samsung vs iphone case study

Apple and Samsung settle seven-year-long patent fight over copying the iPhone

By Jacob Kastrenakes , a deputy editor who oversees tech and news coverage. Since joining The Verge in 2012, he’s published 5,000+ stories and is the founding editor of the creators desk.

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Apple and Samsung have finally put an end to their long-running patent battle whose central question was whether Samsung copied the iPhone. In a court filing today, Judge Lucy Koh said the two companies had informed her that they had reached a settlement. Terms of the settlement were not disclosed.

The patent battle started in 2011 and initially resulted in a $1 billion ruling in Apple’s favor. But it didn’t end there. A series of appeals pushed the dispute to the Supreme Court and back, as the companies continually rehashed which patents were infringed and, more recently, exactly how much Samsung owes Apple because of the infringement.

“This case has always been about more than money.”

The case revolved around a number of design and utility patents for basic functions of a smartphone, like tap to zoom and the home screen app grid. But while the fight was hashed out using specific patents, the battle was ultimately about whether Samsung copied Apple in the early days of smartphones to gain an edge. The jury decided that, in many ways, it had.

Most recently, the verdict had been whittled down to $539 million for Apple. Samsung filed to appeal that earlier this month. But the two companies were able to reach an agreement before it could be litigated again.

Apple declined to give terms of the settlement and pointed to a statement it made in May, when the case was last ruled on:

We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers. This case has always been about more than money. Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple.   We’re grateful to the jury for their service and pleased they agree that Samsung should pay for copying our products.

Samsung declined to comment.

It’s not entirely clear why, after all these years, this case is finally coming to a close now. As Apple points out, money was hardly the issue here — and really, the amounts being discussed never amounted to anything substantial for either company. It’s seemed more like neither company was willing to break over the years and put an end to such a symbolically important battle. Perhaps, so many years (and some leadership changes) later, they no longer cared enough to see this through to the bitter end.

Apple and Samsung had one other major patent battle, which was first decided in 2014 but didn’t end until last year. In that case, Apple won $120 million over violations of its slide-to-unlock patent and several others. The two companies also had patent fights going internationally, but they agreed to drop those lawsuits back in 2014.

With both of these cases wrapped up, the seemingly endless, occasionally dramatic, and often extremely technical battle between these two smartphones giants is finally, officially over. At least until the next one.

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Samsung electronics co. v. apple inc..

• Supreme Court

SAMSUNG ELECTRONICS CO. v. APPLE INC. 786 F. 3d 983, reversed and remanded.

• Syllabus [Syllabus] [PDF]
• Opinion , Sotomayor [Sotomayor Opinion] [PDF]

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 , 337.

SUPREME COURT OF THE UNITED STATES

SAMSUNG ELECTRONICS CO., LTD., et al. v . APPLE INC.

certiorari to the united states court of appeals for the federal circuit

Section 289 of the Patent Act makes it unlawful to manufacture or sell an “article of manufacture” to which a patented design or a colorable imitation thereof has been applied and makes an infringer liable to the patent holder “to the extent of his total profit.” 35 U. S. C. §289 . As relevant here, a jury found that various smartphones manufactured by petitioners (collectively, Samsung) infringed design patents owned by respondent Apple Inc. that covered a rectangular front face with rounded edges and a grid of colorful icons on a black screen. Apple was awarded $399 million in damages—Samsung’s entire profit from the sale of its infringing smartphones. The Federal Circuit affirmed the damages award, rejecting Samsung’s argument that damages should be limited because the relevant articles of manufacture were the front face or screen rather than the entire smartphone. The court reasoned that such a limit was not required because the components of Samsung’s smartphones were not sold separately to ordinary consumers and thus were not distinct articles of manufacture.

Held : In the case of a multicomponent product, the relevant “article of manufacture” for arriving at a §289 damages award need not be the end product sold to the consumer but may be only a component of that product. Pp. 4–9.

 (a) The statutory text resolves the issue here. An “article of manufacture,” which is simply a thing made by hand or machine, encompasses both a product sold to a consumer and a component of that product. This reading is consistent with §171(a) of the Patent Act, which makes certain “design[s] for an article of manufacture” eligible for design patent protection, and which has been understood by the Patent Office and the courts to permit a design patent that extends to  only a component of a multicomponent product, see, e.g. , Ex parte Adams , 84 Off. Gaz. Pat. Office 311; Application of Zahn , 617 F. 2d 261 , 268 (CCPA). This reading is also consistent with the Court’s reading of the term “manufacture” in §101, which makes “any new and useful . . . manufacture” eligible for utility patent protection. See Diamond v. Chakrabarty , 447 U. S. 303 , 308. Pp. 4–7.

 (b) Because the term “article of manufacture” is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not, the Federal Circuit’s narrower reading cannot be squared with §289’s text. Absent adequate briefing by the parties, this Court declines to resolve whether the relevant article of manufacture for each design patent at issue here is the smartphone or a particular smartphone component. Doing so is not necessary to resolve the question presented, and the Federal Circuit may address any remaining issues on remand. Pp. 7–8.

786 F. 3d 983 , reversed and remanded.

 Sotomayor, J., delivered the opinion for a unanimous Court.

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

_________________

SAMSUNG ELECTRONICS CO., LTD., et al. , PETITIONERS v. APPLE INC.

on writ of certiorari to the united states court of appeals for the federal circuit

 Justice Sotomayor delivered the opinion of the Court.

 Section 289 of the Patent Act provides a damages rem- edy specific to design patent infringement. A person who manufactures or sells “any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.” 35 U. S. C. §289 . In the case of a design for a single-component product, such as a dinner plate, the product is the “article of manufacture” to which the design has been applied. In the case of a design for a multicomponent product, such as a kitchen oven, identifying the “article of manufacture” to which the design has been applied is a more difficult task.

 This case involves the infringement of designs for smartphones. The United States Court of Appeals for the Federal Circuit identified the entire smartphone as the only permissible “article of manufacture” for the purpose of calculating §289 damages because consumers could not separately purchase components of the smartphones. The question before us is whether that reading is consistent with §289. We hold that it is not.

 The federal patent laws have long permitted those who invent designs for manufactured articles to patent their designs. See Patent Act of 1842, §3, 5 Stat. 543 –544. Patent protection is available for a “new, original and ornamental design for an article of manufacture.” 35 U. S. C. §171(a) . A patentable design “gives a peculiar or distinctive appearance to the manufacture, or article to which it may be applied, or to which it gives form.” Gorham Co. v. White , 14 Wall. 511, 525 (1872). This Court has explained that a design patent is infringed “if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same.” Id., at 528.

 In 1885, this Court limited the damages available for design patent infringement. The statute in effect at the time allowed a holder of a design patent to recover “the actual damages sustained” from infringement. Rev. Stat. §4919. In Dobson v. Hartford Carpet Co. , 114 U. S. 439 (1885) , the lower courts had awarded the holders of design patents on carpets damages in the amount of “the entire profit to the [patent holders], per yard, in the manufacture and sale of carpets of the patented designs, and not merely the value which the designs contributed to the carpets.” Id., at 443. This Court reversed the damages award and construed the statute to require proof that the profits were “due to” the design rather than other aspects of the carpets. Id., at 444; see also Dobson v. Dornan , 118 U. S. 10 , 17 (1886) (“The plaintiff must show what profits or damages are attributable to the use of the infringing design”).

 In 1887, in response to the Dobson cases, Congress enacted a specific damages remedy for design patent infringement. See S. Rep. No. 206, 49th Cong., 1st Sess., 1–2 (1886); H. R. Rep. No. 1966, 49th Cong., 1st Sess., 1–2 (1886). The new provision made it unlawful to manufac ture or sell an article of manufacture to which a patented design or a colorable imitation thereof had been applied. An act to amend the law relating to patents, trademarks, and copyright, §1, 24 Stat. 387 . It went on to make a design patent infringer “liable in the amount of” $250 or “the total profit made by him from the manufacture or sale . . . of the article or articles to which the design, or color- able imitation thereof, has been applied.” Ibid.

 The Patent Act of 1952 codified this provision in §289. 66 Stat. 813 . That codified language now reads, in relevant part:

“Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250 . . . .” 35 U. S. C. §289 .

 Apple Inc. released its first-generation iPhone in 2007. The iPhone is a smartphone, a “cell phone with a broad range of other functions based on advanced computing capability, large storage capacity, and Internet connectiv- ity.” Riley v. California , 573 U. S. ___, ___ (2014) (slip op., at 2). Apple secured many design patents in connection with the release. Among those patents were the D618,677 patent, covering a black rectangular front face with rounded corners, the D593,087 patent, covering a rectangular front face with rounded corners and a raised rim, and the D604,305 patent, covering a grid of 16 colorful icons on a black screen. App. 530–578.

 Samsung Electronics Co., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC (Samsung), also manufacture smartphones. After Apple  released its iPhone, Samsung released a series of smartphones that resembled the iPhone. Id., at 357–358.

 Apple sued Samsung in 2011, alleging, as relevant here, that various Samsung smartphones infringed Apple’s D593,087, D618,677, and D604,305 design patents. A jury found that several Samsung smartphones did infringe those patents. See id., at 273–276. All told, Apple was awarded $399 million in damages for Samsung’s design patent infringement, the entire profit Samsung made from its sales of the infringing smartphones. See id. , at 277–280, 348–350.

 The Federal Circuit affirmed the design patent infringement damages award. 1 In doing so, it rejected Samsung’s argument “that the profits awarded should have been limited to the infringing ‘article of manufacture’ ”—for example, the screen or case of the smartphone—“not the entire infringing product”—the smartphone. 786 F. 3d 983 , 1002 (2015). It reasoned that “limit[ing] the dam- ages” award was not required because the “innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.” Ibid.

 We granted certiorari, 577 U. S. ___ (2016), and now reverse and remand.

 Section 289 allows a patent holder to recover the total profit an infringer makes from the infringement. It does so by first prohibiting the unlicensed “appli[cation]” of a  “patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale” or the unlicensed sale or exposure to sale of “any article of manufacture to which [a patented] design or colorable imitation has been applied.” 35 U. S. C. §289 . It then makes a person who violates that prohibition “liable to the owner to the extent of his total profit, but not less than $250.” Ibid. “Total,” of course, means all. See American Heritage Dictionary 1836 (5th ed. 2011) (“[t]he whole amount of something; the entirety”). The “total profit” for which §289 makes an infringer liable is thus all of the profit made from the prohibited conduct, that is, from the manufacture or sale of the “article of manufacture to which [the patented] design or colorable imitation has been applied.”

 Arriving at a damages award under §289 thus involves two steps. First, identify the “article of manufacture” to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.

 This case requires us to address a threshold matter: the scope of the term “article of manufacture.” The only question we resolve today is whether, in the case of a multicomponent product, the relevant “article of manufacture” must always be the end product sold to the consumer or whether it can also be a component of that product. Under the former interpretation, a patent holder will always be entitled to the infringer’s total profit from the end product. Under the latter interpretation, a patent holder will sometimes be entitled to the infringer’s total profit from a component of the end product. 2

 The text resolves this case. The term “article of manufacture,” as used in §289, encompasses both a product sold to a consumer and a component of that product.

 “Article of manufacture” has a broad meaning. An “article” is just “a particular thing.” J. Stormonth, A Dictionary of the English Language 53 (1885) (Stormonth); see also American Heritage Dictionary, at 101 (“[a]n individual thing or element of a class; a particular object or item”). And “manufacture” means “the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man” and “the articles so made.” Stormonth 589; see also American Heritage Dictionary, at 1070 (“[t]he act, craft, or process of manufacturing products, especially on a large scale” or “[a] product that is manufactured”). An article of manufacture, then, is sim- ply a thing made by hand or machine.

 So understood, the term “article of manufacture” is broad enough to encompass both a product sold to a consumer as well as a component of that product. A component of a product, no less than the product itself, is a thing made by hand or machine. That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.

