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Despite willful infringement findings, Judge argues Apple did not prove that it lost its ability to participate

A California federal judge has ordered that while Samsung Electronics Comp., Ltd. (KSC:005930) is guilty of willful infringement of software and design patents held by Apple, Inc. (AAPL), that she would not order a sweeping ban of Samsung smartphones, which Apple had argued for.

I. A Lump of Coal -- Apple Gets no Ban in its Stocking

Apple and Samsung are currently the two most profitable and most prolific smartphone makers in terms of U.S. sales.  Samsung's recent success was kick-started by the Galaxy S, a phone that some felt borrowed a little too much from the iPhone.  

Since then, the tables have turned and it has been Samsung (and its operating system partner Google Inc. (GOOG)) that has been pushing the user interface and form factor envelope.  For example, Samsung's flagship Galaxy Note II and Galaxy S3 feature 5.5-inch and 4.8-inch displays, respectively, prompting Apple to begrudging bump its screen size to 4-inches with the iPhone 5.

Judge Lucy Koh
Federal Judge Lucy Koh

Overall, there are signs that Apple's so-called "patent war" against Google's alliance of Android manufacturers is cooling.  Apple recently agreed to a 10-year licensing agreement with HTC Corp. (TPE:2498).  And it appears to have exhausted its U.S. legal avenues against Motorola Mobility after its case against the Google subsidiary was dismissed with prejudice not once, not twicebut three times.

But the fight between Apple and Samsung remains ongoing and bitter.

In her ruling on Monday, U.S. District Court for the Northern District of California Judge Lucy Koh wrote that the $1.05B USD jury verdict against Samsung was a legitimate reflection that Samsung's violation of six Apple design and utility patents may have caused Apple to lose some customers.

Galaxy S3 v. iPhone 4S
Apple's request to ban Samsung smartphones was denied on Monday.
[Image Source: Android Authority]

However, when it comes to banning products, she comments, "There is no suggestion that Samsung will wipe out Apple's customer base or force Apple out of the business of making smartphones. The present case involves lost sales -- not a lost ability to be a viable market participant."

"In sum, to the limited extent that Apple has been able to show that any of its harms were caused by Samsung’s illegal conduct (in this case, only trade dress dilution)," she concludes, "Apple has not established that the equities support an injunction. Accordingly, Apple’s motion for a permanent injunction is DENIED."
Apple Denied Motion for Permanent Injunction

II. Ban Could Still be Resurrected

The ruling was in some ways unsurprising as Judge Koh had previously denied a similar request for a U.S. sales ban on the Galaxy Tab.

Both denials are likely to be appealed to higher U.S. courts, as stated by Florian Mueller, a paid "consultant"/commentator for anti-Android software firm Oracle Corp. (ORCL).

That means Samsung isn't out of the woods just yet.  It's very possible that the likely appeals court -- Court of Appeals for the Federal Circuit -- might order Judge Koh to reconsider a ban.  Such an order could force the federal judge's hand.

In fact, that is precisely what happened after Judge Koh denied a request for a preliminary injunction earlier in the case.  The Circuit Court ordered [PDF] Judge Koh to reconsider, and she did, issuing the temporary ban.  The Circuit Court made its decision, in part, because sales bans are often used in patent infringement cases in the U.S. to provide so-called "injunctive-relief" to the plaintiff.

Federal Circuit Appeals Court
Apple will likely appeal to the Court of Appeals for the Federal Circuit.

However, there are no guarantees for Apple either.  While sales bans are common, the scope and magnitude of the ban Apple is pushing for are rather unprecedented and would represent a U.S. court removing a major participant from the U.S.'s supposedly "free market".

Thus it should be interesting to see what the higher court says when the inevitable appeal does come.

III. Samsung's Request for Retrial Also Smacked Down

Speaking of appeals, Apple did win one small victory in the ruling.  Judge Koh denied Samsung's request for a retrial.

