Apple and Samsung Business Relationship Comparison

Table of Content

The Parties Plaintiff Apple is a California corporation having its principal place of business at 1 Infinite Loop, Cupertino, California 95014. Apple is one of the leading designers and manufacturers of mobile communication devices, personal computers, and portable digital media players.

As a result of Apple’s large investment in research and development, the company has developed innovative technologies that have changed the face of the computer and telecommunications industries.

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Samsung Electronics Co., Ltd. is a Korean corporation with its principal offices at 250, 2-ga, Taepyong-to, Jung-gu, Seoul, 100-742, South Korea. Samsung Electronics Co. is South Korea’s largest company and one of Asia’s largest electronics companies. The company designs manufacture and provide a wide range of products such as consumer electronics, computer components, and many mobile and entertainment products to the U. S. and other world markets. Samsung Electronics America, Inc. is a New York corporation with its principal place of business at 105 Challenger Road, Ridgefield Park, New Jersey 07660. The company was formed in 1977 as a subsidiary of Samsung Electronics Co. Samsung Electronics America markets and offers a variety of consumer electronics for sale. These include TVs, VCRs, DVD, and MP3 players, video cameras, as well as memory chips, and computer accessories such as printers, monitors, hard disk drives, and DVD/CD-ROM drives.

Samsung Electronics

America also manages other Samsung subsidiaries such as the North American operations of 4 Samsung Telecommunications America, Samsung Electronics Canada, and Samsung Electronics Mexico. Samsung Telecommunications America, LLC is a Delaware limited liability company with its principal place of business at 1301 East Lookout Drive, Richardson, Texas 75081. The company was founded in 1996 as a subsidiary of Samsung Electronics Co., and markets sell or offers for sale a variety of personal and business communications devices mainly in the United States. The Lawsuit In this essay, the massive design war between mobile devices giants Apple and Samsung will be summarized and reviewed. This lawsuit was the first of a series of ongoing lawsuits between the two. Apple’s multinational lawsuits concerning mainly technology patents became known as the mobile device patent war; extensive litigation in the fierce competition in the global market for mobile devices and applications. 15 months after Apple first sued Samsung, the two companies were both defendant and plaintiff in more than 50 lawsuits around the globe.

The claimed damaged between the corporations ran into the billions of dollars. In the end, Samsung won rulings in its favor in South Korea, Japan, and the UK. Apple won a ruling in its favor in the U. S. In this review, only the first original lawsuit in the United States District Court for the Northern District of California will be addressed. The hostile standoff between the two corporate giants Apple and Samsung can be seen as a shapeshifting space for intellectual property laws. This is because of the different interpretations of IP law this case has evoked from the courts.

The Lawsuit happened after the two corporations had several meetings about intellectual property infringement issues that led nowhere. Over the course of several months, Apple CEO Tim Cook had met with Samsung’s top executives to try and reach a settlement. The two sides were even asked, by the judge in this trial, to talk one more time before a verdict would be delivered. Apple and Samsung did talk one more time but a Samsung lawyer said on August 20th, 2010 that they did not manage to come to any sort of agreement. So in April 2011, Apple Inc. sued Samsung Electronics Co. claiming that the electronics maker made a deliberate choice to copy Apple’s iPhone and iPad. Apple filed a 38-page federal complaint, alleging that several of Samsung’s Android mobile phones and tablets, including the Galaxy S 4G, Epic 4G, Nexus S, and the Samsung Galaxy Tab, infringed on Apple’s 6 intellectual property. As shown above, on the legal case front page, the specific complaints Apple made included the following; patent infringement federal false designation of origin and unfair competition federal trademark infringement state unfair competition common law trademark infringement unjust enrichment U.S. District Court Judge Lucy H. Koh, a former intellectual property attorney who was appointed in 2010 by President Barack Obama, was in charge of the trial. The trial was being heard in the U. S. District Court in the Robert Peckham Federal Building and Courthouse in downtown San Jose, California. Each side first stated their 90 minutes opening remark. After that, each side used their 25 hours of trial time they were given.