 This reading of article of manufacture in §289 is consistent with 35 U. S. C. §171(a) , which makes “new, original and ornamental design[s] for an article of manufacture” eligible for design patent protection. 3 The Patent  Office and the courts have understood §171 to permit a design patent for a design extending to only a component of a multicomponent product. See, e.g., Ex parte Adams , 84 Off. Gaz. Pat. Office 311 (1898) (“The several articles of manufacture of peculiar shape which when combined produce a machine or structure having movable parts may each separately be patented as a design . . . ”); Application of Zahn , 617 F. 2d 261 , 268 (CCPA 1980) (“Section 171 authorizes patents on ornamental designs for articles of manufacture. While the design must be embodied in some articles, the statute is not limited to designs for complete articles, or ‘discrete’ articles, and certainly not to articles separately sold . . . ”).

 This reading is also consistent with 35 U. S. C. §101 , which makes “any new and useful . . . manufacture . . . or any new and useful improvement thereof” eligible for utility patent protection. Cf. 8 D. Chisum, Patents §23.03[2], pp. 23–12 to 23–13 (2014) (noting that “article of manufacture” in §171 includes “what would be considered a ‘manufacture’ within the meaning of Section 101”). “[T]his Court has read the term ‘manufacture’ in §101 . . . to mean ‘the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by hand-labor or by machinery.’ ” Diamond v. Chakrabarty , 447 U. S. 303 , 308 (1980) (quoting American Fruit Growers, Inc. v. Brogdex Co. , 283 U. S. 1 , 11 (1931)). The broad term includes “the parts of a machine considered sepa- rately from the machine itself.” 1 W. Robinson, The Law of Patents for Useful Inventions §183, p. 270 (1890).

 The Federal Circuit’s narrower reading of “article of manufacture” cannot be squared with the text of §289. The Federal Circuit found that components of the infringing smartphones could not be the relevant article of manu facture because consumers could not purchase those components separately from the smartphones. See 786 F. 3d, at 1002 (declining to limit a §289 award to a component of the smartphone because “[t]he innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers”); see also Nordock, Inc. v. Systems Inc. , 803 F. 3d 1344 , 1355 (CA Fed. 2015) (declining to limit a §289 award to a design for a “ ‘lip and hinge plate’ ” because it was “welded together” with a leveler and “there was no evidence” it was sold “separate[ly] from the leveler as a complete unit”). But, for the reasons given above, the term “article of manufacture” is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading “article of manufacture” in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.

 The parties ask us to go further and resolve whether, for each of the design patents at issue here, the relevant article of manufacture is the smartphone, or a particular smartphone component. Doing so would require us to set out a test for identifying the relevant article of manufacture at the first step of the §289 damages inquiry and to parse the record to apply that test in this case. The United States as amicus curiae suggested a test, see Brief for United States as Amicus Curiae 27–29, but Samsung and Apple did not brief the issue. We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties. Doing so is not necessary to resolve the question presented in this case, and the Federal Circuit may address any remaining issues on remand.

 The judgment of the United States Court of Appeals for the Federal Circuit is therefore reversed, and the case is  remanded for further proceedings consistent with this opinion.

It is so ordered.

1  Samsung raised a host of challenges on appeal related to other claims in the litigation between Apple and Samsung. The Federal Circuit affirmed in part—with respect to the design patent infringement finding, the validity of two utility patent claims, and the design and utility patent infringement damages awards—and reversed and remanded in part—with respect to trade dress dilution. Only the design patent infringement award is at issue here.

2  In its petition for certiorari and in its briefing, Samsung challenged the decision below on a second ground. It argued that 35 U. S. C. §289 contains a causation requirement, which limits a §289 damages award to the total profit the infringer made because of the infringement. Samsung abandoned this theory at argument, and so we do not address it. See Tr. of Oral Arg. 6.

3  As originally enacted, the provision protected “any new and original design for a manufacture.” §3, 5 Stat. 544 . The provision listed examples, including a design “worked into or worked on, or printed or painted or cast or otherwise fixed on, any article of manufacture” and a “shape or configuration of any article of manufacture.” Ibid. A streamlined version enacted in 1902 protected “any new, original, and ornamental design for an article of manufacture.” Ch. 783, 32 Stat. 193 . The Patent Act of 1952 retained that language. See §171, 66 Stat. 813 .

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Apple and Samsung End Smartphone Patent Wars

By Jack Nicas

• June 27, 2018

SAN FRANCISCO — The smartphone patent wars are finally over.

Apple and Samsung settled a seven-year legal fight on Wednesday, ending the most prominent case in a series of lawsuits over smartphone patents over the last decade.

The companies did not disclose the settlement amount. A jury in May ordered Samsung to pay Apple $539 million for infringing on its patents.

Apple first sued Samsung in 2011 for copying the design of the iPhone, kicking off a winding trail of countersuits, trials and appeals, including a stop at the Supreme Court in 2016.

Apple initially sought to block Samsung phones from the market, but the technology at dispute has long been outdated, and the fight has since largely been about money. Apple at one point sought more than $2 billion, while Samsung had argued it owed just $28 million.

With two of global industry’s biggest players fighting over one of history’s most successful products, the case was one of the most closely watched legal fights in modern business.

“And if I had to characterize it, it didn’t really accomplish anything,” said Brian J. Love, a Santa Clara University law professor who tracked the case. “Close to a decade of litigation, hundreds of millions of dollars spent on lawyers, and at the end of the day, no products went off the market.”

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Apple inc. v. samsung electronics co., ltd..

A business journal from the Wharton School of the University of Pennsylvania

Knowledge at Wharton Podcast

The apple-samsung case: what it means for patents — and innovation, august 29, 2012 • 35 min listen.

A California jury awarded Apple what could be a decisive victory in the smartphone wars last week by ruling that Samsung infringed on a number of patents relating to the functionality and design of the iPhone. Samsung plans to appeal, but Apple is now calling for a ban on U.S. sales of some of the devices at issue in the case. Some observers believe the verdict might open the door for additional Apple lawsuits against other smartphone makers -- including Google. Wharton professors David Hsu and Andrea Matwyshyn discuss the key players, the future of smartphone design and the U.S. patent system. (Podcast with transcript)

In what some are calling “the patent trial of the century,” a federal grand jury in California last week decided in favor of Apple in a patent infringement lawsuit against Samsung. In addition to awarding Apple more than $1 billion in damages, the jury found that Samsung violated several iPhone utility and design patents when it created phones such as the Galaxy S II and the Fascinate.

Following the verdict, Apple requested that eight Samsung phones be banned from sale in the U.S. A hearing on the matter has been scheduled for December. In the meantime, Samsung has said it will appeal the case. Many observers believe Friday’s verdict could open the door to Apple pursuing litigation against other companies — including Google, maker of the Android operating system used in Samsung phones and tablets.

To discuss the key issues of the case, Knowledge at Wharton turned to Wharton management professor David Hsu and Wharton legal studies and business ethics professor Andrea Matwyshyn .

Edited versions of both transcripts appear below.

In the first conversation, Hsu talked about the case’s impact on innovation as it relates to design and creativity.

Knowledge at Wharton: David, first of all, could you tell us some of the winners and losers as a result of the jury’s decision?

David Hsu: Apple is the clear winner here, and the device makers on the Android system are the ones that are going to be scrambling and trying to figure out in what areas they’re going to have to retrofit, or even redesign, their products. Of course, Google is kind of the company lurking in the background — it isn’t being attacked directly, but it’s getting closer [to being directly impacted]. My interpretation of why Apple leadership was so insistent on pursuing this case to the end is because they feel strongly that the design elements in conjunction with the functional elements of their products really make the user experience, and they want to protect that. As a result, the likes of Samsung, HTC, Motorola Mobility (owned by Google) and the other large handset makers on the Android platform are the ones that will be trying to figure out their next moves.

Knowledge at Wharton: Are there other winners besides Apple? I know there’s been some discussion that Microsoft, which makes the Windows mobile operating system used in Nokia devices, could get a boost from this decision because their product is so different from Apple/Android.

Hsu: I think that may be true in that this opens up the landscape of competition beyond just the functionality. Maybe it would be useful to take one step back and to analyze the patents that were under dispute here. A number of them were on the design side, so it’s not protecting the functionality of the innovation, but rather the packaging of it. And then a few of the others did not go to the core of the operating system, but were about some of the more design-oriented aspects, [such as] the [feature in which pages viewed on Apple’s iOS operating system “bounce back” into place when a user reaches the top or bottom] or the array of the icons on the grid.

I interpret it as a strengthening of design-related patents. Previously, it was the case that if you were a furniture designer and came up with an innovative design, that did not necessarily stop competitors from coming in and marketing say, an “Eames-like” chair, so long as they were clear that it was not the genuine product. [The Apple/Samsung case indicates] that there seems to be a broadening of the protection of design elements. And so this, I think, broadens the landscape for how companies — including electronics companies or fashion design companies — will seek protection of their creative efforts, their intellectual property.

For the direct competitors in the handset space, [the implications] will play out in terms of acquiring patents, as we’ve already seen over the last two years or so. There has been lots of interest in trying to acquire whole “patent portfolios” that surround smartphones. Obviously, the smartphone is going to be the Swiss Army knife of the 21st century — it already is, and is becoming more so. And as a result, there is almost a land grab for the various kinds of more elemental patents in intellectual property that undergird that platform.

So to summarize my answer, I think that this case will broaden the landscape of competition. It may open the landscape a little bit more. You mentioned Nokia and Microsoft, and clearly they have their own operating systems for the smartphone hardware, and they may be kind of waiting on the edges. But it is pretty clear that the dominant competition, at least right now, is the Android versus the Apple operating system. So this is why the case was billed “the [patent] trial of the century,” as a result of the two large manufacturers going head-to-head in this battle.

Knowledge at Wharton: So you don’t think that one impact will be Nokia and Microsoft immediately elbowing out Samsung, HTC, Google and the rest of the Android-based phones? It would be for the number one space, since Apple phones are really number two in the U.S. market.

Hsu: No, I don’t think that this is going to radically reconfigure the landscape because in this kind of platform-oriented competitive space, there tend to be tipping points. And there has to be enough of a critical mass of users, a developer community and support by the companies to really enable the critical mass because people are not necessarily just looking at today’s functionality: They’re trying to anticipate the functionality down the road as they decide to adopt one platform or another.

While I think that there’s going to have to be some redesign [as a result of this case] — not only in the smartphone market but also in the tablet market, where these operating systems naturally share a common code — what we’re going to see if anything, is perhaps more of a creative or innovative effort by the manufacturers of the Android platform to try to differentiate themselves.

But I do think that there’s a window now, a little bit of a window of opportunity for Microsoft and Nokia to take advantage of this particular event. Whether or not they’ll be able to successfully navigate that obviously remains to be seen.

Knowledge at Wharton: You just mentioned the potential that this case will encourage more innovation in smartphone design. Patents are intended to encourage innovation, but do you feel that cases like this — where some of the aspects Apple is trying claim as proprietary would seem to severely limit the design and functionality options for all of the other players in the market — can actually have the opposite effect? Have we reached a kind of inflexion point with this so-called “smartphone patent land grab” that’s been taking place?

Hsu: Let me try to lay out the arguments on both sides. On the one hand, you could certainly think about companies like Apple, which spent many years coming up with the perfect design that might appeal to the users, as just trying to protect that and trying to blockade any efforts [to copy that design]. It’s much more about the symbolic value of what Apple is doing, despite the judge urging the CEOs of Samsung and Apple to try to come to a private settlement. Apple wasn’t interested in that, of course, because they wanted to assert and send a signal to the broader market about trying to protect their efforts.

It is true, and I think the Samsung team tried to make these arguments of should it really be the case that the casing of the phone, the rounded corners on the rectangle and the spacing between icons on the grid need to be protected. And we have to keep in mind that there is this distinction between the design patents and the utility patents. The utility patents are much more about the functionality of the phone; the design patents are just about the non-functional elements. These things come together as a package to the consumer.

I think we are treading a line a bit in terms of how much protection should we as a society give to the innovators — and we should think about innovation very broadly, not just in the technical sense, but here broadened out to the design sense — balanced against a free market economy in which there is healthy competition that can observe market signals, try to build on top of what’s already been done and basically unlock more value for consumers.

