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A Trick For Understanding Trials - Apple's Trial Brief as text, and Trade Dress ~pj
Sunday, August 05 2012 @ 11:08 PM EDT

I want to show you a little trick that will help you understand trial testimony. I'll use Apple's Trial Brief [PDF], which we have now as text, in the Apple v. Samsung litigation, just because it's current, but this works with any civil trial. Then I want to show you, again using Apple's trial brief, why Samsung may have felt it needed to stir things up a bit last week.

You have probably seen articles in the media about the testimony of Phil Schiller and other recent Apple witnesses, where some seemed to wonder why the lawyer wasn't asking questions with more punch. Why go on and on about ad campaigns and how much money they spend on it? It may be interesting. But what does it prove? Why should the jury hear about that? Why does the lawyer ask about ad campaigns in a trial about patents, design patents, and trade dress? I'd like to show you.

The Verge, for example, live blogged Schiller's testimony, and it reported this:

They're discussing iPhone marketing after the release. "Leading towards June we began to carefully turn on the marketing. First we held a TV ad during the Academy Awards... and then as we got closer to the launch in June we started to bring in additional ads."
Was he just rambling? No. Wait and see. And then this:
9:28 AM - We're now looking at a summary of news articles from the iPhone launch. David Pogue and Walt Mossberg are both featured, touting the iPhone as a "breakthrough" product. Schiller calls Mossberg's piece "a great review that we were so happy to get" and "an over-the-top positive reaction."

9:29 AM - As each review is admitted into evidence, the jury is instructed that they're not to consider the reviewers' comments to be factual truths.

All right. Reading from newspapers? Why? If not for establishing truth, then for what?

I told you when we posted Samsung's trial brief as text that parties file their trial briefs just as the trial is about to begin, and it has the purpose of letting the judge know what each side plans to present, what it hopes to prove, and what the contested legal issues are likely to be. That helps the judge to prepare. But now it's going to help us too.

Let's look at what the trial brief says about Phil Schiller, for example, and Chris Stringer, and match the testimony up with what Apple said in its brief it intended to prove. Here's what the brief says Apple had in mind to bring out via these witnesses:

Apple will show likely confusion under the factors set forth in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), which include (1) strength of the trade dress; (2) similarity of the trade dress; (3) evidence of actual confusion; (4) marketing channels used; and (5) defendant's intent in selecting the trade dress. Likely confusion can occur before a purchase, at the moment of the purchase ("point of sale"), or "post-sale," such as when a consumer sees somebody using a Galaxy Tab 10.1 in a cafe and wrongly assumes that person is using an iPad. Apple relies on both point-of-sale and post-sale confusion.

Apple will present overwhelming evidence of likely confusion under the Sleekcraft factors. This evidence will show that Apple's iPad trade dress is strong and closely associated with Apple. Philip Schiller, Apple's Senior Vice President of Worldwide Marketing, will testify regarding Apple's widespread advertising campaign for the iPad that specifically emphasizes its distinctive appearance; the extensive and highly favorable coverage by the media and industry analysts; the iPad's outstanding commercial success; and Apple's and Samsung's head-to-head competition.

Apple will also present evidence of a survey conducted by Hal Poret, which confirmed that consumers associate the iPad trade dress with Apple. Russell Winer, a highly experienced marketing expert, will testify that Apple's trade dress is strong, and that Samsung's competing products are sold in similar marketing channels to Apple's.

Apple will also present evidence that Samsung's accused tablets are very similar to the iPad trade dress, and have caused actual confusion. The similarity is clear from a direct comparison between Samsung's tablets and the iPad trade dress. It is also shown by widespread comments in the media and by others struck by the similarity. Apple will present evidence of actual confusion -- consumers who mistook Samsung's tablets for iPads -- even though such evidence is not required to prevail on a trade dress infringement claim. This evidence includes Samsung documents that show [retacted]. (PX59 at 19.) It also includes a survey conducted by Kent Van Liere, which concluded that consumers are likely to associate Samsung's Galaxy Tab 10.1 with Apple in a post-sale environment.

Apple will also show that Samsung deliberately copied Apple's iPad trade dress, and even redesigned its Galaxy Tab 10.1 to make it look more similar to the iPad 2. This evidence includes Samsung's own documents and admissions.

In addition to showing likely confusion, Apple will show that Apple's iPad trade dress is distinctive and non-functional, and thus protectable. Trade dress is distinctive when consumers identify the trade dress with a particular source. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1261 (9th Cir. 2001). Factors relevant to distinctiveness include (1) the length and nature of Apple's use of the trade dress; (2) the nature and extent of Apple's advertising and promotion of its trade dress; (3) efforts made to promote a conscious connection between Apple's trade dress and Apple's products; (4) association of Apple's trade dress with Apple by purchasers of Apple products using the trade dress; (5) successful use of the trade dress to increase Apple's sales; (6) whether Apple authorized anyone else to use its trade dress; and (7) whether Samsung intentionally copied Apple's trade dress. Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 517 (9th Cir. 1989). The evidence from Mr. Schiller and others that shows Apple's trade dress is strong also establishes the requisite distinctiveness.

As for functionality, a trade dress is not functional unless, taken as a whole, the trade dress is essential to the use or purpose of the device or the trade dress affects its cost or quality. Clicks Billiards, 251 F.3d at 1258. Factors relevant to the functionality of a trade dress include whether Apple's advertising touted the utilitarian advantage of its trade dress; whether the trade dress results from a simple or inexpensive method of manufacture; whether the trade dress yields a utilitarian advantage; and whether alternative designs are available. (Dkt. No. 1159 at 5.) Apple will show that its iPad trade dress is not functional under these factors, based on the testimony of Apple employees and experts, as well as documentary evidence, including the evidence that this Court cited in denying Samsung's motion for summary judgment. (Id. at 5-7.) Chris Stringer, a Senior Director of Industrial Design at Apple, will testify that aesthetic rather than functional considerations drove the design of the iPad and iPad 2. Design expert Peter Bressler will testify that the design of the iPad and iPad 2 is not essential to the use or purpose of these devices.

See how clear it is, when you hold the trial brief in one hand while you listen to or read about the witness testimony? It's all carefully planned and mapped out, and the questions sync up with what needs to be proven.

These claims in this case have certain elements, or factors, the plaintiff, Apple, has to prove by evidence, meaning testimony or something on paper or whatever. You see the numbered items up above. Those are the factors that are considered when you try to prove customer confusion, and you have to establish them by evidence, and witness testimony is direct evidence, as the judge here explained [PDF] to the jury, "Direct evidence is direct proof of a fact, such as testimony by a witness about what that witness personally saw or heard or did."

There are two claims mentioned, trade dress infringement and trade dress dilution. To prove confusion regarding the first, you have to prove:

  • strength of the trade dress, meaning what it looks like and whether the look is functional or purely decorative, the former being unprotectable;
  • similarity of the trade dress of the allegedly infringing product, in this case how much Samsung's products look like Apple's;
  • evidence of actual confusion, like customers buying one product thinking it's another
  • marketing channels used, meaning that the two are actually competing products, so if one copies the other and people buy it by mistake, the one copied is logically losing sales; and
  • defendant's intent in selecting the trade dress.

Now notice what these witnesses are reported to have said on the stand. See the match up? I'm sure we'll notice an even closer match, once the court releases the transcripts in three months, but even now you can see what each witness was there to establish. Chris Stringer, for example, was there to give testimony that Apple made the choices that it did to make a beautiful product, not for function alone. Schiller was there to, as the brief puts it, "specifically emphasizes its distinctive appearance; the extensive and highly favorable coverage by the media and industry analysts; the iPad's outstanding commercial success; and Apple's and Samsung's head-to-head competition." And that's what he did, precisely.

Update: It occurs to me I should explain why Apple wants it to be deemed beauty and not function. Here's an explanation of trade dress law, and what you need to have to be protected:

There are two basic requirements that must be met for trade dress law protection. The first is that the protectable features must be capable of functioning as a source indicator—identifying a particular product and its maker to consumers. In the United States, package design and building facades can be considered inherently distinctive. However, product design can never be inherently distinctive. Therefore, product design trade dress or other designs that cannot satisfy the ‘inherent distinctiveness’ requirement may only become protectable by acquiring ‘secondary meaning.’ Secondary meaning requires that the product design acquire an association in the public mind with the producer of the goods.

Under the functionality doctrine, trade dress must also be nonfunctional in order to be protected. If the element is functional, protection should be sought under patent law. What is functional depends upon the particular product. To be nonfunctional, it cannot affect a product’s cost, quality, or a manufacturer’s ability to effectively compete in a non-reputational way. For example, color is functional in regard to clothing because that product is purchased substantially because of its color and appearance, but color is not functional on household insulation, which is purchased purely to be installed in a wall and is never seen. In fact, courts have found that the color of certain building insulation constituted protectable trade dress.

Adoption of another’s business’s trade dress may be infringing if it confuses potential customers as to the origin of the goods.

More details here. And here's Bitlaw on trademark infringement.] - End update.]

Like I say, it's all planned out in advance. Here's the AMF v. Sleekcraft decision, by the way, in case you want to read it. Some cases set the tone for an entire type of issue, and this is one of them, Apple says. It was a trademark infringement case, where the issue was confusion. How do you establish, by law, whether customers are or are not confused? You sometimes can't. Maybe there's a new product out, and you think it's a problem and you'd rather not wait for customers to be confused. Or, sometimes you can prove customer confusion, and that would indicate that future confusion is also going to happen. And that's where the factors come in, and they are factors as to *likelihood* of confusion. The decision explains all 8 of the factors. Yes, there are 8, not 5, as Apple listed:

In determining whether confusion between related goods is likely, the following factors are relevant:

1. strength of the mark;
2. proximity of the goods;
3. similarity of the marks;
4. evidence of actual confusion;
5. marketing channels used;
6. type of goods and the degree of care likely to be exercised by the purchaser;
7. defendant's intent in selecting the mark; and
8. likelihood of expansion of the product lines.

See, e. g., Sleeper Lounge Co. v. Bell Manufacturing Co., 253 F.2d at 722; Restatement of Torts s 731 (1938).

It was a case about boats, AMF's called Slickcraft and another company called its line of boats Sleekcraft. I know. Confusing. And both boats, both quality boats, and competing in the same marketing channels. Both had used their marks for over a decade. Neither wanted confusion. But the court found against Sleekcraft boat's owner, on the basis of the likelihood of confusion. But why is that so bad? Is it just lost business? No, it's also reputational. The decision explains:
The high quality of defendant's boats is also relevant in another way. The hallmark of a trademark owner's interest in preventing use of his mark on related goods is the threat such use poses to the reputation of his own goods. ... When the alleged infringer's goods are of equal quality, there is little harm to the reputation earned by the trademarked goods. Yet this is no defense, for present quality is no assurance of continued quality.... The wrong inheres in involuntarily entrusting one's business reputation to another business; ... AMF, of course, cannot control the quality of Sleekcraft boats. In addition, what may be deemed a beneficial feature in a racing boat may be seen as a deficiency to a person seeking a craft for general-purpose recreation; the confused consumer may then decide, without even perusing one, that a Slickcraft boat will not suit his needs. Finally, equivalence in quality may actually contribute to the assumption of a common connection.
But, you may say, how stupid would you have to be to buy a Samsung phone and not realize you didn't buy an Apple iPhone? The law doesn't care. Stupid buyers are not excluded, any more than they are in real life:
In assessing the likelihood of confusion to the public, the standard used by the courts is the typical buyer exercising ordinary caution.... Although the wholly indifferent may be excluded ... the standard includes the ignorant and the credulous.
Just like real life. And now you understand why you keep hearing witnesses talking about confusion.

Intent matters. If the defendant, the case goes on, shows a good faith intent to avoid confusion, fashioning a remedy may be lighter on the defendant, even if confusion is proven. That's part of why Apple keeps painting Samsung as deliberately and "slavishly" copying. They want a lot of money in damages. And more than money, they want an injunction to block Samsung's products, so it can't compete with them in the US.

Interestingly, the court of appeals did *not* order an injunction in the boats case. Instead this is what happened:

Both parties have used their trademarks for over a decade. AMF has a substantial investment in the Slickcraft name, yet a complete prohibition against appellee's use of the Sleekcraft name is unnecessary to protect against encroachment of appellant's mark, See Miss Universe, Inc. v. Patricelli, 408 F.2d at 510, or to eliminate public confusion. Appellee has also expended much effort and money to build and preserve the goodwill of its mark.

There is little doubt both parties honestly desire to avoid confusion of their products. Nescher adopted the Sleekcraft name in good faith and has subsequently taken steps to avoid confusion. Use of the Nescher logo in all facets of the business would ensure that confusion would not occur. The exhibits, particularly the yellow pages advertisements, convince us that this is not being done.

Thus, in "balancing the conflicting interests both parties have in the unimpaired continuation of their trade-mark use," Durox Co. v. Duron Paint Manufacturing Co., 4 Cir., 320 F.2d 882 at 885, and the interest the public and the trade have in avoiding confusion, we conclude that a limited mandatory injunction is warranted. Upon remand the district court should consider the above interests in structuring appropriate relief. At minimum, the logo should appear in all advertisements, signs, and promotional materials prepared either by appellee or by his retail dealers, and on all appellee's business forms except those intended for strictly internal use. A specific disclaimer of any association with AMF or the Slickcraft line seems unnecessary, nor do we think it necessary to enjoin Nescher from expanding his product line. In its discretion the district judge may allow appellee sufficient time to consume supplies at hand and to add the logo to more permanent assets, such as business signs.

That is how litigation can turn out when both sides act in good faith, and neither is just using the courts to kill off a competitor. Apple would have a fit if this litigation ended up like the boat case, don't you think? Why might that be, do you think? What's the X factor? Why is Apple fighting so hard? And Samsung too? Aside from what Samsung feels is the two judges making Samsung's lawyers fight with one hand tied behind their backs by excluding evidence over and over, look at what Apple is asking for in damages for its rectangle with rounded corners and other design patents, from its trial brief again:
The law provides that anyone who sells "a colorable imitation" of a patented design "shall be liable to the [patent] owner to the extent of his total profit." 35 U.S.C. § 289 (2006). The Federal Circuit has held that "total profit" means exactly that -- all profits received by the infringer for sale of the product without reducing that profit to account for the alleged contribution of the patented design. Nike, Inc. v. Wal-Mart, 138 F.3d 1437, 1442 (Fed. Cir. 1998); see also Bergstrom v. Sears, Roebuck & Co., 496 F. Supp. 476, 495 (D. Minn. 1980). Similarly, 15 U.S.C. § 1117 requires Samsung's to disgorge the profits it obtained from sales that dilute or infringe Apple's trade dress.
Yes, you read it right. It wants all of Samsung's profits from any product found to look too much like Apple's. 100%, without even subtracting for all the other features and technology that Samsung worked hard to invent, and paid R & D to think up, and put together. On top of that, Apple goes on to say, it wants damages for lost profits, in this case $500 million just for that, with interest and costs. And then it wants "similar remedies" for trade dress infringement and dilution as for patent infringement. Ka-ching.

Sound fair to you? Or does it sound like a double or triple scoop, where the real goal is harm to a competitor, not find a solution but a punishment?

It doesn't have to be like this. You saw that in the boat case. Notice from the ruling [PDF] by Judge Richard Posner in the separate but thematically related case of Apple v. Motorola, another Android vendor. He threw the case out, claims and counterclaims, and here's part of why he thought no injunction made sense either:

A further objection to Motorola’s claim for injunctive relief applies to Apple’s claim for such relief as well. The grant of an injunction is not an automatic or even a presumptive conse- quence of a finding of liability, either generally or in a patent case—in fact the Supreme Court has held that the standard for deciding whether to grant such relief in patent cases is the nor- mal equity standard. eBay Inc. v. MercExchange, L.L.C., supra, 547 U.S. at 391–92; see also Ecolab, Inc. v. FMC Corp., 569 F.3d 1335, 1351–52 (Fed. Cir. 2009). And that means, with immaterial ex- ceptions, that the alternative of monetary relief must be inade- quate. “[T]he inadequacy of one’s damages remedy is normally a prerequisite to injunctive relief.” Hoard v. Reddy, 175 F.3d 531, 533 (7th Cir. 1999); see also Walgreen Co. v. Sara Creek Property Co., 966 F.2d 273, 274 (7th Cir. 1992). “[A] plaintiff seeking an injunction is quite often successful precisely because he cannot calculate the damages he suffers.” Pelletier v. Stuart-James Co., 863 F.2d 1550, 1558 n. 15 (11th Cir. 1989). A FRAND royalty would provide all the relief to which Motorola would be entitled if it proved infringement of the ‘898 patent, and thus it is not entitled to an injunction.

In fact neither party is entitled to an injunction. Neither has shown that damages would not be an adequate remedy. True, neither has presented sufficient evidence of damages to with- stand summary judgment—but that is not because damages are impossible to calculate with reasonable certainty and are there- fore an inadequate remedy; it’s because the parties have failed to present enough evidence to create a triable issue....

Also ignored are the harm that an injunction might cause to consumers who can no longer buy preferred products because their sales have been enjoined, and the cost to the judiciary as well as to the parties of administering an injunction—which un- der the rubric of “public interest” is another factor that eBay re- quires me to weigh in deciding whether to grant injunctive re- lief. 547 U.S. at 391. The danger that Apple’s goal in obtaining an injunction is harassment of its bitter rival, requiring particu- larly watchful supervision by the court should it issue the in- junction, is suggested by the fact that while a delayed injunction would in principle render no benefit to Apple besides harming its competitor by forcing it to waste time and money finding a new way of performing the functions now performed in an al- legedly infringing manner, an ongoing royalty would yield significant income to Apple—yet which it wants to forgo in favor of imposing costs and litigation burdens on its adversary.

Because of the potential costs to Motorola and the federal judiciary I could not responsibly order injunctive relief in favor of Apple without knowing whether the lower cost of a compulsory license at a reasonable royalty would produce a better balance of hardships. I note, amplifying earlier points, the absence of evidence that if Motorola is infringing the patent claims at issue, it is imposing a significant cost on Apple. Consider the ‘002, which Apple charges is infringed by Motorola’s preventing partial obstruction of its smartphones’ notification windows. There is no evidence, and it seems more than unlikely, that occasional partial obstruction would appreciably reduce the value of Motorola’s smartphones to consumers—Apple didn’t even bother to install a notification window on its devices until last year. Consider next the ‘949, which Apple contends is infringed by Motorola’s enabling customers who buy a Motorola smartphone with a Kindle reader pre-installed to turn pages by tapping on the screen rather than by swiping a finger across it (which actually is more like turning pages than tapping is). Consider the ‘263, the realtime patent, alleged to be infringed by Motorola’s adopting a method for avoiding glitches in “real time” communications (such as movies) that has not been shown to provide a superior experience to consumers than al- ternative, noninfringing realtime software or hardware or oth- erwise drive consumer demand for the iPhone. And consider the ‘647 (structural linking and detection), which also provides unproved consumer benefits.

The notion that these minor-seeming infringements have cost Apple market share and consumer goodwill is implausible, has virtually no support in the record, and so fails to indicate that the benefits to Apple from an injunction would exceed the costs to Motorola. An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare. That is the insight behind the “balance of hardships” component of the eBay standard for injunctive relief in patent cases.

And I must not lose sight of the basic principle that injunctive relief is available only when the remedy at law is inadequate—that is, only when damages would not provide complete relief. As noted in Stickle v. Heublein, Inc., 716 F.2d 1550, 1563 (Fed. Cir. 1983)—though the point is too obvious to require a citation—a patentee can’t obtain an injunction (and, by parity of reasoning, an ongoing royalty in lieu of an injunction) if either damages or an equitable substitute such as a running royalty would provide complete relief. Ordinarily a running royalty, combined with the damages remedy for past sales, should provide full compensation to the patentee, thus obviating injunctive relief.