Apple’s opening statement about the nature of the lawsuit was very harsh and accusatory, saying that: “Apple’s innovations have been the subject of widespread emulation by its competitors, who have attempted to capitalize on Apple’s success by imitating Apple’s innovative technology, distinctive user interfaces, and elegant and distinctive product design. One of the principal imitators is Samsung, which recently introduced the Galaxy line of mobile phones and Galaxy Tab computer tablet, all of which use the Google Android operating system, to compete with the iPhone and iPad.

Instead of pursuing independent product development, Samsung has chosen to slavishly copy Apple’s innovative technology, distinctive user interfaces, and elegant and distinctive product and packaging design, in violation of Apple’s valuable intellectual property 7 rights. As alleged below in detail, Samsung has made its Galaxy phones and computer tablet work and look like Apple’s products through widespread patent and trade dress infringement. Samsung has even misappropriated Apple’s distinctive product packaging. ”

Apple’s Arguments

Apple accused the following products, which Samsung important into or sold in the U.S. , of infringing one or more of Apple’s Intellectual Property Rights: Samsung Captivate Continuum Vibrant Galaxy S 4G Epic 4G Indulge Mesmerize Showcase Fascinate Nexus S Gem Transform Intercept Acclaim Samsung Galaxy Tab tablet Apple’s lawyers claimed that rather than being innovative and develop its own technology and unique Samsung style for its products, Samsung chose to copy Apple’s technology, user interface, and innovative style in these infringing products. According to Apple, the copying went so far that the Samsung Galaxy products appear to be actual Apple products.

They argued that the smartphones have the same rectangular shape with rounded corners, silver edging, a flat surface face with substantial-top and bottom black borders, gently curving edges 9 on the back, and a display of colorful square icons with rounded corners. Apple’s lawyer said: “When a Samsung Galaxy phone is used in public, there can be little doubt that it would be viewed as an Apple product based upon the design alone. ” They argued that the icons in the earlier versions of the Samsung smartphones looked different because their shapes were varied, and did not appear as a field of square icons with rounded corners.

Apple’s lawyer added that: “Samsung chose to infringe Apple’s patents, trade dress, and trademark rights through the design, packaging, and promotion of its Galaxy mobile phones and the Galaxy Tab computer tablet, and similar products, and it did so willfully to trade upon the goodwill that Apple has developed in connection with its Apple family of mobile products. ” Apple said that because Samsung infringed on its utility patents, Samsung was provided with unique functionality for its products that were the result of Apple’s innovation, not Samsung’s. They added that Samsung had not obtained their permission to use their inventions.

Apple’s lawyer supported this claim by showing them the image below. They made a side-by-side comparison which, according to them, showed that Samsung had misappropriated Apple’s patented smartphone designs. 10 They then addressed the infringement of Apple’s trade dress. Apple said that Samsung announced its Galaxy smartphone line in March of 2010. They then made a side-by-side comparison between the original model, the Galaxy S i9000, and an iPhone 3GS. The comparison image they used is shown below. They argued that each of Samsung’s Galaxy smartphones has a combination of several elements of the Apple Product Configuration Trade Dress.

They listed the following patent infringing elements: a rectangular product shape with all four corners uniformly rounded the front surface of the product dominated by a screen surface with black borders substantial black borders above and below the screen having roughly equal width and narrower black borders on either side of the screen having roughly equal width a metallic surround framing the perimeter of the top surface; 11 – a display of a grid of colorful square icons with uniformly rounded corners; and a bottom row of icons set off from the other icons and that do not change as the other pages of the user interface are viewed.

Apple iPhone 3GS Galaxy S i9000 Next, Apple claimed that Samsung had infringed on the Apple Product Packaging Trade Dress. They showed that Samsung’s packaging included: a rectangular box with metallic silver lettering and a large front-view picture of the product prominently on the top surface of the box 12 – a two-piece box wherein the bottom piece is completely nested in the top piece use of a design that cradles products to make them immediately visible upon opening the box.