As I said earlier, before now, design patents were thought to be fairly ineffective, not really enforceable. Utility patents have always been a domain where companies have really tried to be both offensive and defensive in the patent space. And so this judgment will give companies and managers a reason to start thinking about design as the basis of protection.

To your broader question of whether this is good or bad for society, I think it always has to be a balancing act. Whether or not these particular patents being enforced this way will send a chilling signal to the rest of the market remains to be seen because this is just the tip of the iceberg. This is one trial. Apple and Samsung have something like 19 or 20 trials around the world slated. Of course, this judgment will impact how Samsung will put forward their products, as well as others that use the Android system, but there remains in this case an appeal that’s looming, as well as many other jury trials that will be in different jurisdictions around the world. And so I think that this is not necessarily just the beginning, but it’s also not close to the end in terms of this patent war.

Knowledge at Wharton: I think I had read that Samsung has said they’re willing to take this case all the way to the Supreme Court if necessary.

Hsu: This will actually be an interesting test case for many creative industries, not just electronics or information technology. I alluded to design, fashion, product design, industrial design — all these things tend to be converging and increasingly are differentiated…. I think Apple has shown repeatedly that users care not just about the raw technical horsepower of the product, but also how they interact with it. And so my interpretation of this case is much more about the implications for the design community and protection of creative advances in thought very broadly, not just in the technical space.

Knowledge at Wharton: Apple is the winner in the court of law for now, at least, but what about the court of consumer perception? How do you see this affecting Apple in that space, and Samsung as well?

Hsu: That brings up a point that I should have probably mentioned earlier, which is that these product lifecycles tend to be fairly quick. We’re used to a new iPhone every year. And while [companies are] not completely abandoning some of the core design, it’s not like some other industries in which one design will rule for decades and decades. And so you wonder why Apple and Samsung took this case all the way to a final judgment … since it’s likely that the design a couple years from now will be obsolete.

In terms of public sentiment, Apple has to be a little bit careful. I think this can work both ways. On the one hand, there could be a little bit of a backlash from users saying, “Well, I actually prefer, for example, an Android platform and Apple is trying to assert these rights about how things are laid out, the physical form of the product, in ways that aren’t necessarily novel or that deserve patent protection.” And so [consumers] could be more willing to experiment with some of these other platforms, like Nokia, Microsoft, etc.

On the other hand, I could see perhaps some users acknowledging that Apple did spend quite a bit of effort and put a great deal of detail into the design, as well as the functionality, and they should be rewarded for that.

Apple has had a blockbuster set of years in terms of their performance on the stock market and the value of their company. There is this danger that maybe they’re going to be perceived as, in some sense, the next Microsoft, trying to come up with one innovation and then trying to blockade everyone, and not allowing competitors to come in and innovate. There is this double-edged sword phenomenon that could work here. Apple has to, as they’ve been doing, continue this pace of innovation, and as I said before, it is this delicate balancing act between trying to protect versus trying to innovate and allowing others to come in as well to try to push the envelope forward.

Knowledge at Wharton: Do you feel like this case represents a new strategy going forward for Apple? Apple has always been able to capitalize on this sort of cool aesthetic that’s attached to its devices. Is that put in danger if the company goes into more of a protectionist mode?

Hsu: That’s the danger of being the market leader: All of the sudden, they become the targets of all types of consumer sentiments. That was certainly true when Microsoft ruled the day. [Apple] is a company that obviously stresses industrial design, as well as functionality and obsessing over the details. I think consumers have clearly appreciated that. I’m sympathetic to this argument of, now that Apple has been so successful in the market, companies like Samsung coming in and just basically taking everything that it’s done after lot of experimentation doesn’t seem fair.

On the other hand, as these types of cases get sharper in the courts of law in terms of protectability versus not, I think what is allowable versus not will become clearer. Before now, it hasn’t been such a big, high-stakes type of enterprise. Now that landscape has shifted a bit.

But in terms of the overall corporate image, it’s clear that Apple’s brand and what it means as a brand to consumers is quite valuable. And so this litigation is an effort to try to, in accordance with its late founder, Steve Jobs, defend itself there. But as you allude to, there is this danger that if they become perceived as litigious, or if that part of the company crowds out the more innovative, creative, design-oriented side of things, then obviously it becomes problematic for Apple. They don’t want to lose what’s been at the core of their identity and what’s caused them to become the world’s most valuable company.

In a separate interview immediately following the interview with Hsu, Matwyshyn talked about the case’s implications for U.S. patent law and how patents are being employed by companies seeking to protect their inventions and technology.

Knowledge at Wharton: Andrea, I’ll start by asking you the same question we posed to David earlier: Who would you say are the key winners and losers from the court’s decision last week?

Andrea Matwyshyn: The winners and losers in this decision still remain to be determined. The commentary that’s been running in the press and in academic circles is, frankly, a little divided. On the one hand, the commentators and academics who are very supportive of patent holder rights view this as a strong win for Apple. However, of course, the decision is likely to be appealed. And so the ultimate outcome with respect to the damages award and the crafting of the decision itself may come under scrutiny at a higher level.

On the other hand, we have some commentators who are pointing to Samsung getting an indirect kind of market base win in this case with [the decision] highlighting a kind of de facto comparison of similarity between the products that Apple and Samsung are offering. Some consumers may view this in essence as a court saying, “Hey, these are functionally equivalent products.” And then the consumers look at the price point and recognize that one is significantly less expensive than the other.

However, I think the big-picture questions that are perhaps most interesting with respect to this case are the questions about the identity crisis that exists in the U.S. patent system and the conversation that we need to have as society about what it is that we’re trying to achieve in our models of innovation and in our intellectual property law. There were many different bases for Apple’s assertion that Samsung was infringing on its intellectual property rights: utility patent arguments, trade dress arguments, they really ran the gamut. And the way that these legal rights are constructed is somewhat problematic.

When we’re talking about patent reform — as we are these days in Congress and in society as a whole — this case really kind of brings to the fore and encapsulates some of these legal and policy discussions about different models of innovation and what we’re trying to achieve when we are affording certain individuals rights to enforce limited access to their creations. And, on the other hand, we have companies or individuals who are leveraging that existing knowledge — perhaps overly aggressively, but nevertheless leveraging that existing knowledge — to bring new products to market and potentially offering more choices to the consumer in the marketplace.

So this is a broader social conversation that needs to happen, and that’s the big take away here — that the law and social policy and innovation are confused. This is just the first round of this broader battle that’s going to be playing out over many years to come.

Knowledge at Wharton: Do you feel that patent law as it exists now is accomplishing what it was intended to achieve? Or has it become a hindrance to innovation?

Matwyshyn: That’s the big debate that we need to have as a society. On the one hand, certainly in some cases, affording a patent holder the right to defend their created product means that perhaps more research and development will happen in some cases because companies and individuals will be motivated by the desire for financial gain and to be able to control the creations that they’re making. However, we also know from creativity theory research that many people create not because they’re seeking financial rewards; they create for other reasons. So this bigger-picture question of what we’re trying to accomplish with our legal regimes and whether we’re accomplishing those goals, that’s what I’m really highlighting in this case.

The patent system has also evolved across time to include what some commentators view to be problematic players. For example, “patent trolls,” or people who aren’t really using the inventions for which they hold patents, but they nevertheless seek to enforce the rights that pertain in connection with their granted patents. So some commentators view these patent trolls as being part of the problem. And although they technically have the legal rights to enforce these patents, they’re not necessarily adding value to the business space because they’re not bringing new products to market; they’re not really actively using the rights that they hold to research and develop in new directions.

Knowledge at Wharton: The decision has prompted some outcry over Apple seeking to enforce patents that would seem to severely limit competitors, such as the shape of the phone or the way you move your fingers to zoom in. Do you feel like this is just another form of being a “patent troll”?

Matwyshyn: That’s the debate that I’m pointing to, that you have these different overlapping legal categories of potentially protectable interests. And it’s not clear which of these categories necessarily pertain in all cases. There’s a debate over whether the way that technology related patents are currently granted is simply not sustainable in the long term. There’s a debate over whether the types of patents that you’re pointing to, the utility and design patents, whether those should even be protectable through patent law. Maybe they’re better protectable through copyright…. It’s not clear that we have optimized the balance between giving innovators the right to defend their products and simultaneously offering the marketplace more product choice by allowing for building off of those products.

These two parties, Apple and Samsung, have approximately 50 rounds of litigation going on in various different forums throughout the world, so this battle is an epic one that spans continents, not merely the U.S. courts. Another interesting wrinkle in this particular relationship is that apart from the drama of the scope of this legal battle, there was a failed attempt to license some of these technologies that existed prior to the filing of some of the litigation.

So we have this discussion also in terms of should we be encouraging parties to collaborate more and to share their technologies? And are there ways to create incentives for licensing of technology, rather than having the result of tension in the technology space end up in the courts? It’s not always a socially or even individually efficient solution to have people going to court all the time. Lawyers are expensive. Judicial resolutions to these kinds of questions take time. Ultimately, that is time that maybe we should refocus toward more research and development, more innovation and the streamlining of the squabbles that exist between players in this space through encouraging licensing and sharing of research, rather than creating legal incentives for people to want to duke it out in courts of law.

Knowledge at Wharton: Do you feel that there is the will in the technology industry to do that? David had mentioned in our earlier conversation that the judge in this case had previously, unsuccessfully, urged Apple and Samsung to reach a private settlement.

Matwyshyn: This demonstrates the reality that when tensions run high, companies or individuals don’t necessarily see it to be in their best interest to be accommodating of each other and to want to resolve battles. Press reports indicate that Steve Jobs was very upset over the emergence of, for example, some Google [Android-based] products and viewed it as almost a personal betrayal, and that, by press accounts, he was “ready to go thermonuclear” on this situation.

When you have inventors’ emotions wrapped up in legal battles, or really in almost any business scenario, it’s not always the case that parties will act in their economic best interests. Humans are not always rational and predictable creatures. And so that has to be factored in when we are analyzing optimal regimes for incentivizing innovation.

The other moving piece in this litigation that many press accounts have highlighted, and in particular as jurors are being interviewed by the press [is that] it’s becoming evident that the jury deliberations that happened in this case — although perhaps they weren’t unusual in terms of the quality of deliberation that happens in various jury cases — were a bit rushed and that the jurors did not necessarily fully process the information at the high level of analytical specificity that certainly legal experts would have preferred.

Some of the comments that the jurors are sharing with the press indicate that perhaps there was a desire to punish Samsung rather than to obtain a redress for Apple for real economic harms that they had suffered. That, again, calls into question the broader structure of the way that we resolve intellectual property disputes, particularly in a technology context. The question of whether code, computer code, is even patentable subject matter is up for grabs right now in terms of the way the different courts are analyzing these questions. Legal commentators expect to see more action in this space, potentially resulting in the Supreme Court ultimately accepting the case for resolution.

Knowledge at Wharton: Moving away from the patent question a little, how do you think the case will affect consumer perception of the companies involved?

Matwyshyn: That’s a great question. As I mentioned in the beginning of my comments, there is some discussion of whether this legal process has highlighted the similarity between the Apple and the Samsung products, and maybe some consumers will, in fact, consider a Samsung product now when they would not have in the past.

Other consumers might perceive Apple to be acting as a bit of a bully by using courts rather than research and development labs to continue to innovate. Consumers might argue that even if there is recognition [that Apple was behind] a particularly useful mechanism, such as the pinch and zoom method, that they want to have other companies model that winning development, and to build on each other’s knowledge and bring more products into the market. So I think consumer reaction will be mixed.

Now of course, there’s a very strong “Apple fan boy” dynamic in the consumer marketplace as well, so Apple supporters will undoubtedly be very pleased with this result. I think it’s a mixed bag all around, and we will have to take a look, again, and revisit these questions in about two or three years to see how the big picture has evolved in this space.

Knowledge at Wharton: This case is just one of a number of patent-related lawsuits and moves that have taken place in the smartphone and tablet market. For example, Google’s purchase of Motorola Mobility was widely believed to be motivated by acquiring patents. What do you think this “patent land grad” means for the future of smartphone and tablet design?

