The US Supreme Court has decided to hear an appeal of the latest ruling in the Apple vs Samsung court drama – concerning rounded corners and a grid-UI on two of Samsung’s smartphones, which a court jury has ruled infringed on Apple’s intellectual property.
The initial ruling, by a court in Silicon Valley, saw Apple awarded just over $1 billion (not the $2.7 billion Apple asked for), deciding that Samsung infringed three design patents, as well as three other Apple patents in 2011. However, an appeals court later reduced the amount to $548 million, which Samsung is now raising with the Supreme Court. Samsung has already paid, but is looking to claw its money back through the appeal.
In the first hearing of a design patent in over 120 years, the Supreme Court will respond to Samsung’s question of whether damages awarded under the 1887 Design Patent Act entitle the winner to the entire profit of the infringing device, or just a portion attributable to the infringing component. A separate court case regarding slide-to-unlock has also been killed off in the appeals court, after Apple’s patents were declared largely invalid, which has freed Samsung of another $120 million settlement.
The current interpretation would mean that Apple could be granted damages totaling the entire revenue of the infringing Samsung phones, but Samsung is trying to mitigate the amount by arguing that it should only be sued for damages representing the rounded corners at the heart of the case – which could dramatically soften the potential blow. Samsung is arguing that the rules under the 1887 act are unfair in this case. The law was designed to prevent passing off one device as another, and of course, once you switch on the phone, they behave rather differently and you could never mistake the two.
Should Samsung be successful, Faultline’s prediction that Apple will get much less damages than it is asking will have proved correct. For both parties, the sum is paltry, and as the phones at the heart of the matter are no longer sold, the figure isn’t tied to future potential revenue either. Apple has also been handed defeats by the USPTO, which ruled that its slide-to-unlock and tumbler-input features were obvious, and therefore unpatentable – in another blow to the validity of software patents as a whole.
There is some support for the Supreme Court to pressure the US Congress to rewrite or update the statute in Samsung’s favor, but a similar number of third-party legal outlets are arguing the opposite. It’s a divisive issue, but just another in a long string of court cases that see high technology rub up against old and sometimes outdated legislation.
Notably, the court decided not to hear Samsung’s second complaint, which questioned the role of the judge in deciding the scope of the design patents in the infringement disputes – an argument which might have reduced the damages by some $400 million, had Samsung been successful in that regard.
A number of other tech companies are filing supporting documents, currently in support of Samsung, for fear that the ruling “will lead to absurd results and have a devastating impact on companies.” The ones known to date include amicus briefs from the CCIA (Computer and Communications Industry Association), Dell, eBay, the Electronic Frontier Foundation (EFF), Facebook, Google, HP, and Vizio – a mixed group of advocates from a broad variety of markets.
The CCIA stated that it was “breathing a sigh of relief that the Court was hearing the issue. The misinterpretation of this law by the Federal Circuit could have disastrous effects on innovation,” said Matt Levy, the CCIA’s patent counsel. “The lower court could greenlight a new breed of design patent trolls that use design patents to threaten companies’ entire profits.”
We have always said that by holding the original case in Apple’s backyard and with Samsung being seen as a foreign and large interloper, this was always a home court decision, which we predicted at the time was simply a waste of money and which would lead to Apple’s name becoming blemished in the eyes of the consumer.
Apple’s attorneys have said “granting Samsung’s motion to stay proceedings now would forfeit the substantial time and resources that the court and the parties have poured into preparing for the upcoming trial and hearing on supplemental damages. A stay could result in a delay of a year or more, and would necessitate a second, equally costly outlay of resources once the stay is lifted – all of which would be for naught if the Supreme Court affirms the Federal Circuit’s ruling applying the long-settled law of design patent damages.”
The most likely outcome of the Supreme Courts’ involvement will be some rhetoric about how to apply the law correctly, and then handing it back to the lower court to have another go at it, something that will inevitably lead to a lower payment.
Apple’s largest recent legal loss concerned a dispute with the University of Wisconsin, which claimed that Apple’s in-house designed A7 and A8 processors infringed on patents its owns. The university won $234 million in damages, concerning patent 5,781,752 – awarded back in 1998, and cited by Apple as prior art in some of its own patent filings, which might have proven something of a smoking gun.