Samsung v Apple: justices question role of juries in calculating damages
The US Supreme Court case between Apple and Samsung centring on design patents has seen justices question the ability of juries to calculate damages for infringement.
In oral arguments heard on Tuesday, October 11, Justice Anthony Kennedy questioned how a jury could understand a test proposed by counsel representing Samsung.
The Supreme Court is assessing the question of: “Whether where a design patent is applied to only a component of a product, an award of infringer’s profits should be limited to those profits attributable to the component.”
Kathleen Sullivan, a partner at Quinn Emanuel Urquhart & Sullivan and acting on behalf of Samsung, explained one of her arguments that was rejected by the US District Court for the Northern District of California in the early stages of the case.
“The instruction we proposed and that was rejected by the district court … and what we would have told the jury is that the article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent”.
She added: “Our test is very simple.”
Kennedy replied: “If I’m the juror, I just don’t know what to do. I’d have the iPhone in the jury room; I’d— I’d look at it. I just wouldn’t know.”
Seth Waxman, partner at WilmerHale and acting on behalf of Apple, asked: “What should the jury be instructed under what we and the government believe to be the relevant question—that is, the factual test of whether the relevant article of manufacture is the article as sold or a distinct component of it?”.
The case centres on patents D618,677, D593,087 and D604,305, which are owned by Apple.
The ‘677 patent covers the rectangular front face of a smartphone with curved corners. The ‘087 patent introduces a rim surrounding the bottom of the device, and the ‘305 patent relates to the shape of the grid displaying app icons on the screen.
In 2015, the US Court of Appeals Federal Circuit awarded Apple $399 million in damages for Samsung’s infringement, calculating the damages based on total profits made from the products.
The damages were reduced from the original $930 million because trade dress dilution was vacated by the court.
Samsung rejected the notion of applying damages based on total profits and said the decision would create a “sea-change” in the law of design patents.
The South Korean company was granted a writ of certiorari by the Supreme Court in March this year.
Sullivan added: “A single design patent on the portion of the appearance of a phone should not entitle the design patent holder to all the profit on the entire phone.
“Section 289 [of the Patent Code] does not require that result, and as this case comes to the court on the briefing, Apple and the government now agree that section 289 does not require that result,” she added.
Sullivan asked the Supreme Court to hold that when a design patent is applied to a component of a phone or product, section 289 “entitles the patent holder to total profit on the article of manufacture to which the design patent is applied, and not the profits on the total product”.
Justice Kennedy, addressing Sullivan’s argument, said that the problem is “is how to instruct the jury on that point. Both parties, not the government, both parties kind of leave it up and say, ‘oh, give it to the juror’.
“If I were the juror, I simply wouldn’t know what to do under your test.”
He suggested that he would show the jury market studies to see the extent to which the design affected the consumer. However, he added that it’s “apportionment, which runs headlong into the statute”.
Other justices including Elena Kagan, Sonia Sotomayor and Ruth Ginsburg all questioned how the test should be applied in the case.
Waxman asked the Supreme Court that “whatever you determine the right instruction should be, there is no basis to overturn the jury's damages verdict in this case”.
He said: “There were two trials below. In neither trial did Samsung, either in argument, statement, or witness testimony, ever identify for the jury any article of manufacture other than the phones themselves.”
He continued: “In both trials, Samsung’s expert witness … calculated total profits under 289 only on the phones themselves. And thus there is no—no reasonable juror in these trials could possibly have awarded total profits on anything other than the phones.”
Eric Amundsen, shareholder at Wolf Greenfield & Sacks, said: "Regardless of whether the court sides with Apple or Samsung, or sends the case back down to the lower courts for further consideration, the decision will have a large effect on the determination of design patent infringement damages and strategic approaches when seeking design patent protection."
The case continues.