Samsung had requested the verdict be tossed and a new trial scheduled after it was revealed that Jury Foreman Velvin Hogan did not reveal, despite direct questioning, that a company tied to Samsung had sued him, and thus might be biased against the device-maker.  Mr. Hogan in the 1990s been sued by hard-drive manufacturer Seagate, which today controls Samsung's old hard drive business, after he failed to repay a promissory note after being terminated (reportedly, for misconduct).

The idea was that the Jury Foreman's history could have introduced a bias against Samsung that permeated to other jurors.

It was also known that several jurors had family members who were Apple shareholders, but Judge Koh had previously ruled that was acceptable, in that they would only indirectly profit from Samsung being found guilty, not directly profit.  Samsung did not mention that potential conflict of interest in its failed appeal.

Much like the product ban request, Samsung may opt to take its request for a retrial to the Circuit Court.
Galaxy Note II
The Galaxy Note II will be targeted in the second upcoming patent trial in
Apple and Samsung's legal war.

Both companies are currently gearing up for a second major lawsuit in the Northern California Federal Court.  That case will tackle patent infringement claims by both companies against their latest respective flagship products, including the Apple iPhone 5 and the Samsung Galaxy Note II and S3.

A trial is slotted for early next year.

Source: Scribd via AppleInsider

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Still smells fishy to me
By Dorkyman on 12/18/2012 1:12:06 PM , Rating: 1
It still looks like Koh is in Apple's pocket. She protected the original verdict, which most observers think is utterly without merit.

I have to believe that verdict will eventually be overturned. In my view it makes a mockery of the whole concept of patents.

RE: Still smells fishy to me
By Gondor on 12/18/2012 1:37:22 PM , Rating: 1
100% agreed. This is just throwing some sand into the eyes of the public to shift the attention away from all the nonsense she (judge Koh) has pulled off so far.

RE: Still smells fishy to me
By maugrimtr on 12/19/2012 8:36:00 AM , Rating: 3
While I think the verdict, and especially the award, were insane, that decision rested with the Jury. Unless you want all trials from henceforth to operate without a jury involved...this is the downside of a jury system - ignorance.

RE: Still smells fishy to me
By Stuka on 12/18/2012 1:36:34 PM , Rating: 2
Yeah, if memory serves me, the California court is the only one in the states that is feeding Apple.

Is this case Supreme Court-able? I would love to have them weigh in on this whole frivolous patent viability issue.

Maybe we need a class-action suit against the USPTO with every citizen automatically named as plaintiffs?

RE: Still smells fishy to me
By Mint on 12/19/2012 1:04:45 PM , Rating: 2
I really blame Hogan (jury foreman) 10x more than Koh. He mislead the jury with some technical BS about prior art not mattering.

Honestly, if there's no sales ban, I think the original $1B fine (or even if it's upped to $2B/$3B) is fair. As BS as Apple's patents are, it's pretty clear that Samsung did some serious aping in the past from the trial evidence.

What bugged me about the verdict back then was future implications and how wide Apple would cast a net with the worst of its patents. Sales bans for current products would have been ludicrous (I can't believe Apple had the nerve to ask for the Note/NoteII to be banned).

As is often the case, once the noise has settled down, everything seems to be turning out as it should.

RE: Still smells fishy to me
By tamalero on 12/20/2012 12:22:59 AM , Rating: 2
Werent some of the jurors also owners of apple stock?

RE: Still smells fishy to me
By Mint on 12/19/2012 1:07:18 PM , Rating: 2
Sorry Stuka, meant to reply to Gondor. Don't know how I screwed that up...

RE: Still smells fishy to me
By Jedi2155 on 12/18/2012 2:05:08 PM , Rating: 2
As an envineer who has worked directly with a large multinational Korean company id say willful copying is part of their culture. Observing how they had directly copied a competitors design and implemented in their design with no apparent moral regard. I'd say Koreans copy just as much as the Chinese just that they do it better than everyone else with Some original innovation.

In either case writing this onGalaxy Note II is really cool!

RE: Still smells fishy to me
By ssnova703 on 12/18/2012 3:14:03 PM , Rating: 2
So is any company in the technology/ "fashion" design arena, regardless of "cultural ties".