Matwyshyn: There’s speculation that exists in the press, in part because of what has been reported to be personal animosity that existed between Steve Jobs and Google, that the ultimate target or goal of Apple’s aggressive litigation posture is to ultimately go after Google Android, which has been building market share very aggressively. Attacking or highlighting the manufacturers of the physical hardware upon which Android runs is a way to undercut or slow down Android adoption throughout the marketplace. So the exact outcome of that strategy and Apple’s future relationship to Google are certainly two of the most interesting moving pieces in this broader conversation.

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Why are Apple and Samsung throwing down? A timeline of the biggest fight in tech

On March 31, a $2 billion trial between Apple and Samsung began in California court. Apple is accusing Samsung of infringing on software patents related to its iPhone. If you’re feeling a sense of deja vu, you aren’t crazy. The legal battle between the two largest mobile tech companies has been raging quietly and loudly for nearly four years, and it’s set to last for at least another three.

To help catch you up (and honestly, keep track of this mess ourselves) we’ve put together a timeline of what’s happened in the last few years. If you want to know what happens when two immovable objects crash into each other, this is a good case study.

The Players

Samsung is a tech powerhouse:  Not only does it make many of the components used in devices from many vendors, it owns key patents related to wireless communication technology and is the most successful Android device maker by a massive margin.

Apple arguably invented the modern smartphone and tablet: It tries to protect its products by dotting every i and crossing every t with patents on from outward design to that rubber-band stretchy effect you get on iOS when you scroll past the edge of a page or photo.

The Apple-Samsung Timeline

Aug. 2010: The warning

Apple warns Samsung it believes some Samsung phones and tablets infringe on Apple patents. Since Samsung is a major Apple supplier and a “trusted partner,” Apple wants to work out a deal.

Oct. 2010: The failed meeting

Apple meets with Samsung to propose a licensing deal where Samsung would pay Apple up to $30 per phone an $40 per tablet. In comparison, six months earlier HTC agreed to pay Microsoft a reported $5 for every Android device sold. Samsung declines.

April 2011: The first lawsuit, and the countersuit

Apple sues Samsung , claiming Samsung “slavishly” copied its product designs. Within days, Samsung countersues over 3G technology patents, and takes the fight international by filing claims against Apple in Japan, Germany, and Korea.

Aug. – Sept. 2011: Products pulled from shelves

Apple has sales of Samsung’s Galaxy Tab 10.1 put on hold in Australia and secures an injunction on Galaxy Tab 10.1 sales in the EU , claiming its design too closely resembled the iPad. The EU injunction is quickly scaled back to just Germany , but Apple gets the German ban extended to the Galaxy Tab 7.7 .

Apple’s patents include design elements as well as slide-to-unlock, rubber-banding, and universal search features.

Both companies start to get specific about patents at play. Apple’s patents include design elements as well as slide-to-unlock, rubber-banding, and universal search features; Samsung’s complaints center on standards-essential patents for 3G mobile technology that are supposed to be available to anyone on fair, reasonable, and non-discriminatory ( FRAND ) terms.

Nov. – Dec. 2011: 30 open lawsuits

Australia allows the Galaxy tablet to go on sale many months after its planned debut, but Samsung changes the design to get around the sales ban in Germany. Samsung manages to get iPhones and iPads banned in Germany for a few hours, and Apple loses a bid to block sales of specific Samsung 4G phones in the United States.

More cases get filed. The fight now spans about 30 cases spanning North America, Asia, Europe, and Australia.

March – May 2012: Settlement talks begin (and fail)

July 2012: Apple publicly admits Samsung didn’t copy

Samsung and Google are forced to scale back the universal search bar on the Galaxy Nexus and Galaxy S3 in response to an injunction granted by Judge Koh.

A UK court orders Apple to post public notice that Samsung didn’t copy the iPad’s design — ostensibly because Samsung’s tablets just weren’t as cool . (Apple eventually complied rather cheekily , and was forced to take a do-over .)

Judge Koh asked if Apple was “on crack” for submitting a 75-page list of potential witnesses at the last minute.

Apple and Samsung are now engaged in more than 50 lawsuits worldwide.

August 2012: Apple’s $1 billion victory

Boom. After three days of deliberation the U.S. jury sides with Apple , awarding over $1 billion in damages and finding that 26 Samsung products infringed on both Apple software and design patents. The decision is controversial, generating debate about whether the jury acted properly and if lay juries should sit on patent cases at all.

Apple quickly files a second U.S. lawsuit against Samsung, asserting 21 more devices released since August 2011 infringe on Apple patents, including the Galaxy S3 and Galaxy Note.

Oct. – Nov. 2012: Galaxy Nexus ban lifted

An appeals court lifts an injunction on U.S. sales of the Samsung-made Galaxy Nexus, which had been Apple’s strongest blow against a flagship Android product.

Dec. 2012: Apple’s patents called into question

Judge Koh denies Apple’s motion for a permanent injunction against Samsung. Despite Apple’s court victory, Samsung’s infringing products remain on sale.

March 2013: Apple’s victory shrinks, retrial set

Judge Koh finds the U.S. jury calculated damages incorrectly, so she invalidates $450 million of the $1 billion awarded to Apple and orders a retrial to determine proper damages.

June 2013: ITC rules iPads infringe on Samsung patents

In a surprise win for Samsung, the U.S. International Trade Commission rules older iPhones and iPads should be barred in the United States for infringing on a standards-essential patent belonging to Samsung.

Aug. 2013: ITC ruling vetoed, ITC blocks older Samsung phones

The United States Trade Representative outright vetoes the June ITC ruling two days before going into effect. Some view the decision as Apple pulling strings in Washington D.C., while others call it a victory for not allowing companies to use standards-essential patents as weapons in litigation.

A few days later, the ITC blocks some older Samsung phones from sale in the United States for violating two Apple patents.

Nov. 2013: Retrial starts, Apple seeks $379.8 million

The retrial on damages invalidated by Judge Koh gets underway . Apple seeks $379.8 million; Samsung argues the amount should be $52 million. A Samsung representative concedes in court some of its devices “contain some elements of Apple’s property.” Judge Koh awards Apple $290 million in damages, bringing the Samsung’s total penalty in the first U.S. case down from $1.05 billion to $929 million.

March 2014: Samsung asked for $1 billion, immediately appeals

The $929 million judgement against Samsung in the first U.S. trial becomes official. The next day, Samsung files a formal appeal.

Steve Jobs hated Android and once called it a “stolen” product — a ripoff of the iPhone.

April 2014: New $2 billion trial underway

During the first days of April, the jury was selected and Apple’s Phil Schiller sat in the hot seat .

Here’s what to expect in the coming weeks and months:

• An initial decision (or mistrial) in the second U.S. case.
• Samsung’s appeal of the first U.S. case, expected to hinge on the validity of key Apple patents. However, the appeals process will likely run ahead of the patent review process, putting the whole thing into question.
• Samsung (or Apple!) appealing the second U.S. case.
• Final rulings on the validity of key Apple patents in the first U.S. case. Even if they’re invalidated, Apple thinks the process will take at least until mid-2017 .

Where we stand now

As of early 2104, Apple has been largely successful against Samsung, with the bulk of rulings and court decisions going in Apple’s favor. Apple has also struck a blow against companies (like Motorola) using predatory licensing on standards-essential patents to seek bans on competing products, and can perhaps claim a moral victory with Samsung outright admitting some of its products copied Apple technology.

However, Apple has almost nothing concrete to show for its efforts with Samsung. Apple hasn’t managed to get Samsung’s key products banned in major markets, Apple hasn’t collected a penny of damages from the high-profile first U.S. trial, and the ongoing international litigation is at best a distraction and at worst a long-term drain on the company.

(Lead image courtesy of  Valentin Agapov  and  hurricanehank  via Shutterstock )

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Samsung has been sitting pretty at the top of the global smartphone market for more than a decade. Until now, that is.

Data released this week by research firm IDC shows that the Korean tech giant has been knocked off its perch by archrival Apple thanks in part to robust sales of the iPhone.

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Negotiation in Business: Apple and Samsung’s Dispute Resolution Case Study

What happened between apple and samsung makes for a great example of negotiation in business.

By PON Staff — on June 25th, 2024 / Business Negotiations

For two days in late May 2012, Apple CEO Tim Cook and Samsung CEO Gee-Sung Choi met with a judge in the U.S. District Court of Northern California in an attempt to reach a settlement in a high-profile U.S. patent case, a sobering example of negotiation in business.

Back in April 2011, Apple had filed a lawsuit accusing Samsung of copying the “look and feel” of the iPhone when the Korean company created its Galaxy line of phones.

Samsung countersued Apple for not paying royalties for using its wireless transmission technology. Since then, the number of patents under dispute has skyrocketed, according to the Korea Times , as has the number of courts involved in various countries. The two companies have repeatedly accused each other of copying the appearance and functions of their smartphones and tablet devices.

The companies showed some willingness to compromise in an effort to avoid going to court: at the California court’s suggestion, they cut the number of disputed patents in half. But even as the CEOs sat down at the table for their mediation , which was urged by the court, Apple filed a motion asking the presiding judge to bar the sale of Samsung’s Galaxy Tab 10.1 on the grounds that the tablet was designed to “mirror” Apple’s second-generation iPad (see also, What are the Three Basic Types of Dispute Resolution? What to Know About Mediation, Arbitration, and Litigation ).

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Both sides had said they hoped to avoid a legal battle. Given that Samsung is one of Apple’s biggest suppliers, the companies had a strong incentive to move beyond their dispute and build on their ongoing partnership. Yet the two-day mediated talks between the CEOs in late May ended in an impasse, with both sides refusing to back down from their arguments. The suit later went to trial twice, with Apple ultimately winning more than $409 million.

Mediation Between Business Negotiators and Chances of Success

As this example of negotiation in business suggests, mediation as a dispute resolution technique between business negotiators is far less likely to succeed when the parties are grudging participants than when they are actively engaged in finding a solution. When negotiators feel they have spent significant time and energy in a case, they may feel they have invested too much to quit.

Moreover, the longer they spend fighting each other, the more contentious and uncooperative they are likely to become. The lesson? When a business dispute arises, you should always do your best to negotiate or mediate a solution before taking it to the courts.

What did you learn from this negotiation in business? Do you side with Apple or Samsung in this dispute resolution case study? Let us know what you think in the comments.

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• 10 Real-World Negotiation Examples  – Real-world negotiation examples—whether successes, failures, or somewhere in between—often offer useful lessons for those involved in business negotiations. Here’s an overview of what we can learn from some real-world negotiation examples.
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Originally published in 2013.

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Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real world example of how seating arrangements can influence a negotiator’s success. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School.

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Samsung vs. Apple: Inside The Brutal War For Smartphone Dominance

An excerpt from samsung rising by geoffrey cain.

I n 2005, Chang-Gyu Hwang —president of Samsung’s semiconductor and memory business—traveled with two fellow executives to Palo Alto, to the home of Steve Jobs.   

“I met him with the solution to Apple’s life-or-death problem hidden deep in my pocket,” Hwang wrote.            

In the course of their meeting, he pulled out the NAND flash memory, as it was called, and put it on the table. He called it “my trump card.”   

His pitch? Flash memory was a much more lightweight and efficient storage device than the traditional hard disk. And Samsung was one of few companies that could guarantee a rock-solid supply.

“This is exactly what I wanted,” Jobs said of Samsung’s flash memory, according to Hwang. He agreed to make Samsung the sole supplier of flash memory for the iPod. 

“It was the moment that marked the beginning of our dominance in the U.S. semiconductor market,” Hwang wrote. With that, Samsung had a launchpad from which to eventually get into smartphones, when they came out.

They would go from supplier to competitor.

Jobs was livid when Samsung released its smartphone in 2009. As he told biographer Walter Isaacson, he wanted to launch “thermonuclear war” on Android, the operating system used in Samsung phones. Samsung was the Apple iPhone chip supplier that dared to compete directly against Apple by making a similar-looking smartphone, and with the Android operating system, which Jobs abhorred. Jobs was prepared to sue. Tim Cook, as Apple’s supply chain expert, was wary of endangering the relationship with a supplier that Apple depended on.