Then Apple turned to Samsung’s Galaxy Tab, shown in the picture below, claiming that this product also slavishly copies a combination of several elements of the Apple Product Configuration Trade Dress. They listed the following infringing elements: rectangular product shape with all four corners uniformly rounded; the front surface of the product dominated by a screen surface with black borders; substantial black borders on all sides being roughly equal in width; and a display of a grid of colorful square icons with uniformly rounded corners. 13

Apple then argued that in addition to copying the Apple Product Trade Dress, Samsung had also copied many application icons, which are shown below, in which Apple had trademark rights. They claimed that infringing Apple’s trademark rights are likely to cause confusion and deceive costumers into thinking that Samsung products are actually Apple products, or that they are sponsored by Apple. Apple’s lawyer argued that: “The copying is particularly problematic because the Samsung Galaxy products are the type of products that will be used in public—on the bus, in cafes, in stores, or at school, here third parties, who were not present when the products were purchased, will associate them with Apple because they have the unmistakable Apple look that is created from the various elements of the Apple Trade Dress. Samsung’s flagrant and relentless copying of Apple’s intellectual property rights in its Galaxy family of products not only allows Samsung to reap benefits from Apple’s investment, but it also threatens to diminish the very important goodwill that Apple has cultivated with its products”. Apple then told the jury that in Samsung’s marketing, they play up the similarities between the Galaxy line and the iPhone. They said Samsung’s smartphones were marketed as the phone that was closest to the iPhone and was the best choice for consumers who wanted a product with a distinct Apple look, but who did not want to pay as much money. To support the claim that Samsung was deliberately copying and comparing to Apple, they showed the jury one of their most important pieces of evidence.

They brought forth a 132-page confidential internal report of Samsung’s Product Engineering Team, which contained hundreds of side-by-side comparisons between Samsung smartphones and an iPhone, each of which examined the operations, designs, looks, and feel of the particular product followed by comments. Then Apple presented a second confidential internal document from Samsung. This was a 94-page usability evaluation, containing further direct comparisons as well as suggested improvements such as “provide a layout similar to that of iPhone” and “provide a fun visual effect identical to that of the iPhone”.

According to the contents of internal emails from Samsung executives, these two documents contained more than 20 visual, functional, design, and looks changes in order to “move it closer” to the iPhone. In the image below, an example of one of the comparisons from these documents is shown. 16 They added that Apple’s efforts to address Samsung’s copying of their intellectual property directly with Samsung had been unsuccessful and that this left them with no other choice but to file this lawsuit in order to protect the technology used in and the designs of the iPhone, iPod, and the iPad.

Samsung’s Arguments

One of the first remarks that Samsung’s lawyer, mister Verhoeven made during the legal case’s closing arguments was that: “Apple is attempting to block its most serious competitor from even playing the game. The jury’s decision can change the way competition works in this country. Think about Silicon Valley, the way it used to be, back in the day… now there are tens of thousands of tech jobs. That’s because of free competition. Consumers deserve a choice. Competition is what’s built in this country. Just think about walking into a Best Buy store.

You go into the TV section. All of the TVs look the same. They’re all boxes. They’re all flat screens. They’re all minimalist designs. The same is true with phones. They are all black rectangles with touchscreens. Phones used to look like “old Ma Bell” phones. Then technology changed. Blackberry is a great example of a game-changing device. What happened to the competition? Every single one came out with a QWERTY phone. ” Verhoeven showed the jury a variety of devices that have been on the market for the past few years. He said: “This is what you see when you go into the Best Buy store.

All touchscreen devices. Apple thinks it’s entitled to have a monopoly on a rounded rectangle with a touchscreen. Is anyone really deceived by Samsung’s devices that they were buying Apple devices? The fact is consumers make choices, not mistakes… there’s no deception, there’s no confusion, and Apple has no credible evidence of it. ” He added that Apple’s own surveys show that design/color is important for only 1 percent of iPhone buyers and showed a graph with the top reasons for buying an Android phone among those who considered iPhone. 18

