Analysis: How Apple overwhelmed Samsung's patent case tactics

Mon Aug 27, 2012 10:40am EDT
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By Dan Levine and Poornima Gupta

SAN FRANCISCO (Reuters) - In August 2010, just a few months after Samsung Electronics launched its Galaxy smartphone, a team of Apple Inc lawyers flew to South Korea.

Apple's late co-founder, Steve Jobs, had already told Samsung executives at a meeting earlier that summer that he considered the Galaxy S, based on Google's Android operating system, an illegal copy of the iPhone. But given the extensive business ties between the two companies - Samsung is one of Apple's key component suppliers - a negotiated solution seemed most likely.

The Apple attorneys were blunt: "Android is designed to lead companies to imitate the iPhone product design and strategy," read the second slide in their presentation.

But the meeting did not go well, according to a person familiar with the case. Samsung attorneys bristled at being accused of copying, and produced a set of their own patents that they said Apple was using without permission.

The meeting brought to the fore a fundamental disagreement between the two companies, and set the stage for a bitter, multi-country patent dispute that led to Friday's U.S. jury verdict that Samsung had violated Apple's patents. The jury awarded Apple $1.05 billion in damages, which could be tripled as the jury found Samsung acted willfully.

Samsung could now face a costly ban on sales of key smartphone and tablet products. Shares in Samsung - the world's biggest technology firm by revenue - tumbled more than 7 percent on Monday, set for its biggest daily percentage drop in nearly four years, wiping $12 billion off its market value.

Samsung says it will seek to overturn the decision, and the worldwide patent battles among tech giants are hardly over. But for now at least the decision in what was widely seen as a critical case promises to re-set the competitive balance in the industry.

The vast majority of patent disputes settle before trial, particularly between competitors. In this case, though, the stakes were just too high - and the two companies ultimately had very different views of the often murky legal issues.   Continued...

An employee poses as he holds Apple's iPhone 4s (L) and Samsung's Galaxy S III at a store in Seoul August 24, 2012. REUTERS/Lee Jae-Won