Apple is to issue a free bumper case to iPhone 4 owners, in addition to the software update, in order to solve the “Death Grip” problem, which Jobs referred to as “antennagate” at todays special press conference to explain how the company was going to respond to the problem. iPhone 4 owners who have already bought a bumber case can apply for a refund. Anyone still not happy can take the phone back for a full refund.

Jobs opened the conference by stressing the companys comitment to keeping its customers happy, then surprised those present by showing a video of the BlackBerry Bold 9700 and HTC Droid apparently experiencing a similar problem.

He told journalists that its a challenge for the entire industry, saying: “We screwed up our algorithm…we havent figured out a way around the law of physics yet”.

He also said that only 0.55 per cent of iPhone 4 owners have called Apple Care (Apples support service) about the problem, and that returns were running at the rate of 1.7 per cent, compared to 6 per cent for the iPhone 3GS. According to AT&T, dropped calls on the iPhone 4 are running at the rate of 1 per 100 more than on the iPhone 3GS.

Announcing the bumper case giveaway, Jobs said:””We think this has been so blown out of proportion… its fun to have a story, but its not fun on the other side. So heres what were going to do to make our users happy. The first part is the software update, that fixes the way the bars report and other bugs, thats out now. Second, people said the bumper fixes everything… why dont you give everybody a case? Okay, well give you a free case.”

There was no live stream of the press conference that we were able to find, so weve been following it via Engadgets text and photo coverage from the event.