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Big Blue Veteran Leads Apple-Samsung Patent Jury

By Joel Rosenblatt
May 06, 2014 12:01 AM EDT 27 Comments
A customer looks at Samsung's Galaxy S5 smartphone at a mobile phone shop in Seoul on March 27, 2014.
Photographer: Jung Yeon-Je/AFP via Getty Images
A customer looks at Samsung's Galaxy S5 smartphone at a mobile phone shop in Seoul on March 27, 2014.

Apple (AAPL) Inc. and Samsung Electronics Co. (005930) placed their trust in a retired IBM executive with patent litigation experience to give them a fair trial. Neither side ended up with a sweeping victory.

When jury foreman Thomas Dunham handed over the verdict in court May 2, Apple got just $120 million of the $2 billion it sought for infringement of its smartphone patents. Samsung, whose lawyer said yesterday it will seek to overturn the verdict, won one of its two claims against the iPhone maker.

The trial, involving 10 Samsung devices and five of Apple’s, demanded the jury weigh complexities of Apple’s iOS operating system and Google Inc. (GOOG)’s Android system used in the Galaxy and other Samsung models. The verdict will guide the judge as she decides probable requests by both companies to ban U.S. sales of the other’s products found to violate patents.

Dunham, without describing how the jury weighed specific evidence or witness testimony, said jurors examined the evidence closely for each patent. He said the $2.2 billion sought by Apple was “a big number.”

“I’m not going to argue with them that it’s not fair, but we came to a different conclusion,” he said yesterday in an interview at the federal courthouse in San Jose, California. “We came up with a different fair and reasonable” royalty rate, he said.

It isn’t surprising that a foreman such as Dunham would help lead to “a mixed bag result,” said David Shlansky, an intellectual property litigator who has followed the case.

‘Nominal Award’

“The nominal award on one patent to Samsung implies a careful reckoning with each claim, and a deliberate, compartmented treatment -- similar to a last will leaving a nominal amount to deliberately avoided beneficiaries, saying effectively, ‘I did not forget you, I just didn’t think you deserved much,’” he said in an e-mail.

The four-week trial in the heart of Silicon Valley was held in the same federal courtroom where the world’s top two smartphone makers had their first U.S. trial two years ago. The cases were part of the companies’ patent battles across four continents as each tries to dominate a market valued at $338.2 billion last year, according to data compiled by Bloomberg.

While Apple and Samsung have fought in court, Google has continued to aggressively pursue a bigger piece of the market, with new features and updates to attract more users. The efforts helped the search engine company claim more than 75 percent of the smartphone industry at the end of last year, according to Gartner Inc. (IT)

Dunham Influence

That both companies agreed to let Dunham serve is “a message that each party believed in its case,” said Michael Risch, a professor at Villanova University’s law school. He also said it’s a solid bet Dunham influenced his fellow panelists.

“When you pick someone with that kind of experience, the chances are good that you’ll get someone who will look closely at the details,” Risch said. “And if that’s true, you have to believe that the details support your case.”

Dunham, who retired from International Business Machines Corp. (IBM) four years ago to pursue a hobby of restoring classic cars, stood out among the eight jurors, three of whom had master’s degrees, for experience with patented software.

Dunham said yesterday after the judge excused the jury that his fellow panelists chose him as foreman because of his background developing IBM’s large software systems. He said the lawyers did a good job of presenting the material in a way that was understandable to other jurors, many of whom didn’t have any technical background.

“I just happened to be a ringer in patents,” he said.

Spanish Juror

The Apple-Samsung jury included a Spanish-born, retired teacher with master’s degrees in linguistics and Spanish literature, a retired contractor, a county government business services specialist and a community service officer at a police department in a suburb of San Jose, California.

Four of the jurors were born outside the U.S. and at least four owned iPhones. One is an accounting assistant at a local college, while another is an executive assistant at Seagate Technology. (STX)

Margarita Palmada, the juror from Spain, said yesterday Dunham’s role as foreman “was to put things together in a way that makes sense in the language of the patents.”

Palmada said each of the jurors had their own opinions and came to their own decisions, and that Dunham led the way to a consensus.

First Trial

The jury foreman at Apple and Samsung’s 2012 trial, another Silicon Valley resident, was an engineer with a patent to his name and 35 years’ experience in the computer hard-drive industry. He said in an interview after the trial that his fellow panelists selected him to be foreman based partly on his experience.

