Judge Koh Throws Out Damages Award in Apple v. Samsung

Apple’s high-profile and short-lived win against Samsung may turn into the licensing agreement that it should have been in the first place.

On Friday Judge Lucy Koh halved the $1.05 billion award that a San Jose, CA jury provided Apple for Samsung’s infringement of 14 of its patents. Judge Koh also ordered the damages portion of the case be retried, while allowing the infringement decision to stand.

In her decision Judge Koh said that “the Court has identified an impermissible legal theory on which the jury based its award.” Apple is headquartered in nearby Cupertino.

Until now, Apple had appeared to have won a significant victory in the case, even though it failed to win an injunction that would have shut down sales of Samsung’s popular Android phones. The N-CA district court’s ruling is a reminder that Apple’s infringed patents, while worthy, have a lot less damages value than they at first appeared to.

The court’s decision looks to be part of a larger pattern of vacating mega jury awards, such as J&J Centocor (J&J) v. Abbott, $1.7 billion and Lucent v. Microsoft, $1.5 billion. These cases, and many on the list of top all-time patent damages awards, have either been overturned or dramatically reduced.

Why Bother?

Why bother to file a patent suit in the first place if winning a really big damages award frequently amounts to little more than an initial or Pyrrhic PR victory? Perhaps that’s the message the courts want to send — don’t bother. For kungfu-apple-samsung_616Apple the initial positive media coverage may be a sufficient spoil to justify the time and cost. Its limited win sends a message: “If competitors infringe our patents we will pursue them. Money is no object.” It also implies that while Apple may not have as many patents as other tech giants, such as Samsung, Sony or IBM, theirs are strong rights and it will vigorously will defend them. (Microsoft pursued a similar strategy in the 2000’s after a series of costly patent losses and settlements.)

*     *     *

Back in September I had suggested in IP CloseUp after Apple and Samsung was decided that the result amounts to little more than posturing between the two dominant electronics players hoping to convey the existence of a competitive landscape.  The fact is that after these two companies there effectively is no smartphone landscape, and, let’t not beat around the bush, they would not mind keeping it that way. It’s not unlike organized crime families taking out each other’s capos in a turf war. Does it really matter who wins?

The retrying of damages may result in a local jury finding somewhat higher award than Judge Koh currently suggests, or possibly a lower one. The risk of a new and potentially embarrassingly low revised damages award may encourage Apple to finally agree to a license with Samsung before the retrial concludes, which it might have done in the first place. Although having done so too quietly may have been regarded as collusive by others who wish to participate in the smartphone sales, like Nokia and RIM.

The Joke’s on Who?

The public spectacle of Apple v. Samsung is a bit laughable. It makes the two companies appear to be enemies when they may, in fact, be helping each other carve up the smartphone space.  IP CloseUp readers already know, Samsung is Apple’s largest parts supplier.

“Samsung turns out to be a particularly important supplier,” wrote The Economist. “It provides some of the phone’s most important components: the flash memory that holds the phone’s apps, music and operating software; the working memory, or DRAM; and the applications processor that makes the whole thing work. Together these account for 26% of the component cost of an iPhone.”

Last year Apple spend $3.9 billion on Samsung custom chips alone, according to IC Insights data.

I guess you could say that innovative IP strategies often are the most effective ones.

Image source: ijailbreak.com; webpronews.com

About Bruce Berman

Independent IP observer, adviser and author.

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