Samsung sought to beat iPhone with Galaxy Nexus, Apple says

Apple said its largest smartphone competitor, Samsung Electronics Co., set out to steal market share by selling a Galaxy Nexus phone that copies its features, including one that makes the iPhone's Siri virtual personal assistant so compelling.

"This was the beat-Apple strategy," Apple lawyer Mark Perry, of Gibson Dunn in Washington, told a U.S. appeals court today. "This was the top of the line, Cadillac phone they trotted out to compete with the iPhone."

Samsung, the world's largest maker of smartphones, is seeking to overturn an order to stop selling the Galaxy Nexus in the U.S. until a patent-infringement case brought by Apple can be held. The case, which involves different patents than those at the heart of a trial under way in San Jose, Calif., is scheduled for trial in March 2014.

Samsung lawyer John Quinn said Apple, with the biggest share of the U.S. market, wasn't hurt by the "minuscule" sales of the Galaxy Nexus, so there's no threat if the phone remains on the market. Samsung also is appealing U.S. District Judge Lucy Koh's finding that Apple is likely to win the case, and challenges the patent's validity.

A key issue in the arguments today before the U.S. Court of Appeals for the Federal Circuit in Washington is whether Apple must prove it lost market share to the Galaxy Nexus to obtain a pre-trial ban on sales, and whether the patented feature drove sales of either product.

Apple said it sold $16.2 billion worth of iPhones in the third quarter ended June 30. By contrast, Quinn said, Samsung sold $250 million of the Galaxy Nexus device in the first two quarters it was on the market.

"This is a product that, at most, captured 0.5 percent of the market," Quinn said. "Nothing in the record here would support a finding of irreparable harm" to Apple.

The patent is for a unified search feature that forms the heart of Siri; consumers like the comprehensive results they get when they ask a question.

Quinn said many consumers didn't know the feature was on the Samsung phones. It is Google Inc.'s Android operating system that customers chose, he said.

The three-judge panel questioned whether the dominance Apple and Samsung have should be a factor in the analysis.

"This is a two-horse market," said Circuit Judge Jimmie Reyna. "It's a two-horse and several ponies market."

Susan Decker Bloomberg News

Susan Decker
Bloomberg News