When Samsung vice chairman Jay Lee—who was then the company’s chief customer officer—visited the Cupertino campus, Jobs and Cook expressed their concerns to him. Apple drafted a proposal to license some of its patents to Samsung for $30 per smartphone and $40 per tablet, with a 20 percent discount for cross-licensing Samsung’s portfolio back to Apple. For 2010 that revenue would have come to $250 million. 

Left: Steve Jobs unveils the new iPhone 4 at an Apple conference in June 2010. Right: Chang-Gyu Hwang speaks at the Mobile World Congress in Barcelona in March 2015.

In the end, Samsung’s lawyers reversed the offer. Since Apple was copying Samsung’s patents, they argued, Apple had to pay Samsung.                     

In April 2011, Apple filed multiple lawsuits, spanning dozens of countries, against Samsung for patent infringement. It demanded $2.5 billion in damages. Samsung quickly countersued for infringement of five patents relating to its wireless and data transmission technology.

The war was on.

Samsung executives felt Apple was trying to create a monopoly with generic patents like the iPad’s black rounded rectangle shape, a patent so silly that a court threw it out. “We are going to patent it all,” Jobs once said. He also blatantly mocked Samsung and other competitors, calling their larger phones “Hummers.” “No one’s going to buy that,” he said at a press conference in July 2010.

Samsung’s management team didn’t take Jobs’ attack lightly.

“I am talking to you on a phone right now that Apple just copied,” Brian Wallace, Samsung’s former vice president for strategic marketing, told me years later. “I’ve got a Note Edge. It’s a giant fuckin’ phone that Steve Jobs made fun of. Who was right? Samsung was right.”

Samsung’s greatest strength was its ability to manufacture superior hardware, faster than any of its competitors, through its vast, strict, top-down management system and its superior supply chain.

But the work of the marketers at Samsung was frustratingly subpar.

Samsung didn’t use people in its commercials—“just product and voiceover and talking about the product benefit,” said Samsung’s chief marketing officer, Todd Pendleton. Rather than pitch consumers on why Samsung was great, marketing stories were framed around the telecom carriers—“telling a story around their network and why their network is great.”

The South Korean headquarters, meanwhile, sent over goofy and culturally inappropriate commercials that incited rebellion among the Americans on staff. “They wanted us to use butterflies,” said former marketing vice president Clyde Roberson. He called the ads “Hello Kitty.”

“I am talking to you on a phone right now that Apple just copied,” said Brian Wallace, Samsung’s former vice president for strategic marketing. “It’s a giant phone that Steve Jobs made fun of. Who was right? Samsung was right.”

“We need more creativity!” Dale Sohn, the CEO of Samsung Telecommunications America, the Texas mobile phone office, exclaimed in a meeting in 2010, according to a senior manager who was present. Dale reported to mobile chief J.K. Shin. He had been tasked with turning things around in America, Samsung’s toughest market, given the iPhone’s huge popularity. “I want someone who’s got tattoos all over his arms and earrings!”

When Dale put out a call for a new chief marketing officer, a headhunter zeroed in on Pendleton. Pendleton had been an unconventional marketer at Nike, an impresario and master brand builder. He had been offbeat and irreverent in the ads he crafted and sharp and to the point in the way he communicated.

Todd, however, had never worked at a tech company before and didn’t know the industry. As a tech specialist, the company reached out to a former BlackBerry digital marketer named Brian Wallace.

Pendleton and Wallace quickly got to work. The two marketing executives brought aboard thirty-six marketers and treated the office as a black-box operation. “We had to be somewhat insular to be able to pull some of this stuff off,” said a team member. They were worried about meddling from South Korea’s bureaucracy. Dale provided air cover from headquarters, giving them an unusual degree of latitude and space to get their work done.

In 2011, at Samsung’s U.S. headquarters, Pendleton gathered about fifty people into a meeting. He approached the whiteboard and wrote: “Samsung = ?”

“Who are we?” he asked. “What do we stand for?” Then he went around the room and asked everyone to fill in their idea. “I got about 50 different answers,” he said. For Todd Pendleton, it was alarming. “If we can’t answer [that] as employees, consumers are not going to know who we are.”

On a chart of competitors in their space, with “style” for the vertical and “innovation” for the horizontal axis, they placed Apple and Sony in the upper-right quadrant, marking them as both stylish and innovative.

Samsung, on the other hand, still lacked brand power: It was raised only slightly on the style axis, while it was far to the left on the innovation axis. In other words, consumers saw Samsung as having little of either. “Less stylish, less innovative.” “More functional.” “Good quality and value.” With Apple and Sony commanding and fiercely protecting that stylish and innovative space, could Samsung find an opening?

In focus groups and surveys, the marketers noticed, there was a growing divide between two camps: those who used Apple’s iPhones and those who used smartphones from HTC, Samsung, and Nokia, which ran Google’s quickly growing open-source operating system, Android.

If Walls Could Talk: Samsung's headquarters in Mountain View, California.

“Android people consider themselves to be smarter than Apple people,” a marketer under Todd concluded from his data. In fact, the team had to split up focus groups that included both Apple and Android fans, as they’d get particularly raucous and unproductive. There was always at least one Apple fan in the room who scolded the Android fans, and vice versa, with Android users pointing out how much more flexible and customizable their operating system was. “There was this growing base of Android users who could become a tribe,” Brian Wallace said, crunching a new trend in the social-media chatter. “But they needed a leader.”                                          

Samsung wanted to be that leader.   

Pendleton showed his colleagues side-by-side hardware comparisons between the iPhone and the Galaxy phone in The Wall Street Journal, which showed Samsung leading in a number of areas. The problem was that Samsung, up to this point, was not attempting to tell a story. Apple was commanding the narrative: It had the cult of Steve Jobs, a massive following, and glowing media coverage, and it had unleashed a barrage of aggressive legal action arguing that Samsung was a copycat in terms of new products and innovation.

Could Samsung reverse the narrative? What if its Android phones were actually the smart person’s alternative to the iPhone, and Steve Jobs’s worshippers were the mindless followers?

The outcome of the lawsuits—showing that this or that square, icon, or color wasn’t copied—wasn’t the concern of Todd’s team. More urgent was the big-picture narrative; that is what built emotional appeal for the customer. The court case was only one aspect of the Samsung war; final victory, they knew, would go to the company that told the best story to the public.

Because Apple was an important Samsung customer, the executives at headquarters were pushing for a cautious approach. They wanted to take down each competitor, from HTC to Motorola to BlackBerry to Apple, one by one over the next five years.

Dale informed Todd and his team that five years was too long a time period to overtake Apple. He shortened the time frame to two years, on orders from Samsung headquarters. In fact, the team completed their work in eighteen months.

Samsung debuted its ‘Next Big Thing’ campaign promoting the Galaxy S II in 2011.

By attacking Apple head-on, Samsung’s marketers thought they could establish themselves as the challenger brand, turning the competition with Apple into a Coke-versus-Pepsi war for the smartphone world. But how do you attack Apple without looking petty, without giving it free advertising, without acting like the smaller dog in the pack who barks the loudest and then gets laughed at?

The team turned to a consultant named Joe Crump, senior vice president for strategy and planning at Razorfish, one of the world’s largest interactive agencies, to help them convey the depth of the brand problem in America to Samsung’s senior executives. Crump had an idea to get that across: He’d send camera crews around Times Square, each carrying two duffel bags. The first bag, people on the street would be told, contained the next unreleased iPhone. The other had a Samsung phone.

“What would you give us for each?”

Here was the response to the question when they thought the bag contained the new, unreleased iPhone: “I’d give you my brand new BMW. . . . I’d give you ten thousand dollars. . . . I’d give you my sister.” And the response for the Galaxy: “I don’t know. Five bucks?” One guy offered his half-eaten ice cream cone. 

“The Samsung [response] was just blistering,” Brian recalled. “We had to even take some of it out because it was just so harsh.”

A visiting delegation of South Korean executives huddled in a conference room to watch the video of these Times Square interactions. They were aghast. Suddenly Pendleton had their ear. The research—the field testing—had been done for internal consumption only. It was designed by Pendleton to get the South Korean executives to grasp the size of the problem.

Step two was to ensure that the economics of the coming marketing war on Apple made sense. Samsung had built a carrier-driven model, jumping through hoops to ensure that Sprint and AT&T received their own customized Galaxy phones to sell, using Samsung’s marketing money. If Todd pulled a maneuver too soon, swarms of customers might show up at AT&T stores—AT&T was the exclusive carrier for the iPhone at the time—only to have the advertising throughout the stores nudge them toward Apple.

The solution? To redirect Samsung’s marketing budget. At the time, Samsung was putting about 70 percent of its U.S. smartphone budget in so-called marketing development funds (MDFs), which were cash piles allocated to the carriers for advertising and rebates. About 30 percent of the budget went to Samsung’s own branding efforts. Pendleton’s team convinced Dale Sohn to reverse the figures: to put 70 percent behind Samsung’s own efforts and devote 30 percent to the carriers.

What would you give for the new, unreleased iPhone? “I’d give you my brand new BMW. . . . I’d give you ten thousand dollars. . . . I’d give you my sister.” And the response for the Galaxy? “I don’t know. Five bucks?”

Once Samsung had the marketing budget to reach out directly to customers, Pendleton could initiate step three: hiring an ad agency. He annoyed Samsung headquarters by going around their established Madison Avenue and Seoul agencies and instead putting in a call to relative newcomer 72andSunny, a boutique advertising firm with offices in Los Angeles, New York, and Amsterdam that had a special zing for cultural marketing.

Todd’s team chose 72andSunny specifically for its edginess. On a conference call with 72andSunny, he laid out Samsung’s goal, as handed down by Dale Sohn.

“I expect us to be number one in a couple years.”

The creative executives at 72andSunny got to work and churned out their first approach for Pendleton, who was present at the shoots and the editing, eager to maintain his creative hand. In one early version of a commercial, two characters waiting in line outside an Apple store had a conversation about the features and quality of their Apple and Samsung phones, followed by a cut to another scene of two characters talking about their phones.

It was slow, boring, and dull. Samsung’s bid to take on Apple, Todd’s team feared, would be finished before it had even started.

“We don’t have a campaign here, guys,” Pendleton said.

With the holiday shopping season closing in, the only solution was to chop up and redo the film then and there. During a frantic all-nighter, someone in the room suggested that they turn the commercial into a single scene, rather than two separate, awkward, forced moments of chatter between disparate characters.

The new commercial was completed the next afternoon.

It started, as before, with a line of apparent Apple lemmings waiting all night around a street corner for the release of the next big iThing—presumably an iPhone, though Apple was never mentioned by name.

“Guys, I’m so amped I can stay here for three weeks,” says an apparent Apple idolater.

No longer was the smartphone war a battle between Apple and a tangle of obscure Android me-too phones. Now it was a two-horse race. Everyone else had fallen by the wayside.

One guy notices a woman on a sidewalk tapping away at some weird gadget that— what? —doesn’t look like an iPhone.

“Whoa, what does she got there?”

Then another pedestrian hails a taxi on the sidewalk, holding the mystery device.

“Hey, bro, can we see your phone?” The mob of Apple fans snatch the device and pore over its hardware and features. “It’s a Samsung Galaxy,” the pedestrian tells them. “Check out the screen on this thing—it’s huge.”        

What is this thing?

“It’s a Samsung,” they repeat to each other. “Samsung?”

“It’s a Galaxy S II. This phone is amazing,” says the Samsung guy, showing off his smartphone before getting into a taxi, bidding farewell to the crowd of Apple zombies. 

The message? You don’t need to wait in line. You don’t need to follow the hype.

“The Next Big Thing Is Already Here,” the commercial finishes.

“God damn!” Todd exclaimed after looking at it. “We’ve got a campaign!”

Pendleton’s staff sent the commercial to South Korea for approval. Five days later, they’d still heard nothing back. At six o’clock on day five, Dale Sohn stood up, put on his jacket, and got ready to go home, before leaving a word of advice on the silence from Seoul.                          

