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Big Stakes on Small Devices: Apple and Samsung Square Off in Federal Court

July 30, 2012 at 12:00 AM EDT
Jury selection began for a lawsuit Apple, Inc. filed against Samsung Electronics, in which Apple claims Samsung copied Apple's smartphone and tablet designs. Ray Suarez reports on a showdown over dominance in a $200 billion market.
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GWEN IFILL: Finally tonight, a pair of major tech companies square off in federal court over the big stakes surrounding small devices.

Ray Suarez has the story.

RAY SUAREZ: The trial that began today in California is ostensibly about patents related to software. But Apple and Samsung are locked in a much bigger showdown over dominance in a $200 billion-plus market.

Apple claims Samsung has illegally copied an operating system it says it pioneered in iPhones and iPads. It’s seeking $2.5 billion in damages. Samsung counters that, if anything, Apple has copied key parts of the iPhone from mobile phones of the past. Also implicated in the fight is another tech giant. Apple is upset over the Google Android phone operating system used by Samsung and other manufacturers.

Before he died last year, Apple founder Steve Jobs told his biographer: “I will spend every penny of Apple’s $40 billion in the bank to right this wrong. I’m going to destroy Android. I’m willing to go thermonuclear war on this.”

Laura Sydell is covering this story for NPR, and joins me now.

And what is it exactly that Apple says Samsung did, Laura? A copy? A theft? A lift? What do they say happened?

LAURA SYDELL, NPR: Well, it comes down to a few patents, actually.

So, for example, if you look at the shape of the iPhone, which we’re all familiar with now, you have that nice glass face. And you have this rectangular shape with rounded corners. Apple says they patented that design and that, if you look at Samsung phones before the iPhone came out in 2007, they had keyboards. They had sharp square edges and that, as soon as the iPhone came out, they changed the design, and so they were copying Apple.

Now, Samsung is countering that, in fact, they did make phones like that. They just weren’t as popular. And so while Apple can show you patents that it has for these sorts of things, the Patent Office actually isn’t always right. Sometimes, they grant patents that they shouldn’t have granted.

And I think you’re going to see Samsung making that case in court over the next month.

RAY SUAREZ: Each company is demanding billions of dollars from the other. Where does that rank in patent cases, in spats between companies over products?

LAURA SYDELL: Apple wants over $2.5 billion in damages. They say that Samsung has stolen sales from them. That is — that would be the largest patent verdict in history if they actually got it.

So in terms of patent cases, this one is huge. And the other thing you have to realize is, this is the first jury trial on this. But this battle has gone all over the world. I read I think it’s up to 50 countries that this has gone into, where you have Samsung and Apple going at each other over this.

And there have been some successes for Apple. The E.U. banned the Galaxy Tab 7.7 in all of Europe. Though, in this instance, it’s actually an older tablet computer, so it’s not going to matter so much. But this is really quite an epic battle between these giants.

RAY SUAREZ: Jury selection was today. Opening arguments are tomorrow, but they have already been in court a while. Hasn’t Apple already won some interesting concessions from the judge in this case?

LAURA SYDELL: Well, actually, the judge issued an injunction against two Samsung devices, a tablet and the Galaxy Nexus phone.

The Galaxy Nexus phone, which is actually for sale directly from Google — and I think you mentioned this, that in some ways this is a war against Google, because this is Google’s Android operating system in these phones.

So the judge issued an injunction on that phone, but then it was stayed by a higher court. So for the moment, you can still buy that phone. And, again, this isn’t the first time there has been an injunction against some Samsung products.

But on the other hand, Samsung is throwing some patents back at Apple. That’s what happens with some of these big giants. You have these huge companies. They each have basically satchels filled with thousands of patents. So, Samsung has some essential patents that are important to all phones.

Apple is saying, you have to license them to us, which is true. They do. And you have to license them to us at a fair price. And they’re saying Samsung is asking too much. So, you’re seeing them throw these patents back and forth at each other.

RAY SUAREZ: Help me understand this animus towards Google a little better.

When the late Steve Jobs talked about thermonuclear war, every device needs an operating system. Why is Steve Jobs so angry about Android in a Samsung product?

LAURA SYDELL: Well, he says that Android, the way Android works copied all kinds of things from Apple’s operating system.

So, for example, if you look at an Apple phone and you scroll through your contacts, you will notice when you get to the very end, say, A., it bounces back, right? And there is this little bounce.

And that same kind of bounce was put into the Android operating system, although now, in a concession to Apple, they have taken it out of the Samsung phone. So that’s the kind of thing they’re fighting over, these little things that I guess to Apple — Apple feels like these are the kinds of things that make their products really elegant.

And, indeed, Apple makes really elegant products. But just because Apple put things together beautifully doesn’t necessarily mean they’re entitled to protection from the patent system. Many of these things may have already been out there. People may have been doing them. They just didn’t do them as well as Apple.

RAY SUAREZ: Well, the judge in this case is a former patent attorney herself. But the 12 jurors aren’t. Isn’t this going to be a fairly demanding technical argument for a lay jury?

LAURA SYDELL: It is. And I should say there will be 10 jurors in this case, not 12.

RAY SUAREZ: Ah.

LAURA SYDELL: It will.

But, remember, this is taking place in Silicon Valley. And actually, today, in selecting a jury, the trouble they were having is how many of the jurors in one way or another had professional connections to one of these companies. I mean, you’re talking about Silicon Valley. Everybody works for the tech world. It’s a one-company town.

So I think actually you’re likely to get a jury that really understands it. There’s also, I think, if you find — in Silicon Valley, it is my experience there is some animus towards the patent system.

So I think there are some people who may not be so sympathetic to Apple in this case. Again, you’re talking about often very incremental patents. And there’s a general feeling among many people — in fact, recently Judge Richard Posner, a very famous jurist, threw out a case between Apple and Motorola, saying that he thought the whole patent system had just become ridiculous.

So, it’s possible you’re going to have people in the jury pool who will lean that way. There are other people who are going to love Apple and realize that Apple changed, undeniably, the smartphone market and that they should be entitled to some reward for changing the smartphone market.

Apple created the iPad. And there had been tablet computers before that, but there’s no doubt that the iPad opened that market up in a new way. And shortly thereafter, Samsung came out with tablets that looked a lot more like iPads.

RAY SUAREZ: NPR’s Laura Sydell, thanks for joining us.

LAURA SYDELL: You’re welcome.