a product, not just the entire product. But it didn't detail how to determine what the overall infringing product was and sent the case back to district court. During the latest damages retrial, in May in San Jose, a jury determined that Samsung had to pay Apple $539 million for infringing five patents with Android phones it sold in 2010 and 2011. That was on top of $548 million that Samsung had already paid. 

The value of design patents

By reaching a settlement, Apple and Samsung are putting the case behind them instead of going through more rounds of appeals. But it doesn't resolve a question that has broader implications for all of tech: How much are design patents worth? 

The Supreme Court decision said it was possible to narrow the damages, but the court dodged setting actual parameters. That came down to the district court. 

At a patent infringement damages trial, Greg Joswiak, Apple's vice president of product marketing, answers questions from Apple attorney Bill Lee about Apple's history of product design.

At a patent infringement damages trial in May in San Jose, California, Greg Joswiak, Apple's vice president of product marketing, answers questions from Apple attorney Bill Lee about Apple's history of product design.

Vicki Behringer

Samsung had hoped to pay less for design patent infringement in the latest trial. But the $539 million set by the jury was significantly more than the original damages tally of $399 million. Unsurprisingly, Samsung appealed the verdict, asking the court to dismiss the judgment or order another retrial. The company said the verdict was "excessive" and not supported by the evidence.

By reaching a settlement, that claim will never be presented in court, at least not by Samsung. For now design patents are likely to be seen as a powerful threat against rivals, said Sarah Burstein, a University of Oklahoma law professor who studies design patents

"Design patent owners will be able to credibly threaten their competitors with the threat of outsize damages awards, regardless of the strength of their patents or the merits of their infringement claims," she said.

CNET's Stephen Shankland contributed to this report.

First published June 27 at 12:09 p.m. PT
Updates frequently until 2:10 p.m.: Adding background, Apple comment and expert comment. 

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