Apple's $1B patent victory over Samsung has long-term implications for smartphone industry Verdict could herald a change in how smartphones are designed Read more: Apple's $1B patent victory over Samsung has long-term implications for smartphone industry

August 27, 2012 | By Phil Goldstein

The jury verdict that awarded Apple (NASDAQ:AAPL) $1.05 billion in damages against Samsung Electronics for patent infringement is still reverberating across the wireless industry, with analysts and legal experts sorting through the ramifications for smartphone makers and beyond.

The verdict, delivered late Friday night, represented a near total victory for Apple, even though the $1.05 billion awarded in damages was less than the $2.5 billion Apple wanted. Samsung was found to have infringed upon Apple's design and utility patents with its smartphones but was not found to have infringed on those patents with its Galaxy Tab 10.1 tablet. Samsung had countered with claims that Apple had infringed upon its patents. However, the jury did not find that to be the case.

Because of the decision, Apple is likely to seek a ban on the infringing Samsung products in the U.S. Additionally, experts say the decision could impact the design and function of other smartphones as other device makers work to avoid the same mistakes Samsung made.

Apple and Samsung, as expected, produced sharply contrasting responses to the verdict, with Apple saying that the "mountain of evidence" presented during the trial showed that Samsung's copying was deeper than expected. "The lawsuits between Apple and Samsung were about much more than patents or money. They were about values," Apple said. "At Apple, we value originality and innovation and pour our lives into making the best products on Earth. We make these products to delight our customers, not for our competitors to flagrantly copy. We applaud the court for finding Samsung's behavior willful and for sending a loud and clear message that stealing isn't right."

By contrast, Samsung said that the decision was not a victory for consumers, and that it will lead to fewer choices, less innovation and potentially higher prices. "It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies," Samsung said. "Consumers have the right to choices, and they know what they are buying when they purchase Samsung products. This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple's claims. Samsung will continue to innovate and offer choices for the consumer."

For many the case was widely seen as a proxy fight between Apple and Google's (NASDAQ:GOOG) Android platform, since Samsung is the largest Android handset maker. Apple's executives, led by the late CEO Steve Jobs, have long argued that Google's Android platform too closely copies the company's iPhone and iOS software.

In its own statement, Google chose to keep the matter at a distance. "The court of appeals will review both infringement and the validity of the patent claims. Most of these don't relate to the core Android operating system, and several are being re-examined by the U.S. Patent Office," Google said. "The mobile industry is moving fast and all players--including newcomers--are building upon ideas that have been around for decades. We work with our partners to give consumers innovative and affordable products, and we don't want anything to limit that."

If the fate of Google's Android ecosystem is less clear, the next legal steps are apparent. Apple is expected to file within days for permanent injunctions against sales of the infringing Samsung products. U.S. District Judge Lucy Koh has set a formal hearing on the matter for Sept. 20. Samsung is expected to appeal the jury's verdict, but it's not clear how strong a case Samsung will be able to mount, given the overwhelming legal victory for Apple.

"There is a strong presumption that the jury was correct and will be reversed only in cases in which the verdict was, essentially, a travesty of justice," Peter Toren, a patent litigation expert and partner at Weisbrod, Mattheis & Copley in Washington, told the Washington Post. "There does not appear to be any serious question that the jury's verdict was wrong in this case. Further, I can't imagine that Judge Koh would take it upon herself to reverse the verdict in such a high-profile case."

And what will the case mean for handset innovation? The verdict could be a boon to Microsoft's (NASDAQ:MSFT) Windows Phone, which has licensed Apple's design patents for the platform, and has noted that Windows Phone is very distinct from both Apple's iOS and Android. It could also force handset makers to design phones that are more unique and distinct in both industrial design and functionality than the iPhone. "It's good for intellectual property, and good for firms that invest in design," Chip Lutton Jr., vice president and general counsel of Nest, maker of a smart thermostat, told the New York Times.

Some say the verdict will give Apple sweeping control over an industry it already controls a large share of. Others, however, think it will force OEMs to become more innovative. "Within a product cycle or two, consumers will begin to see exciting, new and different-looking designs," Christopher Carani, a partner at the Chicago-based intellectual property law firm McAndrews, Held & Malloy, told the Post.