Apple’s Small Pay Day In Court Over Patent Dispute with Samsung

A California federal judge, Lucy H. Koh, granted Apple almost $6.5 million in ongoing royalties from Samsung in the companies’ dispute over patented designs on Feb. 15, 2018 after scolding Samsun in a hearing last month for continuing to sell the infringing phones. The Federal Circuit has not squarely addressed the standard for evaluating claims for ongoing royalties on newly accused products. However, the Federal Circuit has articulated a test in the context of “evaluating whether an injunction against continued infringement has been violated by a newly accused product.”

Accordingly, Judge Koh denied royalties to Apple for phones containing certain design-arounds, finding that while that two design changes in the messenger and browser applications in Samsung’s new phones were “not colorably different” from the phones already found to infringe the D’647 patent, neither change in the new phones infringed Apple Inc.’s patent under the doctrine of equivalents. Under the doctrine, a product that does not literally infringe on the “express terms” of a patent claim may still be found to infringe on the claim if there is an “equivalence between the elements” of the product and the patented invention, according to the decision.

The dispute between the two smartphone titans began in 2011. Apple filed suit in the U.S. District Court for the Northern District of California against Samsung Electronics Co. In its initial 38-page complaint, Apple claimed unfair competition, trademark infringements, and patent infringements; whereby, Apple alleged Samsung’s smartphones and Galaxy Tab 10.1 “slavishly” copied the iPhone and iPad designs.

Samsung responded to Apple’s design patent and trade dress infringement claims by filing cross-claims. Samsung sought revocation of the patent claims and further alleged that the iPhone and iPad infringed on Samsung’s technology patents (including wireless data communication technology). Additionally, Samsung filed suit in South Korean, Japanese, and German courts.

On December 2, 2011, the district court denied Apple’s motion for preliminary injunction for a selected list of devices. The federal circuit affirmed the court’s order in part, but remanded for further proceeding with respect to the D’889 Patent.

The damages statute, 35 U.S.C. § 289 says, “whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale . . . .” A jury initially found in 2012 that Samsung infringed Apple’s patents and awarded more than $1 billion in damages, but a damages retrial and a Federal Circuit decision reduced the award to $548 million.

Samsung only appealed the $400 million part of the award related to design patents to the Supreme Court. In its petition to the Supreme Court, Samsung argued that the huge design-based award, which amounts to 100 percent of its profits for several types of phones, is a “ridiculous” result that will lead to a “flood of extortionate patent litigation.”

There are clearly aesthetic design features to the smartphone, making a particular model visually appealing. But no one would buy a smartphone simply based on its appearance; people want smartphones that perform certain functions, like making phone calls, playing music, or surfing the Internet. However,

“the damages statute for design patents was written to protect products like rugs, where the design was essentially the entire thing being sold,”

explained Matt Levy, patent counsel for the Computer and Communications Industry Association.

For the first time in a century, the United State Supreme Court has decided on how much design patents are worth. The 8-0 opinion rebuked the US Court of Appeals for the Federal Circuit, which held that “article of manufacture” for calculating damages was the entire smartphone. That mean even though Apple’s patents covered only certain design elements, it was entitled to $399 million in lost profit damages. In an opinion authored by Justice Sonia Sotomayor, the Supreme Court rejected that approach, finding that the statutory term “article of manufacture” could mean either a whole product or just one component of a product. “Reading ‘article of manufacture’ [] to cover only an end product sold to a consumer gives too narrow a meaning to the phrase,” writes Sotomayor. This decision did not keep the tech titans away from the courts.

The fight over ongoing royalties comes as the dispute heads to a jury trial for the third time. It is unlikely to be the last.