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Originally published August 24, 2012 at 8:35 PM | Page modified August 24, 2012 at 8:55 PM

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Apple's $1 billion patent victory over Samsung may lead to bigger things

The more important long-term effect of the jury's decision in the Apple case could be the impact it has on Android, the Google operating system used by Samsung and a broad array of other companies in their devices.

The Washington Post

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Apple won a sweeping victory in its landmark patent dispute against Samsung when a Silicon Valley jury ruled Friday that a series of popular smartphone and tablet features — from the rounded rectangle shape to the way screens slide and bounce to the touch — are proprietary Apple innovations.

The nine-person jury overwhelmingly sided with Apple's claims that Samsung had infringed on valid patents when it copied those and other design elements while seeking to compete against the popular iPhone and iPad. The jury rejected claims that Apple had infringed on several of Samsung's patents.

Damages totaled $1.05 billion — less than half of the $2.5 billion that Apple requested — but the impact on Samsung's business practices and those of other electronics manufacturers stands to be more profound if the ruling survives a likely appeal.

Together, Apple and Samsung control more than half of the fast-growing smartphone market, and both are major players in tablets. The ruling has no immediate effect on the sale of either company's products, but Apple has requested injunctions against the sales of products found to infringe on its patents.

"While a billion dollars is significant, Samsung has the balance sheet to cover it," said Demetrios Anaipakos, a patent lawyer. "What's more substantial is an injunction. If Samsung is required to pull devices off the market, that will be much more expensive."

Quick decision

The speed and decisiveness of the ruling, which came after just three days of deliberations, startled observers who had been bracing for a long wait as the jury worked its way through an uncommonly detailed set of 700 questions involving several features and dozens of individual devices.

The jury found infringement by Samsung in six of seven patents raised by Apple in the suit. In five cases, the infringement was willful, the jury said, which enables Apple to seek to triple the billion-dollar damage award. Shares of Apple, the most highly valued U.S. company, jumped in aftermarket trading on news of its victory.

The jury found that various Samsung products violated Apple patents covering things such as the "bounce back" effect when a user scrolls to the end of a list on the iPhone and iPad, and the pinch-to-zoom gesture that users make when they want to magnify an image. Samsung was also found to have infringed Apple patents covering the physical design of the iPhone.

"Today's verdict should not be viewed as a win for Apple, but as a loss for the American consumer," Samsung said Friday night after the ruling. "It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies."

Apple had no immediate comment.

Lucrative licensing fees

The ruling could lead to higher licensing fees, which companies pay one another to use proprietary technology. Such higher costs could eventually raise consumer prices and send more profits to Apple should it choose to license its technology.

"Clearly Apple is the winner here in financial terms, with things coming from licensing down the road," said Al Hilwa, a technology analyst with International Data.

He predicted the net effect would be price increases for consumers. "Someone has to swallow these licensing fees," he said.

Hilwa said Apple's victory also stands to raise the value of patents held by other companies, including Redmond-based Microsoft and Research In Motion, maker of BlackBerry devices, whose fortunes have fallen as swiftly as the iPhone's have risen. Many companies have been buying up vast troves of patents in recent years, to prepare for legal battles and to collect licensing fees should the patents hold up in court.

Apple sued Samsung in April 2011, and Samsung countersued as part of a battle being waged on four continents over a smartphone market valued at $219.1 billion, according to Bloomberg Industries.

Many analysts considered the fight in a federal court in San Jose, not far from Apple's headquarters in Cupertino, Calif., to be the most important in the proliferating patent war among technology companies.

Those battles have played out in Britain, Germany and Australia. Also Friday, a court in South Korea, where Samsung is based, sided with that company in a suit dealing with similar issues, finding that Apple had infringed on Samsung patents in addition to patent infringement on Samsung's part.

A subtext throughout the federal case was the nature of innovation itself.

Apple submitted evidence showing internal Samsung communications in which executives openly fretted about the design advancements of the iPhone.

Samsung countered that consumer-product manufacturers routinely adopt each other's best ideas, and that some iPhone features were pioneered on devices from other manufacturers, including Samsung itself.

Analysts had predicted a Samsung victory might have caused future generations of smartphones, tablets and other electronic products to increasingly mimic Apple products because rival manufacturers would feel freer to appropriate popular features. Instead, Apple's victory, if upheld, will make other companies wary of hewing too closely to the look and feel of its devices.

Android targeted

This is especially true for products running on Google's Android operating system, which offered a popular alternative to Apple's mobile operating system and was eagerly adopted by Samsung and other manufacturers.

Apple's co-founder and former chief executive, the late Steve Jobs, was so enraged by what he saw as similarities between his products and those powered by Android that he called it "grand theft" and threatened "thermonuclear war" to protect the distinctiveness of Apple products through patent lawsuits, according to his biography, "Steve Jobs," by journalist Walter Isaacson.

"I will spend my last dying breath if I need to ... to right this wrong," Jobs said in the book, published shortly after his death in October. "I'm going to destroy Android because it's a stolen product."

Material from The New York Times, Bloomberg News and The Associated Press is included in this report.

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