“It means they’ve given you enough rope to hang yourself,” Sohn said.                  

It was up to Todd’s team to make the leap and take the risk. And if it failed, they’d have to answer for it.

They proceeded to leak the film to the popular tech and culture website Mashable, which unveiled it on November 22, 2011, before Samsung posted it “officially” on its Facebook page later that day. Pendleton was abandoning the marketing world’s older, more vanilla strategy of going through print and TV news outlets, opting for the Web first, appealing to millennials. Then, on Thanksgiving weekend, the commercial debuted in minute-long spots during the NFL games.    

Geoffrey Cain's <i>Samsung Rising</i> hits shelves on March 17, 2020.

The campaign was a phenomenal success, beyond anything the team had anticipated; Samsung had hit precisely the sweet spot, with viewers responding that they were tired of swallowing what they thought was Apple’s unjustified pretentiousness. The commercial transformed Samsung Telecommunications America into one of the fastest-growing brands on Facebook, with more than 26 million fans in sixteen months.

“We are the fastest-growing brand globally on Twitter, with almost two million followers,” Pendleton later recounted at a press conference. 

“Get ready to take out your designer pitchforks, Macheads. Your hipness is under attack as we speak,” joked CBS’s Chenda Ngak.

During the third quarter of 2011, Samsung surged past Apple to the number one spot among phone manufacturers, based on shipments. No longer was the smartphone war a battle between Apple and a tangle of obscure Android me-too phones. Now it was a two-horse race. Everyone else had fallen by the wayside.

Trucks carrying fresh apples started arriving at the Texas headquarters of Samsung. Bushel baskets were placed in the elevator banks and break rooms, so that wherever Samsung employees took a coffee break, they were reminded of their mission—to take a bite out of Apple.

Excerpted from Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech © 2020 by Geoffrey Cain. Published by Currency, an imprint of Penguin Random House LLC. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Geoffrey Cain is a foreign correspondent and author who has covered Asia and technology for The Economist, The Wall Street Journal, Time, The New Republic, and other publications. A resident of South Korea for five years and a Fulbright scholar, he studied at the School of Oriental and African Studies in London and the George Washington University. He is a term member of the Council on Foreign Relations.

COVER PHOTO-ILLUSTRATION BY FORBES/ BLOOMBERG NEWS

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Apple v. Samsung: All you need to know about latest patent trial (FAQ)

The rivals will return to the courtroom on Monday. The trial is still all about smartphone and tablet patents, but this time, the accused devices are newer, including the Galaxy S3 and iPhone 4S.

Here we go again.

Almost two years after Apple and Samsung faced off in a messy patent dispute, the smartphone and tablet rivals will return to the same San Jose, Calif., courtroom and appear before the same federal judge who presided over their 2012 case to argue once again over patents.

The trial, which begins March 31, is the latest in a long-running patent infringement spat that has involved jury trials, International Trade Commission disputes, and numerous international suits.

Apple and Samsung have accused each other of copying features used in their popular smartphones and tablets, and a jury will have to decide who actually infringed and how much money is due. This trial involves different patents and newer devices than the ones disputed at trial in August 2012 and in a damages retrial in November 2013.

The new trial involves the iPhone 5, released in September 2012, and Samsung's Galaxy S3 , which also debuted in 2012.

But what's really at stake is the market for mobile devices. Apple now gets two-thirds of it sales from the iPhone and iPad, South Korea-based Samsung is the world's largest maker of smartphones, and both want to keep dominating the market.

So far, Apple is ahead. In 2012, the jury in a month-long trial presided over by Judge Lucy Koh, sided with Apple. The damages retrial in November of 2013 also favored Apple. Samsung so far has been ordered to pay Apple nearly $1 billion in damages for infringing its patents.

However, Samsung has had more success outside the US, and Apple hasn't succeeded in receiving a sales ban on Samsung products in the U.S. -- something that could cause bigger problems for the maker of the iPhone and iPad.

To get a better understanding of what's at stake and what the patent war is all about, CNET put together this FAQ.

When did all this litigation start?

Apple initially filed suit against Samsung in April 2011, accusing its rival of copying the look and feel of its iPhones and iPads. Samsung countersued, and the case went to trial in August 2012. A nine-person jury sided with Apple on a majority of its patent infringement claims against Samsung. It a warded Apple $1.05 billion in damages, much less than the $2.75 billion sought by the Cupertino, California company. Samsung, which asked for $421 million in its countersuit, didn't get anything.

However, Judge Koh in March 2013 ordered a new trial to recalculate some of the damages in the case, striking $450.5 million off the original judgment against Samsung. A jury in November awarded Apple an additional $290.5 million in damages, bringing the total damages to $930 million.

What is this 2014 trial about?

Apple filed suit against Samsung on Feb. 8, 2012, accusing it of infringing several patents. Samsung then filed counterclaims against Apple. In Apple's original suit, the company said Samsung "has systematically copied Apple's innovative technology and products, features, and designs, and has deluged markets with infringing devices in an effort to usurp market share from Apple." Apple will argue, as it has in the past, that it took on a lot of work and risk to develop the first iPhone and iPad.

Samsung, meanwhile, will argue that Apple is trying to hurt competition by targeting it for litigation. It also claims that Apple has infringed some of its patents. "Without the ability to enforce its intellectual property rights ... Samsung would not be able to sustain the extensive commitment to research and development that has enabled it to lead the way into numerous improvements across a broad range of technologies," the company said in a court document in April 2012.

Apple v. Samsung 2014: The gadgets in question

What's different this time around?

Along with different patents and different devices, this trial has some interesting new facets. One is that most Samsung features that Apple says infringe are items that are a part of Android, Google's mobile operating system that powers Samsung's devices. All patents except one, called "slide to unlock," are built into Android.

Why doesn't Apple just sue Google?

Suing Google wouldn't get Apple anywhere since Google doesn't make its own phones or tablets. Instead, Apple has sued companies that sell physical devices using Android, a rival to Apple's iOS mobile operating system. In particular, Apple believes Samsung has followed a strategy to copy its products and then undercut Apple's pricing. While Apple isn't suing Google, it expects that Google will make changes to its software if Samsung is found to infringe on patents through Samsung's Android devices.

Samsung, however, will argue that Google had invented those features before Apple patented them. It plans on calling Google engineers to the stand to back up its assertion.

What patents does the trial involve?

There are seven patents at issue -- five held by Apple and two by Samsung. Both companies wanted to include more patents in their suits, but Judge Koh limited the number.

Apple has accused Samsung of infringing US patents Nos. 5,946,647; 6,847,959; 7,761,414; 8,046,721; and 8,074,172. Patents are often referred to by their last three digits, so Apple's patents typically will be called the '647, '959, '414, '721, and '172 patents.

The '647 patent covers "quick links," which do things like automatically detect data in messages that can be clicked. The '959 patent covers universal search, such as what Apple uses in Siri. Patent No. '414 involves background syncing, such as syncing calendars, email, and contacts. The '721 patent covers slide-to-unlock, the motion used to unlock the home screen. And '172 covers predictive text. Overall, Apple will argue that the patents enable ease of use and make a user interface more engaging.

Samsung, meanwhile, has accused Apple of infringing US patents Nos. 6,226,449 and 5,579,239, or in shorthand, '449 and '239.

The '449 patent, which Samsung purchased from Hitachi, involves camera and folder organization functionality. The '239 patent, which Samsung also acquired, covers video transmission functionality and could have implications for Apple's use of FaceTime.

What gadgets does this cover?

Unlike the previous infringement suit, this one covers gadgets that are actually still in the market and have sold in high numbers. Apple has included Samsung's Galaxy Note 2 and Galaxy S3 on its list of infringing devices, while Samsung has accused the iPhone 5, iPad Mini, and many other devices of infringement.

Here's the full list and the patents each is accused of infringing:

Samsung products that Apple says infringe on its patents:

1. Admire: '647, '959, '414, '721, '172

2. Galaxy Nexus: '647, '959, '414, '721, '172

3. Galaxy Note: '647, '959, '414, '172

4. Galaxy Note II: '647, '959, '414

5. Galaxy S II: '647, '959, '414, '721, '172

6. Galaxy S II Epic 4G Touch: '647, '959, '414, '721, '172

7. Galaxy S II Skyrocket: '647, '959, '414, '721, '172

8. Galaxy S III: '647, '959, '414

9. Galaxy Tab 2 10.1: '647, '959, '414

10. Stratosphere: ' 647, '959, '414, '721, '172

Samsung has accused the following products of infringement:

1. iPhone 4: '239, '449

2. iPhone 4S: '239, '449

3. iPhone 5: '239, '449

4. iPad 2: '239 Note: Samsung dropped the infringement claim against the iPad 2 over the April 19 weekend.

5. iPad 3: '239 Note: Samsung dropped the infringement claim against the iPad 3 over the April 19 weekend.

6. iPad 4: '239 Note: Samsung dropped the infringement claim against the iPad 4 over the April 19 weekend.

7. iPad Mini: '239 Note: Samsung dropped the infringement claim against the iPad Mini over the April 19 weekend.

8. iPod Touch (5th generation) (2012): '449

9. iPod Touch (4th generation) (2011): '449

What happens to the other court rulings?

Nothing. Those still stand and remain under appeal. Samsung will try to find select a jury that hasn't heard of the previous litigation. Apple, however, will want people to know that it has accused Samsung of infringement before and that it has been successful in its previous suits.

Where does the trial take place?

It will be held in the United States District Court for the Northern District of California in San Jose. The case is No. 5:12-cv-630.

How long will the trial last?

Each side has been allotted 25 hours for direct examination, cross-examination, and rebuttal. Then the jury deliberates. It has come back quickly with verdicts in the past, but there's no way to predict what happens this time around. Court will only be in session on Mondays, Tuesdays, and Fridays, which means the trial likely will end early in May.

Will the companies settle?

Unlikely, but we can always hope.

How much money is at stake?

A lot. Apple and Samsung are both asking for damages for the other's accused infringement. Apple wants about $2 billion from Samsung. Samsung, meanwhile, is asking for much less because it believes royalties shouldn't be so high. The company wants about $7 million in royalties for Apple's accused infringement ($6.78 million for the '239 patent and $158,400 for the '449 patent), according to a court document viewed by CNET. The companies will give more detailed information about requested damages, including the amounts requested for lost profits and royalties, likely during their opening arguments.

Note: Samsung lowered its damages request on April 22 after dropping four iPad models from its infringement claims. It now wants $6.07 million for the '239 patent and $158,400 for the '449 patent, bringing the new total to $6.23 million.

Apple has argued at pretrial hearings that if the two parties had negotiated royalties, Samsung would have paid an average of $40 per device for the use of five Apple software patents. That level has been deemed extremely high by experts such as Florian Mueller of the popular blog Foss Patents

The most typical way to determine royalties stems from 1970's "Georgia-Pacific Corp. vs. United States Plywood Corp." In that ruling, the court determined a jury/judge would have to make up a hypothetical scenario where the two companies were forced to negotiate royalties at the time the infringement began. In this latest Apple vs. Samsung trial, the infringement began at the same time Apple was suing Samsung for other infringement (August 2011).

Apple is expected to argue that it would have had to negotiate with Samsung while it also was pursuing other cases and while it knew Samsung was copying its devices and hurting its profits. The company would try to get as much money as it could from Samsung in that scenario -- one where it was forced to do something completely against its nature (settle with Samsung).

Samsung, however, will argue that the rate Apple is requesting is unreasonable and is much higher than what it has granted other companies, such as Motorola. Samsung also will argue that its damages request is more reasonable.

Inside the Apple v. Samsung courtroom (sketches)

What does this mean for consumers?

As with all the patent trials between Apple and Samsung, this trial may not mean much to consumers. However, this time around, the accused devices are some still sold by the companies. Apple has included the Galaxy S3, Samsung's extremely popular smartphone, on its list of infringing products, while Samsung has accused the iPhone 4S. In a worst case scenario, the losing company would face a sales ban. If Google is forced to make changes to Android because of a ruling in favor of Apple, however, that's something consumers could see in their devices.