During jury selection for the second trial, lawyers for the companies took extra time vetting prospective jurors with technology industry backgrounds for any possible bias.

A LinkedIn Corp. software engineer in the jury pool who said his company provides products for both Apple and Samsung was excused after he told the court both companies are “bullies with their patent libraries.” Another who didn’t make the cut was a woman who worked for Tessera Technologies (TSRA) Inc. in the early 2000s and recalled that the company had been involved in litigation with Samsung.

“Selecting a jury in this case was extremely difficult,” said Brian Love, an assistant professor of law at Santa Clara University. “This jury is far from a random selection.”

‘Nitty Gritty’

Lawyers often seek jurors who can be “molded by general themes and broad stories rather than nitty gritty facts,” Risch said.

After three days of deliberations, Dunham and the other jurors came to a unanimous agreement on about 250 decisions involving seven patents after hearing some 50 hours of evidence, including testimony from company executives, engineers and business school professors. One of the Apple patents covered by the case was found by the judge before the trial to have been infringed by Suwon, South Korea-based Samsung.

While the 2012 trial was a clear victory for Cupertino, California-based Apple, ending with an award of $930 million in damages against Samsung, jurors this time around sided with Apple on two out of four patents they considered and with Samsung on one out of two.

Dunham said it was an “exciting” moment when Apple presented evidence showed that Samsung had a confidential pact in which Google agreed to cover some of the defense costs and liability for patents related to Android, and retain some control over the litigation.

Google ‘Implicated’

“It woke us all up,” Dunham said, adding that “Google was implicated.”

Dunham suggested the revelation about the Google indemnification may have worked against the iPhone-maker. If Apple and Google “go head to head,” the courts will sort the truth out, he said.

“If you feel Google is the cause behind this, as everyone has observed, don’t beat around the bush,” Dunham said. “A more direct approach is something to think about.”

After U.S. District Judge Lucy H. Koh said there was a possible error in the verdict jurors issued May 2, the panel reviewed its calculations yesterday and made some modifications, while leaving the total amount of damages the same.

Samsung will ask Koh and an appeals court, if necessary, to reduce the damages awarded by the jury to zero, John Quinn, a lawyer for the company, said yesterday in a statement.

Verdict ‘Unsupported’

“Of course we’re pleased that the jury awarded Apple 6 percent of what they were asking for,” Quinn said. “But even that can’t stand, because Apple kept out all the real world evidence and didn’t produce anything to substitute for it, so you have a verdict that’s unsupported by evidence -– and that’s just one of its problems.”

Kristin Huguet, a spokeswoman for Cupertino, California-based Apple, didn’t immediately respond to an e-mail seeking comment on Quinn’s statement.

She said earlier that the jury’s verdict “reinforces what courts around the world have already found: that Samsung willfully stole our ideas and copied our products.”

The verdict is the eighth-largest jury award in the U.S. this year, according to data compiled by Bloomberg. It’s the fourth-largest jury award in a patent case this year.

IBM Responsibilities

Dunham, who was questioned more extensively by lawyers during jury selection than most others in the pool, displayed a knowledge for the kinds of details the case would present when he explained that he had responsibility at IBM for “$2 billion worth” of income statements while directing large systems software projects.

Dunham was also quizzed by Koh about serving as a witness in a lawsuit accusing Compuware Corp. of copying IBM’s code that settled before trial. He told the judge he gave a deposition, a response to questions from lawyers, in that case, and that he wasn’t involved in other cases in which IBM sought, “on a regular basis,” to enforce its patents.

Mark Lemley, a professor at Stanford Law School who specializes in intellectual property, said at the start of the trial that for someone with Dunham’s background, “both sides might see him as a potential ally.”

It was the gray-haired Dunham who drew special attention when the jury was selected. Born in Oklahoma City and now living in San Martin, California, Dunham said in court that he provided the direction for Armonk, New York-based IBM’s patented software at his division.

“As you know, IBM has quite a patent portfolio, and I had responsibility for developers that created patents,” he told the court on March 31, according to a transcript.

“And did you think those patents were important to IBM?” Bill Lee, a lawyer for Apple. asked Dunham.

“Yes, I did,” Dunham said.

The case is Apple Inc. (APPL) 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

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