And so, round one of Apple v. Samsung court saga is over.

A jury of nine Americans have unanimously handed Apple a victory in the form of a verdict for $1,049,343,540.00 in damages. Imagine a cheque for this amount: “One Billion Forty Nine Million Three Hundred Forty Three Thousand Five Hundred Forty Dollars and 00 Cents.”

Kyle Vanhemert has a great day-by-day rendition of the trial.

Wall Street Journal has an equally great chart showing the mutual patent and design patent claims of Apple and Samsung, and the jury’s decision as to each of these claims with respect to each of the allegedly infringing phone models.

Apple spokeswoman Katie Cotton in a statement to the New York Times said:

“We are grateful to the jury for their service and for investing the time to listen to our story and we were thrilled to be able to finally tell it. The mountain of evidence presented during the trail showed that Samsung’s copying went far deeper than even we knew. The lawsuits between Apple and Samsung were about much more than patents or money. They were about values. At Apple, we value originality and innovation and pour our lives into making the best products on earth. We make these products to delight our customers, not for our competitors to flagrantly copy. We applaud the court for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right.”

Samsung Electronics issued the following statement:

“Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer. It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies. Consumers have the right to choices, and they know what they are buying when they purchase Samsung products. This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims. Samsung will continue to innovate and offer choices for the consumer.”

Google, the force behind Android OS, released the following statement:

“The court of appeals will review both infringement and the validity of the patent claims. Most of these don’t relate to the core Android operating system, and several are being re-examined by the US Patent Office. The mobile industry is moving fast and all players – including newcomers – are building upon ideas that have been around for decades. We work with our partners to give consumers innovative and affordable products, and we don’t want anything to limit that.”

A great comment came from Al Sabawi, a former IBM executive, who wrote:

“To all the lazy copycats out there who think cutting and pasting is an intellectual achievement, that hard work, sweat and tears don’t matter, that ideas, designs, and innovations can be stolen willy-nilly with no consequences: This is to you.”

It comes as no surprise that Samsung will now appeal the decision, and this is the decision of the appelate courts that would be of extreme interest to everybody – IP lawyers, innovators, copy-cats and consumers alike.

For now, I would like to share a couple of observations and comments about this case.

First of all, despite all today’s attacks against intellectual property and the forced “let’s all share” mentality, we have a unanimous decision of 9 non-lawyers who confirmed that patents as tools for protecting innovation are still worth something. In this case, they were worth a Billion bucks. In my opinion, Apple’s statement was very on point. The verdict is about values, it is about sending the message, as clearly as it gets, that taking something that’s not yours is improper.

Second, I’m baffled (although, not really) to read a great number of comments to the effect that Apple’s patents and the jury’s verdict will kill competition and rip off consumers of legitimate options. By definition, patents are about building a monopoly based on something you managed to invent, which had not existed before. Granted, there are tons of nonsense patents out there and a great number of patent trolls, we all know that. The real issue is that legitimate patents always create a monopoly, and there is absolutely nothing wrong with that monopoly.

Just because iPhones had tremendous success does not mean that the monopoly should be destroyed. This goes back to my argument on copyright laws when I reject that public interest should have a role in copyright protection: we don’t have copyright laws to protect works that no one wants to use, while creating loopholes for unauthorized use of works that are popular with the public. If no one wants to use a work, there is no need to have laws to protect it.

I remember the day when the first iPhone was released and all the usual Apple fans vs. Anti-Apple fan battles raging with renewed force. Essentially, after that day the world was divided into three groups: those who owned or dreamed of owning an iPhone; those who had no money or desire to buy an iPhone but wanted their phone to have an interface resembling the one of an iPhone as closely as possible; and those who for one reason or another disliked anything that Apple might put out on the market, didn’t want their phones to be like an iPhone but wanted them to have similar functionality.

The iPhone became and still is the measure of comparison for all cell phones on the market.

Apple knew the value of the innovation that it brought to the market with the release of the iPhone, and so it spent a lot of money in an attempt to protect this innovation. Its efforts have paid off – first with the massive acceptance by the market, and now when the jury confirmed the validity of its patents.

Is this a loss for consumers? Even if so, it is a loss of illegitimate advantage. To avoid an analogy with theft of tangible goods, imagine a situation when somebody came up with a way to trick PayPal into adding $10 a day to everyone’s balance. If at some point PayPal decided to fix the problem, would that be a loss to those who would stop receiving the undeserved benefits? Of course!

Samsung is a serious competitor with a pile of patents of its own. They certainly know how to innovate. Otherwise, it would be difficult for Samsung to win a record almost 20% market share for all LCD TVs sold worldwide. Don’t tell me they can’t come up with technologies that wouldn’t infringe on other company’s patents. At least, don’t tell me they can’t properly license such technologies from those who invented them first.

This is what competition in the XXI century is all about. It’s not about who can manufacture the best and cheapest version of a gadget, it’s about who can come up with a gadget that will redefine the way people live their lives.

Love it or hate it, but this is exactly what Apple did when it released the iPhone and the iPad.

And Apple didn’t precisely intend to prevent Samsung from selling competing phones. Apple actually offered Samsung to license its patents at $30 per smartphone and $40 per tablet.

Finally, and I’ve commented on this issue already, in my opinion, the litigation between the giants (especially, after it will have gone through all available appeals) gives us all a great benefit of having a better understanding of the limits of the modern patent system. Very few patent owners can afford to go out and start a full-blown patent litigation war. So we have been left with a plurality of lawyers’ opinions as to what should be considered obvious, what should be considered novel, and what is the proper subject-matter for a tech patent.

We will soon find out.

PS. Full disclosure: I don’t have an iPhone because it’s too heavy and too big for my taste. However, I’m slowly getting fed up with my current phone and will be investigating my options soon.