That was refreshing, wouldn't you say? So Apple's desire for everything, damages *and* an injunction, sounds like overreaching, wouldn't you say? I'd say. The judge in Apple v. Samsung might not see it that way. That's the trouble with litigation. There are a lot of variables, including the inclinations of a judge. But I believe Posner has it right. There should be a balancing of benefit and loss to both parties, even if there is infringement proven. Because when you put a competitor out of business, customers suffer. A lot of people *want* Android products from Samsung, and they do know they are not buying an Apple product. Some of them are perhaps even doing it on purpose, because they don't much care for Apple's slash-and-burn litigation jihad against Android. Some think they are better than Apple products.

By the way, you should read the entire Posner ruling. It's like a cool drink of water on an August day. Here's another ruling [PDF] of his, where he sees through an Apple legal maneuver. Apple has been portraying Samsung like it's the bad guy, but trust me, both sides are fighting with real bullets, so to speak.

This judge is worrying me, as is the magistrate. I am worrying they may be putting administrative rule-keeping decisions they issue way above making sure the jury gets all the relevant evidence. Is there some reason why expedited scheduling is more important than getting this right? As Samsung's lawyer asked the judge when she refused to allow evidence to be used, Why even have a trial? What's the point?

I'll give you an example. Apple goes on and on about Samsung being late with evidence in discovery. They were. Three times that I've counted as I've been reading as many of the filings as I could over the weekend, trying to get up to speed. And as a result, the judges ruled in various rulings that they can't use certain evidence to defend themselves at trial. Do you know how late Samsung was in the three instances I found? Two days late on two occasions, and one month late on another.

Or read this Order [PDF] in March by Judge Koh, denying Samsung the right to add five new examples of prior art. Samsung heard about the prior art, tried to investigate, had some difficulty finding computers to run the stuff on, negotiated with Apple to try to avoid motion practice -- you guessed it, after a while Apple said no -- and then Samsung gets smacked by the judge for taking too long to ask to amend. Read the dates for yourself. See how reasonable it seems, and then add on to it more and more such orders. Does it seem fair to you or a little schoolmarmy? With so much as stake, on both sides, shouldn't evidence in the jury's hands be more important than a party being two days late?

That's what has Samsung worried. The judge keeps removing evidence from their side. Just over and over. Here's the latest denial.

Now, being late matters, especially if it's planned. And newly discovered evidence can certainly be banned if it's too late and there is the likelihood that it was strategically held back or it would be prejudicial to the other side. That happened to SCO in the IBM case, if you recall. And I don't know all the specifics here, but if you look at all the separate pieces of evidence being tossed overboard in this case, there does seem to be pattern. I haven't followed the case closely enough from the beginning to know if Samsung has been delinquent, or if Apple has too (it's been sanctioned too, you know), or if the court is overly strict about sanctioning everyone right and left. But something feels wrong. It doesn't feel normal.

Here's another example. Apple in its trial brief, after telling the court about the billions they want in various categories of damages, writes that Samsung claims the design patents cover features nobody buys a phone to get and in any case could be removed in less than a month of coding:

Samsung in contrast claims that Apple's sole remedy should be an absurdly low royalty payment of $28,452. This number is based on Samsung's belief that it would take less than a month fully to design around all of Apple's intellectual property, and that it could do so without losing a single sale. Samsung's position is based on self-serving, hypothetical testimony from its own engineers, as translated by Samsung's in-house litigation attorneys. The testimony violates Judge Grewal's order regarding evidence of Samsung's alleged design-arounds with respect to the '381 and the '163 Patents. (Dkt. No. 1106 at 3-4.) Moreover, it is inherently incredible. If Samsung could have avoided this lawsuit and this trial at a cost of less than $30,000, it would have done so.

If ordered to remove the features, it can quickly do so, and so any damages for future use should be a non-issue. Ditto an injunction. How useless would it be? Now, personally, I don't know yet how the experts are doing their calculations of damages, but would it amaze you if I pointed out that plaintiffs *always* ask for the moon and defendants find an extremely low figure to be fair?

It won't be either figure. Not if we are looking at what normally happens.

But my bigger point is this: Samsung, because it was late in discovery, can't present this evidence of how easily it can remove the features and how it wouldn't lose a sale doing so. See what I mean? But that's relevant to the issue of a permanent injunction, which Apple says it also intends to ask for.

The judge has said that some evidence that can't be used with the jury can be used in the damages phase, if there is one, so it's not hopeless. But what I see is that Samsung is fighting with less and less to work with. At some point, the trial does become pointless.

And there is more from Apple:

Under Ninth Circuit law, it is Apple's burden only to establish Samsung's gross sales associated with the trade dress violation, and Apple then enjoys a presumption that this sum may be recovered as damages. Rolex Watch, U.S.A., Inc., v. Michel Co., 179 F.3d 704, 712 (9th Cir.1999) (plaintiff carries burden to show with "reasonable certainty" defendant's gross sales from infringing activity). Samsung bears the burden of establishing all deductions, whether for costs that are "actually attributable to sales of the infringing items," or for amounts that are "demonstrably not attributable" to the protected design. Nintendo of Am. v. Dragon Pac. Int'l, 40 F.3d 1007, 1012 (9th Cir. 1994); Kamar Int'l, Inc., 752 F.2d at 1329.

Samsung adopted an excessively aggressive position on apportionment that it could not support, and as a result all of Samsung's evidence on apportionment has been excluded under Rule 702. (Dkt. No. 1157 at 9-10.) Samsung therefore cannot rebut the presumption that all of its infringing sales are attributable to infringement, and Apple will recover all of Samsung's profits on the infringing or diluting sales. Nintendo of Am. v. Dragon Pac. Int'l, 40 F.3d 1007, 1012 (9th Cir. 1994) ("where infringing and noninfringing elements of a work cannot be readily separated, all of a defendant's profits should be awarded to a plaintiff").

Get it? Samsung can't use that evidence either, according to this court's rulings, because it "adopted an excessively aggressive position on apportionment". Remember in the Oracle v. Google litigation, the judge gave Oracle three tries to get an expert's damages report right? Here it's off with their heads. At this rate, all Samsung will get to do at trial is stand there and listen to Apple tell the jury what awful things Samsung allegedly did and stand there with its head down. Like a trial in China. I'm sorry, but that's just not fair, even if Apple thinks it is, not even if the judge thinks it is, not for lateness or whatever the high crimes and tardiness misdemeanors were.

Why is Apple being so extreme? Don't forget that on top of all the money it wants to make it "whole", it intends to ask for a permanent injunction. Why? Because of what Steve Jobs said, that he planned to go thermonuclear and destroy Android, I'd say.

By the way, Samsung isn't allowed to tell the jury about that either.

And as you'll see as you read through the trial brief, Apple says in a number of places that Samsung is estopped from saying this or that or should be. That means Apple's position is that there are even more things Samsung shouldn't be allowed to say to the jury. Here's just one example, from page 40:

Samsung has failed to come forward with evidence sufficient to prove literal infringement or to satisfy the legal standard governing the doctrine of equivalents. Specifically, Samsung has utterly failed to provide the particularized testimony and linking argument that is required before Samsung can rely on the doctrine of equivalents. Therefore, the Court should not permit Samsung to rely on this theory in any way, including the presentation of any evidence to the jury in support of this assertion. See, e.g., Amgen, 580 F.3d at 1382 (doctrine of equivalents requires "particularized testimony and linking argument").

For example, Dr. Yang offers the conclusion in his report, unadorned by any supporting analysis, that "[u]se of swiping on iPhone 4S is insubstantially different from use of scroll keys," and "[u]nder the doctrine of equivalents, swiping meets this claim element."8

(See Yang Opening Report at Ex. 1A-1, step three (asserting "doctrine of equivalents" but omitting function/way/result or other particularized analysis).) This purely conclusory testimony without any linking argument falls far short of the applicable legal standard and is precisely the type of generalized and unsupported evidence that should be excluded from the trial. Further, Dr. Yang's expert report provides no argument regarding infringement of any other limitations of claim 1 under the doctrine of equivalents.
Here's another on the next page, page 41:
In any event, Samsung has failed to provide the particularized testimony and linking argument that is required before Samsung can rely on the doctrine of equivalents.

Therefore, the Court should not permit Samsung to rely on this theory in any way, including the presentation of any evidence to the jury in support of this assertion. See, e.g., Amgen, 580 F.3d at 1382 (doctrine of equivalents requires "particularized testimony and linking argument").

It's not just one order by these judges; it is all of them together. I mean, here's another ruling [PDF] by the magistrate judge. It's a decision on motions by both parties, Apple and Samsung, each trying to exclude evidence in experts' reports. The judge says both parties have shown problems:
Unfortunately, in either its conception or execution or both, expert trial testimony in patent cases is often far from perfect. This case is no exception. Most importantly for this order, many of the expert reports offer theories or rely on evidence never previously disclosed as required. Even if disclosed somewhere, the parties have forced each other to comb through the extraordinarily voluminous record to find them, rather than simply amending their contentions or interrogatory responses as they should. This is unacceptable. Patent litigation is challenging and expensive enough without putting one party or the other to the task of sifting through mountains of data and transcripts to glean what is at issue. At the same time, the line between permissible application of a disclosed theory to disclosed evidence and impermissible reliance on either a new theory or new evidence can blur. Under these circumstances, when asked to strike some or all of an expert report, the court must revert to a simple question: will striking the report result in not just a trial, but an overall litigation, that is more fair, or less? With this framework and these standards in mind, the court turns to the two motions to strike before it.
By all means read it all, but after saying both parties had issues with their experts, here's how he ruled, expert by expert. Apple moved to strike portions of the following expert reports Samsung wants to use, so every time you read a GRANTED, it means something a Samsung expert wanted to testify about is not going to be permitted to be presented to the jury, whether about invalidity of a patent or prior art:
Apple:
Robert Anders - GRANTED and GRANTED on both issues raised
Stephen Gray - GRANTED on 7 of 10 invalidity contentions. Denies on another issue and instead orders further deposition opportunity.
Nicholas Godici: GRANTED and GRANTED on both issues.
Jeffrey Johnson: DENIED.
Sam Lucente: GRANTED, GRANTED and GRANTED on three issues.
Itay Sherman: GRANTED, GRANTED and GRANTED.
Andries Van Dam: GRANTED.
Brian Von Herzen: GRANTED on one issue; DENIED on another, and GRANTED on a third and GRANTED on a fourth.
Michael Wagner: DENIED but orders deposition opportunity on two issues.
Tim Williams: GRANTED.
Woodward Yang: DENIED.
Here's how Samsung fared:
Samsung:
Ravin Alakrishnan: DENIED but orders further deposition opportunity.
Peter Bressler: GRANTED as to mentioning devices; denied as to reviews, comparisons and design elements.
Tony Givargis: DENIED and DENIED.
Susan Kare: GRANTED.
Michael Maharbiz: DENIED and GRANTED.
Terry Musika: DENIED.
Sanjay Sood: DENIED.
Russel Winer: DENIED
If you are Samsung, looking at this list, what are you thinking? I'm thinking it too.

The judge is quoted in InformationWeek by Charles Babcock as saying that the rulings have been even with regard to exclusions due to being late, this on the day she decided not to sanction Samsung:

Koh, a young judge who's been on the bench for only two years, addressed the matter at the start of Friday's session. She said both sides had been dealt with the same way when it came to belated evidence. "Apple's untimely discoveries have also been barred," she said...
It might be worth checking those stats.

It does seem to be a deliberate Apple strategy, to just knock out as much of Samsung's ability to tell its story as it can, and in fact, that's what lawyers are supposed to do, if it's all true and fair. But forgive me if at least one eyewitness, me, concludes that this indicates that Apple is pretty sure it can't win *unless* it excludes a great deal of Samsung's evidence, both for its defense and for supporting its counterclaims. If I am right about that, it means it feels it can't win fair and square. I mean, that's where strategies like this come from. It's expensive to lawyer like this, and you don't normally bother if you know you can easily win with both sides putting all their evidence in front of the jury. So Apple is either worried, or it's a serious bully. That indicates to me that Samsung can't be the bad guy Apple is portraying it to be. There's more to this story, and they don't want the jury to hear about it.

I don't know why there seems to be this tilt Apple's way on the part of the judges. Maybe a patent lawyer would understand it perfectly, and could explain it as normal, but it looks odd to me. And I gather it looks odd to Samsung too.

What might that rest of the story be? Here's one example showing part of the story, from a ruling [PDF] on Samsung's motion for summary judgment on some of Apple's claims, from Judge Lucy Koh on May 12th, that I stumbled upon as I'm trying to get up to speed on this case, now that we're covering it, since we didn't do so from the beginning. It goes into Apple's FRAND claims. To understand this, you need to know that French law is binding on deciding the FRAND claims. Here's what she wrote about one of Apple's claims:

Under French contract theory, “an offer must be specific enough for the contract to be formed by a simple acceptance of the person to whom the offer is communicated.” Libchaber Decl. ¶ 70. At the hearing, the parties disagreed primarily as to whether French law requires a price term in order to create an enforceable license. See also Molfessis Decl. ¶ 30 (“Absence of the determination of the price does not void the contract. However, if the parties abuse their right to determine the price, it will only give rise to indemnities or to allow revocation.”). Even assuming, without deciding, that Apple is correct that French law does not require a price term, taken as a whole, it is not plausible that Samsung’s FRAND declarations constitute an offer to license. The FRAND declarations fail to specify not only the royalty rate, but also the duration of the license, as well as the geographic scope of the license. Reply at 10. Apple now argues that these terms can be implied: the geographic scope could be the geography covered by the patent, the duration can be the patent term, and the royalty rate can be supplied at a later date. However, there is no indication that the FRAND declarations in fact imply all of these terms. Instead, Samsung’s FRAND declarations, merely state that Samsung was “prepared to grant irrevocable licenses on fair, reasonable and non-discriminatory terms.” ACR ¶ 63.

Apple has also failed to establish acceptance by performance. Professor Molfessis opines that “the idea of acceptance by way of performance of the offered contract is acknowledged as a general principle” of French contract law. Molfessis Decl. ¶ 93. While offer and acceptance may proceed as described by Apple, this theory is inconsistent with the ETSI IPR Policy and the FRAND declarations, and the subsequent conduct of Apple itself. Samsung, as well as other ETSI members submitting FRAND declarations, state only that they are “prepared to grant irrevocable licenses.” These statements neither implicitly, nor explicitly establish that the offeree takes a license merely by adopting the standard and practicing the patented technology. Nor is it plausible that anyone who uses the technology has a preexisting license merely because an ETSI member submitted a FRAND declaration. If this were the case, manufacturers and producers could utilize patented technology in silence without ever expressing acceptance or paying royalties.

That is, of course, precisely what Apple has been doing, using the Samsung patents without accepting Samsung's terms or paying any royalties.

And if you believed Apple when it says that Samsung refused to offer it a license:

Finally, additional allegations in the Amended Counterclaims belie Apple’s allegations that it already has a license to Samsung’s Declared-Essential Patents. Apple alleges that it entered into negotiations with Samsung over a FRAND license and that “Samsung finally offered Apple a license to its Declared-Essential Patents on July 25, 2011.” ACR ¶ 77. If Apple believed that it already owned a license, it is unclear why Samsung would be obliged to offer Apple a license. Ultimately, it is not plausible that the parties consented to the arrangement that Apple claims is now in place.
You don't have to be a legally trained judge to see that there is a logical problem in this picture. Apple claims that Samsung refused to offer a license to its standards-related patents. Then Apple says the royalty price Samsung is "demanding" for a license is too high. I mean. Duh.

It's also not true that you can't get an injunction regarding your FRAND patents, as Apple declares. Here's a lawyer who writes the law on that is unclear, and it is. Apple wants it to be the law that Samsung can't get an injunction, but that's not the case yet.

So, don't expect you have understood all there is to understand about this case in a quick sound bite. This story, on both sides, is deep and complex. I still don't know who should prevail, if you analyze it based on how patent law is, not how it should be. Mostly we've heard Apple's side of the story in the media up until recently, and Apple goes first in the trial, so all the stories are about Apple and its case, and that's natural. But there is another side to come. So just as lawyers tell juries to wait until you hear the whole story, I think we should do exactly that too.

You know why I think Apple believed it might work to file a "recommendation" that the judge just hand a win to Apple as a sanction against Samsung for talking to the press (as if Apple hasn't been doing the same long before the jury was seated, meaning while they actually *could* be tainted by the media)? I suspect it's because this court has been chopping Samsung's case to bits to such an extent already, Apple thought it just might work. And if John Quinn had not made his protest known so audibly and so effectively, it just might have.

If you were Samsung, and you saw this happening to your case, what would you want your lawyer to do? Say, "Oh, OK, Your Honor, whatever you think best"? Well, that's not real life in the world of litigators. They know for sure that judges can make mistakes too. And if they are talented, they don't have to just stand there and hope for the best on appeal. As one lawyer famously said, lawyers are not potted plants. They are supposed to speak, to zealously defend their clients, not just stand there. That's their job.

Update 2: Howard Minz at Mercury News is continuing his daily live blogging, and he reports this sequence, in reverse chronological order, about some evidence Samsung has been trying to get before the jury for some time:

Judge Koh lets Samsung put in its F700 phone for the limited purpose of showing alternative designs, could get raised during cross of Bressler...we'll see if Samsung can avoid "crossing the line," judge's warning.... by hmintz

Samsung argues it has right to cross-examine Bressler, while Apple says any references to the prior phone should be barred because of Samsung's troubles with discovery rules.... by hmintz

Samsung atty trying to get its F700 phone, a pre-iPhone design that had been excluded, into trial (been barred so far)...more material left on cutting room floor that Samsung hoping to get in front of the jury...Koh mulling it for limited purposes (not to prove Samsung's prior art argument)..

Just sayin', y'all.

And with all that, here's Apple's trial brief, as text:

***************************

HAROLD J. MCELHINNY (CA SBN 66781)
[email]
MICHAEL A. JACOBS (CA SBN 111664)
[email]
RACHEL KREVANS (CA SBN 116421)
[email]
JENNIFER LEE TAYLOR (CA SBN 161368)
[email]
ALISON M. TUCHER (CA SBN 171363)
[email]
RICHARD S.J. HUNG (CA SBN 197425)
[email]
JASON R. BARTLETT (CA SBN 214530)
[email]
MORRISON & FOERSTER LLP
[address]
[phone]
[fax]

WILLIAM F. LEE
[email]
WILMER CUTLER PICKERING
HALE AND DORR LLP
[address]
[phone]
[fax]
MARK D. SELWYN (SBN 244180)
[email]
WILMER CUTLER PICKERING
HALE AND DORR LLP
[address]
[phone]
[fax]
Attorneys for Plaintiff and
Counterclaim-Defendant APPLE INC.

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

APPLE INC., a California corporation,

Plaintiff,

v.

SAMSUNG ELECTRONICS CO., LTD., a
Korean corporation; SAMSUNG ELECTRONICS
AMERICA, INC., a New York corporation; and
SAMSUNG TELECOMMUNICATIONS
AMERICA, LLC, a Delaware limited liability
company,

Defendants.