Look at HP and their beat notebooks, quite a deliberate knockoff in MBP's design language. Or nearly any PC that attempts to be a All-In-One designed into the monitor that mimics the Apple Imac. I'm not Apple fan, but Apple has been catching the market by storm and many of the competitors have been catching on to the "design"(not so much technological, more asethics).

What makes this "patent war" so hilarious is the fact that it's based largely on a rectangular shaped device(which is a logical and obvious shape for a handset, and not to mention APple was not the first to make this shape).

To drive it to the point, look at how many companies have borrowed design cues from other market trend setters. Take the Automotive Industry for example, Audi(well more like the designer who was contracted to articulate it) was perhaps the first to make the "loud and proud" grille, you look at American automakers, Asian automakers, and other European automakers who followed suit.

RE: Still smells fishy to me
By Solandri on 12/18/2012 4:09:05 PM , Rating: 1
Look at HP and their beat notebooks, quite a deliberate knockoff in MBP's design language.

Apple doesn't make the Macbook/Macbook Pro. Quanta does. They're the ODM (original design manufacture) Apple uses to make their laptops. ODMs differ from OEMs in that they not only do the manufacturing, they also do the design. So the MBP design is a Quanta design.

If you look at the ODMs used by the major brands, you find that HP's primary ODM is (drumroll...) Quanta. So yeah it looks similar to the MBP - it was designed by the same company and most likely by the same Taiwanese engineers and designers.
To drive it to the point, look at how many companies have borrowed design cues from other market trend setters. Take the Automotive Industry for example, Audi(well more like the designer who was contracted to articulate it) was perhaps the first to make the "loud and proud" grille, you look at American automakers, Asian automakers, and other European automakers who followed suit.

Fashion and nonfunctional design aren't protected by IP law. You're free to copy someone else's design cues to your hearts content. That's why fashion designers like Gucci resort to putting trademarks and logos on their products. Those are protected, and thus can't be copied.

That's the whole point of a design patent - if you come up with a uniquely characteristic look (e.g. the curved shape of a Coca Cola bottle), the design patent protects against a knockoff of your product which looks exactly the same and thus creates confusion in the buyer. None of this silly it's flat and has rounded corners therefore it infringes. If your design is minimalist and deliberately omits unique distinguishing characteristics, one of the risks you are taking is that there is nothing protecting you from others copying the design.

RE: Still smells fishy to me
By TakinYourPoints on 12/18/12, Rating: -1
RE: Still smells fishy to me
By Totally on 12/18/2012 5:25:34 PM , Rating: 2
Not disagreeing with your last paragraph but I'd like to point out the "loud and proud" is just more reinterpretation of 1960s auto style, but well executed design. Unlike the first retro mustang that kicked off the retro modern era period.

RE: Still smells fishy to me
By max_payne on 12/18/2012 3:34:33 PM , Rating: 2
In either case writing this on Galaxy Note II is really cool!

Funny Jedi2155, that make me smile.
As for "copy", this is how humanity has progress over the centuries. No one is reinventing the wheel again. Imagine if someone patent it ! We progress by improving on obvious designs which make sense and is best suitable for a particular task. A panel with buttons is the obvious way to control devices, whatever that device is. It has been used long before the cellphone/tablet business appeared. Only the methods have improved. So I am all for stopping this lawsuits nonsense and get a healthy competition/cooperation to move forward. In the best world, Apple and Samsung sign an intellectual exchange partnership and split the profits. The world is big enough to make tons of money. Who knows, we may, by now be wearing implanted, brain control communication devices in that world. I am just dreaming.

RE: Still smells fishy to me
By tng on 12/18/2012 5:22:59 PM , Rating: 2
We progress by improving on obvious designs which make sense and is best suitable for a particular task.
Not sure you understand what I have seen. I have watched Samsung buy a piece of equipment for Coating LCD panels, and copy that same piece of equipment in house several times without reguard for design patents or IP. In a couple of cases the OEM was put out of business because of the cost of the equipment design and they never made their money back on subsequent sales that Samsung promised them.

