U.S. District Judge Lucy Koh, Northern District of California. (Jason Doiy)
SAN JOSE — A U.S. Supreme Court patent decision that had nothing to do with trade dress may have everything to do with whether Apple collects attorney fees from Samsung in the litigation over smartphone design.
Apple Inc. wants to recoup $16 million in attorney fees it incurred in the litigation that resulted in a $1 billion jury verdict before U.S. District Judge Lucy Koh of the Northern District of California in 2012. Apple moved for fees under the Lanham Act, based on jury findings of trade dress dilution, rather than under the Patent Act, where the standard for recovering fees has been higher.
But the Supreme Court changed the standard in April, when it threw out the rigid test for finding a patent case “exceptional,” instructing trial judges to simply consider the totality of the circumstances. The decision in Octane Fitness v. ICON Health & Fitness interpreted the Patent Act, but the Lanham Act uses identical language.
Koh suggested Thursday that Apple’s trade dress claims wouldn’t merit fees on their own. She had found the trade dress claims to be “a close call” on summary judgment, and the jury found for Apple on only two of its five trade dress claims.
“Is that now the standard for Lanham Act fees in the Ninth Circuit?” she asked Morrison & Foerster partner Rachel Krevans, representing Apple.
Krevans argued that the jury had found that Samsung Electronics Co. acted willfully, and under U.S. Court of Appeals for the Ninth Circuit case law, attorney fees “naturally flow” from willfulness, though she acknowledged there’s no hard-and-fast rule.
But Koh also suggested that under Octane Fitness, she might be able to consider not only trade dress, but “what some might argue is overwhelming evidence” of Samsung’s deliberate infringement of Apple’s design patents.
“This is an equitable, totality-of-the-circumstances, discretionary kind of decision by the court,” she told Quinn Emanuel Urquhart & Sullivan partner Victoria Maroulis, representing Samsung. “Why can’t I consider the totality of this jury verdict?”
Maroulis argued that it’s “common knowledge” that Octane Fitness was the court’s way of discouraging frivolous litigation by nonpracticing entities.
“I don’t think there’s anything in there that says this is a troll issue,” Koh shot back.
Maroulis further argued that the trade dress claims were not “inextricably intertwined” with the patent allegations, as Krevans had argued. The battle over an injunction and the Markman hearing, for a couple of examples, had only to do with patents, Maroulis said.
The two companies also duked it out Thursday over whether Apple must reimburse Samsung for costs it sustained from a preliminary injunction on importing its Galaxy 10 tablet. Samsung says it was forced to scrap $2.6 million worth of components, only to see the injunction dissolved a few months later when the jury verdict didn’t support it.
Koh sounded skeptical, recalling that Samsung had argued at the time that an injunction was unnecessary because the Galaxy 10 was no longer a big seller. Or, as Wilmer Cutler Pickering Hale and Dorr partner Mark Selwyn put it for Apple, “Samsung represented to the world” that “sales would soon fall to zero.”
Maroulis acknowledged that “it is correct that the product was being phased out,” but said Samsung produced evidence that it still could have sold more units to cost-conscious shoppers.
Koh said Samsung’s evidence “wasn’t clear at all,” but that it may be entitled to an evidentiary hearing.
That won’t be cost-effective, she pointed out. “We might be talking less than $1 million here,” she told the attorneys. “This might be the one and only issue you can resolve by ADR.”
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