Case No. 11-cv-01846-LHK (PSG)

APPLE'S TRIAL BRIEF
Trial:July 30, 2012
Time:9:00 a.m.
Place:Courtroom 8, 4th Floor
Judge:Hon. Lucy H. Koh

PUBLIC REDACTED VERSION

TABLE OF CONTENTS

Page

I. SAMSUNG HAS VIOLATED APPLE'S INTELLECTUAL PROPERTY
RIGHTS ........................................................... 3
A. Samsung Infringes Apple's Design Patents ........................................................... 3
1. Apple's Elements of Proof ......................................................................... 3

2. Design patent infringement depends on whether Samsung's product
designs appear substantially the same to an ordinary observer as
Apple's patented designs................................................. 4

3. A patented design is "functional" only if the design is "dictated by"
function ................................................ 6

4. Samsung must identify a primary obviousness reference that creates
"basically the same" overall visual impression as the patented
design .................................................... 7

5. Some of Samsung's defenses have already been rejected or
excluded ............................................ 8

B. Samsung Infringes Apple's User-Interface Software Patents ................................ 9

C. Samsung Has Infringed and Diluted Apple's iPad Trade Dress and Diluted
Apple's iPhone Trade Dress.................................... 10

1. Samsung is infringing Apple's iPad trade dress ...................................... 11

2. Samsung has diluted Apple's iPad Trade Dress ...................................... 13

3. Samsung has diluted Apple's iPhone Trade Dress .................................. 14

4. Samsung's trade dress defenses are based on legally incorrect
premises ............................................... 15

II. SAMSUNG'S TORTS RESULT FROM AN INTENTIONAL CORPORATE
STRATEGY TO COPY APPLE AND ITS PRODUCTS ........................... 16
A. Samsung's Own Documents Show that Samsung Copied Apple ........................ 16

B. Samsung's Copying Establishes the Intent Required for Willful
Infringement and for Inducement and Supports Apple's Trade Dress
Claims ..................................... 18

III. SAMSUNG'S VIOLATION OF APPLE'S INTELLECTUAL PROPERTY
RIGHTS GIVES RISE TO BILLIONS OF DOLLARS IN DAMAGES ........................ 20
A. Apple Is Entitled to Substantial Monetary Damages ........................................... 20
1. Samsung's Profits ........................................ 21

2. Apple's Lost Profits ..................................... 22

3. Reasonable Royalty........................................ 24

B. Special Considerations Apply to Calculating Trade Dress Damages .................. 25
1. Samsung Cannot Rebut the Presumption That All Profits Are
Attributable to Samsung's Infringing Activity ........................................ 25

2. Actual Notice Is Not Required to Recover Damages for Violation
of Unregistered Trade Dress Rights ......................................................... 26

i

TABLE OF CONTENTS
(continued)

Page

IV. APPLE WILL BE ENTITLED TO A PERMANENT INJUNCTION............................ 26

V. SAMSUNG'S ASSERTED DECLARED-ESSENTIAL PATENTS ARE NOT
INFRINGED AND INVALID ..................................... 27

A. The '941 Patent ............................................ 28
1. Apple Does Not Infringe the '941 Patent ............................... 29

2. The '941 Patent Is Invalid ................................. 31

B. The '516 Patent ........................................... 31
1. Apple Does Not Infringe the '516 Patent ................................................. 32

2. The '516 Patent Is Invalid ................................................... 33

C. No Willful Infringement of the Declared-Essential Patents ................................ 33
VI. SAMSUNG'S RIGHTS IN THE ASSERTED DECLARED ESSENTIAL
PATENTS HAVE BEEN EXHAUSTED BY INTEL'S AUTHORIZED SALE OF
LICENSED BASEBAND CHIPS TO APPLE ............................................ 34

VII. SAMSUNG'S STANDARD-SETTING DECEIT RESULTS IN WAIVER OF ITS
RIGHTS TO ASSERT THE PATENTS AGAINST APPLE ............................... 36

VIII. SAMSUNG IS ESTOPPED FROM ASSERTING ITS PATENTS AGAINST
APPLE BECAUSE OF ITS STANDARD-SETTING DECEIT ..................................... 37

IX. SAMSUNG'S FEATURE PATENTS ARE NOT INFRINGED AND INVALID ......... 37

A. The '460 Patent .......................................................... 38
1. Apple Does Not Infringe The '460 Patent ............................................... 38

2. The '460 Patent Is Invalid .............................................. 41

B. The '893 Patent .............................................. 42
1. Apple Does Not Infringe The '893 Patent ............................................... 42

2. The '893 Patent Is Invalid ............................................... 43

C. The '711 Patent ........................................... 43
1. Apple Does Not Infringe The '711 Patent ............................................... 43

2. The '711 Patent Is Invalid ............................................. 44

D. No Willful Infringement of the Feature Patents....................................... 45
X. SAMSUNG'S STANDARD-SETTING DECEIT HAS RESULTED IN BREACH
OF CONTRACT AND VIOLATIONS OF THE ANTITRUST AND UNFAIR
COMPETITION LAWS ........................................ 45
A. Samsung Has Breached Two Contractual Obligations Critically Important
to the 3GPP Standard-Setting Process ..................................... 45
1. Samsung Repeatedly Breached Its Duty to Timely Disclose IPR ........... 46

2. Samsung Breached its Duty to Grant FRAND Licenses ......................... 47

B. Samsung Has Violated The Antitrust Laws By Its Standard-Setting
Misconduct .................................................... 49

ii

TABLE OF CONTENTS
(continued)

Page

XI. SAMSUNG'S CLAIMED DAMAGES ARE EXCESSIVE AND
UNSUPPORTED........................................................... 50
A. To The Extent That Samsung Is Entitled To Any Remedy, its FRAND
Damages Cannot Exceed $0.0049 Per Unit for Each Infringed Patent................ 50

B. The Royalty Damages Sought by Samsung on The '460, '711, and '893
Patents Are The Product of Flawed Methodology and Are Overstated ............... 53

XII. APPLE'S SUMMARY EXHIBITS COMPLY WITH FEDERAL RULE OF
EVIDENCE 1006 ........................................... 54

iii

TABLE OF AUTHORITIES

Page(s)

CASES

A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
960 F.2d 1020 (Fed. Cir. 1992) ..................................................... 37

AMF, Inc. v. Sleekcraft Boats,
599 F.2d 341 (9th Cir. 1979)............................................. 11, 20

Amgen Inc. v. F. Hoffman-La Roche Ltd.,
580 F.3d 1340 (Fed. Cir. 2009) ......................................... 30, 40, 43, 44

Amini Innovation Corp. v. Anthony California, Inc.,
439 F.3d 1365 (Fed. Cir. 2006) .................................................. 7

Apple Inc., v. Samsung Elecs. Co.,
678 F.3d 1314 (Fed. Cir. 2012) .................................. passim

Apple Inc. v. Motorola, Inc.,
No. 11-cv-08540,
2012 WL 1959560 (N.D. Ill. May 22, 2012) ........................................ 54

Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc.,
457 F.3d 1062 (9th Cir. 2006)...................................................... 15, 16

Bard Peripheral Vascular v. W.L. Gore & Assocs.,
No. 2010-1510,
2012 U.S. App. Lexis 13561 (Fed. Cir. Jun. 14, 2012) .............................................. 19

Bergstrom v. Sears, Roebuck & Co.,
496 F. Supp. 476 (D. Minn. 1980) ................................................ 21

Braun, Inc. v. Dynamics Corp.,
975 F.2d 815 (Fed. Cir. 1990) ..................................................... 6

Cel-Tech Communications v. LA Cellular,
973 P.2d 527 (Cal. 1999) ........................................... 49

Clamp Mfg. Co. v. Enco Mfg. Co.,
870 F.2d 512 (9th Cir. 1989).......................................... 12

Clicks Billiards, Inc. v. Sixshooters, Inc.,
251 F.3d 1252 (9th Cir. 2001).......................................... 12, 13

Cornell Univ. v. Hewlett-Packard Co.,
609 F. Supp. 2d. 279 (N.D.N.Y. 2009) .................................. 51

iv

Crocs, Inc. v. International Trade Com'n,
598 F.3d 1294 (Fed. Cir. 2010) ...................................................... 4

Depuy Spine, Inc. v. Medtronic Sofamor Danek, Inc.,
567 F.3d 1314 (Fed. Cir. 2009) ..................................................... 24

Dwyer Instruments, Inc. v. Sensocon, Inc.,
No. 09-CV-10-TLS,
2012 U.S. Dist. LEXIS 78491 (N.D. Ind. June 5, 2012) ........................................................ 26

eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006) ................................... 27, 52, 53

Egyptian Goddess, Inc. v. Swisa, Inc.,
543 F.3d 665 (Fed. Cir. 2008) .............................. 3

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,
304 F.3d 1289 (Fed. Cir. 2002) ................................... 30

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,
535 U.S. 722 (2002) ................................. 41, 43, 44

First Brands Corp. v. Fred Meyer, Inc.,
809 F.2d 1378 (9th Cir. 1983)............................................... passim

Gales v. Winco Foods,
No. C 09-058913 CRB,
2011 U.S. Dist. LEXIS 96125 (N.D. Cal. Aug. 26, 2011) ...................................................... 55

Global-Tech Appliances, Inc., v. SEB S.A.,
131 S. Ct. 2060 (2011) ............................................. 20

Gorham Co. v. White,
81 U.S. 511 (1872) ................................................. 5, 6

In re Seagate Tech. LLC,
497 F.3d 1360 (Fed. Cir. 2007) ................................... 19, 33, 45

Intel Corp. v. Terabyte Int'l, Inc.,
6 F.3d 614 (9th Cir. 1993)........................................................... 22

Kamar Int'l, Inc. v. Russ Berrie & Co., Inc.,
752 F.2d 1326 (9th Cir. 1984)................................................... 21, 25

Keith v. Volpe,
618 F. Supp. 1132 (C.D. Cal. 1985)................................................ 55

L.A. Gear, Inc. v. Thom McAn Shoes Co.,
988 F.2d 1117 (Fed. Cir. 1993) ......................................... 5, 6

v

Lindy Pen Co. v. Bic Pen Corp.,
982 F.2d 1400 (9th Cir. 1993)...................................................... 20

Loral Fairchild Corp. v. Sony Corp.,
181 F.3d 1313 (Fed. Cir. 1999) ................................................... 40

Lucent Techs., Inc. v. Gateway, Inc.,
580 F.3d 1301 (Fed. Cir. 2009) ................................................. 51

Mantech Envtl. Corp. v. Hudson Envtl. Servs., Inc.,
152 F.3d 1368 (Fed. Cir. 1998) ............................................... 40

Mattel, Inc. v. MCA Records, Inc.,
296 F.3d 894 (9th Cir. 2002)............................................ 13

Mehus v. Emporia State Univ.,
222 F.R.D. 455 (D. Kan. 2004) .......................................... 55

MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp.,
420 F.3d 1369 (Fed. Cir. 2005) ...................................................... 35

Micro Chem. v. Lextron, Inc.,
318 F.3d 1119 (Fed. Cir. 2003) ................................................... 22

Miracle Blade, LLC v. Ebrands Commerce Group, LLC,
207 F. Supp. 2d 1136 (D. Nev. 2002) ............................................... 55

Nike, Inc. v. Wal-Mart,
138 F.3d 1437 (Fed. Cir. 1998) ................................................... 21

Nintendo of Am. v. Dragon Pac. Int'l,
40 F.3d 1007 (9th Cir. 1994)........................................................... 25

North American Philips Corp. v. American Vending Sales, Inc.,
35 F.3d 1576 (Fed. Cir. 1994) ................................. 35

Phoenix v. Com/Systems, Inc.,
706 F.2d 1033 (9th Cir. 1983)......................................... 56

Qualcomm Inc. v. Broadcom Corp.,
548 F.3d 1004 (Fed. Cir. 2008) ................................. 36, 37

Quanta Computer, Inc. v. LG Electronics, Inc.,
553 U.S. 617 (2008) ............................................... 34

Read v. Portec,
970 F. 2d 816, 827 (Fed. Cir. 1992) .................... 19

Ring Plus, Inc. v. Cingular Wireless Corp.,
614 F.3d 1354 (Fed. Cir. 2010) ......................................................... 40

vi

Rodan & Fields, LLC v. Estee Lauder Cos.,
No. 10-cv-02451-LHK,
2010 U.S. Dist. LEXIS 109573 (N.D. Cal. Oct. 5, 2010) ....................................................... 14

Rolex Watch, U.S.A., Inc., v. Michel Co.,
179 F.3d 704 (9th Cir. 1999).................................................... 25

Sands, Taylor & Wood v. The Quaker Oats Co.,
978 F.2d 947 (7th Cir. 1992)..................................................... 25

SEB S.A. v. Montgomery Ward & Co., Inc.,
594 F.3d 1360 (2010) ........................................ 19

Thorn EMI N.A. v. Hyundai Electronics Industries,
No. 94-332 RRM,
1996 U.S. Dist. LEXIS 21170 (D. Del. July 12, 1996)..................................................... 34, 35

Tulip Computers Int'l v. Dell,
262 F. Supp. 2d 358 (D. Del. 2003) ................................................ 35

United States v. Cuddy,
147 F.3d 1111 (9th Cir. 1998)...................................................... 8

United States v. Francis,
131 F.3d 1452 (11th Cir. 1997)...................................................... 55

United States v. Gardner,
611 F.2d 770 (9th Cir. 1980)............................................ 55

United States v. Morin,
627 F.3d 985 (5th Cir. 2010)..................................................... 55

United States v. Rizk,
660 F.3d 1125 (9th Cir. 2011)....................................... 55

United States v. Shirley,
884 F.2d 1130 (9th Cir. 1989)..................................................... 55

Warner-Jenkinson Co. v. Hilton-Davis Chem. Co.,
520 U.S. 17 (1997) ............................................................ 31

STATUTES
15 U.S.C. 1111 (2006) ............................................................... 26

vii

15 U.S.C.
§ 1115(a) ..................................................... 14
§§ 1115(a), 1125(a)(3) ................................................ 14
§ 1116 .................................................. 26
§ 1117 ............................................................. 21
§ 1117(a) (2006)................................................... 25
§ 1125(a)(1)(A)..................................................... 5, 11
§ 1125(c) ....................................................... 13
§ 1125(c)(2)........................................................ 13
§ 1125(c)(2)(B) .................................................... 13, 20
35 U.S.C.
§ 283 .............................................................. 26
§ 284 (2006) .................................................................... 22
§ 289 (2006) .................................................... 5, 21, 22
Cal. Bus. & Prof. Code § 17200 et seq. ................................................... 49

viii


INTRODUCTION

Samsung is on trial because it made a deliberate decision to copy Apple's iPhone and iPad. Apple's innovations in product design and user interface technology resulted in strong intellectual property rights that Samsung has infringed. Try as it might, Samsung cannot deflect attention from its own copying by the patents it has asserted against Apple. To the contrary, the trial will expose how Samsung deceived the international body responsible for creating the UMTS wireless standards to slip its patents into the standard and illegally monopolize technology markets.
These pictures, by now familiar to the Court, remain the basic story of our case:
Samsung Smartphones BEFORE iPhone Apple's iPhone (announced Jan. 2007) Samsung Smartphones AFTER iPhone

Samsung Touchscreen Tablet BEFORE iPad Apple's iPad 2 (announced March 2011) Samsung Touchscreen Tablet AFTER iPad 2

1

Samsung once sold a range of phones and a tablet of its own design. Now Samsung's mobile devices not only look like Apple's iPhone and iPad, they use Apple's patented software features to interact with the user.

The intellectual property that Apple has asserted against Samsung goes to the heart of the extraordinary success of the iPhone and the iPad. Samsung's asserted patents, on the other hand, claim minor features, which are not practiced by the accused products and, in any event, were invented by others before Samsung. Furthermore, the two asserted declared-essential patents are unenforceable because Samsung unquestionably violated the Intellectual Property Rights (IPR) Policy of the European Telecommunications Standards Institute (ETSI) UMTS standard by failing timely to disclose that it had filed for patents on the very proposals that it was pushing ETSI to adopt. Samsung also exhausted its rights with respect to these patents when it licensed Intel to sell the chipsets that Samsung now accuses of infringement.

This will brief summarizes the elements of Apple's proof for its claims and counterclaims, and explains why Samsung's attempts to avoid the consequences of its decision to copy Apple must fail. It also explains why Apple does not infringe any of Samsung's asserted patents and the reasons they are invalid and, in the case of the declared-essential patents, unenforceable. Along

2

the way, we briefly address legal issues the Court may need to resolve, while pointing out how decisions this Court and the Federal Circuit have already made have simplified that task.


I. SAMSUNG HAS VIOLATED APPLE'S INTELLECTUAL PROPERTY RIGHTS

Samsung has violated Apple's rights in (A) design patents that protect the iPhone's and iPad's industrial design and the iPhone's Graphical User Interface (GUI) design; (B) utility patents that protect software features that make the iPhone and iPad easy and fun to use; and (C) trade dress rights that protect the iPhone's and iPad's distinctive appearance, which consumers closely associate with Apple.

A. Samsung Infringes Apple's Design Patents

1. Apple's Elements of Proof

Samsung's products infringe Apple's D'677 and D'087 iPhone design patents; D'889 tablet design patent; and D'305 iPhone GUI design patent. Samsung's product designs appear substantially the same as Apple's designs to an ordinary observer familiar with the prior art, which is the test for design patent infringement. See Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 670, 678 (Fed. Cir. 2008) (en banc). This Court previously found likely infringement of the D'677 and D'889 patents in its preliminary injunction ruling. (Dkt. No. 452 at 24-27.)

At trial, Apple will present the testimony of Peter Bressler, a former President of the Industrial Designers Society of America (IDSA), who in 2010 received the profession's highest honor, an IDSA Personal Recognition Award. Mr. Bressler will compare Samsung's product designs to Apple's patented designs from the perspective of an ordinary observer and explain why he believes they infringe. Similarly, Susan Kare, a graphic designer with 30 years of experience designing user interface graphics and icons, will analyze Samsung's GUI designs. In addition to side-by-side comparisons, Apple will present evidence that many people -- industry observers, consumers, [redacted] -- considered Samsung's products to look very similar to Apple's products that embody the patented designs.

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Samsung contests infringement and argues that Apple's patents are not valid. But Samsung builds its case around "experts" such as Robert Anders and Itay Sherman. Mr. Anders has made his living since the 1990s as a professional witness. Mr. Sherman has worked in the industry but candidly admits he is "not . . . an industrial design expert." (Dkt. No. 1059-1 at 1.) Apple's patents enjoy a presumption of validity, and Samsung will be unable to rebut that presumption. This Court and the Federal Circuit have already held that Samsung failed to present a substantial validity challenge to the D'677, D'087, and D'889 patents in opposing Apple's preliminary injunction. (Dkt No. 452 at 23-24; Apple Inc., v. Samsung Elecs. Co., 678 F.3d 1314, 1326-27, 1330-32 (Fed. Cir. 2012).) At trial, Mr. Bressler, Dr. Kare, and other witnesses will testify that Apple's patented designs differed significantly from the prior art and were not dictated by function. Apple itself considered numerous alternatives, and others in the industry (including Samsung) marketed a range of different designs. The initial skepticism that met Apple's announcement of the iPhone and of the iPad, followed by the extraordinary commercial success of these products, is evidence that the designs were not obvious. Indeed, such secondary considerations as the commercial success of a product embodying the patented design "can be the most probative evidence of nonobviousness in the record." Crocs, Inc. v. International Trade Com'n, 598 F.3d 1294, 1310 (Fed. Cir. 2010) (internal quotation omitted). This conclusion is strongly reinforced by Samsung's deliberate copying.

Samsung cannot change the central fact that its products are strikingly similar to Apple's patented designs. Nor can it change the novelty and extraordinary success of Apple's designs. Samsung will instead attempt to confuse the issues with a hodgepodge of defenses based on incorrect legal standards. Samsung's defenses will fail.

2. Design patent infringement depends on whether Samsung's product
designs appear substantially the same to an ordinary observer as
Apple's patented designs.

Samsung attempts to avoid infringement by importing a trademark-like concept of consumer "deception" into design patent law. Samsung contends Apple must show not only that Samsung's products "appear substantially the same" to an ordinary observer as the claimed design, but also that purchasers are "deceived" into buying Samsung's products thinking they are

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Apple's. (Dkt. No. 1232 at 163.) This Court applied the correct test by finding likely infringement based on substantial similarity, without any evidence of deception. The jury should be instructed to apply the same test.

Samsung's insistence on consumer "deception" as an essential element is contrary to the Patent Act and controlling precedent. Unlike the Lanham Act, the design patent provisions do not refer to "deception" or "confusion." Compare 15 U.S.C. § 1125(a)(1)(A) (Lanham Act) with 35 U.S.C. § 289 (liability for applying to a product "the patented design, or any colorable imitation thereof"). The Supreme Court in Gorham Co. v. White, 81 U.S. 511 (1872), referred to deception, but only after stating that the "true test of identity" is "sameness of appearance"; that "slight variance in configuration" does not destroy "substantial identity"; and that the key issue is whether, "in the eye of an ordinary observer," the accused design is "substantially the same" as the patented design. Id. at 526-28. Deception is a result that may follow if the two designs appear substantially the same, but the Court did not hold that designs are substantially the same only if "deception" is shown. This is confirmed by the Supreme Court's application of its rule, which relied on a detailed comparison between the patented design and the defendant's design to conclude there was "no substantial difference." Id. at 528-29.

