Northern California Record

Friday, November 22, 2019

Outcome of Apple-Samsung trial could affect patent value, experts say

By John Breslin | Jan 16, 2018


SAN FRANCISCO — Experts believe the ultimate resolution of a long-running head-to-head between Samsung and Apple over the design of their phones could have deep implications for the value of patents.

The two tech giants, which have been battling over the issue for seven years, are due back in the U.S. District Court for the Northern District of California for another trial over the amount awarded for damages in the case. 

Apple won the first trial and was awarded more than $1 billion, an amount later reduced to less than $400 million. The U.S. Supreme Court, which reviewed the trials, in 2016 sent the case back to the district court, which ruled in October that another damages trial will take place.

The legal fight is over claims that Samsung infringed Apple's patent over the rounded corners of the iPhones.

But the Supreme Court decision and what happens in the next damages trial "may have big implications for the value of design patents," Peter Lee, a patent law professor with the University of California at Davis, told the Northern California Record.

"The Supreme Court had held an 'article of manufacture' for purposes of determining design patent damages did not have to be an entire device (e.g., a smartphone) but could be part of a device," Lee said.

This appeared to counter Section 289 of the Patent Act, which states that an infringer of a design patent for an article of manufacture shall be liable "to the extent of his total profit." But Samsung and others have argued the "total profit" standard will chill innovation.

"If the court takes an expansive view of the relevant article of manufacture, then damages would be high, thus shoring up the value of the underlying design patents," Lee said. "If, however, the court takes a narrow view of the relevant article of manufacture, then damages would be relatively low, thus tending to decrease the value of design patents."

Judge Lucy Koh will now have to apply the new framework established by the Supreme Court for determining design patent infringement damages, Lee noted.

The Supreme Court "issued an opaque decision holding that the damages might be subject to apportionment with regard to multicomponent products," Peter Menell, Koret Professor of Law at UC Berkeley and director of the Berkeley Center for Law & Technology, told the Northern California Record.

"Since the district court had previously awarded Apple the total profit on the infringing Samsung products, the Apple-Samsung case is back at the district court for a determination of whether apportionment should be done," Menell added.

Lawyers for the two companies could not be reached for comment.

But, in a statement to CNET, Samsung said it welcomes the new trial. 

"This is a historic opportunity to determine how the US Supreme Court's guidance on design patent damages will be implemented in our case and future cases," the company said.

In October, Koh ordered a new damages trial, and the two sides are due back in court in May.

"The Court finds that the jury instructions given at trial did not accurately reflect the law and that the instructions prejudiced Samsung by precluding the jury from considering whether the relevant article of manufacture ... was something other than the entire phone," Koh wrote in her order.

The Supreme Court did not give advice on how damages could be assessed, but Koh outlined the parameters in her order:

"The scope of the design claimed in the plaintiff’s patent, including the drawing and written description; the relative prominence of the design within the product as a whole; whether the design is conceptually distinct from the product as a whole; and the physical relationship between the patented design and the rest of the product."

Apple has since won another patent case against Samsung. The Supreme Court refused in November to hear an appeal by Samsung against $120 million damages over Apple's slide-to-unlock patent and others. 

It was first decided in Apple's favor in 2014, overturned, then reinstated. 

But even that decision continues to be the subject of arguments, including before Koh on Thursday relating to the operation of quick links, which involves software that automatically turns certain information into links users can tap. That particular patent is part of a more than $120 million damages win.

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