Justices Question $400M Award in Apple-Samsung Case

Teal Johnson

This Samsung and Apple dispute is the first design patent case to make it to the Supreme Court in over 120 years.  Samsung Electronics Co. Ltd. appealed a jury verdict that awarded Apple Inc. $399 million.  The patents-in-suit are U.S. Patent Numbers D593,087, D604,305 and D618,677.  The case is Samsung Electronics Co. Ltd. et al. v. Apple Inc., case number 15-77, in the Supreme Court.

At oral arguments in the appeal some of the supreme court justices questioned the decisions by the district court and the Federal Circuit to set damages as Samsung’s total profits from the accused phones.  Several justices suggested that they did not believe Apple should be awarded the total profits from Samsung’s smartphones that infringe Apple’s design patents.

The design patent statute states that anyone who uses a patented design to an “article of manufacture” or sells an article to which the design has been applied “shall be liable to the owner to the extent of his total profit.”  The arguments are focused on how the “article of manufacture” should be determined.

The justices appear open to Samsung’s argument that damages should have been the profits derived from the parts found to infringe Apple’s design patents instead of all the profits from the smartphones.  The design patents cover the face of the iPhone and the layout of the home screen icons.  Chief Justice John Roberts believes that the design patent is the exterior case of the phone and not the chips and wires.  He stated that it seemed to him that the profits awarded should not be based on the entire price of the phone.

Google Inc. submitted an amicus brief in support of Samsung.  The brief laid out a standard which said that only profit derived from the patented design should be awarded.  Justice Stephen Breyer suggested that this was a workable standard.

The jury was instructed that if Samsung was found to infringe Apple’s design patent, they could award Apple the total profit attributable to Samsung’s infringing products, not just the parts covered by the design patent.  The Federal Circuit court affirmed that approach.

The Supreme Court asked how damages could be measured if the damages were deemed to be profits from only some parts of a product.  Additionally, what evidence and expert testimony would be needed was questioned.  Justice Anthony Kennedy voiced concern of how to instruct the jury on damage measurement under that standard.  He said, “If I were the juror, I simply wouldn’t know what to do under [that] test.”

Samsung’s attorney, Kathleen Sullivan responded that courts could first identify the relevant article of manufacture, which she said in this case should be the front fact of the phone and the icons, and then get evidence and expert testimony on how much those features contributed to the infringers profits.  Apple disagrees arguing that there was no basis for overturning the jury’s damages award because Samsung never argued that the article of manufacture should be anything other than the phones themselves.  There was not a suggestion of what parts that would be considered the article of manufacture under the new test.

Those in attendance of the argument said the justices appeared interested in describing a new standard for design patent damages instead of talking about the damage award potentially being correct.  Several justices appeared to approve of Samsung’s proposal that the courts must first determine the article of manufacture and then how much that contributed to the profit.  When the decisions comes out, it will likely have some type of that two-part test.

See the original Law 360 article here.