Consistent with this reading of Gorham, this Court found in its preliminary injunction order that Samsung is likely infringing the D'889 and D'677 patents based on a "side-by-side comparison" of the Samsung products with the patented designs, without any evidence of actual or likely deception. (Dkt. No. 452 at 25-27, 45-48.) On appeal, Samsung emphasized that "Apple has not identified a single example of customer confusion." (Apple Inc. v. Samsung Elecs. Co., Ltd., Federal Circuit No. 2012-1105, Brief of Defendants-Appellees, dated January 9, 2012, at 63.) The Federal Circuit nonetheless found that Apple was likely to prevail on the merits of the D'889 patent. Apple, 678 F.3d at 1328, 1333.

Other Federal Circuit precedent confirms that design patent infringement does not require consumer deception. In L.A. Gear, Inc. v. Thom McAn Shoes Co., 988 F.2d 1117, 1120-21 (Fed. Cir. 1993), the district court found the defendant liable for both design patent infringement and unfair competition based on trade dress infringement. On appeal, the Federal Circuit reversed the

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finding of unfair competition because it found that purchasers were unlikely to be deceived into buying the accused product thinking it was the plaintiff's product. Id. at 1134. The Federal Circuit nonetheless found design patent infringement, emphasizing that "[d]esign patent infringement relates solely to the patented design, and does not require proof of unfair competition in the marketplace." Id. at 1126.

Similarly, in Braun, Inc. v. Dynamics Corp., 975 F.2d 815, 821 (Fed. Cir. 1990), the defendant argued that "a trier of fact may not as a matter of law find design patent infringement," unless there is empirical "evidence that the blender's design would deceive ordinary observers." The Federal Circuit held that the defendant waived this argument by failing to present it to the district court but went on to observe that "[n]othing in Gorham suggests that, in finding design patent infringement, a trier of fact may not as a matter of law rely exclusively or primarily on a visual comparison of the patented design, as well as the device that embodies the design, and the accused device's design." Id.

3. A patented design is "functional" only if the design is "dictated by"
function.

Relying on Federal Circuit authority, this Court has held that a design is not "functional" merely because it has "a utilitarian purpose" or "enhance[s] the user experience;" rather, the design must be "dictated by function." (Dkt. No. 452 at 13, citing L.A. Gear, 988 F.2d at 1123.) This Court also held that the relevant inquiry for invalidity is not "'the utility of each of the various elements that comprise the design,'" but the functionality of the patented design "as a whole." (Id., quoting L.A. Gear, 988 F.2d at 1123.) Based on these standards, the Court rejected Samsung's arguments that the iPhone and tablet design patents are invalid as "functional," and that almost every element of Apple's designs should be ignored as "functional" in deciding whether Samsung's products appear substantially the same as Apple's designs. (Id. at 11-15, 39-40.)

Samsung ignores these rulings. Samsung's proposed jury instructions do not even mention the "dictated by function" test. (Dkt. No. 1232 at 178, 204.) Instead, Samsung dissects Apple's patented designs into numerous elements and then contends that each element is

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"functional" because it "affects the cost or quality of the article." (Dkt. No. 1189 at 21; Dkt. No. 1232 at 178.) Affecting "cost or quality" is a trademark concept that does not belong in design patent law. Samsung cites a Federal Circuit case that mentioned "cost or quality," but that case did not apply "cost or quality" in deciding design patent functionality, and cited a Supreme Court case that used this test in the context of trade dress functionality. Amini Innovation Corp. v. Anthony California, Inc., 439 F.3d 1365, 1371 (Fed. Cir. 2006), citing Inwood Labs., Inc.v. v. Ives Labs., Inc., 456 U.S. 844, 851 (1987). The Federal Circuit emphasized that "discounting of functional elements must not convert the overall infringement test to an element-by-element comparison," and reversed the district court's finding of no design patent infringement on that ground. Id. at 1372.

4. Samsung must identify a primary obviousness reference that creates
"basically the same" overall visual impression as the patented design

This Court and the Federal Circuit have held that design patent obviousness requires Samsung to identify (1) a primary prior art reference whose overall visual impression is "basically the same" as the patented design; and (2) a secondary prior art reference whose overall appearance is so related to the primary reference that the appearance of certain ornamental features in one would suggest the application of those features in the other. Apple, 678 F.3d at 1329-30. (See also Dkt. No. 1170 at 7-8.) Despite these rulings, Samsung has proposed a jury instruction on obviousness that does not even mention the controlling design patent test, and relies instead on rules that apply to utility patents. (Dkt. No. 1232 at 185.) Samsung has proposed an "alternative" instruction in case its primary instruction is rejected, but that instruction still deviates from the controlling test in several respects, including by referring to "deceptive similarity." (Id. at 187.)

Samsung experts Itay Sherman and Sam Lucente have relied on numerous prior art references to support their obviousness opinions while not identifying any reference that they contend creates "basically the same" overall visual impression as the patented designs. At trial, Samsung's experts should not be allowed to opine that a design is obvious without applying the correct legal test.

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5. Some of Samsung's defenses have already been rejected or excluded

Prior rulings of the Federal Circuit, this Court, and Judge Grewal preclude Samsung from relying on several non-infringement and invalidity theories.

As a result of the Federal Circuit's decision on Apple's motion for a preliminary injunction, Samsung should be barred from relying on Fidler as a primary obviousness reference, the Compaq TC1000 as a secondary reference to Fidler, and JP'638 for anticipation of the D'087 patent. The Federal Circuit held that Fidler cannot qualify as a primary reference because it does not create "basically the same" visual impression as the D'889 design. Apple, 678 F.3d at 1330-32. It also held that the Compaq TC1000 "is so different in visual appearance from the Fidler reference" that it cannot qualify as a "secondary reference" to "bridge the gap between Fidler and the D'889 design." Id. at 1331. It further held that the JP'638 cannot qualify as an anticipatory reference for the D'087 patent because, when the claimed side view is taken into account, "the differences between the arched, convex front of the '638 reference distinguish it from the perfectly flat front face of the D'087 patent." Id. The Federal Circuit based its rulings on the appearances of the patented designs and Samsung's references, which new evidence cannot change. Thus, these decisions bind Samsung at trial as law of the case. United States v. Cuddy, 147 F.3d 1111, 1114 (9th Cir. 1998)1

This Court has also properly narrowed Samsung's case by granting (except as to the LG Prada) Apple's Motions in Limine #2 and #3 to exclude references that are not prior art. (Dkt. No. 1267 at 3.) In addition, the Court held in its summary judgment order that Apple's January 2007 iPhone image is not prior art against Apple's GUI design patent because it has the same inventors and was not publicly displayed more than one year before the D'305 priority date. (Dkt. No. 1158 at 38-39.) And Judge Grewal has stricken prior art references and invalidity and non-infringement contentions that Samsung failed to disclose in timely responses to Apple's interrogatories. (Dkt. No. 1144 at 3-5.) Samsung's failure timely to disclose these contentions

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bars Samsung from presenting them at trial in any manner, whether through experts or fact witnesses of either side.

B. Samsung Infringes Apple's User-Interface Software Patents

Apple will prove at trial that Samsung is infringing three patents directed to innovative features of its multi-touch user interface: the '381 "rubberbanding" [redacted] patent, the '163 "tap-to-zoom" patent, and the '915 "scroll vs. gesture" patent. Infringement is clear from using the Samsung products and reviewing the source code, as Apple's experts Ravin Balakrishnan and Karan Singh will explain. Apple will also present evidence that Samsung deliberately copied Apple's features.

The Court's claim construction rulings leave Samsung with only a few scattered non-infringement arguments that plainly lack merit. Samsung's own expert conceded that Samsung infringes the '163 patent. Samsung's original non-infringement defense to the '915 patent cannot survive the Court's construction of "invokes" in rejecting Samsung' motion for summary judgment. (Dkt. No. 1158 at 18-20.) Samsung has an alternative argument that a few of its products do not infringe the '915 patent because they can be made to perform what Samsung's expert calls "two-finger scrolling" (i.e., a combination of translating and minimal or imperceptible zooming). But Samsung's argument fails because it adds a new limitation that is not part of the claim, namely that scrolling and scaling are mutually exclusive.

As to the '381 patent, this Court has already found likely infringement, rejecting the claim constructions that were the basis for Samsung's non-infringement defenses. (Dkt. No. 452 at 52-56; Dkt. No. 1266.) Samsung apparently continues to argue that it does not infringe because "first direction" requires the human finger to move with single-pixel precision, even though the Court has rejected that argument. (See Dkt. No. 452 at 55 ("because the term 'first direction' does not require linear movement, Samsung's devices do infringe").) Samsung may also assert that some of its products do not infringe the '381 patent because they can be manipulated to avoid rubberbanding, by making slow and minimal finger movements. But the Accused Products do "rubberband" in normal operation and thus necessarily include the instructions for performing the claimed method, which is all that asserted claim 19 requires.

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Lacking any plausible non-infringement argument, Samsung has no choice but to argue invalidity. Samsung cannot overcome the presumption of validity with clear and convincing evidence. Samsung's prior art references fail to disclose key limitations of Apple's inventions, as Apple's experts will explain. Samsung's deliberate copying and the iPhone's and iPad's commercial success reinforce the conclusion that Apple's inventions were far from obvious. Moreover, Judge Grewal struck prior art references to the '915 patent cited by Samsung's expert Stephen Gray, as well as references cited by Andries Van Dam (except as technical background to the '381 patent). (Dkt. No. 1144 at 3, 5.) Samsung cannot rely on these references as prior art.

Finally, Judge Grewal's rulings preclude Samsung from presenting evidence of any efforts to design around Apple's software patents. On May 4, 2012, Judge Grewal ruled that as a sanction for Samsung's unjustified failure to produce "design-around" source code for Samsung's products until long after the Court-ordered deadline, Samsung "shall be precluded from offering any evidence of its design-around efforts for the '381 . . . and '163 patents. . . ." (Dkt. No. 898 at 9.) In response to Samsung's motion for "clarification," Judge Grewal confirmed that his order meant what it said: during the jury trial, Samsung could not offer "any evidence of its design-arounds," meaning "no source code evidence, no non-source code evidence, no evidence of any kind, whether for liability or any other purpose." (Dkt. No. 1106 at 3-4.) Samsung did not file a timely objection to Judge Grewal's June 19 Order. (Dkt. 1274-2, at 3.)

C. Samsung Has Infringed and Diluted
Apple's iPad Trade Dress and Diluted Apple's iPhone Trade Dress

Samsung has both infringed and diluted Apple's distinctive iPad trade dress and has diluted Apple's famous iPhone trade dress. Apple's trade dress is protected by trade dress Registration No. 3,470,983, Apple's unregistered iPhone 3G trade dress, its unregistered combination iPhone trade dress, and its unregistered iPad/iPad 2 trade dress. (See Exhibit A hereto.) Samsung's sale of products that are virtually indistinguishable from the iconic iPhone 26 and iPad violates Apple's trade dress rights.

At trial, Samsung will be unable to overcome the presumption that Apple's registered trade dress is valid and protectable. Apple will prove that Apple's unregistered trade dress is

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protectable (i.e., distinctive and non-functional), and that Samsung has diluted and infringed Apple's trade dress.

1. Samsung is infringing Apple's iPad trade dress

There is no question that Samsung's sale of its accused tablets is likely to cause confusion about the source, sponsorship, or approval of those tablets, which is the Lanham Act test for infringement. 15 U.S.C. § 1125(a)(1)(A). Indeed, as the Court noted, Samsung's Galaxy Tab 10.1 is "virtually indistinguishable" from the iPad 2. (Dkt. No. 452 at 47.)

Apple will show likely confusion under the factors set forth in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), which include (1) strength of the trade dress; (2) similarity of the trade dress; (3) evidence of actual confusion; (4) marketing channels used; and (5) defendant's intent in selecting the trade dress. Likely confusion can occur before a purchase, at the moment of the purchase ("point of sale"), or "post-sale," such as when a consumer sees somebody using a Galaxy Tab 10.1 in a cafe and wrongly assumes that person is using an iPad. Apple relies on both point-of-sale and post-sale confusion.

Apple will present overwhelming evidence of likely confusion under the Sleekcraft factors. This evidence will show that Apple's iPad trade dress is strong and closely associated with Apple. Philip Schiller, Apple's Senior Vice President of Worldwide Marketing, will testify regarding Apple's widespread advertising campaign for the iPad that specifically emphasizes its distinctive appearance; the extensive and highly favorable coverage by the media and industry analysts; the iPad's outstanding commercial success; and Apple's and Samsung's head-to-head competition. Apple will also present evidence of a survey conducted by Hal Poret, which confirmed that consumers associate the iPad trade dress with Apple. Russell Winer, a highly experienced marketing expert, will testify that Apple's trade dress is strong, and that Samsung's competing products are sold in similar marketing channels to Apple's.

Apple will also present evidence that Samsung's accused tablets are very similar to the iPad trade dress, and have caused actual confusion. The similarity is clear from a direct comparison between Samsung's tablets and the iPad trade dress. It is also shown by widespread comments in the media and by others struck by the similarity. Apple will present evidence of

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actual confusion -- consumers who mistook Samsung's tablets for iPads -- even though such evidence is not required to prevail on a trade dress infringement claim. This evidence includes Samsung documents that show [retacted]. (PX59 at 19.) It also includes a survey conducted by Kent Van Liere, which concluded that consumers are likely to associate Samsung's Galaxy Tab 10.1 with Apple in a post-sale environment.

Apple will also show that Samsung deliberately copied Apple's iPad trade dress, and even redesigned its Galaxy Tab 10.1 to make it look more similar to the iPad 2. This evidence includes Samsung's own documents and admissions.

In addition to showing likely confusion, Apple will show that Apple's iPad trade dress is distinctive and non-functional, and thus protectable. Trade dress is distinctive when consumers identify the trade dress with a particular source. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1261 (9th Cir. 2001). Factors relevant to distinctiveness include (1) the length and nature of Apple's use of the trade dress; (2) the nature and extent of Apple's advertising and promotion of its trade dress; (3) efforts made to promote a conscious connection between Apple's trade dress and Apple's products; (4) association of Apple's trade dress with Apple by purchasers of Apple products using the trade dress; (5) successful use of the trade dress to increase Apple's sales; (6) whether Apple authorized anyone else to use its trade dress; and (7) whether Samsung intentionally copied Apple's trade dress. Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 517 (9th Cir. 1989). The evidence from Mr. Schiller and others that shows Apple's trade dress is strong also establishes the requisite distinctiveness.

As for functionality, a trade dress is not functional unless, taken as a whole, the trade dress is essential to the use or purpose of the device or the trade dress affects its cost or quality. Clicks Billiards, 251 F.3d at 1258. Factors relevant to the functionality of a trade dress include whether Apple's advertising touted the utilitarian advantage of its trade dress; whether the trade dress results from a simple or inexpensive method of manufacture; whether the trade dress yields a utilitarian advantage; and whether alternative designs are available. (Dkt. No. 1159 at 5.) Apple will show that its iPad trade dress is not functional under these factors, based on the testimony of

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Apple employees and experts, as well as documentary evidence, including the evidence that this Court cited in denying Samsung's motion for summary judgment. (Id. at 5-7.) Chris Stringer, a Senior Director of Industrial Design at Apple, will testify that aesthetic rather than functional considerations drove the design of the iPad and iPad 2. Design expert Peter Bressler will testify that the design of the iPad and iPad 2 is not essential to the use or purpose of these devices.

2. Samsung has diluted Apple's iPad Trade Dress

Unlike trade dress infringement, dilution does not require a showing of likely confusion; rather, "dilution" means a lessening of the capacity of a famous trade dress to identify and distinguish goods. (See Dkt. No. 1232 at 254, 256 (similar definitions in Apple's and Samsung's jury instructions).) Apple relies, in particular, on "dilution by blurring," meaning that the accused tablets have impaired the distinctiveness of Apple's famous iPad trade dress through an association arising from the similarity between the appearance of the two products. See 15 U.S.C. § 1125(c)(2)(B). Thus, evidence that Samsung's sale of similar-looking tablets makes the asserted iPad trade dresses seem less distinctive and less closely associated with Apple shows dilution by blurring, even if consumers understand that Samsung's tablets are made by Samsung. See Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 905 (9th Cir. 2002) ("Dilution . . . does not require a showing of consumer confusion").

Trade dress dilution requires a showing that the trade dress was famous when the defendant began offering the products accused of diluting the trade dress. See 15 U.S.C. § 1125(c) (defining the elements of a dilution claim)2

Apple must show that the iPad trade dress was "famous" by June 8, 2011, which is when Samsung first sold a product (the Galaxy Tab 10.1) accused of diluting the iPad trade dress.3

(See Dkt. No. 1232 at 264-65 (jury instructions of Apple and Samsung agreeing on this date).) Trade dress is famous if it is widely recognized by the general consuming public as identifying the source of the goods. 15 U.S.C. § 1125(c). Apple

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will show fame through evidence of extensive advertising, industry praise, sales, and widespread recognition of the iPad trade dress.

Apple will also present evidence that Samsung's sale of look-alike tablets has diluted the distinctiveness of Apple's iPad trade dress. The evidence largely overlaps with the evidence of trade dress infringement discussed above. For example, although evidence of likely and actual confusion between the Galaxy Tab 10.1 and the iPad is not required for trade dress dilution, it strongly supports this claim. Also, marketing expert Russell Winer will explain how Samsung's sales of look-alike products impairs the distinctiveness of Apple's trade dress.

3. Samsung has diluted Apple's iPhone Trade Dress

Samsung has diluted Apple's registered and unregistered iPhone trade dress, which is valid, protectable, and famous. Registered trade dress is presumed to be valid and protectable, so Samsung has the burden of proving that Apple's registered iPhone trade dress lacks distinctiveness and is functional. 15 U.S.C. §§ 1115(a), 1125(a)(3); Rodan & Fields, LLC v. Estee Lauder Cos., No. 10-cv-02451-LHK, 2010 U.S. Dist. LEXIS 109573, at *15 (N.D. Cal. Oct. 5, 2010) (registration of trade dress entitles owner to presumption of protectable rights under 15 U.S.C. § 1115(a), but plaintiff must show inherent distinctiveness or secondary meaning when trade dress is not registered). Samsung will not be able to meet that burden. Indeed, the evidence of fame cited in the Court's summary judgment ruling shows that Apple's registered and unregistered iPhone trade dress is both famous and distinctive. (See Dkt. No. 1189 at 10-11.) Apple must show that the iPhone trade dress was famous by July 15, 2010, which is when Samsung released a product (the "Vibrant" version of the Galaxy S) that Apple has accused of diluting its iPhone trade dress.4

(See Joint Pretrial Statement, Dkt. No. 1189 at 2, 11.)

Samsung's sale of numerous products that use the iPhone trade dress has unquestionably resulted in "dilution by blurring," by making the iPhone trade dress seem less distinctive and less

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closely associated with Apple. Apple will show dilution by blurring by evidence that will include Hal Poret's survey showing that significant numbers of consumers associate the asserted iPhone trade dresses with Apple, as well as a survey by Kent Van Liere regarding consumers' association of the accused products with Apple. Apple will also present evidence that Samsung deliberately copied the iPhone trade dress.

4. Samsung's trade dress defenses are based on legally incorrect premises

Lacking any valid defense, Samsung resorts, once again, to incorrect legal standards in an attempt to show that Apple's trade dress is not protectable because it is "functional."

As this Court has held, Ninth Circuit precedent "requires that in evaluating functionality, the trade dress should be considered as a whole rather than as a collection of individual elements." (Dkt. No. 1158 at 5 (emphasis added), citing Clicks Billiards, 251 F.3d at 1259.) Despite this ruling, Samsung's proposed jury instructions misleadingly define functionality as meaning that "a claimed feature of the trade dress" is essential to the product's use or purpose or affects its cost or quality. (Dkt. No. 1232 at 262 (emphasis added).) Samsung's experts Itay Sherman and Sam Lucente have compounded this error by focusing on individual elements rather than the functionality of the trade dress as a whole. Indeed, as this Court noted, "Samsung does not offer any support for its assertion that the arrangement of features in the overall trade dress is strictly functional . . . ." (Dkt. No. 1158 at 5.)

