Samsung and Apple are back in court over iPhone design. Here's why.
9. iPhone. In its fiscal first and second quarter, the company sold nearly 95 million iPhones, and sales this year are poised to exceed the 150 million mark set in 2013. (Source: 24/7 Wall St.)(Photo: Marcio Jose Sanchez, AP)
Samsung and Apple return to a San Jose, Calif. district courtroom Monday to resume a patent infringement dispute that dates to 2011. The latest chapter in the longstanding saga is about determining the financial damages Samsung owes Apple for infringing on design patents covering the original iPhone, an outcome that could have a broad impact on intellectual property law.
Here’s how we got here.
In December 2016, the U.S. Supreme Court rejected the near $400 million judgement that Apple had won over allegations that Samsung copied iPhone-designed features used in its own phones. The sum, based on Samsung’s profits from the sale of such phones, had already been whittled down through the courts from $1.05 billion that a jury awarded Apple in 2012. .
The fact that Apple is due financial damages from its South Korean rival — which has already paid $548 million to Apple — isn’t in dispute at this retrial. What the justices effectively did was kick the case back down to the lower courts to have a jury decide how those damages will be calculated.
That’s “the big deal as this case moves forward,” says Mark McKenna, a professor of law at Notre Dame Law School.
As part of the earlier verdict, it was determined that Samsung infringed on three of Apple's iPhone design patents covering a rectangular front face with rounded edges and a grid of colorful icons on a black screen.
The legal squabble now will turn on what is referred to as the “article of manufacture” and whether in this case the relevant article means the entire phone, or merely design features within the phone that relate to the infringed patents.
The Supreme Court noted the article of manufacturer is “broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not.”
Apple has been seeking the full profits attributable to the sales of the infringed phones; Samsung has been arguing for smaller penalties directly related to the value of features impacted by the patents. Samsung hasn’t sold the phones in question in more than five years.
Determining the outcome won’t be easy for the jury, McKenna says. “The Supreme Court decision struck me as obviously right. But it didn’t do anybody a favor by punting on the hard question which is 'how do I identify those circumstances where this is worth less than the whole?’”
The 1887 patent law on which the present case relates to covered design patents back in the day for such items as carpets, wallpapers and oil cloths.
During the earlier trial, Apple lawyer Seth Waxman argued that the design patent referred to "the thing to which the design is applied" — meaning the entire smartphone. "Design is not a component," he said.
Samsung's lawyer, Kathleen Sullivan, told the justices. "A smartphone is smart because it contains hundreds of thousands of the technologies that make it work.”
At the time, Justice Elena Kagan, seemed to offer something to both sides. She said a Volkswagen Beetle's design is an example of "the thing that makes the product distinctive.” But she also added that "the car has to run, and it has to do all the other things that cars do."
Neel Chatterjee, an intellectual property litigator and Silicon Valley-based partner at Goodwin Procter, offers this analogy. A computer without a power cord wouldn’t work, he says, but the cord itself is not where the computer derives its primary value.
“Some people could go to court and say without a power cord it wouldn’t work so I should get a bigger slice of the overall patent royalties due associated with the device. That’s an extreme example. But you can imagine when there are thousands of patents that cover something like a Samsung phone there’s going to be a lot of fight about relative importance, and what factors you look to determine their relative importance to value the patent.”
The latest trial is expected to last about five days, with the jury to be selected Monday and opening arguments to follow Monday or Tuesday. Neither Apple CEO Tim Cook nor the company’s design chief Jony Ive is expected to testify.