Apple, Samsung Square Off in High-Stakes Court Battle

Aside from a temporary, once-a-year bump that Apple gets from its annual iPhone releases, rival Samsung has had no problem beating the Cupertino consumer electronics giant in the open market, with its smartphones outselling the iPhone by as much as two to one each quarter. But the two firms are facing off this week in a more important battleground: a federal courtroom in San Jose, California. And the outcome of this case could have far-reaching ramifications for both companies and for the broader market.

With jury selection complete, the trial will start Tuesday. The jurors will decide on the merits of Apple’s September 2011 complaint that Samsung has willfully copied the designs of its iPhone smartphone and iPad tablet in the creation of its respective competing devices. Samsung’s response is as elegant and simple as the original complaint: Apple, it claims, is the one copying competitors, and the designs for the iPhone and iPad are not its own to begin with.

Furthermore, Samsung says that it has been making handsets since 1991, a full 16 years before Apple entered the market with its iPhone. And it has designs of previous products that prove it is Apple, and not Samsung, that is copying others.

Apple is demanding $2.5 billion in damages for the alleged copying. And although this case is just one of about 50 marring the smartphone and tablet markets currently, and one of just several involving both Samsung and Apple in various locales, it is considered a bellwether milestone for the industry, and one that could affect other similar complaints.

According to Apple, Samsung openly copied the design of the iPhone when Samsung designed smartphones such as the Galaxy line of Android-based handsets. And Samsung openly copied the design of the iPad in its Galaxy tablet devices, also based on Android.

Judge Lucy Koh, who is overseeing this case in San Jose, apparently agrees with this assessment. She granted Apple an injunction against the Galaxy 10.1 tablet, pending the outcome of the trial. Intriguingly, however, Judge Koh has barred Apple’s attorneys from informing the jurors in the case about this ruling. This suggests she could overrule a jury verdict that she doesn’t agree with and institute the sales ban even if the jury finds Samsung innocent of copying Apple.

Either way, the stakes are high. If Apple wins this case, all Android-based smartphones and tablets are in danger of similar legal attacks and injunctions. But if Apple loses the case, it might get buried under a sea of similar Android-based devices. Worse, if Apple is compelled by the court to license its technologies to competitors, as Samsung is asking, it might need to raise the prices of its own already expensive devices. This could further harm Apple in what will quickly become commodity markets, mimicking its minority position in the PC market.

It’s still possible that the two companies could settle, of course. Apple and Samsung executives—including Apple CEO Tim Cook—attended court-ordered mediation sessions in recent weeks, though they were unable to resolve their differences. But the companies are partners as well as rivals—Samsung actually provides several important parts for both the iPhone and the iPad, go figure—and their respective fortunes are somewhat intertwined.


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