Samsung has also proposed an incorrect and extraordinarily broad definition of "aesthetic functionality" that would effectively obliterate trade dress rights. As this Court noted, aesthetic functionality is "a limited doctrine"; the Ninth Circuit has questioned whether it even exists independently from "utilitarian functionality." (Dkt. No. 1158 at 7-8, citing Clicks Billiards, 251 F.3d at 1259 and First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1382 n.3 (9th Cir. 1983).) Yet Samsung asserts that a patent is invalid for aesthetic functionality if "a claimed design feature of the trade dress improves the attractiveness and eye-appeal of the design." (Dkt. No. 1232 261-262.) Samsung cites a district court case that refers to Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1068 (9th Cir. 2006), but Au-Tomotive Gold does not support Samsung. The Ninth Circuit in Au-Tomotive-Gold "rejected the notion that 'any feature

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of a product which contributes to the consumer appeal and saleability of the product is, as a matter of law, a functional element of the product.'" 457 F.3d at 1069, 1073 (quoting Vuitton et Fils S.A. v. J. Young Enterprises, Inc., 644 F. 2d 769, 773 (9th Cir. 1981).) Such an expansive view of aesthetic functionality would "provide[] a disincentive for development of imaginative and attractive design," because "[t]he more appealing the design, the less protection it would receive." Id. at 1073 (internal quotation and citation omitted). Indeed, such a view "would be the death knell for trademark protection," since "it would mean that simply because a consumer likes a trademark, or finds it aesthetically pleasing, a competitor could adopt and use the mark on its own products." Id. In sum, while Au-Tomotive Gold suggests the doctrine of aesthetic functionality might have "some limited vitality," it squarely rejects Samsung's overreaching interpretation. 457 F.3d at 1069-70, 1073.

II. SAMSUNG'S TORTS RESULT FROM AN INTENTIONAL CORPORATE
STRATEGY TO COPY APPLE AND ITS PRODUCTS

A. Samsung's Own Documents Show that Samsung Copied Apple

Samsung's documents show that the similarity of Samsung's products is no accident or, as Samsung would have it, a "natural evolution." Rather, it results from Samsung's deliberate plan to free-ride on the iPhone's and iPad's extraordinary success by copying their iconic designs and intuitive user interface. Apple will rely on Samsung's own documents, which tell an unambiguous story.

Samsung's documents show that Samsung developed an overall plan to copy Apple's innovative designs and features so that it could compete with Apple. In September 2007, Samsung concluded that [redacted] (Id. at 37.) In September 2008, Samsung's CEO commented that Samsung should probably [redacted] (PX9 at 1.) In December 2008, a Samsung-commissioned study concluded that

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consumers [redacted]. (PX36 at 10, 20-22, 32). In February 2010 - five months before Samsung began selling its infringing Galaxy S smartphone in the U.S. - Samsung Mobile Division President JK Shin told Samsung's designers that the difference in user experience between the iPhone and Samsung's flagship smartphone, the "Omnia," is that of "Heaven and Earth," and that he hears comments that Samsung should "make something like the iPhone." (PX 40 at 2, 4.)

With regard to Apple's design patent and trade dress claims, Samsung's documents show that Samsung developed and released products that look almost identical to Apple's, despite repeated warnings that Samsung's products were too similar. [redacted] (PX47 at 27.) Similarly, in February 2010, Google told Samsung the [redacted] (PX42, PX43 at 2.) In 2011, Samsung's own Product Design Group noted that [redacted] (PX53 at 2.) And a Samsung-commissioned analysis concluded that Samsung's smartphone container icons were [redacted] (PX 41 at 192, PX41 at 193.) This evidence involves the products that Apple has accused of infringing its design patents and violating its trade dress rights, including the Galaxy S phone (sold in the U.S. as the "Vibrant" and other names), the Galaxy Tab 10.1, and the icon containers that Samsung used on its smartphones.

With regard to Apple's user-interface software patents, Samsung's documents show that Samsung deliberately copied numerous features of Apple's products because it recognized that consumers preferred those features. Samsung's copying was pervasive, was directed from the

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highest levels of the company, and reached the patented features at issue in this litigation. For example, in May 2010, Samsung concluded from an extremely detailed side-by-side comparison of the iPhone and Samsung's [redacted] This is the feature claimed by Apple's '381 patent. Samsung concluded that it should implement [redacted] and it did. (PX46 at 66.) Similarly, in April 2011, Samsung concluded from a comparison of one of [redacted] (PX57 at 19, 57 at 73) Samsung copied the rubberbanding (or "bounce") feature in its tablets. Samsung's documents also show that Samsung copied the "tap-to-zoom" feature claimed by the '163 patent, because it concluded that [redacted] And in March 2010, Samsung concluded from an extremely detailed side-by-side comparison [redacted] (PX 44 at 33, 58, 65, and 131.) Once again, this evidence is linked directly with the specific infringing features of the products that Apple has accused of infringement.

B. Samsung's Copying Establishes the Intent Required for Willful Infringement
and for Inducement and Supports Apple's Trade Dress Claims

The evidence at trial will show that Samsung copied Apple's products without taking care to design around patented designs and technology. This is paradigmatic willful infringement. It is also helps to establish indirect patent infringement and dilution and infringement of Apple's trade dresses.

Apple's evidence of willfulness dates back to 2007. When Steve Jobs introduced the iPhone at a Macworld Expo, he announced to the world "we patented it" with more than 200

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applications. (PX 32.) When Samsung released copycat smartphones in July 2010, Apple immediately confronted Samsung to demand that it stop infringing. Senior Apple executives showed Samsung, in side-by-side comparisons, how the design of the Galaxy phone imitated the iPhone and walked Samsung through how the product infringed various Apple utility patents, including the '381. (PX 52 at17-19, 50-51.) Samsung was undeterred. It continued to release infringing products. In fact, after learning [redacted] Samsung's response was to design its next-generation tablet to look even more like an iPad 2.

When Samsung copied Apple's products it willfully infringed Apple's patents. Whether an "infringer deliberately copied the ideas or design of another" is the first factor in the Federal Circuit's list for analyzing willfulness. Read v. Portec, 970, F. 2d 816, 827 (Fed. Cir. 1992). Apple will establish for the Court the objective unreasonableness of Samsung's conduct, Bard Peripheral Vascular v. W.L. Gore & Assocs., 2010-1510, 2012 U.S. App. Lexis 13561 at *6 (Fed. Cir. Jun. 14, 2012), and will prove to the jury that Samsung knew or should have known of the risk that it was infringing Apple's design and utility patents. See also, In re Seagate Tech. LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007).

The evidence at trial of Samsung's willful infringement, together with other evidence of Samsung's willfulness and its litigation misconduct, will support a post-verdict finding that this is an exceptional case warranting treble damages. In addition to the evidence of Samsung's copying, the Court can and should consider Samsung's willful refusal to stop infringing Apple's patents after both this Court and the Federal Circuit found Samsung was likely infringing Apple patents as to which it had failed to raise a substantial question of validity. (Dkt. 1206-1 at 19-20.) The Court should also consider all three of the sanctions orders Judge Grewal has entered against Samsung for its failure to produce documents as ordered by the Court. (Id. at 21-22.)

The evidence of Samsung's intentional copying also supports a finding of inducement. Apple will show that SEC infringed Apple's patents both directly and by inducing its subsidiaries to infringe. SEC's infringement was direct, as it sold phones and tablets directly into the United States. SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360, 1375 (2010), aff'd on other

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grounds, 131 S. Ct. 2060 (2011) . And SEC induced its subsidiaries to infringe because SEC knew or was willfully blind to the fact that their sales infringed Apple's patents. Global-Tech Appliances, Inc., v. SEB S.A., 131 S. Ct. 2060, 2069 (2011).

Finally, the evidence that Samsung copied Apple and brought to market products it knew were confusingly similar to the iPhone and iPad clinches Apple's trade dress case. Samsung's knowing adoption of a product configuration similar to Apple's trade dress goes to the "intent" prong of infringement. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 354 (9th Cir. 1979). And "intent to create an association" is an element of dilution by blurring. 15 U.S.C. § 1125(c)(2)(B). Because the evidence will show Samsung's intent to trade on Apple's goodwill and reputation and to deceive consumers, Apple will be entitled to damages for Samsung's willful infringement of its trade dress. Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir. 1993).

In sum, SEC and its subsidiaries will be liable for infringing and diluting Apple's intellectual property, and will be liable for an amount that will include treble damages.

III. SAMSUNG'S VIOLATION OF APPLE'S INTELLECTUAL PROPERTY RIGHTS
GIVES RISE TO BILLIONS OF DOLLARS IN DAMAGES

A. Apple Is Entitled to Substantial Monetary Damages

Samsung adopted as its number one goal to [redacted]" in the smartphone and tablet markets, and it chose to compete by copying Apple. Samsung's infringing sales have enabled Samsung to overtake Apple as the largest manufacturer of smartphones in the world. Samsung has reaped billions of dollars in profits and caused Apple to lose hundreds of millions of dollars through its violation of Apple's intellectual property. Apple conservatively estimates that as of March 31, 2012, Samsung has been unjustly enriched by about [redacted] and has additionally cost Apple about $500 million in lost profits. Apple also conservatively estimates that it is entitled to over $25 million in reasonable royalty damages on the proportionately small set of remaining sales for which it cannot obtain an award of Samsung's profits or Apple's own lost profits, for a combined total of $2.525 billion.

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1. Samsung's Profits

The law provides that anyone who sells "a colorable imitation" of a patented design "shall be liable to the [patent] owner to the extent of his total profit." 35 U.S.C. § 289 (2006). The Federal Circuit has held that "total profit" means exactly that -- all profits received by the infringer for sale of the product without reducing that profit to account for the alleged contribution of the patented design. Nike, Inc. v. Wal-Mart, 138 F.3d 1437, 1442 (Fed. Cir. 1998); see also Bergstrom v. Sears, Roebuck & Co., 496 F. Supp. 476, 495 (D. Minn. 1980). Similarly, 15 U.S.C. § 1117 requires Samsung's to disgorge the profits it obtained from sales that dilute or infringe Apple's trade dress.

This remedy begins with undisputed facts. Samsung admits that its total sales revenue from selling the accused products in the United States exceeds [redacted] through March 31, 2012. Samsung bears the burden of proving any deductible expenses, including the costs incurred in producing the gross revenue and any other costs that are directly attributable to the sale of the infringing products. Kamar Int'l, Inc. v. Russ Berrie & Co., Inc., 752 F.2d 1326, 1332 (9th Cir. 1984) (overhead expenses may be deducted from award of profits in a copyright action "only when the infringer can demonstrate it was of actual assistance in the production, distribution or sale of the infringing product"). By subtracting Samsung's cost of goods sold, as reported by Samsung in connection with the infringing sales, Apple has calculated that Samsung's gross profits during the damages period exceeds [redacted]

Samsung claims that an additional [redacted] of operating expenses should be deducted from its accused gross profits, beyond the deductions for costs of goods sold. These expenses, however, do not bear a sufficient nexus to the production, distribution, or sale of the accused products to warrant deduction. Samsung's claimed deductions are bloated with such generalized overhead expenses as depreciation, general maintenance, fixed labor, and general research and development costs for other products, and are not even consistent with how Samsung's accounts are labeled in its internal accounting database. Apple will also show that the financial data Samsung produced to support its claimed deductions is an unreliable allocation of various

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expenses, prepared solely for purposes of this litigation and repeatedly characterized by errors and inconsistencies.

Samsung wrongly claims that any award of infringer's profits under 35 U.S.C. § 289 should be apportioned to address the specific value to Apple's design patents. The Court has already resolved this issue when it correctly held that this position was "contrary to law." (Dkt. No. 1157 at 9.) The Court has also excluded the testimony of Michael Wagner because he used unreliable methods by which to argue that only one percent of Samsung's profits were attributable to Apple's designs in connection with the trade dress case. (Dkt No. 1157 at 9-10.)

2. Apple's Lost Profits

Separately, Apple's design and utility patent infringement claims entitle Apple to "damages adequate to compensate for the infringement . . . together with interest and costs as fixed by the court." 35 U.S.C. § 284 (2006). Under well-established case law, this means that Apple may recover the profits that Apple lost as a result of Samsung's infringing sales. Micro Chem. v. Lextron, Inc., 318 F.3d 1119, 1126-27 (Fed. Cir. 2003). Further, Apple can recover its lost profits resulting from violations of its trade dress. Intel Corp. v. Terabyte Int'l, Inc., 6 F.3d 614, 621 (9th Cir. 1993).

Apple conservatively estimates that Samsung's trespasses on the intellectual property in this case have caused Apple to lose about $500 million in profits. These lost profits arise from sales that differ from and are in addition to the sales that are the focus of Apple's disgorgement claims discussed above.

Apple took steps to tailor its calculation conservatively to this case. First, Apple limited the periods during which it calculated lost sales of Apple products to times during which Samsung would need to redesign products to avoid infringing Apple's intellectual property. That is, Apple looks only to the gains that it would have made while Samsung was hypothetically creating a non-infringing alternative. Second, Apple focused it reallocation of sales under what is known as a Mor-Flo analysis on the specific market shares Apple held at each carrier. This approach results in a lost profits calculation that captures the specific dynamics present at each carrier as well as in the market generally. Third, Apple's damages expert independently assessed

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Apple's capacity constraints, making the analysis even more conservative. Due to all these adjustments, Apple's calculations show that Apple would have gained approximately 7.5 percent of the infringing smartphone sales made by Samsung, and about 10.5 percent of the infringing tablet sales made by Samsung, which are sales Apple would have made "but for" Samsung's IP violations. These figures are far smaller than the 17 to 45 percent market share that Apple actually held for smartphones during the damages period and the 60 to 90 percent market share that Apple actually held for tablets. As noted above, Apple will seek either Samsung's profits (where its design rights are being violated) or a reasonable royalty (where only a utility patent is being infringed) for the remaining sales that are not accounted for in lost profits.

Samsung asserts that Apple is not entitled to lost profits at all because Samsung's accused products do not compete in the same market segments as Apple's products. The Court has already recognized that "the parties are clearly direct competitors." (Dkt. No. 1157 at 11.) Samsung's own documents state that "[redacted]" (PX183 at SAMNDCA10036088), and that Samsung made it a primary objective to [redacted] (PX27 at 3). Samsung's documents even state that in [redacted] between Apple and Samsung. (PX27 at 1.)

Samsung also claims that Apple cannot recover lost profits because consumers do not actually care about any of the patented features. This misstates the facts and the law. Apple has extensive evidence showing demand for Apple's proprietary features. Professor Hauser's conjoint survey shows that Samsung's customers are willing to pay between $90 and $100 above the base price of a $199 smartphone and a $499 tablet, respectively, to obtain the patented features covered by Apple's utility patents. (PX30.) Samsung's market research and its blatant copying of Apple's intellectual property further refute Samsung's litigation position that Apple's intellectual property does not drive value and sales. In any event, the law does not require a showing of demand unique to the patented features, but instead begins with proof of damages for the products as a whole. Thus, recovering lost profits under Panduit "requires a showing of (1) demand for the patented product, (2) absence of acceptable noninfringing substitutes,

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(3) manufacturing and marketing capability to exploit the demand, and (4) the amount of profit that would have been made." See Depuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1329-31 (Fed. Cir. 2009) (emphasis added). Apple will easily meet this standard at trial.

Finally, Samsung argues that Apple did not have the manufacturing capacity to make the lost sales, based on temporary backlogs immediately following new product launches. This argument ignores the evidence that Apple's supply constraints were relatively short-lived, and did not coincide with the specific time periods during which Apple claims lost profits.

3. Reasonable Royalty

Finally, Apple has calculated about $25 million of reasonable royalty damages based on infringing sales for which Apple is not seeking to recover either Samsung's profits or Apple's lost profits. Because this component of damages relates to products that infringe only the utility patents, it is the smallest component of Apple's calculation. These damages are based on per-unit reasonable royalty rates of $2.02 for infringement of the '381 patent, $3.10 for use of the '915 patent, $2.02 for use of the '163 patent, and $24 for use of any of Apple's design patents or trade dress rights. These amounts were calculated based on standard economic models frequently used in calculating reasonable royalty damages, including an evaluation of the well-worn Georgia Pacific factors. These methods are all commonly used and approved by the Federal Circuit in patent cases.

Samsung in contrast claims that Apple's sole remedy should be an absurdly low royalty payment of $28,452. This number is based on Samsung's belief that it would take less than a month fully to design around all of Apple's intellectual property, and that it could do so without losing a single sale. Samsung's position is based on self-serving, hypothetical testimony from its own engineers, as translated by Samsung's in-house litigation attorneys. The testimony violates Judge Grewal's order regarding evidence of Samsung's alleged design-arounds with respect to the '381 and the '163 Patents. (Dkt. No. 1106 at 3-4.) Moreover, it is inherently incredible. If Samsung could have avoided this lawsuit and this trial at a cost of less than $30,000, it would have done so.

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B. Special Considerations Apply to Calculating Trade Dress Damages

The law provides similar remedies for trade dress infringement and dilution as it does for design patent infringement. Apple may recover Apple's lost profits, Samsung's profits, and reasonable royalty damages based on Samsung's violation of Apple's trade dress. 15 U.S.C. § 1117(a) (2006); Sands, Taylor & Wood v. The Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992), on remand, 1993 WL 204092 (N .D. Ill. 1993), aff'd in part and rev'd in part, 34 F.3d 1340, 32 U.S.P.Q.2d 1065 (7th Cir. 1994). There are two important differences specific to trade dress damages. First, a defendant may attempt to apportion an award of infringer's profits based on trade dress infringement. Second, actual notice is not a prerequisite for recovery based on infringement of unregistered trade dress or dilution of any trade dress, whether registered or unregistered.

These two considerations are discussed in turn below.

1. Samsung Cannot Rebut the Presumption That All Profits Are
Attributable to Samsung's Infringing Activity

Under Ninth Circuit law, it is Apple's burden only to establish Samsung's gross sales associated with the trade dress violation, and Apple then enjoys a presumption that this sum may be recovered as damages. Rolex Watch, U.S.A., Inc., v. Michel Co., 179 F.3d 704, 712 (9th Cir.1999) (plaintiff carries burden to show with "reasonable certainty" defendant's gross sales from infringing activity). Samsung bears the burden of establishing all deductions, whether for costs that are "actually attributable to sales of the infringing items," or for amounts that are "demonstrably not attributable" to the protected design. Nintendo of Am. v. Dragon Pac. Int'l, 40 F.3d 1007, 1012 (9th Cir. 1994); Kamar Int'l, Inc., 752 F.2d at 1329.

Samsung adopted an excessively aggressive position on apportionment that it could not support, and as a result all of Samsung's evidence on apportionment has been excluded under Rule 702. (Dkt. No. 1157 at 9-10.) Samsung therefore cannot rebut the presumption that all of its infringing sales are attributable to infringement, and Apple will recover all of Samsung's profits on the infringing or diluting sales. Nintendo of Am. v. Dragon Pac. Int'l, 40 F.3d 1007,

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1012 (9th Cir. 1994) ("where infringing and noninfringing elements of a work cannot be readily separated, all of a defendant's profits should be awarded to a plaintiff").

2. Actual Notice Is Not Required to Recover Damages for Violation of Unregistered Trade Dress Rights

Apple is entitled to recover damages on all of its trade dress claims without regard to whether it gave Samsung actual notice of those claims.

The statutory requirement for actual notice applies only to infringement of registered trade dress rights. 15 U.S.C. 1111 (2006) ("in any suit for infringement under this chapter by such a registrant. . . no profits and no damages shall be recovered . . . unless the defendant had actual notice of the registration"). By its own terms, the notice statute does not apply to Apple's unregistered trade dress claims, nor to Apple's claims based on trade dress dilution. 3 McCarthy on Trademarks & Unfair Competition § 19:144 (4th ed.) ("because the [§ 1111] requirement of notice only applies to registered marks, it is, of course, not a limitation on recovery of damages under a [§ 1125(a)] count for infringement of an unregistered mark); Dwyer Instruments, Inc. v. Sensocon, Inc., No. 3:09-CV-10-TLS, 2012 U.S. Dist. LEXIS 78491, at *29 (N.D. Ind. June 5, 2012) ("This Court agrees that the notice language of § 1111 only applies to registered marks and to claims for infringement of such registered marks.").