Samsung also showed that the accused Infuse 4G smartphone, has in fact no bezel, but Apple’s witness mister Bressler claimed it infringed anyway. Verhoeven said: “The Galaxy S 4G, as you can plainly see does not have a bezel of uniform thickness, unlike the iPhone. It’s a totally different design style. Not only did he not conduct any research or surveys or speak to anybody about whether they were deceived, but he didn’t even test the four buttons on the front of the Infuse 4G” 19 Samsung put a lot of time into discrediting Apple’s witness testimonies. Verhoeven turned to Apple’s witness Dr. Kare’s testimony. He showed the jury a slide of Kare’s testimony and pointed out that she admitted that she didn’t evaluate the functionality of icons versus their visuals. Verhoeven tried to bring down Kare’s testimony by saying that: “This is their expert… and she said she didn’t know. So in fact, Dr. Kare didn’t — even though it’s a graphical user interface, which is obviously functional — Dr. Kare didn’t investigate it at all. All she did was come and show you pictures… ” Then Samsung’s lawyers used the screen size as a way of showing the difference between the iPhone and Samsung phones.

He pointed out that: “60 percent of the real estate for these icons isn’t present on the ‘305 patent. ” Specifically talking about the Fascinate. “That’s not overall impressions being the same. That’s a big difference. ” In Dr. Kare’s testimony, she claimed that the calculator icon of the iPhone and the Fascinate was substantially similar. Verhoeven disagreed and quickly pointed out that they are clearly different. He added: “There are only two remaining icons that Dr. Kare says were similar. The phone and clock… I would submit that the vast majority of the icons are substantially different.

And let’s not pretend you can patent a colorful row, a colorful matrix of icons. ” To support the claim that these icons were not copied from Apple, Verhoeven read apart from the testimony of Juuyen Wang, saying that Samsung used the “dumbbell” phone icon in 2002, long before the iPhone appeared. Samsung’s lawyer pointed out that this is the sum and substance for Apple’s testimony for the D’305 patent, and adds that for merely these issues, Apple is asking for the ridiculous amount of over $2 billion in damages. Samsung then turned to refute the accusations Apple made against the Galaxy 4G S.

They talked about the radius of the corners of the Galaxy S 4G. They showed that the corners on the iPhone are the same and that the Galaxy S 4G’s corners differ by tenths of a millimeter. According to Samsung, this evidence showed that the accused phones are not demonstrably flat across the front surface, and details matter a lot when talking about design patent infringement in a multi-billion dollar lawsuit. Samsung’s lawyers then cited the lozenge-shaped speaker as a difference between the iPhone and the Galaxy 4G S. Verhoeven showed that the speaker has a completely different shape.

The same goes for the Infuse 4G. Verhoeven said that: “Every single design element that Mr. Stringer says differentiated his design from the prior art is not present in the accused products. The only way to find infringement is if Apple owns a black rectangle design. But if things are that broad, then Apple’s own patents would be usurped and considered invalid due to prior art. ” Next, Samsung turned to the alleged iPad design infringement, and Apple’s witness, mister Stringer’s testimony, in which he claimed that “just one gap” around the corner, was important.

Verhoeven showed the trial jury the iPad prototype that was the basis for the patent Apple claimed was infringed. He showed that the back of the iPad is shiny and seamless. Then he showed the jury the Galaxy Tab, which featured a two-piece back and he added that: “The inspiration of Apple’s ‘889 patent does not even exist in these accused products. ” Another feature of the ‘889 iPad design patent is the shading on the back, which indicates a transparent, highly-polished, and reflective surface.

Samsung’s lawyer Verhoeven then showed the Galaxy Tab to the jury again and pointed out that the Galaxy tab does not have a shiny surface but a matte surface. Samsung’s lawyers brought up more strong arguments to counter Apple’s accusations of “slavishly copying” their intellectual property. They brought out a chart with a wider variety of the company’s phones. Verhoeven pointed out to the jury that Samsung’s business model is to have all kinds of different phones for all kinds of different people.

With the help of the below picture, Samsung showed the jury that their phones aren’t even in the same category of design. As a next argument, Verhoeven cited Samsung’s executive Justin Dennison and designer Jin-Soo Kim. In their testimony, they say that they were already working on the Samsung Galaxy Tab before the iPad was introduced in 2010. As proof, he showed the email traffic of Kim that showed a design for an early Galaxy Tab and said that: “This document is created internally within Samsung. The development of the Tab, before anyone knew the iPad existed… and they say he’s a copyist. ” Then Samsung’s lawyers turned to counter another claim Apple had made. Apple had pointed to a document with Juuyen Wang’s name on it, which contained references to the iPhone. According to Apple, this was proof of copying. To refute this, Verhoeven said: “The reason this document existed was that Apple sued Samsung, and needed to collect documents. That doesn’t show copying. It’s a company trying to figure out what’s going on. It’s a completely irrelevant document… Again, it’s a shell game.

