Supreme Court to Hear Samsung Appeal of Apple Patent Suit Damages

The Federal Circuit pared down the amount Apple was entitled to receive from Samsung to $548 million, saying damages a U.S. District Court in San Jose awarded on the basis of trade dress claims weren’t legally valid. The district court in San Jose originally awarded Apple more than $1 billion in damages (see report in the Aug. 28, 2012, issue). The Supreme Court agreed Monday to hear the case only on the issue of determining damages for infringement of design patents. Samsung’s petition also sought a review on the issue of defining the scope of what constitutes a patentable design element.

Supreme Court review is likely to amplify the tech sector’s involvement in the case, particularly given its potential to affect how damages are determined in patent lawsuits, patent lawyers said in interviews.

Samsung said the amount of damages it was required to pay for infringement of three Apple design patents was excessive. Samsung said the Federal Circuit agreed that awarding the full profit from infringing products for design patent damages was “absurd” but was compelled to uphold the existing statute. The Federal Circuit’s decision is “an open invitation to litigation abuse and has already prompted grave concern across a range of U.S. companies about a new flood of extortionate patent litigation, especially in the field of high technology,” said Samsung. That company lauded the Supreme Court’s decision to hear the case, saying in a statement that further review “can lead to a fair interpretation of patent law that will support creativity and reward innovation.”

Apple argued against a Supreme Court review of Samsung’s appeal, saying in a February brief that the case is “legally unexceptional.” U.S. law “explicitly authorizes the award of total profit” for design patent damages, Apple said. “Unlike the buttons, knobs, and ugly protrusions of prior phones, Apple’s iPhone was smooth and elegant and earned immediate acclaim,” the company said. “Although Samsung now tries to portray itself as an innovator, Samsung acknowledged at the time that the iPhone’s design was miles ahead of its own.” Apple didn’t comment Monday.

The Supreme Court is technically reviewing Samsung’s appeal of Apple’s lawsuit only on the issue of calculating damages for design patent infringement. But the case could have broader implications for calculating damages on all patents, said Foley Hoag patent lawyer Philip Swain, chairman of the American Bar Association IP Law Section Amicus Committee. Swain is a member of the American Intellectual Property Law Association but has no connection to the Samsung case. The Supreme Court has taken up several high-profile patent cases in recent years because of its concerns about the potential for patent litigation abuse, and they “may be thinking this will be a way to comment on patent damages in general, not just in design patent cases,” Swain told us.

The potential for the Samsung appeal to be an influential patent law case also “tends to favor” expectations the Supreme Court will rule in Samsung’s favor, Swain said: “Damages in this particular case were extraordinarily high for a relatively minor improvement over” previous smartphone design features. The Supreme Court “may be intending to say that design patent damages weren’t intended to be such an extraordinary windfall,” Swain said. Justice Antonin Scalia’s death last month, which has the potential to alter the outcome of litigation over the FCC net neutrality and Communications Act Title II broadband reclassification order (see 1602160070), is unlikely to have a similar effect on the Supreme Court’s review of the Samsung case, Swain said. “The justices don’t seem to align along ideological lines in patent cases, and I don’t think they will this time, either.”

The Supreme Court’s review of the Samsung case is likely to continue drawing significant involvement from the tech sector. Several entities involved as amici on Samsung’s behalf told us they intend to again argue on the company’s behalf before the court. Public Knowledge, which jointly filed an amicus brief with the Electronic Frontier Foundation supporting a Supreme Court review of Samsung’s appeal, is likely to support Samsung again now that cert has been granted, said PK Patent Reform Project Director Charles Duan. EBay, Facebook and Google were among nine tech firms that also jointly filed an amicus brief supporting Samsung’s petition. Other parties that supported Samsung’s petition include the Computer and Communications Industry Association, the Hispanic Leadership Fund and a group of 37 IP law professors led by Stanford University Law School professor Mark Lemley.

“We’ve long been concerned about the possibility for litigation abuse and here we have a rule that creates a large disparity between the value of patents and the amount of damages” that a plaintiff can receive for that infringement, Duan told us. “Our fear is that design patent damages can open the door to further litigation abuse. The Supreme Court can head off this possibility early on.” CCIA hopes the Supreme Court’s review “will result in design patent law finally getting some much needed oversight and an infusion of common sense,” said President Ed Black in a news release. “Misinterpretation and overreach in patent law could have a chilling effect on innovation -- the opposite intention of the patent system when it was created.”