Samsung Calls One of its Own at $2 Billion Apple Patent Trial

Bloomberg News

Samsung Electronics Co. (005930), fighting a $2 billion patent claim by Apple Inc., called a senior executive to testify to prevent the iPhone-maker from highlighting the absence of such witnesses as it did in their previous trial.

The testimony today of Dale Sohn, who until last year served as chief executive officer at Samsung Telecommunications America, is intended to differentiate the Galaxy maker from its rival by explaining its different business model, and thereby distance itself from Apple's claims of patent infringement.

Sohn's appearance also blocks a line of attack that Apple used in the companies' 2012 U.S. trial over smartphone technology -- that Samsung displayed an irreverence or indifference to the patent claims by failing to make a senior executive available to testify.

'In the other case, I felt a bit uncomfortable,' Sohn said, explaining to jurors why he decided to testify and not use a translator for his native language, Korean. 'Now I have become more comfortable with this case, so I decided to speak English.' Also, Sohn said, 'I have limited time' to testify. 'To make it more effective I decided to use English.'

The world's top two smartphone makers have battled in courts on four continents to dominate a market that was valued at $338.2 billion last year, according to data compiled by Bloomberg. Samsung had 31 percent of industry revenue, compared with 15 percent for Apple, whose share of the market has shrunk as the touch-screen interface has become commonplace and Samsung, LG Electronics Inc. and Lenovo Group Ltd. have introduced lower-cost alternatives.

Sluggish Sales

Sohn told jurors in federal court in San Jose, California, about Samsung's sluggish U.S. sales when he arrived at the company's U.S. unit in 2006, and its dramatic turn-around in 2007, the year the iPhone was introduced, and how by the third quarter of 2008, the company was 'the No. 1 market-share holder' in mobile phones. Sohn now serves in South Korea as an executive adviser to J.K. Shin, one of Samsung's chief executive officers.

Sohn today spoke of how Suwon, South Korea-based Samsung developed its phones using a marketing strategy that was different from Apple's, while Samsung also called engineers from Google Inc. as witnesses to defend against claims that several Android operating system features in Galaxy devices infringe Apple's patents.

Sohn described his study of U.S. market dynamics, and the evolution of Samsung's 'carrier friendly' business model, in which the company strived to design phones to be sold by multiple vendors including AT&T, Verizon, T-Mobile and Sprint. He also described his reaction to the iPhone, when it was introduced in 2007.

'I thought that it was a very impressive, nice product, but also that only AT&T exclusively would distribute the phones,' Sohn said. With its $299 price, Sohn saw the iPhone occupying a 'niche market' because 'not really many of the customer base could afford' the smartphone, he said.

iOS Platform

Apple's iOS platform gained ground in the U.S. in the final quarter of 2013 as the share of the market served by the platforms of Google, Microsoft Corp. and BlackBerry Ltd. shrank. Android's share slipped 0.3 percentage points to 51.5 percent as Cupertino, California-based Apple gained 1.2 percentage points to end the year with almost 42 percent of the market, ComScore Inc. said in February.

Unlike the first trial in 2012, when Apple was awarded $1.05 billion in damages after convincing jurors that Samsung copied the iPhone's look and design, the current case is exclusively about software functions.

Apple claims that 10 Samsung products, including the Galaxy S3, infringe five patents covering a range of user-interface designs for the iOS software that powers iPhones and iPads, including features like the slide-to-unlock function, automatic spelling corrections, and the ability for a user to make a call by clicking on a phone number within a web page or e-mail instead of having to dial it separately.

Other functions Apple says are covered by its patents include searching for words in files stored in different applications and updating applications while using other features of the phone. Apple seeks about $2.2 billion in damages.

Samsung alleges that eight Apple products, including the iPhone 5 and versions of the iPad and iPod, infringe two patents. Samsung seeks about $7 million in damages, according to a court filing.

The case is v. Samsung Electronics Co., 12-cv-00630, U.S. District Court, Northern District of California (San Jose).

To contact the reporter on this story: Joel Rosenblatt in federal court in San Jose, California, at jrosenblatt@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg, Andrew Dunn