What does this mean for Apple and Samsung?

As in previous trials, this isn't really about the damages. Both Apple and Samsung generate billions of dollars a year in profits. For Apple, the trial is about pride in its inventions and protecting its position in the market. For Samsung, it's about proving the company is an innovator in its own right. Beyond that, the trial could set precedence for other patent infringement cases in the new mobile world.

Who could be called as witnesses?

Most of the witnesses will be experts asked to argue the validity of the patents, but we'll also see some big names in the courthouse. Samsung plans to call Phil Schiller, Apple's head of marketing, to talk about design, development, promotion, marketing, advertising, consumer demand for, and sales of Apple's devices. The company is also set to call Todd Pendleton, chief marketing officer of Samsung Telecommunications America, to testify about Samsung's brand and advertising efforts for devices such as the Galaxy S3.

Other potential witnesses for Samsung could include Samsung Telecommunications America Chief Strategy Officer Justin Denison; Dale Sohn, Samsung executive adviser and former president and CEO of Samsung Telecommunications America; Google programmers and engineers; and various Apple executives. Scott Forstall, Apple's former head of iOS software, may testify via deposition.

Apple also has Schiller, Forstall, Pendleton, and Denison on its witness list, as well as Greg Christie, the senior software engineer who invented the '721 slide-to-unlock patent. Christie spoke with The Wall Street Journal earlier this week about how innovative the iPhone was when it launched in 2007.

Other likely witnesses include Tony Blevins, Apple's vice president of procurement, who is expected to talk about Apple's supply chain and manufacturing capacity. Yan Arrouye, the inventor of the '959 patent; Mark Buckley, a financial analyst at Apple; and various Google employees.

CNET will be covering the trial as it unfolds. Check back for updates.

Updated at 1 p.m. PT on April 22 to reflect changes in the accused devices and requested damages by Samsung. Samsung dropped its infringement claims against the iPad and lowered the amount it wanted from Apple in damages.

Up close and personal with the Samsung Galaxy S3 (pictures)

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Apple vs. Samsung: A Case Study on the Biggest Tech Rivalry

Harshit Verma

Humans are amazing animals, I mean we are smart and can do almost anything. Be it flying, cooking, innovating, and even revolutionizing the whole world with unbelievable technology. Think about this, the first computer was built in 1822, by a smart human called Charles Babbage. It used to have vacuum tubes and large compartments for storage. We have grown from that time at a rapid scale and efficiency, we have seen multifold growth in technology.

So much so, that the computer that once occupied a whole room by itself, now sits in your hand. Moreover, it just sits on our palms for a long time now as our screen times jump.

The smartphone industry has grown and has become one of the biggest industries in the world. Right now, there is a smartphone user base in the billions. This growth has led to the establishment of smartphone giants. Behemoth organizations like Apple and Samsung.

We all have that friend who is an ardent fan of apple, and we all have got a friend too who is always in love with Samsung. This takes us back to the smartphone war that has continued since time immemorial. The android vs apple war. This disparity in demographics is a good indicator of the product market. The user market is much skewed in different directions.

This article is the dissection of the silent raging war between Apple and Samsung. Read on to discover stories and not many known facts about the tech hulks.

Apple Apple Product Line Samsung The Rivalry Inception of Samsung and Apple How Samsung and Apple Turned From Friends to Foe The Billion Dollar Samsung Apple Lawsuit The Court Rule and Afterwards FAQ

It's not a necessity to introduce Apple . The reason is that it is already a brand, a valuable brand which has managed to make a place in the hearts of people all around the world. That also explains why the company has no ‘about us’ section on its website.

Apple is the brainchild of Steve Jobs. It is an American multinational company specializing in consumer products in the tech line. The company is the biggest technology company with its magnanimous revenues and the most valuable company in the world . That too started from a garage and managed to become the most recognizable company in the world. It has been revolutionizing personal tech for decades.

Apple Product Line

Apple 1 was the first computer handmade by Steve Wozniak (Apple co-founder) under the name Apple in 1976. It was a computer encased in a wooden block. Then followed by Apple 2 which was more successful than the predecessor. After the success, they faced good losses in the fall of Apple 3. It faced overheating issues.

After seeing such failure they started to work on innovating something new. To come out of this deep pit, Something that will hopefully revolutionize personal computing.

They began to work on the Macintosh. It was their first computer that supported GUI or Graphic user interface, which allows the user to communicate with the computer in graphical mode. Launched the Macintosh in 1980 and this began the winning strike for apple.

It was in 1983 when Steve Jobs famously asked Pepsi CEO John Sculley to be Apple’s next CEO or if he wanted to “sell sugared water for the rest of his life or change the world? ” The relationship went bad later.

To remove him, Steve initiated a move that backfired and ended up removing himself from the board. The company saw good growth under the leadership of Sculley until he was removed because of some failed products.

Later Apple bought ‘Next ’ which was founded by Steve Jobs bringing him back as an advisor. He immediately trimmed most of the product density in Apple and made the company as slim as possible and launched new sleek products.

He worked secretly on the first iPhone and launched it in 2007. It was an instant hit. Since then, iPhones have been the most popular phones in the world. A major part of Apple's revenue comes from them.

The Samsung that we know today, wasn’t this when it started. It has gone through enormous shifts. Surprisingly, the company was not even in the technology business at its inception in 1938. It was a small company dealing in fried fish and noodles. In the 60s it entered the smartphone segment and today is the largest manufacturer of smartphones , televisions, and memory chips in the world.

In 1938, Lee Byung-Chul dropped out of college and founded a small business he named Samsung Trading Co. The initial corporate logo had three stars and was based on a graphical representation of the Korean Hanja word Samsung. It operated with the same Japanese culture as every corporate body, the employees did as they were told.

Soon with a good culture and with government assistance it entered domains like sugar refining, media, textiles, and insurance and became a success. So at this time, it was in good economic condition.

After the succession of third heir Kun-hee, the company saw an opportunity in technology and he invested heavily in semiconductor technologies and transformed Samsung from a manufacturer into a global technology powerhouse.

After Kun’s death, his easy-going son succeeded to the throne and began investing more in smartphones and more in tech. Later the company saw the most profits from smartphone sales. The most famous Samsung phones are Galaxy, after the first launch in 2009. During the third quarter of 2011, Samsung surged past Apple to the number one spot among phone manufacturers, based on shipments.

Samsung, as it saw handsome revenues in the smartphones segment, mocked Apple in many ways. You can still see those commercials on YouTube . So did Apple. They released commercials that defame other pioneer brands openly. This makes the rivalry public and leads to polarisation in the market. Let us discuss it in further detail.

The Rivalry Inception of Samsung and Apple

As the smartphone market and the hype around this continues to grow, smartphone leaders fight for greater dominance in this segment of the product. Behemoth organizations Samsung and Apple are the pioneers in this segment and one of the most famous rivals in the world. They not only fight for a greater market share but the main rivalry is a little off topic, it is a long legal battle into dark plagiarism.

Samsung not only competes with Apple in the notebook, tablets, and smartphones market, It also supplies Apple with crucial items for iPhones like OLED display and flash drive memory chip for storage. The Samsung we know today has not been constant as we consider its long history.

In the 80s the company was primarily focused on the semiconductor business . Apple was one of Samsung's largest buyers, ordering billions of dollars of parts for electronic devices. Its CEO at that time did meet several times with Steve jobs for advice or negotiations. The two companies had friendly relations with each other. Until something happened.

In 2007 the first iPhone was unveiled to the world. Two years later, in 2009 Samsung came up with a touchscreen device for their market running on Google's android system. Apple CEO Steve Jobs called Samsung a Copycat. ‘POOF’. Apple filed a lawsuit against Samsung. The rivalry began.

How Samsung and Apple Turned From Friends to Foe

According to Walter Issacson, Steve’s biographer, He wanted to start a thermonuclear war against Android in this case of plagiarism and copying apple’s authenticity. From that event, Samsung dared from being a supplier of technological equipment to a competitor in market share. It went from being an ally to a fierce enemy.

Apple was extremely infuriated with this and dragged the matter into court, showcasing that the company is super sensitive about this issue. It filed a lawsuit against Samsung in serious violations of patents and trademarks of Apple’s property rights.

However, the court case wasn’t the first guard of Apple against Samsung. Both the companies Apple and Samsung had a long history of cooperation, so Apple first thought of talking the matter out rather than taking the case to court.

Apple proposed a licensing deal for Samsung for the patents and trademarks. The document stated that Samsung will pay 30$ on selling every smartphone and 40$ on every tablet.

Samsung ofcourse declined the offer, stating that the company hasn't done anything wrong and is not involved in copying Apple or violating any of the trademarks mentioned in the lawsuit. Not only this, Samsung reversed the licensing agreement onto Apple stating that they are the ones who are copying. This began the row of court cases by these tech hulks against each other.

The lawsuit filed by Apple was specific about the number of patents and the type of patents Samsung violated, let us discuss a little about the violations Apple mentioned.

The Billion Dollar Samsung Apple Lawsuit

The first lawsuit demanded 2.5 billion dollars in damages from Samsung. So we can assume it wasn’t a normal lawsuit. Apple was very serious about their smartphone launch and now with this case too. Samsung however seemed like it was ignoring Apple’s claims of plagiarism and trying to put the burden on Apple themselves.

Trade Dress

It is a visual form of patent, that deals with the visual and overall look of a product. Sometimes companies copy some famous brand’s product look and hope to generate sales. As people tend no not to look about details of a product, rather they just pick up based on the appearance of something. It instills confusion in consumers. Samsung Galaxy phone was the first touchscreen phone in the Samsung product line and it looked mostly the same as the newly launched iPhone.

Trademark Infringement

While Samsung could argue on the physical appearance being similar with iPhone but another thing the lawsuit included was trademark infringement. The icons on the iPhone were strikingly similar to those in Samsung’s phone. This turns the eyebrows up for Samsung. As there can be thousands of ways of designing icons and GUI effects, Samsung chose in most cases icons similar to that of the iPhone.

Other than these the lawsuit also concluded the methods of copying of the home screen, the design of the front button, and the outlook of the app's menu. All these were some specific irks for Samsung.

The Court Rule and Afterwards

The case began in 2011 and went on to go worldwide. By July 2012, the two companies were still tangled in more than 50 lawsuits around the globe, with billions of dollars in damages claimed between them.

Hearing both sides, the law court ruled in the favour of Apple. The basis was their legitimate concerns about their product being copied in the open market. Samsung paid $1 billion in compensation to the iPhone designer .

“I am talking to you on a phone right now that Apple just copied,” said Brian Wallace, Samsung’s former vice president for strategic marketing. “It’s a giant phone that Steve Jobs made fun of. Who was right? Samsung was right.”

After this and all the cases in between this first court case, Samsung didn’t stay shut. It widely talked against Apple and filed lawsuits claiming infringements of their company policies and patents. These behemoths fought each other like wild animals. Suffering millions on each side, Tore each other apart in claims.

Apple claimed that Samsung had copied the iPhone, leading to a long-running series of lawsuits that were only finally resolved in 2018, with Apple being awarded US$539 million. Issues between the two companies continue. They are now perhaps best described as ‘frenemies’.

While tech hulks like these two fight for global dominance and the crown of the most innovative technology pioneer, it is sure that smartphones are a hot topic. It seems like everyone wants the latest phone to set a trend. From the latest Samsung foldable phone to the iPhones sold as a jewel. This market kind of seems like a fashion innovation.

Apple and Samsung will most probably rule until someone innovates in between. Whatever it will be, humans are fascinated and the future is exciting.

Who won the Samsung Apple lawsuit?

Apple won the patent dispute against Samsung and was awarded $1.049 billion in damages for 6 of the 7 patents brought to bear.

Why did Apple sue Samsung?

Apple initially sued Samsung on grounds of patent infringement.

Who launched first smartphone Apple or Samsung?

Apple iPhone was launched in 2007 and two years later, in 2009, Samsung released their first Galaxy phone on the same date.