With one exception, all of Apple's trade dress claims are for unregistered rights, and the registered right supports only a dilution claim, not an infringement claim. In any event, Apple did notify Samsung of its trade dress claims as early as July 2010 when Apple initiated executive-level discussions in an attempt to stop Samsung's copying. Samsung did not listen to Apple, but willfully continued to violate Apple's trade dress rights.

IV. APPLE WILL BE ENTITLED TO A PERMANENT INJUNCTION

After the jury finds that Samsung has violated Apple's intellectual property rights, Apple will move for an injunction to stop future violations. See 35 U.S.C. § 283; 15 U.S.C. § 1116. A permanent injunction requires a showing that (1) the plaintiff has incurred irreparable injury; (2) monetary damages and other legal remedies are inadequate to compensate for that injury; (3) an injunction is warranted in view of the balance of hardships; and (4) the public interest

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would not be disserved by a permanent injunction. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391-92 (2006).

The Court has already issued a preliminary injunction against the Galaxy Tab 10.1 in this case, and a preliminary injunction against the Galaxy Nexus in Apple's second lawsuit against Samsung. The Court found that Samsung's sale of products that likely infringe Apple's patents is likely to have "downstream effects" on Apple's market share and sales of future products that cannot be remedied through monetary damages. The Court also found that the public interest favors enforcement of intellectual property rights, and that an infringer that elects to build its business on products that violate such rights has no basis to complaint about any "hardship" resulting from an injunction. This is particularly so when, as here, the parties are direct competitors and the infringement results from deliberate copying. (See, e.g., Dkt. 1135.) A finding at trial that Samsung has violated Apple's intellectual property rights will put Apple in an even stronger position to obtain an injunction, since this will be a final judgment rather than a preliminary finding of likely success on the merits.

An injunction is an equitable remedy for the Court to decide, and Apple understands that the Court intends to schedule post-trial briefing that may include evidence not presented at trial. To support a permanent injunction, Apple will rely on much of the same evidence that the Court has already considered in connection with the preliminary injunctions. Apple may also present additional evidence, including documents that Samsung improperly failed to produce during the preliminary injunction phase of this case. (Dkt. No. 898.) Apple will request the Court to issue a permanent injunction as promptly as possible after trial to put a stop to the irreparable harm Samsung's copying is inflicting on Apple.

V. SAMSUNG'S ASSERTED DECLARED-ESSENTIAL PATENTS ARE NOT INFRINGED AND INVALID

Samsung alleges that practice of U.S. Patent Nos. 7,675,941 and 7,447,516 ("the declared-essential patents") is required to comply with two short sections of the voluminous UMTS telecommunications standard, and that all Apple products operate on a UMTS network. Samsung alleges that these patents are important to UMTS; innovations over prior art wireless

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technologies; procured through above-board, proper Samsung conduct during the standard-setting process; and not "exhausted" by Samsung's license with Intel.

Samsung is wrong on all counts.

First, as Apple will demonstrate at trial, the declared-essential patents are not, in fact, required to practice UMTS. The claims of these patents do not read on the relevant portions of the UMTS standard.

Second, Samsung's declared-essential patents are, even on their own terms, trivial features that are invalid in view of the extensive prior art. Each is directed to tiny tweaks that were known or obvious in light of the crowded field of prior art.

Third, Samsung engaged in standard-setting misconduct that renders these patents unenforceable. Samsung hid its patents from the standards working groups -- breaching its duty to timely disclose them -- and compounded this violation by demanding non-FRAND compensation, which breached Samsung's FRAND commitments for these patents.

Fourth, Samsung's infringement allegations are directed to functionality contained in the Intel baseband processors. Pursuant to a cross-license agreement, Samsung authorized Intel to sell these chips, and Intel's authorized sales to Apple terminated Samsung's rights with respect to any Samsung patents substantially embodied in those chips.

For all these reasons, Samsung's declared-essential patent allegations will fail at trial.

A. The '941 Patent

In May 2005, Samsung convinced 3GPP to adopt a proposal to make minor changes to a few subsections of Section 25.322, one of hundreds of subsections of the UMTS specification that make up the overall 3GPP specification. Unbeknownst to 3GPP, less than a week before making its proposal, Samsung filed a patent application in Korea—the priority application to the '941 patent—that Samsung contends covers the technology described in the proposal. Samsung did not disclose to 3GPP that it had filed this patent application. Indeed, Samsung did not disclose that it claimed to hold intellectual property rights over the technology until more than two years later, in August 2007. By that time, Section 25.322 had been frozen for almost two years, and it was too late for 3GPP to consider alternative proposals.

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Samsung claims that the '941 patent covers a feature in Release 6.4.0 and subsequent versions of Section 25.322 of the 3GPP specification called the "Alternative E-bit interpretation." The feature relates to the meaning given to a one bit field in the "header" of data packets. The header provides information that is used during the "segmentation" (i.e., breaking apart) and reassembly of data packets for wireless transmission, and Samsung contends that the Alternative E-bit interpretation utilizes headers more efficiently in certain limited circumstances (although the '941 patent acknowledges that the feature also sometimes leads to inefficiencies).

Under the 3GPP specification, it is mandatory for all mobile devices that support UMTS to respond or react to the Alternative E-bit interpretation if they are signaled to do so by the network operator or "carrier" -- here, AT&T. It is not, however, mandatory that any carrier actually signal any mobile devices to implement the Alternative E-bit interpretation, and Samsung cannot show that AT&T implements the feature on its network. Thus, while Samsung contends that the Alternative E-bit interpretation allows for data to be sent more efficiently, it cannot show that the feature has actually resulted in any use, much less efficiency gains in the real world.

Samsung dropped its previously-asserted method claims -- presumably because it cannot show that the accused products have ever used the Alternative E-bit interpretation -- and now accuses Apple of infringing only apparatus claims 10 and 15. Samsung relies on a false syllogism that the accused products support 3GPP Release 6.4.0 and subsequent versions of the standard; that mobile devices must be capable of implementing the Alternative E-bit interpretation in order to be compliant with the standard; that the asserted claims of the '941 patent cover the Alternative E-bit interpretation; and therefore that the accused Apple products infringe the asserted claims. But Samsung is wrong on several counts.

1. Apple Does Not Infringe the '941 Patent

The asserted claims do not cover the Alternative E-bit interpretation described in the 3GPP standard, and therefore the accused products do not infringe the '941 patent. In particular, the Alternative E-bit interpretation set forth in the standard describes setting the value of a one-bit field in the header of data packets called protocol data units ("PDUs") to indicate whether a PDU contains "a complete SDU [service data unit], which is not segmented, concatenated, or padded."

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A mobile device will understand a specific bit in that field (i.e., a 0) to indicate that the PDU contains a complete SDU and nothing else. In contrast, the asserted claims describe a one-bit field that indicates whether a PDU contains "an entire SDU." As the named inventors on the '941 patent acknowledged during their depositions, a PDU can contain "an entire SDU" and nothing else, but also can contain "an entire SDU" with padding or "an entire SDU" concatenated with another SDU.

This difference is critical. The Alternative E-bit described in the standard is set to a value (i.e., 0) to indicate only the single situation in which the SDU exactly matches the size of the PDU data field, and thus there is nothing else in the data field. By contrast, the '941 claims require that the one-bit be set to the same value (i.e., 0) whenever the PDU contains an "entire SDU," so that the claimed one-bit would be set to 0 in three different situations: (1) when the PDU contains an entire SDU with padding; (2) when the PDU contains an entire SDU with concatenation; and (3) when the PDU contains an entire SDU without padding or concatenation. This difference means that a mobile device programmed to the standard would not be able to communicate properly with a mobile device that was programmed according to the '941 claims.

Samsung has indicated that it is not relying on the doctrine of equivalents ("DOE") for the '941 patent. (See Dkt. No. 1232, at 88.) In any event, such arguments should be excluded because Samsung's expert, Dr. Williams, failed to provide opinions regarding the DOE with any particularity in his report. See, e.g., Amgen Inc. v. F. Hoffman-La Roche Ltd., 580 F.3d 1340, 1382 (Fed. Cir. 2009) (DOE requires "particularized testimony and linking argument"). In addition, prosecution history estoppel bars Samsung from relying on the DOE for the "entire SDU" limitation because Samsung added that limitation by amendment during prosecution in an attempt to overcome a prior art rejection from the Patent Office. See, e.g., Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 304 F.3d 1289 (Fed. Cir. 2002) (en banc). Furthermore, the all-elements rule precludes the DOE because a finding that the accused Alternative E-bit interpretation (which indicates that a PDU contains a complete SDU that is not segmented, concatenated, or padded) is equivalent to the claimed "entire SDU" (which means that the SDU

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can be concatenated or padded within the PDU) would vitiate that claim limitation altogether. See, e.g., Warner-Jenkinson Co. v. Hilton-Davis Chem. Co., 520 U.S. 17, 39 n.8 (1997).

2. The '941 Patent Is Invalid

Many techniques for segmenting and reassembling data packets, including the use of header bits to indicate the contents of a PDU, were well known before the '941 patent. The asserted claims are anticipated by, or would have been obvious in view of, U.S. Patent No. 6,819,658 ("Agarwal"), which discloses all elements of the asserted claims, and in particular discloses both a one-bit field and a pre-defined length indicator for indicating certain information about the contents of PDUs. The asserted claims are also rendered obvious in light of one or more of prior art references including Agarwal, U.S. Patent Application No. 2002/0016852 ("Nishihara"), and PCT Application No. WO 02/43332 ("Petersen"), each alone or in view of other secondary references, which also disclose each of the elements of the asserted claims. The Patent Office was aware of none of this prior art during prosecution of the '941 patent.

B. The '516 Patent

Reflecting a corporate policy of deception in its conduct before ETSI during the UMTS standard-setting process, Samsung followed the same pattern of non-disclosure with the '516 patent as the '941 patent. In May 2005, Samsung persuaded 3GPP to adopt a proposal to make minor changes to a subsection of Section 25.214 of the UMTS specification. The Samsung inventors presenting the proposal deliberately failed to inform 3GPP that in June 2004 they had filed a patent application in Korea -- the priority application to the '516 patent -- that Samsung contends covers the technology described in the proposal. Indeed, Samsung waited more than a year -- until May 2006 -- to disclose to ETSI that Samsung claimed to hold intellectual property rights over the technology. By that time, Section 25.322 had been frozen for approximately 11 months, and it was too late for 3GPP to consider alternative proposals.

Samsung alleges that claims 15 and 16 cover a feature in Release 6.6.0 and later versions of the 3GPP standard TS 25.214 relating to power control on the uplink, i.e., from the mobile device to the base station. There are five total uplink channels in Release 6. Generally, using more power increases data reliability because more power makes it easier to overcome

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interference in the atmosphere. But it is possible that the total transmit power that the mobile device plans to use or is using exceeds the maximum power level that the network will allow or that the device can use for transmission. In that case, as the prior art clearly taught, the mobile device must reduce the amount of power it is transmitting. The 3GPP standard TS 25.214 Release 6.6.0 requires that when the total transmit power for all five of these channels exceeds the maximum allowed power, then the transmit power for one of those channels, the E-DPDCH channel, is scaled down.

Samsung's infringement argument for the '516 patent is the same as for its other declared-essential patent. Samsung again relies on a false syllogism that the accused products (Apple iPhone 4 and iPad 2 3G) comply with the 3GPP Release 6.6.0 and subsequent versions of the standard; that the '516 patent covers the power control portion of TS 25.214 Release 6.6.0; and therefore that the accused products infringe the asserted claims. But, once again, Samsung is wrong.

1. Apple Does Not Infringe the '516 Patent

The asserted claims of the '516 patent do not cover the power control portion of TS 25.214 Release 6.6.0, and therefore the accused products do not infringe. In particular, the asserted claims consider the transmit power for only two of the five channels when determining whether the claimed "total transmit power" exceeds the mobile device's maximum allowed power and, if it does, the claimed device scales down the transmit power factor for the second channel. The asserted claims, therefore, call for an apparatus containing a controller that calculates total transmit power by considering the transmit power for only two of the five channels. In contrast, the 3GPP standard evaluates the transmit power for all five of the channels when determining whether to reduce power. The standard, therefore, calls for a controller that calculates total transmit power differently from what is required by the asserted apparatus claims.

Apple anticipates that Samsung may try to prove infringement by presenting opinions from its expert that Judge Grewal struck because they were not disclosed in (and actually diverged from) Samsung's infringement contentions. Samsung has not alleged that the accused products infringe the '516 patent under the DOE (see Dkt. No. 1232 at 88), but again any such

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arguments should be excluded because Samsung's expert failed to provide opinions regarding the DOE with any particularity in his report.

2.The '516 Patent Is Invalid

Many techniques for reducing power in a mobile device when the total transmit power has been exceeded were well known before the '516 patent. The asserted claims would have been obvious in light of one or more prior art references, including TS 25.214 version 6.1.0, TR 25.896 version 6.0.0, Japanese Patent Application No. 2002-190774 ("Hatta"), the admitted prior art in the '516 patent and U.S. Patent No. 6,510,148 ("Honkasalo"), each alone or in view of other references. The prior art discloses all elements of the asserted claims, and it would have been obvious to combine those teachings. The admitted prior art in the '516 patent and TS 25.214 version 6.1.0 combined with TR 25.896 disclose everything in the '516 patent except unequal scaling of the transmit power factors. However, Hatta solves the same problem as the '516 patent by reducing the transmit power for one class of channels while maintaining constant the transmit power for a second class of channels. It would have been obvious to scale down the power on the E-DPDCH channel first because the E-DPDCH channel uses HARQ, which requires less power to transmit because the data can be retransmitted. The prior art also teaches that the enhanced data channel would have a lower priority. Accordingly, a person of ordinary skill in the art of the '516 patent would have had no difficulty combining these references. The Patent Office was aware of none of this prior art during the prosecution of the '516 patent.

C. No Willful Infringement of the Declared-Essential Patents

The reasonableness of Apple's non-infringement, invalidity, unenforceability (waiver, estoppel), and patent exhaustion defenses to Samsung's declared-essential patents demonstrate, as a matter of law, that Apple did not act "despite an objectively high likelihood that its actions constituted infringement of a valid patent." In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). In addition, there is no evidence that an "objectively defined risk . . . was either known or so obvious that it should have been known to" Apple. Id. at 1371. There is also no evidence that Apple copied the declared-essential patents or otherwise had the subjective intent to infringe. Furthermore, Samsung is required to license the asserted declared-essential

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patents on FRAND terms. Apple could not have willfully infringed patents that Samsung is, under any circumstances, obligated to license on FRAND terms to any implementer of the UMTS standard.

VI. SAMSUNG'S RIGHTS IN THE ASSERTED DECLARED ESSENTIAL PATENTS
HAVE BEEN EXHAUSTED BY INTEL'S AUTHORIZED SALE OF LICENSED
BASEBAND CHIPS TO APPLE

Samsung's infringement claims under the declared essential patents are precluded by the doctrine of patent exhaustion. "The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item." See Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008). Samsung has accused Apple's products of infringing the declared-essential patents because they comply with the UMTS standard. All the accused functionality resides in one component: the baseband processor, which Intel sells to Apple. Through an agreement between Intel and Samsung, Intel is licensed to sell [redacted] to Apple baseband chipsets that embody Samsung's declared-essential patents, and Intel's sales to Apple thus exhaust Samsung's patent rights.

Samsung makes two arguments that exhaustion does not apply, neither of which has merit. First, Samsung claims that the express authorization it gave Intel to "sell [redacted] baseband chipsets embodying its patents is inoperative [redacted] d.

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Moreover, Intel bargained for and paid compensation to Samsung for the unfettered right to "sell [redacted] the baseband chipsets at issue here. Accordingly, Samsung has been fully compensated for sales of chipsets it claims are covered by its patents, and the conditions for exhaustion are satisfied. It makes no sense that Intel would be deprived of its unqualified contractual rights to "sell [redacted] simply because [redacted]5

Second, Samsung argues that sales of the relevant baseband chipsets were not U.S. sales and therefore do not trigger patent exhaustion because Apple directs Intel to deliver the chips to its contract manufacturers located abroad. But, among other indicia of a U.S. sale, negotiations for the chipset sales occured in the United States, the chipsets were sold through a U.S. subsiduary of Intel to Apple in the United States, the relevant orders were placed in the United States, and payment was invoiced and received in the United States. As the Federal Circuit has held, the location of contract negotiations, among other factors, can define the location of a sale See, e.g., MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1377 (Fed. Cir. 2005)(focusing on the location of contracting and finding that a sale occured in Japan where all of the negotiations, ordering, invoicing, and shipping shipping instructions were in Japan, despite the fact that delivery was in Texas). Contrary to Samsung's argument, the place of delivery is not dispositive. See, e.g., North American Philips Corp. v. American Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994)("[I]t is possible to define the situs of the tort of infringement-by-sale either in real terms as including the location of the seller and the buyer and perhaps the points along the shipment route in between, or in formal terms as the single point at which some legally operative act took place.... [A]ppellee has failed to explain why the criterion shuold be the place where the legal title passes rather than the more familiar places of contracting and

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performance."). Here, Intel was in fact authorized to sell baseband chipsets incorporating the declared-essential patents regardless of the provenance of those chipsets and the patents are substantially embodied, if at all, in the baseband processors Intel sells to Apple.

VII. SAMSUNG'S STANDARD-SETTING DECEIT RESULTS IN WAIVER OF ITS
RIGHTS TO ASSERT THE PATENTS AGAINST APPLE

Samsung's failure to disclose its IPR as required by the ETSI IPR Policy also results in an implied waiver of any right it would otherwise have to assert its declared-essential patents against implementers of the UMTS standard. Under the doctrine of implied waiver, Samsung's conduct "was so inconsistent with an intent to enforce its rights as to induce a reasonable belief that such right has been relinquished." Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1020 (Fed. Cir. 2008). The evidence will show the following elements required for waiver: (1) Samsung had a duty to timely disclose the asserted patents (or related patents or applications) during the UMTS standard-setting process, and (2) Samsung failed to do so. See Qualcomm, 548 F.3d at 1020.

Samsung contends that (1) Apple can only establish unenforceability by proving an intentional waiver, and (2) its disclosure obligations extend only to patents found to be actually essential. Samsung is wrong on both counts. First, waiver need not be intentional; it may be implied. See Qualcomm, 548 F.3d at 1020 (upholding jury instruction on waiver that "was not limited to 'true waiver,' [i.e., intentional waiver] but also addressed 'implied waiver'"). Second, Qualcomm upheld a finding of waiver where the rules of the relevant standard-setting organization (like the ETSI IPR Policy) required disclosure of IPR that "might be essential" to the standard and where it was found that the undisclosed patents "reasonably might be necessary" to practice the standard. Id. at 1022.

Both elements of implied waiver under Qualcomm are met. Samsung had a duty under ETSI's IPR Policy to timely disclose patents and patent applications that "might be essential" to the ETSI standard, and Samsung breached that duty.

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VIII. SAMSUNG IS ESTOPPED FROM ASSERTING ITS PATENTS AGAINST APPLE
BECAUSE OF ITS STANDARD-SETTING DECEIT

Due to its breach of its disclosure obligations under the ETSI IPR Policy, Samsung is equitably estopped from asserting the '516 and '941 patents. Under the doctrine of equitable estoppel, a patent holder's infringement claim may be barred where the alleged infringer proves by a preponderance of the evidence that (1) the patentee was silent in the face of a duty to disclose IPR, (2) the standard-setting body relied on the patentee's adherence to its disclosure rules in deciding to standardize the relevant technology, and (3) implementers of the standard can no longer select alternative technologies that perform the standardized function covered by the patent. See A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028, 1042-43 (Fed. Cir. 1992) (en banc).

