On Monday, Apple Inc will face Samsung Electronics Co Ltd in court in one of the biggest ever technology patent trials. The case centres around the question – did Apple steal Samsung’s intellectual property to create the iPhone, or did Samsung rip off Apple’s patents in its mobile devices and tablets?

Together, Apple and Samsung account for more than half of global smartphone sales. iPhone sales dropped to 26 million in the quarter ended June, well below the 28 million predicted by Wall Street. Samsung is estimated to increase sales to around 50 million smartphones, meaning they have overtaken Apple and Nokia to become the world’s largest smartphone maker.

The case was prompted by a lawsuit from Apple in April last year, claiming a total of US$2.5 billion in damages. A countersuit by Samsung followed, and the two actions were combined. Samsung is demanding an unspecified “reasonable royalty rate” (suggested by Apple’s filing to be a share of 2.4% of the sale price of its products) for the five patents it claims Apple infringed.

The Main Claims:

Apple claims “[Samsung]’s flagrant copying and massive infringement must stop,” claiming Samsung breached seven of their patents, in addition to other trade violations. These include copies of its original designs for the iPhone and iPad, as well as user-interface elements including the bounce-back response when a person scrolls beyond the end of a list, and tap-to-zoom.

Samsung counter argues that Apple has been “free-riding” on its technology “while using excessive legal claims against our products in their attempt to limit consumer choice and discourage innovation.” The company claims Apple’s iPod touch, iPad 2, iPhone 3G, iPhone 3GS and iPhone 4 infringe five of their patents, two of which are standard-essential patents relating to a mobile phone’s ability to use 3G technology. Other patent claims cover the integration of a mobile phone, digital camera and email into a single device, bookmarking a picture in an image gallery, and using an app while simultaneously listening to music.

Samsung’s paperwork suggests it seeks to undermine Apple’s accusations by showing it was already working on handsets dominated by a screen and a single button months before the iPhone was revealed. Furthermore, it claims Apple’s ideas were heavily influenced by Sony, with a change of direction sparked by an interview with the company’s product designers.

Apple’s filings suggest it will argue Samsung knowingly brought products to market that were “confusingly similar” to Apples, highlighting a Samsung survey that found the most common reason for customers returning a Galaxy Tab 10.1 to the retailer Best Buy was because they mistakenly thought they had purchased an iPad. Furthermore, it suggests Google warned Samsung their tablet designs were “too similar” – a claim that carries weight because the search giant designed the Android system used by Samsung.

The Trial:

On Monday, in San Jose, California federal court, a nine-member jury is expected to be chosen to resolve the dispute in a patent and antitrust trial. US District Judge Lucy Koh has already blocked the Galaxy Nexus, from being sold in the United States on the basis that the flagship Google smartphone infringes Apple patents via “the core voice and search functionality within Android”. Koh also blocked the US sale of Samsung’s Galaxy Tab 10.1 on the grounds it resembles the iPad too closely. Germany followed this decision, however a British judge disagreed, saying the Tab was obviously “not as cool” as the iPad.

The jury will hear the evidence over at least four weeks, in a trial patent consultant Florian Muller referred to as complicated due to the diversity of intellectual property rights – “[the jury] will almost certainly be overtaxed as far as the highly technical patents are concerned.”

The Impact:

Nick Rodelli, lawyer and adviser for CFRA Research in Maryland referred to the trial as “arguably the most commercially and doctrinally significant US patent case in the modern era.” The dispute has reached deep into the tech sector – conapies including Microsoft Corp, IBM Corp, Nokia and Research in Motion Ltd this week filed court papers in an attempt to keep their own patent licensing agreements from being disclosed during the trial, although Judge Koh stated she would be guided by the rule that “public access must be respected unless truly unwarranted.”

A loss for Samsung could lead to a permanent sales ban against products including the Galaxy S III phone, and affect upwards of 20% of Samsung’s global consolidated profit. A loss for Apple could be significant, says chief executive of Destination Wealth Management, Michael Yoshikami, not just because they may be ordered to pay financial damages but because the Galaxy S III is “a better phone” than the iPhone 4S. Billions of dollars of payments could be triggered from one business to the other, and sales bans imposed if the one or both parties are found guilty.

Some legal experts suggest this trial may involve intellectual property that should never have been patented. Legal scholar Robin Feldman comments we should consider “whether society should be granting such powerful rights so easily… [the trial] is one more indication of a patent system that has lost its bearing, with litigation rather than innovation leading the way.”

Either way, this trial will certainly be one to watch. The court documents are being made available for free here, and Wired’s Gadget Lab is providing detailed coverage of the trial.

via Reuters