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Apple vs. Samsung: The Design Patent War Between Two Technology Giants

By- dhani Editors - paruli upadhyaya

Nokia and Motorola dominated the mobile phone market before Apple and Samsung became the world’s largest smartphone manufacturers. In 2007, Apple took over the market with the launch of ‘iPhone’, a product that rapidly gained popularity due to its large and multi-touch user interface. Apple continued to dominate the smartphone market for years until Samsung introduced its Galaxy series in 2013 and emerged as a tough competitor. It was Samsung’s heavy advertising together with the distinct Android features that enabled Galaxy to overtake iPhone to become the most popular smartphone brand globally. This led to the beginning of a hostile competition and endless court battles between the two technology giants.

The following article discusses the design patent litigations and the battle of power between Apple and Samsung.

Table of Contents

The Beginning of Patent Lawsuits

Although filing lawsuits is a common strategy for Apple, its focus on Samsung is quite intense and recurrent. In 2011, when Apple was already embroiled with Motorola, it went after Samsung for tablet and smartphone designs. The first claim came in April and by August 2011, there were 19 continuing cases between Apple and Samsung in nine countries. The number of cases reached four dozen by mid-2012, wherein both firms claimed billions of dollars in damages. Each company won numerous decisions against the other during 2012-2015, quite often in contradictory rulings from German, American, Japanese, South Korean, Italian, French, British, Dutch, and Australian courts.

In 2012, Apple was victorious in an initial verdict in a case that targeted over one dozen Samsung phones. However, the appeals and counter lawsuit processes continued until 2014 when almost every target model was out of production. The actual damage, therefore, was not on the production line but in the massive legal costs incurred by the two companies.

However, there have been some production or distribution wins as well. For instance, in August 2011, a German court ordered an injunction on the Samsung Galaxy Tab 10.1 across the EU for infringing Apple’s interface patent. Though Samsung defended itself and the injunction was reduced to German markets, it was still a big win for Apple.

Timeline of the Apple vs. Samsung Legal Battle

• April 2011: In the actual legal action filed by Apple against Samsung, the former stated that Samsung had copied the design as well as the technology of Apple products.
• August 2011: Apple sued Samsung for patent infringement through its products, including the Samsung Galaxy Tab 10.1. In response, Samsung sued Apple over 3G patents and stated that iPhone such as iPhone 4, iPhone 4S, and iPad 2 infringed its patents.
• November 2011: In late 2011, Samsung was held victorious against Apple. A federal court in Australia lifted the preliminary sales injunction banning Galaxy tablet sales. A stay, however, was just another condition that stopped Samsung from selling the tablet till December 2, 2011.
• December 2011 – April 2012: Apple failed to block Samsung from selling some 4G-enabled products to US consumers. The iPhone manufacturer accused Samsung of “failing to comply” with the order set against it as part of the deal and “ partial compliance ” for not handing over everything that was agreed upon. US District Judge Lucy Koh, who presided over numerous Apple vs. Samsung cases, ordered both the parties to talk. The settlement talk dates were set for May 21-22 in San Francisco.
• May 2012: The US Court of Appeals for the Federal Circuit (CAFC) gave Apple the consent to look for a sales injunction on Samsung’s Galaxy Tab 10.1. The CAFC also stated that the sales prohibition must be imposed until a trial.
• June 2012: Following the appeals court ruling, US District Judge Lucy Koh had to reconsider the preparatory sales injunction against Samsung’s Galaxy Tab 10.1. Koh conveyed that Apple’s request to prevent Galaxy Tab sales in the US had to wait until the completion of court procedures. A higher appeals court was also required to formally give the jurisdiction back to her before the request could be admitted.
• July 2012: The dispute between the two firms which started in San Jose, California, was estimated to be resolved in four weeks. 10 individuals based in Santa Clara, California, were selected as the jury from a pool of 74 .
• August 2012: Apple won over $1 billion against Samsung in a huge US court decision. It was one of the largest patent cases in decades and its finding was anticipated to have vast market ramifications. As per reports, the jury awarded $1.049 billion to Apple but declined Samsung’s counterclaims against the US tech giant.

The Outcome

Under the US patent laws, the harm of infringing a design patent does not agree with the impairment calculation for infringing a utility patent. Although a design patent owner may recuperate the infringer’s total profits, the utility patent owner may recuperate his/her lost profits or a fair royalty. This explains why the jury’s award based on infringement of a design patent was 100X the award based on infringement of a utility patent. In 2016, the Supreme Court reviewed this case and held that the net profit damages for infringing design patents need not be calculated based on the product sold to the consumer. Instead, it may be worked out based on only a constituent of that product.

The Apple vs. Samsung case not only reminds us of the importance of filing multiple design patents for protecting a new product’s look but also the significance of conducting a patent search. In the ongoing war between Apple and Samsung, no matter who emerges as the winner, the consumer will continue to lose unless the companies agree on having a healthy competition and offering their best products.

-Dhani, Adeena, Shubham, Rishabh (ICT Licensing) and the Editorial Team

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Samsung vs. Apple: Comparing Business Models

Samsung vs. Apple's Business Model: An Overview

It is fair to say there is no love lost between Apple, Inc. ( AAPL ) and Samsung Electronics Co. Ltd. ( SSNLF ). They are in a worldwide corporate battle that started in 2010 when Samsung, then an Apple supplier, released a very iPhone-like product through its Galaxy lineup. Steve Jobs, Apple's late CEO, was furious and went on the offensive; Samsung, in turn, dug in its heels.

It made sense that Samsung would try to incorporate elements of the Apple business model , especially after the American technology giant passed Exxon Mobil Corporation as the world's most valuable company in 2011. Ask either company, however, and you are likely to hear there is too much emulation going on.

Consider the almost unprecedented legal wars taking place between Samsung and Apple, which span four continents and billions of dollars in awarded damages. Or the aggressive, political election-style marketing campaigns that are reminiscent of the Ford versus Chevy attack ads.

From a business model perspective, the two companies are constantly converging and modifying, although stark contrasts remain. Samsung has been a global force longer and has its hands in more industries. Apple's rise has been comparatively meteoric and focused.

In March 2014, someone leaked a Samsung strategy document from 2012 in which the Korean-based tech company blankly stated, "Beating Apple is #1 Priority (everything must be in the context of beating Apple)." It is a telling example of the animosity between two of the world's largest smartphone producers, who are clearly modifying their respective business strategies with each other in mind.

Key Takeaways

• Samsung and Apple are two consumer electronics giants with global reach and loyal customer bases.
• Samsung's business model has focused on vertically integrating supply chains and ramping up production volume.
• Apple has made a business strategy of focusing on design and user experience while outsourcing elements such as manufacturing.
• The two companies have found themselves engaged in legal battles over intellectual property and patent fights.

Samsung: Vertical Integration and Product Volume

Samsung operates like many other Asian producers, such as NEC Corporation or Sony Corporation, with an emphasis on vertical integration and a flood of products. Samsung is present in dozens of markets, including flat panels, sensors, LED lights, batteries, gaming systems, cameras, TVs, appliances, cellphone carriers, tablets, smartphones, and even medical electronics.

Before turning its sights to Apple, Samsung competed with, and in many cases bested, Japanese technology companies in the 1980s and 1990s. The company spends a fortune on research and development (R&D) and capital expenditures (CapEx) . This pays off in the mid- and low-end markets, but the high-end products keep running into the juggernaut that is Apple.

Samsung relies on vertical integration as a chief competitive advantage. While Apple still imports billions of dollars worth of components from its rival every year, Samsung is accountable to nobody. It is not a magical formula, Nokia was almost as integrated before being steamrolled by Apple and Samsung, but Samsung controls some logistical certainty in a way that Apple does not.

However, declining profit margins in 2014 and 2015 forced some introspective analysis within Samsung's executive team. Chair Lee Kun-hee saw his company's global share of smartphone sales drop from 35% in 2013 to 24% in the third quarter of 2015, and his son, Lee Jae-Yong, reportedly wants to respond through mergers and acquisitions (M&A) and partnerships. This would be a historic shift in focus, likely signaling a departure from self-funded R&D and into outsourced innovation, not unlike Apple.

Apple: Design, Integration, and Outsourcing

From its target marketing, research, and product design, Apple is a much more focused company than Samsung. Apple succeeds in design and integration, and no small degree of risk.

All of Apple's products include programs that work very well with each other, but not with any of its competitors' products, which makes it easy for customers to keep buying Apple and difficult to switch to someone else. Over half of Apple's revenue comes from the iPhone lineup, making the firm single product-dependent.

Able to suppress R&D costs by outsourcing hardware component production and assembly, Apple's CapEx looks radically different from Samsung's ($2.09 billion as of July 1, 2023). This inflates margins and boosts AAPL stock, and is one of the chief reasons Apple can grow at astounding clips.

Apple does not race to be first; it lets other companies spend time on R&D and early market development before swooping in and improving everything. Consider the iPod, the first breakthrough product during Jobs' second stint as CEO, which came out years after the Sony Walkman. Not content to just throw out an imitator product, Apple worked diligently with record labels and created a small, sleek-looking replacement. There are similar stories with the smartphone and tablet markets, each considered a pillar of Apple innovation but neither of which the company invented.

Apple vs. Samsung: Endless Patent Lawsuits

The two companies have been fighting over patent infringement since 2011 and took their case all the way to the Supreme Court. Lawsuits are a common strategy from Apple, which is one of the most legally aggressive firms in the world

The battle on intellectual property started in 2011 when Apple accused Samsung of “slavishly copying” the iPhone's design and software features. Samsung then countered the allegation by suing Apple for infringing Samsung’s software patents. This went on with multiple cases being filed on multiple patents and each company claiming billions of dollars in damages.

In 2012, a U.S. jury ruled In favor of Apple making Samsung pay more than $1.05 billion for copying various hardware and software of the iPhone and iPad. Although in 2013 the penalty was reduced to $600 million, the jury said that Samsung should pay Apple an additional $290 million for patent infringing.

In a different trial in 2024, a U.S. jury found both companies infringing upon each others’ patents. Apple was awarded $120 million and Samsung $160,000. By that year, both Samsung and Apple decided to drop all the patent cases outside the U.S. In 2015 Samsung agreed to pay $548 million to Apple to settle the original patent infringement from 2011. 

The case reached to Supreme Court in 2016 after Samsung challenged the lower court’s ruling that the company should pay Apple $399 million in damages for violating three of Apple's design patents on the iPhone's shape and icons (100% of the profits earned from its smartphone business). However, the Supreme Court rejected the ruling and returned the case to lower courts.

In May 2018, a U.S. jury eventually found Samsung had infringed on the majority of the patents and ordered Samsung to pay Apple $539 in damages for “copying features of the original iPhone”. Apple was awarded $533.3 million for Samsung’s violation of three design patents on the iPhone and an extra $5.3 million for infringing utility patents.

Which One Sells More, Samsung or Apple?

With the launch of the Galaxy S23 , Samsung sold the most smartphones worldwide during Q1 2023, thus reclaiming the top spot from Apple during the quarter. The company ended Q1 2023 with a 22% share of the global smartphone market, followed by Apple at 21%.

Which One Is Best, iPhone or Samsung Smartphones?

The Apple iPhone design is generally more minimalist and sleek. It's easy to use, has a good camera, and lasts a long time on a charge. Samsung's smartphones, on the other hand, have more features and customization options, and a bigger screen.

Samsung smartphones are available at various prices. while Apple iPhones are only available at one price point (usually high).

How Are Apple and Samsung's Business Models Different?

Samsung's business model focuses on vertically integrating supply chains, ramping up production volume, and diversifying product offerings (electronic devices, appliances, and services) for a global customer base.

Apple's business model focuses on design and user experience, continuous innovation, branding excellence, strategic partnerships, outsourcing, and long-term vision.

Samsung and Apple are two multinational major appliance and consumer electronics corporations with different business models and strategies. It's also worth noting that while Samsung is currently more profitable, Apple remains a much larger company overall. Samsung is valued at less than $200 billion, while Apple is the world's most valuable technology company with a market cap of nearly $500 billion.

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