Samsung contends that Apple must prove that Apple itself, rather than 3GPP, relied on an understanding that Samsung would fulfill its disclosure obligations and thereby suffered material harm. The Federal Circuit, however, has made clear that equitable estoppel may apply based on disclosure violations in the standard-setting context, see Qualcomm, 548 F.3d at 1021 n.8 ("[E]quitable estoppel may generally be an appropriate legal framework for analysis of breaches of disclosure duties in the SSO context[.]"), and it is, of course, the standard-setting body and its members—not the implementer (unless the implementer was also participating in the standard-setting activities)—that rely on standard-setting disclosure obligations. 3GPP members, including Apple, substantially relied on adherence to the ETSI IPR Policy's disclosure obligations when determining whether to incorporate a given technology into the UMTS standard.

All the elements of equitable estoppel have been met. As discussed in Section V above, Samsung had a duty to timely disclose the '516 and '941 patents (or related patents or applications) that "might be essential" to the ETSI standard, and Samsung failed to meet that duty.

IX.SAMSUNG'S FEATURE PATENTS ARE NOT INFRINGED AND INVALID

The innovative Apple products that Samsung accuses do not infringe Samsung's U.S. Patent Nos. 7,577,460, 7,456,893, and 7,698,711, and, in any event, all three of these patents are

37

invalid. Samsung's patents are narrow in scope, covering only specific and outmoded technologies that are not practiced by any of the accused products. Specifically, Samsung asserts claim 1 of the '460 patent against the Apple iPhone 3G, iPhone 3GS, iPhone 4, iPad 2, and iPod touch (4th Generation); claim 10 of the '893 patent against the Apple iPhone 3GS, iPhone 4, iPad 2, and iPod touch (4th Generation); and claim 9 of the '711 patent against the iPhone 3G, iPhone 3GS, iPhone 4, and iPod touch (4th Generation)6

(Dkt. 1189 at 13; Yang Opening Expert Report, March 16, 2012, at ¶ 17.) Claim 1 of the '460 patent covers a specific and convoluted method of sending emails from sub-modes with and without images; claim 10 of the '893 patent covers an apparatus displaying a last-viewed image rather than a last-captured image no matter how long a user switches away from an image viewing mode; and claim 9 of the '711 patent covers a device using a particular software element called an "applet" to play music in the background.

In contrast, the accused products operate in fundamentally different ways and are based on more modern technologies that differ substantially from the outmoded methods claimed in the Samsung patents. For example, the accused products employ built-in applications ("apps") that are more flexible, modern, and innovative than the more static and outdated "modes" claimed in the Samsung patents. Furthermore, the Samsung patents are invalid as anticipated or obvious 18 over prior art including references that Samsung did not disclose to the Patent Office.

A. The '460 Patent

1. Apple Does Not Infringe The '460 Patent

The '460 patent does not cover the more sophisticated and innovative methods employed by the accused products in the sending of email with or without photo images. Rather, the '460 patent requires a complicated and hard to follow series of steps involving "modes" and "sub-modes" that are not employed in the accused products. Specifically, the '460 patent claim requires that a user enter a first e-mail transmission sub-mode from a portable phone mode; enter a second e-mail transmission sub-mode from a display sub-mode displaying an image most

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recently captured in a camera mode; display other images using scroll keys; and transmit the two e-mails. The steps described by the '460 patent are significantly different from the simple and elegant method Apple provides to users for sending photos, which cannot be practiced as claimed in the '460 patent.

Indeed, claim 1 of the '460 patent is so convoluted that even Samsung has had difficulty explaining it. To date, Samsung has offered three different interpretations of what the claim requires. Samsung initially asserted that Apple infringes when a user employs the following series of steps: enter the Mail app and start a first email; return to the Home screen; enter the Photos app and start a second email including an image; return to the Home screen; enter the Camera app and display photos through the use of left and right arrows; return to the Mail app and send the first email; and return to the Photos app and send the second email. (Samsung's Disclosure of Asserted Claims and Infringement Contentions (Patent L.R. 3-1, 3-2), Sept. 7, 2011, Ex. J at 3, 5, 9, 10, 12.) Presumably recognizing that it would be impossible to demonstrate that Apple users actually performed such a convoluted series of steps, Samsung tried to broaden its interpretation after retaining Dr. Yang as an expert witness. In his report, Dr. Yang asserted a new theory that Apple infringes when a user merely performs "three core functions": (1) sending an e-mail with text; (2) sending an e-mail with a photo; and (3) scrolling through photos. Finally, perhaps recognizing that survey results would demonstrate how few people actually practiced the '460 patent under Dr. Yang's new "three core functions" theory, Samsung's survey expert Dr. Sukumar provided still another interpretation of the '460 patent in the customer survey that he conducted. [redacted](Sukumar Opening Expert Report, March 16, 2012, at 3, 31.)

The accused products operate in a fundamentally different manner from the method claimed in the '460 patent. First, the accused products do not employ "modes" and "sub-modes" as claimed. Specifically, the accused products do not have the (1) "first" and "second E-mail transmission sub-mode"; (2) "portable phone mode"; (3) "camera mode"; and (4) "display sub-mode." Rather, in contrast to the fixed and inflexible "modes" and "sub-modes" claimed in the

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'460 patent, the accused products employ built-in "apps" that provide multiple different functions, can be added to or removed from the Apple device, and are designed to operate at the same time. The accused products also employ a more modern and sophisticated "swiping" method to view photos from a gallery of stored photos in lieu of the "scroll key" method claimed in the '460 patent. Second, it is not even possible for accused products to perform Samsung's convoluted method steps in the manner required by the claim. For example, it is not possible to instruct the Photos or Camera app to e-mail a most recently captured image, and then browse through "other" images while that e-mail is pending.7

Not surprisingly, Samsung has provided no evidence that Apple itself practices the claimed method or induces anyone else to practice the claimed method.

Samsung has failed to come forward with evidence sufficient to prove literal infringement or to satisfy the legal standard governing the doctrine of equivalents. Specifically, Samsung has utterly failed to provide the particularized testimony and linking argument that is required before Samsung can rely on the doctrine of equivalents. Therefore, the Court should not permit Samsung to rely on this theory in any way, including the presentation of any evidence to the jury in support of this assertion. See, e.g., Amgen, 580 F.3d at 1382 (doctrine of equivalents requires "particularized testimony and linking argument").

For example, Dr. Yang offers the conclusion in his report, unadorned by any supporting analysis, that "[u]se of swiping on iPhone 4S is insubstantially different from use of scroll keys," and "[u]nder the doctrine of equivalents, swiping meets this claim element."8

(See Yang Opening Report at Ex. 1A-1, step three (asserting "doctrine of equivalents" but omitting

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function/way/result or other particularized analysis).) This purely conclusory testimony without any linking argument falls far short of the applicable legal standard and is precisely the type of generalized and unsupported evidence that should be excluded from the trial. Further, Dr. Yang's expert report provides no argument regarding infringement of any other limitations of claim 1 under the doctrine of equivalents.

In any event, Samsung should be estopped from asserting that the accused products infringe the following limitation in the '460 patent: "sequentially displaying other images stored in a memory through the use of scroll keys." During prosecution of the grandparent application to the '460 patent, Samsung added the step of "sequentially displaying other images stored in a memory through the use of scroll keys" to pending claim 20 (corresponding to issued claim 1 of the '460 patent) to overcome a prior art rejection. (JX-1066 at 11/12/2002 Amendment APLNDC-WH-A 0000014250 to 251.) Samsung also added the requirement of displaying an image "most recently" captured in a camera mode as part of the same amendment to overcome prior art. (Id.) Because these limitations were added by amendment during prosecution to overcome prior art, Samsung is estopped from claiming that the accused products infringe the step of "sequentially displaying other images stored in a memory through the use of scroll keys" or the second e-mail transmission sub-mode displaying an image "most recently" captured in a camera mode under the doctrine of equivalents. See Festo, 535 U.S. at 734 ("Prosecution history estoppel . . . preclud[es] a patentee from regaining, through litigation, coverage of subject matter relinquished during prosecution of the application for the patent" (internal quotation omitted)).

2. The '460 Patent Is Invalid

The '460 patent claim is nothing more than an obvious product of the convergence of known old technologies. Samsung may allege that it invented the camera phone, but this allegation is not relevant to the claimed method of the '460 patent and, in any event, it is wrong: many camera phones existed prior to the '460 patent. Indeed, the prior art includes camera phones capable of sending e-mail with text, e-mail with photos, and sequentially displaying photos with scroll keys. (See, e.g., U.S. Patent No. 6,690,417 (TX 120); U.S. Patent No. 6,069,648 (TX 119); U.S. Patent No. 6,009,336 (TX 118).) Dr. Yang's "three core functions"

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were all well-known in the prior art, and the narrow and convoluted '460 patent claim represents nothing more than an obvious combination of old technologies applied in a standard and predictable manner.

B. The '893 Patent

1. Apple Does Not Infringe The '893 Patent

Conventional digital cameras, which were well-known prior to the '893 patent, provided modes, such as a photographing mode to allow a user to take pictures and a stored-image display mode to view the pictures. The purported problem identified by the '893 patent was that conventional digital cameras did not allow a user to return to a last-viewed image in display mode following a mode-switching operation, and instead would display a most recently captured image. The '893 patent claims a digital image processing apparatus, such as a digital camera, that can switch between stored-image display mode and photographing mode, and return to a most recently viewed image in display mode "irrespective of a duration" the apparatus was in the photographing mode.

The accused products operate in a fundamentally different manner and lack several elements of the claim asserted by Samsung. First, the accused products do not have a "stored-image display mode" or a "photographing mode" as claimed in the '893 patent. Instead of employing inflexible "modes," or states of operation, like a conventional digital camera, the accused products are sophisticated computing devices that use built-in "apps," independent pieces of software for capturing and viewing images. Second, the accused products do not display the most recently viewed image when returning to the Photos app from the Camera app "irrespective of a duration" that a user operated the Camera app. The most recently viewed image is not displayed, for example, after the device requires memory use elsewhere and loses the state of the Photos app.

Samsung has failed to come forward with evidence sufficient to prove literal infringement and has stated that it is not relying on the doctrine of equivalents for the '893 patent. (See Dkt. No. 1232, at 88.) In any event, Samsung has failed to provide the particularized testimony and linking argument that is required before Samsung can rely on the doctrine of equivalents.

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Therefore, the Court should not permit Samsung to rely on this theory in any way, including the presentation of any evidence to the jury in support of this assertion. See, e.g., Amgen, 580 F.3d at 1382 (doctrine of equivalents requires "particularized testimony and linking argument").9

2. The '893 Patent Is Invalid

The asserted claim of the '893 patent is invalid because it is anticipated or rendered obvious by several prior art references either alone or in combination. For example, as the prosecution history of the '893 patent makes clear, U.S. Patent No. 6,867,807 to Malloy Desormeaux teaches every limitation of the asserted claim except for the "irrespective of a duration" limitation. (JX-1065 at 1065.038 - 1065.044, e.g., July 10, 2008 Amendment.) This limitation is an obvious and predictable common-sense design choice, as further demonstrated by other anticipatory prior art, e.g., Korean Patent No. 10-2004-0013792 ("KR '792 patent"). (See TX 112.)

Finally, the asserted claim fails for lack of written description because the specification lacks support for the "irrespective of a duration" claim limitation. Samsung added this limitation by amendment to overcome a prior art rejection without identifying support in the specification, and still has not identified any.

C. The '711 Patent

1. Apple Does Not Infringe The '711 Patent

The '711 patent does not cover the more sophisticated and innovative methods employed by the accused products relating to the play of music and multi-tasking. Rather, the '711 patent claims a pocket-sized mobile communication device with a particular implementation for playing music in the background while the user multitasks. Specifically, the '711 patent claims that a user is able to play an MP3 music file, switch to a standby mode, select another function such as text messaging, and use that second function while the music play continues in the background.

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The claims require that the music background play is implemented using an "applet," a special type of software application.

In contrast, the accused products do not practice the limitation in the '711 patent requiring the "music background play object, wherein the music background play object includes an application module including at least one applet" limitation. Specifically, the accused products do not use an "applet" for playing music in the background as claimed. The iOS operating system used in the accused products is not designed to employ an "applet" as defined by the Court and as claimed by Samsung. (The Court has defined "applet" as "an application designed to run within an application module.") Not surprisingly, Samsung has failed to identify any source code for the accused products relating to an application designed to run within an application module, for the simple reason that no such source code exists. Furthermore, while claim 9 requires an "MP3 mode" for selection by a user, the accused products play music by launching a music application, not by selecting a mode. In the absence of an MP3 mode, the accused products cannot infringe the asserted claim.

Samsung has failed to come forward with evidence sufficient to prove literal infringement and has stated that it is not relying on the doctrine of equivalents for the '711 patent. See Dkt. No. 1232, at 88. In any event, Samsung should be precluded from asserting the doctrine of equivalents because it has failed to provide the particularized testimony and linking argument that is required to do so. See, e.g., Amgen, 580 F.3d 1340, 1382 (Fed. Cir. 2009) (doctrine of equivalents requires "particularized testimony and linking argument").10

2. The '711 Patent Is Invalid

The '711 patent is invalid for obviousness. Playing music in the background while multi-tasking, as described in the '711 patent, was well-known on prior art mobile phones, for example, the Sony Ericsson K700i. "Applets" also were well-known in the prior art, including for purposes of playing music files on mobile phones. (See, e.g., Q.H. Mahmoud, "The J2ME Mobile Media

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API." ("Mahmoud") (TX 115).) And the claimed features in the '711 patent are taught by a straightforward combination of prior art patents. (See, e.g., U.S. Pub. App. No. 2003/0236814 to Miyasaka ("Miyasaka") (TX 92), U.S. Patent No. 6,928,648 to Wong ("Wong") (TX 91), U.S. Pub. App. No. 2004/0077340 to Forsyth ("Forsyth") (TX 88).) Thus, the alleged invention is no more than an obvious and predictable combination of old technologies.

D. No Willful Infringement of the Feature Patents

Samsung's allegation that Apple willfully infringed the '460, '893 and '711 patents fails as a matter of law because Apple has multiple strong, independent grounds for non-infringement and invalidity. Samsung will be unable to demonstrate that Apple had the subjective intent to infringe or acted despite an objectively high likelihood that its actions constituted infringement. The record is devoid of any evidence that an "objectively defined risk . . . was either known or so obvious that it should have been known to" Apple, Seagate, 497 F.3d at 1371, or that Apple copied the '460, '893, or '711 patents or otherwise had the subjective intent to infringe.

X. SAMSUNG'S STANDARD-SETTING DECEIT HAS RESULTED IN BREACH OF
CONTRACT AND VIOLATIONS OF THE ANTITRUST AND UNFAIR
COMPETITION LAWS

A. Samsung Has Breached Two Contractual Obligations Critically Important to
the 3GPP Standard-Setting Process

Samsung has breached two contracts critically important to the integrity of the standard setting process of the Third Generation Partnership Project ("3GPP") for the UMTS standard. First, Samsung breached its contractual duty under the European Telecommunications Standards Institute ("ETSI") IPR Policy to timely disclose IPR that it now claims is essential to the UMTS standard. This misconduct was part of systematic Samsung corporate efforts to commit standard-setting deceit in order to implant its IPR into the UMTS standard. Second, Samsung breached its contractual obligation to grant licenses on FRAND terms to standard implementers when it refused to offer Apple such a license and sought to enjoin Apple from selling products that support the UMTS standard.

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1. Samsung Repeatedly Breached Its Duty to Timely Disclose IPR

Samsung breached ETSI's IPR Policy because (1) Samsung owned IPR it was obligated to disclose and (2) Samsung failed to timely disclose that IPR during the UMTS standard-setting process.11

ETSI's IPR Policy imposes the following disclosure obligation:
Each MEMBER shall use its reasonable endeavours to timely inform ETSI of ESSENTIAL IPRs it becomes aware of. In particular, a MEMBER submitting a technical proposal for a STANDARD shall, on a bona fide basis, draw the attention of ETSI to any of that MEMBER's IPR which might be ESSENTIAL if that proposal is adopted.
See Apple Ex. 74, ETSI IPR Policy Cl. 4.1. When Samsung submitted a technical proposal, the plain language of the second sentence of Clause 4.1 required disclosure of Samsung's IPR before the standard was frozen (and therefore while standard-setting participants were still able to consider IPR claims in determining whether to standardize a given technology). Samsung's '516 and '941 patents cover technology it proposed and now claims has been standardized as part of the UMTS. Accordingly, Samsung was plainly required to disclose those patents before the standard was frozen; otherwise the requirement particularized in the second sentence -- disclosure of IPR that might be essential if that proposal is adopted -- would make no sense.

Samsung's non-disclosure was pervasive and deliberate. Named inventors of the '941 and '516 patents attended the relevant working group meetings shortly after filing patent applications in Korea. Notwithstanding that the chairperson began each working group meeting at 3GPP by admonishing participants that they must comply with their duty to timely disclose IPR that might be essential to a technical proposal under consideration, the named inventors sat silent. Although Samsung's IPR related to the technology Samsung proposed for adoption, Samsung employees with actual knowledge of that fact intentionally failed to disclose in breach of Clause 4.1. Samsung's failure to disclose positioned Samsung to hold up Apple (and the industry) by threatening to obtain an injunction against its sales of UMTS-compliant products, thereby injuring

46

Apple. Moreover, this purposeful concealment of IPR during the standard setting deliberations was pursuant to Samsung corporate practice that such IPR should not be disclosed until after the standard was frozen. Samsung has sought to justify this practice by arguing that one cannot know for certain if IPR is involved in the standard until after the standard is set, but this excuse disintegrates in the face of an ETSI requirement to disclose, before standard adoption, any IPR which "might be essential."

2. Samsung Breached its Duty to Grant FRAND Licenses

Samsung also flagrantly breached its FRAND commitments to ETSI and its members (including Apple). Samsung made a general FRAND commitment on December 14, 1998 and specific FRAND commitments for the two asserted declared-essential patents on May 16, 2006 and August 7, 2007, respectively. Samsung has breached its FRAND commitments by seeking to enjoin Apple from selling products that support the UMTS standard and by refusing to offer Apple a license to declared-essential patents on FRAND terms.

ETSI's IPR Policy and Samsung's FRAND commitments prohibited Samsung from seeking injunctions or refusing to offer licenses on FRAND terms. Samsung admits, as it must, that its declared-essential patents are subject to FRAND obligations. Samsung's demands for a [redacted] is unfair, unreasonable, and discriminatory.

First, Samsung's royalty demand is inconsistent with its own and other UMTS declared-essential patent holders' licensing practices. It has never sought or received a [redacted] royalty from any licensee, and indeed cannot even explain where that number came from. [Redacted] In addition, Samsung's royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios.

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Second, [redacted] is exorbitant and non-FRAND on it face. Based on the average selling price of the iPhone, the royalty that Samsung demands would equal [redacted] the price of a baseband chipset-the only component of Apple's products, if any, that employs UMTS technology. Moreover, based on Samsung's proportionate share of all patents that have been declared essential to the UMTS standard (about 5.4%), if all holders of declared-essential patents were to take the abusive position Samsung asserts, total royalties on the iPhone would be [redacted] the baseband chipset price.

Third, Samsung's positions here are all the more remarkable, given that it has taken diametrically opposite positions in other litigations, when the show was on the other foot and it was seeking a FRAND license to UMTS declared-essential patents. As to royalty rate, Samsung has stated that [redacted] Here, Samsung is advocating a royalty that is equivalent to nearly 50% of the entire selling price of Apple products. As to royalty base, while Samsung now seeks to tax the entire sales price of Apple's products, it has previously advocated for a royalty on far less than the full sales price of its products on the grounds that wireless handsets [redacted], Samsung seeks to enjoin the sales of Apple's products based on its FRAND-committed patents. But Samsung previously unequivocally recognized that injunctions are unavailable on patents covered by FRAND commitments: [redacted]

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[Redacted] By exploiting its declared-essential patents to hold-up Apple for either excessive royalties or a coerced license to Apple's differentiating patents instead of negotiating a license in good faith, Samsung has harmed Apple, forcing it to expend significant resources defending against Samsung's improper claims.

