An attorney for Apple cautions the jury that patent infringement destroys economies and companies, much like what happened with US TV makers. A judge denies Samsung's mistrial request.
Shara TibkenFormer managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
SAN JOSE, Calif. -- Samsung attorneys on Tuesday requested a mistrial in a damages case after an Apple attorney said US TV manufacturing died because businesses didn't adequately protect their intellectual property from foreign companies.
Judge Lucy Koh denied Samsung's request though the company continued to protest the comments made by Apple attorney Harold McElhinny. Instead, Koh recalled the jury less than half an hour after they were dismissed to begin deliberations. She instructed the jury to not pay attention to where the companies are based, race, and other issues.
"I don't think what occurred rises to the level of a mistrial, but some remedy might be appropriate to avoid further issues later on," Koh said.
McElhinny during closing arguments Tuesday warned jurors that the entire San Francisco Bay Area and US economy will suffer if Samsung isn'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.
"Our economy will disappear," McElhinny said. "If the cost of breaking the law is a small fine ... Samsung's copying will have proven successful."
However, Price and Samsung's other attorneys objected to McElhinny's comparisons and the issues it could raise about race and outsourcing. He noted that it could have prejudiced the jury and caused them to look at Samsung and the issue differently.
"We all thought the same thing, as [McElhinny] knew we would," Price said, adding the comments were racist.
McElhinny, for his part said his comments were valid and that the history of the TV industry is well known. He never directly accused Samsung or any Asian vendors of dooming the US TV industry but implied that the same thing could happen again if patent rights aren't respected.
"I did not say a word about race," McElhinny said. "I did not say a word."
Still, Koh decided to again remind the jury not to show prejudice when deliberating. Jury members then requested paper, highlighters, and other materials to perform calculations. They could return with a verdict at any time.
It should be noted, that Apple, itself, has been criticized for outsourcing iPhone and iPad manufacturing to Chinese factories. And Samsung is one of Apple's partners, building the A-series processors that power Apple's mobile devices.
A jury last year determined Samsung had infringed on five 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 whatever amount the new jury determines, Samsung also is on the hook for about $600 million in damages from the first trial.
This time around, Apple has asked for $380 million more. Samsung believes it owes Apple only $52 million. What the two agree on is that Samsung sold 10.7 million infringing devices, generating $3.5 billion in revenue.
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 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's 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."
A 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.
Samsung products involved in rethink of damages (pictures)
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.
The two companies spent their final hours and minutes Monday grilling expert witnesses on how much money Samsung owes Apple for patent infringement. A big part of the discrepancy between what Apple wanted and what Samsung thought it should pay came from differing views on how much Apple lost in profits and how much it should be due for royalties. The two sides also disagreed on how much money Samsung made from its copycat products.
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.
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.
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.