Counsel for Apple is trying to mislead you. ” Samsung was essentially arguing that the comparison documents Apple had shown were research documents and not proof of copying at all. Samsung briefly addressed patent exhaustion. Verhoeven said that Intel’s chips are designed and built-in Germany and skipped to China and that the law requires they be sold in the U. S. As a closing remark, Verhoeven said to the jury: “Let’s have Samsung compete freely in the marketplace instead of Apple trying to stop it in the courtroom. “.

Final Ruling and Conclusions

Samsung and Apple are competitors but they also have a very important business relationship. Apple is one of its biggest customers for phone components and Samsung is one of Apple’s biggest suppliers. They have a business relationship worth over $7 billion each year. In 2011, Apple was Samsung’s single biggest customer, responsible for 7. 6% of the revenue of $109 billion. They are dependent on each other, without Samsung’s parts, Apple’s iPad and iPhone operations would come to a halt. Yet the two companies still bash each other’s brains in the courtroom. Apple is seeking $2. 25 billion in damages. One thing that went very wrong in this case in my opinion was the selected jury. According to a study by CNet, the jury contained only two engineers and four office workers from technology companies. Of the nine members, only 7 held any college degree and 2 members were from the Philippines and one from India. Two of the jury members were unemployed while others were occupied as a bike-shop manager, a municipal worker, an electrical engineer, a marketing executive, a social worker, a human-resources consultant, and a network-operations employee.

This is in my eyes, unacceptable considering the fact that this is one of the biggest intellectual property legal disputes in the history of men kind. To make matters worse, only one of the jury members owned an iPhone and none of them owned a Samsung smartphone. Based on mainly the confidential reports from Samsung, which contained side-by-side comparisons between Samsung and Apple products and compared the products’ operation, design, looks and feel and had comments about how to improve certain aspects in order to move closer to the iPhone, I feel that a ruling in favor of Apple is certainly in place.

The sum of $1,049,343,540 that was awarded to Apple, however, was completely ridiculous and very poorly supported. The ruling was in Apple’s favor in almost every single utility patent infringement. The design patent infringements didn’t go much better for Samsung. Judge 26 ruled that almost every Samsung product infringed on Apple’s design patents, with the exception of the iPad, which was not infringed upon. All the alleged trade dress infringements were ruled in Samsung’s favor. For me, the confidential files from Samsung were the nail in the coffin.

If these were not presented by Apple, I would have ruled in favor of Samsung, agreeing with Verhoeven’s claim that: Just think about walking into a Best Buy store. You go into the TV section. All of the TVs look the same. They’re all boxes. They’re all flat screens. They’re all minimalist designs. The same is true with phones. They are all black rectangles with touchscreens. Phones used to look like “old Ma Bell” phones. Then technology changed. Blackberry is a great example of a game-changing device. What happened to the competition? Every single one came out with a QWERTY phone. After the ruling from judge Lucy Koh, a total of $450 million was deducted from the $1 billion in damage that was awarded to Apple. This was because the jury apparently miscalculated the original damages, which is hardly surprising after the study by CNet about the jury’s qualifications came out. According to the judge, the original jury did indeed not have a clear understanding of the patent issues, which she claimed resulted in a lump sum award that did not distinguish between patent violations. This made it impossible for the court to determine the correct sum of money.

Still, with a jury that was under qualified and lacked a clear understanding of the patent issues, they miraculously managed to come to a verdict after a very surprisingly short time of deliberation. After this lawsuit, several of Apple’s patents were ruled invalid and were rejected. These were the same patents for which the judge ruled in Apple’s favor, making Samsung pay hundreds of millions in damages. Not surprisingly, Samsung has filed an appeal and the two parties are currently back in court, both having spent hundreds of millions of dollars on their lawyers alone 7 8.


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