RE: Still smells fishy to me
By tng on 12/18/2012 5:17:22 PM , Rating: 2
As an engineer who has worked directly with a large multinational Korean company id say willful copying is part of their culture.
Same here. Most of my dealings have been with Samsung Semiconductor/LCD and I have seen many instances of direct copying of product designs and even manufacturing equipment.

We learned that whenever Samsung bought some piece of equipment from you that they would ask for the "blueprints" in the old days (now the CAD files). If you gave them the files they would just make more copies of whatever you sold them and those repeat sales would just vanish.

Samsung has a very sound business strategy, copy a product, flood the market with cheaper, well built knock-offs and by the time you get sued, you have major market share. Original LCDs from Samsung were knockoffs from Sharp who was at that time the market leader and their PDPs were knockoffs from Pioneer. Both Pioneer and Sharp sued and won, but Samsung had gained a foothold on the market by that point.

I am not saying that Apple or Samsung is in the wrong here, just that, yes there is a culture war going on here more than anything else.

RE: Still smells fishy to me
By TakinYourPoints on 12/18/2012 9:12:36 PM , Rating: 2
A very interesting story on Samsung's long history of corruption here:

RE: Still smells fishy to me
By Dorkyman on 12/19/2012 1:52:33 PM , Rating: 2
I was an HDTV consultant to Samsung for one year back in the late 80's.

Yeah, they copy. The Chinese copy. The Russians copy. Apple copied from PARC. Microsoft copied from Apple.

The joke going around the HDTV industry back then was that the Americans are deathly afraid of the Japanese, while the Japanese worry about the Koreans, who worry about China. Hey, it's called "competition," and it's a Good Thing. I think it's kinda funny that Microsoft expects a Chinese PC user to pay a month's wages to buy an OS for their PC. Right, like that's gonna happen.

I can understand the idea of trying to reward innovative thinking via patent/copyright, but the current situation is just nuts.

Again, my hope and assumption is that the Samsung conviction is eventually overturned.

RE: Still smells fishy to me
By someguy123 on 12/19/2012 3:03:29 AM , Rating: 2
I think people are a bit too biased in favor of samsung based on somewhat selfish reasoning. People see their products and think "I can get all that? At that price? They're just competing naturally!", when really their business model utterly relies on outside advances and innovation. They're quite literally a caricature of a behemoth company strong arming their way to the top while cutting corners beneath the gloss.

I don't support frivolous patents, but I also don't support samsung's business model. If they continue at this pace there will be no one left to copy because they will consume every market.

RE: Still smells fishy to me
By EasyC on 12/19/2012 7:53:24 AM , Rating: 2
You just described Apples culture with a couple of exceptions. You don't get ALL that, for that price. And they claim that they invented the ideas they stole.

So if Samsung is a copycat, and Apple is a copycat which claims invention and tries to force feed the market with it's own monopoly, which are you going to support?

RE: Still smells fishy to me
By tng on 12/19/2012 8:35:31 AM , Rating: 2
Not trying to defend Apple here, but the original iPhone was an innovative product taking technology that was already out there and putting them together in a novel way. But the real genius of Apple was the way they marketed the original iPhone (IMO).

If you look at the Samsung Galaxy (first Gen) you will notice that it does look almost exactly like the original iPhone. That is what I would expect from Samsung. They made their inroads on the market with that phone and after that started with their own designs.

I can see Apple's point in going after Samsung, but HTC? Moto? Also some of the patents they claim seem to be just frivolous fluff.

RE: Still smells fishy to me
By someguy123 on 12/19/2012 11:24:15 PM , Rating: 2

Outside of the insane lawsuits, though, I'd say apple was at least a trendsetter. At the time most people were going for BB's market, yet nowadays every damn phone is a solid brick touchscreen. Personally I hate it, but it happened, and now I can't even justify a regular cellphone because most providers don't offer upgrades/subsidies on them. At least some people still offer slide out keyboards.

RE: Still smells fishy to me
By Tony Swash on 12/18/12, Rating: -1
"If you mod me down, I will become more insightful than you can possibly imagine." -- Slashdot

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