Would I, as a consumer, benefit from someone making a 3” version of an iPhone? Absolutely! Do I have a right to expect Apple to allow others to manufacture versions of Apple’s patented products simply because Apple does not see a big enough market for 3” iPhones? Absolutely not!

Section 22 of the new Copyright Act only has some cosmetic changes.

The Minister will have the right to grant reciprocal protection not only to countries other than the Rome Convention countries, but also to countries other than WPPT countries.

The only issue I see with this change is that the conjunction “OR” is used. Sections 22(1) and 22(2) now use the following construction to refer to countries to which reciprocal provisions may apply:

”…country other than a Rome Convention country OR a WPPT country”

Logically, a WPPT country falls within the definition of a "country other than a Rome Convention country or a WPPT country". Likewise, a Rome Convention country falls within the definition of a "country other than a Rome Convention country or a WPPT country".

In fairness, I don’t see any particular risks associated with this lack of precision, but it is still unfortunate.

BOTTOM LINE: Changes are merely cosmetic, even though the make up could have been better.

Changes to Section 20 of the Copyright Act cement the incomprehensible intention to create separate regimes of protection for performers and makers of sound recordings having connection to Canada, WPPT countries and the Rome Convention countries. More on that in my posts Changes to Section 19(1) of the Copyright Act - Good Or Bad?, New Subsections 19(1.1) and 19(1.2) of the Copyright Act - Good Or Bad? and New Sections 19.1 and 19.2 of the Copyright Act – Good Or Bad?.

Sections 19(1), 19(1.1) and 19(1.2) set out the right to remuneration “subject to subsections” 20(1), 20(1.1) and 20(1.2) respectively.

Section 20(1) sets out that s. 19(1) applies only if the maker of the sound recording was, at the date of the first fixation, a Canadian citizen or permanent resident, or a corporation with its headquarters in Canada; or if all the fixations done for the sound recording occurred in Canada. Section 20(1.1) sets out analogous requirements with respect to s. 19(1.1) with the exception that instead of connection to Canada, a connection to a Rome Convention country is required. Likewise, Section 20(1.2) sets out the requirements with respect to s. 19(1.2), however instead of connection to Canada, a connection to a WPPT country is required.

The reciprocal limitations whereby the Minister could, by a statement published in the Canada Gazette, limit the scope and duration for sound recordings having connection to a country that does not provide similar level of protection, will not cover not only the Rome Convention countries, but also WPPT countries. This is done by splitting the former s. 20(2) into s.20(2) and s. 20(2.1).

The right of the Minister to grant the right to remuneration conferred by s. 19(1.1) has been tweaked to refer to the right of remuneration available to Rome Convention countries. You may remember that unlike the right of remuneration available to Canadians and WPPT Countries, the right conferred by s. 19(1.1) through bad drafting also appears to cover the right of remuneration for making available right.

BOTTOM LINE: If one of the declared intentions of the Copyright Modernization Act had been to make the Copyright Act easier to read, understand, apply and enforce, the cross-referencing mess between sections 2.4(1.1), 19 and 20 shows a spectacular failure. Even if the result of creating separate regimes for the Rome Convention countries was intended, the language used to do so is virtually incomprehensible. Even worse, if it hand’t been the intention.

More horrible drafting here…

Buckle up as I will guide you through a maze of exceptions from exclusions.

As I wrote in my comments on section 19(1) of the Copyright Act, despite the general definition of communication to the public by telecommunication, which includes the making available right, performers and makers of published sound recordings will only have the right to equitable remuneration for communication of such published sound recordings by telecommunication, but not for the making available right.

That provision is modified in the new subsections 19(1.1) and 19(1.2) of the Copyright Act, which (if interpreted to read what they say) set forth that only performers and makers of sound recordings having connection with the Rome Convention countries will be able to enjoy the equitable right to remuneration for communication of the sound recordings to the public, including the making available right. This appears to be the exception from the rule that will exist for performers and makers having connection to Canada and the WPPT countries.

It gets better from here.

The new Copyright Act will have sections 19.1 and 19.2, which set out that for the purpose of application of Sections 19(1) and 19(1.2), if a work is made available to the public over the Internet, then, for the purposes of the equitable remuneration provisions of s. 19, such making available will be deemed to be publication of the sound recordings. (Remember, s. 19 only vests the equitable right in respect of published sound recordings?)

Now, it is easy to see that the new Sections 19.1 and 19.2 do not address sound recordings having a connection with Rome Convention countries.

So we end up with absolute insanity:

Performers and makers of sound recordings having a connection with Canada and WPPT countries will NOT have the right to equitable remuneration for the making available right, even though the making available of the sound recordings will be deemed to render such recordings “published” for the purposes of the equitable remuneration provisions.

On the other hand, performers and makers of sound recordings having a connection with Rome Convention countries WILL have the right to equitable remuneration for the making available right, even though the making available of such sound recordings will NOT be deemed to render such recordings “published”, and so sound recordings the copies of which that have not been made available to the public other than through communication to the public by telecommunication, will be disqualified.

It’s great to have a “modernized” Copyright Act! If you found my explanations too convoluted, I don’t blame you. The provisions hardly make any sense.

So, let’s recap:

For Canada and WPPT countries:

– making of the sound recordings available through the Internet qualifies them for equitable remuneration;

– the equitable remuneration does not cover cases when the sound recordings are made available through the Internet.

For the Rome Convention countries:

– making of the sound recordings available through the Internet does not render them “published” for the purpose of equitable remuneration;

– the equitable remuneration covers cases when the otherwise published sound recordings are made available through the Internet.

If there is a method to this madness, I surely am incapable of comprehending it.

Are you?