SAN JOSE, CALIFORNIA—Apple's ambitious patent and trademark case against Samsung went into full swing on Friday, as two Apple executives took the stand, testifying about the company's creative process and the huge marketing campaign that supports its flagship products.
"You only have a split second" to sell the consumer
First came Philip Schiller, Apple marketing VP. Schiller spoke to the jury about how Apple got into the phone business, and how the company sold iPhones to a hungry public.
"We'd had this big hit called the iPod," Schiller began. "That really changed everyone's view of Apple, both inside and outside the company. People started suggesting every idea of what we should do next—make a camera! Make a car! Crazy stuff. We were searching for what to do after the iPod—what would make sense. We started to look at whether you could put entertainment content on cell phones. At that time, cell phones weren't any good as entertainment devices. That made us realize—maybe we should make our own phone."
Apple was new to the phone business, and was doubted by many, Schiller said. Apple lawyer Harold McElhinny started flipping through glowing press clips published shortly after the iPhone's unveiling. David Pogue, gushing about how Apple "Wave[d] its Wand at the Phone" and made magic; Walt Mossberg, the WSJ reviewer and Steve Jobs confidante who called the iPhone "a beautiful and breakthrough handheld computer" from day one. "This was a great review we were so happy to get," Schiller told the jury, looking at the Mossberg piece up on the courtroom screen.
Apple's surveys of iPhone customers had shown that "attractive appearance and design" was important to the great majority of them; in some surveys, more than 80 percent had rated those attributes somewhat or very important.
Then Schiller moved on to the marketing muscle that was put behind the products after launch. A graph was displayed showing investment in pushing iPhones and iPads to the public; from 2008 to 2011, the company had spent $647 million on iPhone publicity; meanwhile, $457 million was spent on marketing the iPad in just two years, 2010-11.
At the end of his testimony, McElhinny directed Schiller's attention to Samsung. "Do you recall the first time you saw a Galaxy S phone?" asked McElhinny.
"I do," answered Schiller.
"What was your reaction?"
"I was pretty shocked at the appearance of the Galaxy S phone, and the extent to which it appeared to copy Apple's products," said Schiller. In fact, it created problems for his marketing team. "Customers get confused about whose product is whose. With outdoor billboards, a customer is driving down the highway at 55 miles per hour—you only have a split second."
McElhinny's next question: "Are you opposed to competition?"
"No, competition is great," Schiller answered.
"Is copying fair competition?"
"Not at all," said Schiller. "When you copy or steal the idea of one company's product, you're trading off all that marketing and investment, all that goodwill we've created with customers. When you rip that off, you're trying to get all that benefit to yourself."
In his cross-examination, Samsung lawyer Bill Price drilled home the fact that many features—like larger screens—were simply driven by consumer demand.
"Apple didn't think it had the exclusive right to give the consumer a smartphone with a screen that could exhibit webpages and movies, did it?" asked Price.
"We did not have an exclusive right to play music or movies on phones," said Schiller.
"Do you think customers may have thought the Droid Charge is actually an iPhone?" asked Price later.
"I believe they may," he answered.
"We all hated our cell phones... We wanted to build a phone for ourselves."
Next came Scott Forstall, a member of the top executive team at Apple, who testified about the secrecy-shrouded process of creating the iPhone.
To build the iPhone team, Forstall looked for "true superstars" at the company, he told the jury, and made them an offer. "I'd tell them, you're going to be incredibly successful at Apple if you just stay in your current role," began Forstall. "But I have another option for you. We're starting a new project, so secret I can't even tell you what the new project is. I can't tell you who you will work for. What I can tell you is, if you choose to accept this role, you're going to work harder than you ever have in your life—you're going to have to give up nights and weekends, maybe for years, as we put together this project. Amazingly, some people accepted this challenge, and we built the iPhone team."
He was able to move Apple employees away from products they were currently working on, even when that delayed releases of other products, said Forstall. Secrecy infused everything about the project.
"We took one of the buildings we had in Cupertino, and we locked it down," he said. "We had doors with badge readers—to get into some of our labs you had to 'badge in' four times. The original iPhone was called the 'Purple Project.' I refered to this building as the purple dorm—it was very much like a dorm. People were there all the time, nights, weekends. On the front door we wrote the word 'Fight Club,' because the first rule about Fight Club in that movie is, you don't talk about Fight Club. I personally dedicated years of my life to this, as did hundreds of people on this team. It was very, very difficult."
On cross-examination, Samsung attorney Kevin Johnson honed in on how Samsung's products may have influenced Apple's own creative process. He displayed an e-mail where Steve Jobs referenced a Samsung product, the E910; and asked him about "teardowns" in which Apple would do competitive analysis on competing products, including Samsung's.
Johnson also asked about an e-mail from Apple exec Eddy Cue, who admitted he used a Samsung Galaxy Tab and found "e-mail, books, Facebook and video very compelling on a 7-inch."
The final witness of the day was Justin Denison, a Samsung official who was asked whether his company "considered, reviewed, or compared" any Apple materials while creating the products accused in the present trial. Denison stood by his testimony that the products were created independently.
Testimony continues Monday morning.
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