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Does Apple patent victory mean fewer smartphone choices?

Apple's $1 billion jury award may keep others from making Android smartphones, fearing an Apple lawsuit. Samsung vows to fight the verdict.

By Paul EliasAssociated Press / August 25, 2012

Visitors shop around Samsung's smartphones at a shopping mall in Seoul, Saturday, Aug. 25, 2012. A US jury found that the South Korean phonemaker stole Apple's iPhone and iPad technology and awarded Apple $1 billion in damages.

Lee Jin-man/AP

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SAN JOSE, Calif.

A jury's conclusion that Samsung stole the innovative technology used by Apple to create its revolutionary iPhone and iPad could mean fewer smartphone options for consumers to choose from, analysts said.

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Apple Inc.'s $1-billion (€800-million) legal victory sends a warning to other companies manufacturing similar devices, the biggest marketplace threat to Apple.

A federal jury's found Friday that Seoul-based Samsung Electronic Co. stole Apple's technology to make and market smartphones using Google's Android software.

"Some of these device makers might end up saying, 'We love Android, but we really don't want to fight with Apple anymore,'" said Christopher Marlett, CEO of MDB Capital Group, an investment bank specializing in intellectual property. "I think it may ultimately come down to Google having to indemnify these guys, if it wants them to continue using Android."

That's if the verdict stands. Samsung, the global leader among smartphone makers, vowed to fight. Its lawyers told the judge it intended to ask her to toss out the verdict.

"This decision should not be allowed to stand because it would discourage innovation and limit the rights of consumers to make choices for themselves," Samsung lead lawyer John Quinn said. He argued that the judge or an appeals court should overturn the verdict.

Apple lawyers plan to formally demand Samsung pull its most popular cellphones and computer tablets from the U.S. market. They also can ask the judge to triple the damages from $1.05 billion to $3 billion.

U.S. District Judge Lucy Koh will decide those issues, along with Samsung's demand she overturn the jury's verdict, in several weeks. Quinn said Samsung would appeal if the judge refuses to toss out the decision.

Apple Inc. filed its patent infringement lawsuit in April 2011 and engaged the country's highest-paid patent lawyers to demand $2.5 billion from its top smartphone competitor. Samsung Electronics Co. fired back with its own lawsuit seeking $399 million.

The jury on Friday rejected all Samsung's claims against Apple, but also decided against some of Apple'sclaims involving the two dozen Samsung devices at issue.

It found that several Samsung products illegally used such Apple creations as the "bounce-back" feature when a user scrolls to an end image, and the ability to zoom text with a tap of a finger.

The U.S. case was the latest skirmish in a global legal battle between the two tech giants. Its outcome is likely to have ripple effects in the smartphone market. Other device makers relying on Android, the mobile operating system that Google Inc. has given for free to Samsung and other phone makers, may be more reluctant to use the software and risk getting dragged into court.

During closing arguments, Apple attorney Harold McElhinny claimed Samsung had a "crisis of design" after the 2007 launch of the iPhone, and executives were determined to cash in illegally on the success of the revolutionary device.

Samsung's lawyers countered that it was legally giving consumers what they want: smartphones with big screens. They said Samsung didn't violate Apple's patents and alleged innovations claimed by Apple were created by other companies.

Samsung said after the verdict that it was "unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners."

"This is by no means the final word in this case," Quinn said in a statement. "Patent law should not be twisted so as to give one company a monopoly over the shape of smartphones."

The jurors' determination that Samsung took Apple's ideas probably matters more to the companies than the monetary damages, Marlett said.

"I don't know if $1 billion is hugely significant to Apple or Samsung," Marlett said. "But there is a social cost here. As a company, you don't want to be known as someone who steals from someone else. I am sure Samsung wants to be known as an innovator, especially since a lot of Asian companies have become known for copying the designs of innovators."

Apple and Samsung combined account for more than half of global smartphone sales. Samsung has sold 22.7 million smartphones and tablets that Apple claimed uses its technology. McElhinny said those devices accounted for $8.16 billion in sales since June 2010.

Samsung's Galaxy line of phones run on Android, and ISI Group analysts viewed the verdict as a blow to Android as much as Samsung.

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