B. Samsung Has Violated The Antitrust Laws By Its Standard-Setting
Misconduct

Samsung's standard-setting deceit has enabled Samsung to illegally monopolize relevant technologies markets, in violation of Section 2 of the Sherman Act.12

See Apple Inc. v. Samsung Elecs. Co. Ltd., No. 11-CV-01846 (N.D. Cal. May 14, 2012) ("May 14 Order") (holding that Apple sufficiently alleged monopolization); Apple Inc. v. Samsung Elecs. Co. Ltd., No. 11-CV-01846 (N.D. Cal. Oct. 18, 2011) ("Oct. 18 Order") (same). Specifically, Samsung (1) deliberately and dishonestly failed to timely disclose IPRs it now claims cover technologies incorporated into the UMTS standard and (2) falsely promised to license its declared essential patents to all UMTS implementers on FRAND terms. Samsung sought to wield this ill-gotten monopoly power to illegally and abusively hold up Apple for exorbitant royalties and to coerce Apple to license to Samsung Apple's differentiating patents covering the distinctive functions and designs that distinguish its products in the marketplace.

Samsung has illicitly gained and wrongfully employed monopoly power in each of the relevant technology markets -- power control scaling technology and Voice-Over-Internet-Protocol ("VOIP") header technology. Each of these markets includes both a technology that Samsung claims is covered by one of its asserted declared-essential patents and technologies that were reasonable substitutes for that technology pre-standardization. Through its standard-setting deceit, Samsung illegally excluded competition and acquired monopoly power in each of these markets. As noted in the breach of contract section above, Samsung deliberated violated the

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ETSI IPR policy by concealing known patent rights in connection with proposals under consideration for standardization by ETSI, and falsely promising that any declared essential patent would be licensed to all comers on FRAND terms. Instead, Samsung abused its wrongfully obtained monopoly power by refusing to offer Apple FRAND license terms and seeking to enjoin Apple from practicing the UMTS standard. In the standard-setting context, a firm willfully, and anti-competitively, acquires monopoly power when it "'intentionally [and] false[ly] promises to license essential proprietary technology on FRAND terms,'" the standard setting organization "'reli[es] on that promise when including the technology in the standard, and [] the patent holder[] subsequent[ly] breach[es] . . . that promise . . . .'" Apple, May 14 Order at 10 (quoting Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 314 (3d Cir. 2007)).

Last, Apple has suffered antitrust damages as a direct result of Samsung's exclusionary conduct. See Apple Inc. v. Samsung Elecs. Co. Ltd., No. 11-CV-01846, slip op. of June 30, 2012, at 40 ("because Apple has alleged patent holdup stemming from Samsung's failure to disclose essential patents to ETSI and Samsung's failure to license on FRAND terms, and because Apple's litigation costs stem directly from Samsung's alleged anticompetitive behavior, these litigation costs are a sufficient basis for a potential award of antitrust damages").

XI. SAMSUNG'S CLAIMED DAMAGES ARE EXCESSIVE AND UNSUPPORTED

A. To The Extent That Samsung Is Entitled To Any Remedy, its FRAND
Damages Cannot Exceed $0.0049 Per Unit for Each Infringed Patent

If Apple is found liable for infringement of either of the two asserted declared-essential patents, Samsung's royalty should not exceed its proportional share of reasonable aggregate royalties for all IPR declared essential to the UMTS standard, applied to an appropriate royalty base. Samsung's declared-essential patents represent only a small portion of the total set of declared essential UMTS patents -- around 5.45%.13

Thus, even apart from its use of an inappropriate base, [redacted] which represents almost [redacted] what Samsung has said should be the entire aggregate royalty for all UMTS technologies.

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Equally important, the appropriate rate should not be applied to the sales price of the iPhone or iPad, which contain computer and applicatiob functionality far beyond simple UMTS wireless phone technology. Rather, the royalty should be applied to a base equal to the price of the baseband processor, the smallest priceable unit containing the accused functionality. See Federal Trade Commission, The Evolving IP Marketplace at 212 ("The practical difficulty of idenifying a royalty rate that accurately reflects the invention's contribution to a much larger, complex product often counsels towards choosing the smallest priceable component that incorporates the inventive feature.")(Mar. 2011);Lucent Techs., Inc. v, Gateway, Inc., 580 F.3d 1301, 1336-39 (Fed. Cir. 2009)(holding royalty based on sales of the infringing product inappropriate where the rate does not "account[] for the proportion of the base represented by the infringing component or feature.");Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d. 279, 288 (N.D.N.Y. 2009)(selecting a processor as the royalty base where it was the smallest priceable unit). Apple will show that Samsung's contention that the appropriate royalty base is the average selling price of an iPhone or iPad is inconsistent with Samsung's FRAND obligations, as Samsung itself has acknowledged in past litigation:

[redacted]

[redacted]

In determining the rate to apply to the royalty base, the jury must take into account Samsung's FRAND commitments. In particular, a FRAND rate must reflect the inherent value of

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the patented technology pre-standardization, and cannot take into account value derived from the standardization of the technology. Indeed, a fundamental objective of a FRAND commitment is to ensure that patentees not exploit hold up power derived from the fact that their IPR has been standardized. See Apple, Inc. v. Motorola, Inc., No. 1:11-cv-08540 (N.D. Ill. June 22, 2012), ECF No. 1038, slip op. at 18 (Posner, J., sitting by designation) ("The purpose of the FRAND requirements . . . is to confine the patentee's royalty demand to the value conferred by the patent itself as distinct from the additional value -- the hold-up value -- conferred by the patent's being designated as standard-essential."). Moreover, Apple's calculation of a FRAND rate -- unlike Samsung's -- appropriately considers the cumulative impact of royalties to avoid "royalty stacking," i.e., an excessive aggregate royalty burden on the selling price of Apple's standard-compliant products. In addition, by virtue of its FRAND commitment, Samsung cannot be entitled to an injunction, even if assuming (erroneously) it could otherwise satisfy the four-part eBay standard. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). As Judge Posner recently explained in holding that injunctions are unavailable on FRAND-committed patents (at least absent extraordinary circumstances not present here):
By committing to license its patents on FRAND terms, Motorola committed to license [its declared-essential patent] to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent. How could it do otherwise? How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone with UMTS telecommunications capability -- without which it would not be a cell phone.
Apple, Inc. v. Motorola, Inc., No. 1:11-cv-08540, slip op. of June 22, 2012, at 18-19 (emphasis in original) ("Motorola").

At bottom, as Samsung has conceded in prior litigation, having made a FRAND commitment, Samsung could never show that damages (i.e., FRAND royalties) are inadequate compensation for practicing its patents -- a pre-requisite under the eBay standard, see eBay Inc., 547 U.S. at 391. As Judge Posner held: "A FRAND royalty would provide all the relief to which [the patentee] would be entitled if it proved infringement . . . and thus it is not entitled to an injunction." Motorola, slip. op. at 21. Similarly, having told anyone that wishes to implement the relevant standard that they may practice its declared-essential patents in return for FRAND

52

royalties, Samsung cannot reasonably contend that it would be "irreparably harmed" by others practicing the patents -- which is another pre-requisite to an injunction under eBay. See eBay Inc., 547 U.S. at 391. Samsung's proper remedy for any finding of infringement of its declared-essential patents is a FRAND royalty -- the remedy it agreed to accept when it made its FRAND commitment.

B. The Royalty Damages Sought by Samsung on The '460, '711, and '893
Patents Are The Product of Flawed Methodology and Are Overstated

Samsung seeks reasonable royalty damages for alleged infringement of the '460, '711, and '893 patents. No lost profits damages are sought. Dr. Vincent O'Brien, Samsung's damages expert, opines that total damages [redacted]

Apple will prove that Dr. O'Brien's damages methodology is fundamentally flawed and incapable of producing reliable royalty damages. Dr. O'Brien's entire damages framework is built upon an [redacted] Among the many flaws in Dr. O'Brien's methodology are the following:

First, there is no support for [redacted] but functions built into the accused devices. [Redacted] have generated only several hundred

53

downloads. Given such minimal demand, it makes no economic sense [redacted]

Second, [redacted]. Samsung cannot point to a single patent license negotiation where such a split was proposed, let alone agreed upon.

Finally, [redacted], but the survey results are flawed and unreliable for a variety of reasons. Dr. Sukumar [redacted] See Apple, Inc. v. Motorola, Inc., 2012 WL 1959560, at *5 (N.D. Ill. May 22, 2012), No. 11-cv-08540 (indicating that frequency of usage of the patented feature is a relevant factor that should be included in a survey supporting a damages calculation). Dr. O'Brien's damages formula fails to calculate a reasonable royalty tied to the economic value of the three Samsung non standards-essential patents and is unsupported and unreliable.

XII. APPLE'S SUMMARY EXHIBITS COMPLY WITH FEDERAL RULE OF
EVIDENCE 1006

Apple's trial exhibits include summaries of evidence on matters such as financial data, media coverage of the iPhone, and meeting minutes. Federal Rule of Evidence 1006 authorizes these summary exhibits. It states that "[t]he contents of voluminous writings, recordings, or photographs which cannot conveniently be examined in court may be presented in the form of a chart, summary, or calculation," provided that the underlying evidence is "made available for examination or copying, or both, by other parties at reasonable time and place." Fed. R. Evid. 1006.

Consistent with this rule, Apple's exhibits accurately summarize voluminous underlying evidence on a specific issue, which can be more efficiently presented in summary form than through numerous separate documents directed to the same point. Samsung has not argued that

54

Apple's summaries are inaccurate or that Samsung does not have access to the underlying evidence. Rather, Samsung has suggested that Rule 1006 is directed solely to financial or mathematical data. (July 18, 2012 Hearing Tr. at 47-48; Dkt. No. 1236-4 at 3).

Nothing in Rule 1006 or the case law limits its application to these specific types of information. The plain language of the rule itself, which references photographs, proves Samsung wrong. And courts regularly admit a wide range of evidence under Rule 1006. In United States v. Morin, 627 F.3d 985, 997-98 (5th Cir. 2010), the court admitted a Rule 1006 summary of video excerpts from 16 different security cameras, explaining that the video evidence "was sufficiently voluminous and complex for the district court to allow . . . testimony summarizing the video." Courts have also admitted Rule 1006 summaries of telephone conversation recordings (United States v. Francis, 131 F.3d 1452, 1457 (11th Cir. 1997)), survey data (Mehus v. Emporia State Univ., 222 F.R.D. 455, 461 (D. Kan. 2004); Keith v. Volpe, 618 F. Supp. 1132, 1161 (C.D. Cal. 1985)), and comparison infomercials (Miracle Blade, LLC v. Ebrands Commerce Group, LLC, 207 F. Supp. 2d 1136, 1146 (D. Nev. 2002)). "The purpose of Rule 1006 is to allow the use of summaries when the documents are unmanageable or when the summaries would be useful to the judge and jury." United States v. Rizk, 660 F.3d 1125, 1130 (9th Cir. 2011); Gales v. Winco Foods, No. C 09-058913 CRB, 2011 U.S. Dist. LEXIS 96125, at *22 n.9 (N.D. Cal. Aug. 26, 2011) (overruling objection). The Ninth Circuit endorses use of the rule when it will "contribute[] to the clarity of the presentation to the jury" and "avoid[] needless consumption of time." United States v. Gardner, 611 F.2d 770, 776 (9th Cir. 1980); see also United States v. Shirley, 884 F.2d 1130, 1133 (9th Cir. 1989) (summary evidence can reduce unnecessary delay and help jury evaluate "factually complex and fragmentally revealed" evidence). These decisions rebut Samsung's cramped view of Rule 1006.

Samsung's specific objections to particular exhibits (such as hearsay or relevance) can be dealt with during the trial before the specific exhibit is presented. In the meantime, Apple notes several general points.

First, as Apple explained at the hearing, Apple is generally relying on the summary Rule 1006 exhibit, and not the underlying documents. In limited situations where Apple may present

55

the underlying document as an exhibit, Apple has also designated that document as a separate exhibit.

Second, several of Apple's Rule 1006 exhibits were attachments to an expert report or summarize evidence that the expert identified and relied on in his or her report as to a specific issue. This is a proper use of Rule 1006.

Third, Samsung's assertion that Apple has improperly summarized numerous documents in a single exhibit is not well-taken. (See Dkt. No. 1236-4 at 1-3.) That is precisely what Rule 1006 allows and encourages. Union Planters Bank, N.A., 273 B.R. 764, 768 (S.D. Ill. 2001). Ironically, Samsung also objects that the underlying evidence for Apple's Exhibit 123 is not sufficiently voluminous to comply with Rule 1006. (Dkt. No. 1236-4 at 4.) But this exhibit complies with Rule 1006 because it summarizes over 300 pages of standards-related meeting minutes, the vast majority of which are irrelevant to this case, into a simple 11-page chart with relevant excerpts. Where, as here, "the underlying documents were available for inspection by the defendants," the summary exhibit is "admissible under Fed. R. Evid. 1006." Phoenix v. Com/Systems, Inc., 706 F.2d 1033, 1038 (9th Cir. 1983).

CONCLUSION

In an interview a few weeks ago, Apple's Chief Executive Officer Tim Cook explained the significance of this case for Apple. "[I]t is important for Apple not to be the developer for the world," Mr. Cook said. "We just want other people to invent their own stuff."14

Apple looks forward to a trial that will vindicate its intellectual property rights. Samsung must play by the rules. It must invent its own stuff. Its flagrant copying and massive infringement must stop.

56

Dated: July 23, 2012

MORRISON & FOERSTER LLP

By:/s/ Michael A. Jacobs_______
MICHAEL A. JACOBS

Attorneys for Plaintiff
APPLE INC.

57

Exhibit A

58

iPhone 3G trade dress

  • A rectangular product with four evenly rounded corners;
  • A flat, clear surface covering the front of the product;
  • The appearance of a metallic bezel around the flat, clear surface;
  • A display screen under the clear surface;
  • Under the clear surface, substantial black borders above and below the display screen and narrower black borders on either side of the screen;
  • When the device is on, a row of small dots on the display screen;
  • When the device is on, a matrix of colorful square icons with evenly rounded corners within the display screen; and
  • When the device is on, a bottom dock of colorful square icons with evenly rounded corners set off from the other icons in the display, which does not change as other pages of the user interface are viewed.

Combination iPhone trade dress
(iPhone / iPhone 3G / iPhone 4)

  • A rectangular product with four evenly rounded corners;
  • A flat, clear surface covering the front of the product;
  • A display screen under the clear surface;
  • Under the clear surface, substantial neutral (black or white) borders above and below the display screen and narrower neutral borders on either side of the screen;
  • When the device is on, a matrix of colorful square icons with evenly rounded corners within the display screen; and
  • When the device is on, a bottom dock of colorful square icons with evenly rounded corners set off from the other icons in the display, which does not change as other pages of the user interface are viewed.

iPad/iPad 2 trade dress

  • A rectangular product with four evenly rounded corners;
  • A flat clear surface covering the front of the product;
  • The appearance of a metallic rim around the flat clear surface;
  • A display screen under the clear surface;
  • Under the clear surface, substantial neutral (black or white) borders on all sides of the display screen;
  • When the device is on, a matrix of colorful square icons with evenly rounded corners within the display screen.

_________________
1 The Federal Circuit noted that its ruling that Samsung's "alternative prior art references" do not invalidate the D'889 patent was limited to "this preliminary stage of the litigation," but gave no similar caveat concerning the Fidler, Compaq TC1000, and JP'638 references. 678 F.3d at 1332 n.6.

2 U.S.C. §1125(c)(2) refers to dilution of trademarks, but §1125(c)(4) expressly extends dilution to cover trade dress as well.

3 On July 3, 2012, the parties filed a "Joint Case Narrowing Statement" that dismissed any trade dress claims against Samsung's original Galaxy Tab 7.0. (Dkt. No. 1178 at 2.) Thus, the earliest Samsung tablet at issue is the Tab 10.1, which Samsung released on June 8, 2011.

4 The parties' July 7, 2012, "Joint Case Narrowing Statement" clarified that Apple has not accused Samsung's "F700" of using Apple's iPhone Trade Dress. Apple's First Amended Complaint alleged that the F700 used one portion of Apple's trade dress ("the clean flat clear surface"), but did not accuse the F700 of using all elements of Apple's trade asserted dress, which consists of the combination of multiple elements, and did not accuse the F700 of diluting Apple's iPhone trade dress. (Dkt. No. 75 ¶ 80.)

5 Samsung points to another case from the same court that it claims reaches the opposite conclusion. See Tulip Computers Int'l v. Dell, 262 F. Supp. 2d 358 (D. Del. 2003). That decision, however, fails that Thorn is the better reasoned decision and should be applied here.

6 For the '711 patent, Samsung has made no monetary damages claims for alleged infringement of the iPod touch (4th Generation).

7 Samsung may argue that the method steps of claim 1 of the '460 patent need not be performed in order. This ignores the plain meaning of the claim term "sequentially displaying other images" following the step "displaying an image most recently captured." See, e.g., Ring Plus, Inc. v. Cingular Wireless Corp., 614 F.3d 1354, 1364 (Fed. Cir. 2010) (for steps to occur out of order would recite an "illogical sequence" based on claim language); Loral Fairchild Corp. v. Sony Corp., 181 F.3d 1313, 1321-1322 (Fed. Cir. 1999) ("Although not every process claim is limited to the performance of its steps in the order written, the language of the claim, the specification and the prosecution history support a limiting construction in this case."); Mantech Envtl. Corp. v. Hudson Envtl. Servs., Inc., 152 F.3d 1368, 1375-1376 (Fed. Cir. 1998) (order in claimed steps "is apparent from the plain meaning of the claim" and claimed steps could not be performed "in any order").

8 This Court denied Samsung's motion to amend its Infringement Contentions to add the iPhone 4S to the case. (Order Denying Samsung's Motion to Amend Invalidity Contentions; Order Denying Samsung's Motion to Amend Infringement Contentions, Mar. 27, 2012, at 10-12, [Dkt 836].)

9 Should Samsung attempt to argue that claim 10's "irrespective of a duration" limitation is infringed under the doctrine of equivalents, such argument must be barred by prosecution history estoppel. This limitation was added by amendment to overcome prior art, and Samsung cannot recapture that claim scope having surrendered it during prosecution. See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 734 (2002). See also File History for '893 Patent, Amendment of July 10, 2008.

10Should Samsung attempt to argue that claim 9's limitation "wherein the music background play object includes an application module including at least one applet" is infringed under the doctrine of equivalents, such argument must be barred by prosecution history estoppel. This limitation was added by amendment to overcome prior art, and Samsung cannot recapture that claim scope having surrendered it during prosecution. See Festo, 535 U.S. at 734. See also File History for '711 Patent, Amendment of December 8, 2009.

11 Samsung concedes that it is and has been at all relevant times a member of ETSI. Samsung is therefore contractually bound by the ETSI IPR Policy, and Apple is entitled to enforce it as a member of ETSI and a third party beneficiary. See Samsung's Answer to Apple's Counterclaims in Reply at ¶ 45; Apple Inc. v. Samsung Elecs. Co. Ltd., No. 11-CV-01846 (N.D. Cal. May 14, 2012) ("May 14 Order")at 17 ("Under French law, a contract may be created between the association and its members, and among members of the association...[A] third party beneficiary may sue to enforce the execution of a contract.") (citations omitted).

12 By violating Section 2 of the Sherman Act, Samsung has also violated the California Unfair Competition Law, which is broader. See Cal. Bus. & Prof. Code § 17200 et seq.; Cel-Tech Communications v. LA Cellular, 973 P.2d 527, 561, 566 (Cal. 1999) (holding that violations of other laws constitute violations of the "unlawful" part of the UCL, and that a business practice is unfair under the UCL if it "threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.").

13 See Fairfield Resources International, "Review of Patents Declared as Essential to WCDMA Through December 2008" (Jan. 6, 2009) (Samsung holds 103 of 1889 declared-essential patent families).

14 http://allthingsd.com/20120611/ apples-tim-cook-says-hello-the-full-d10-interview-video/.


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