William Lee of WilmerHale ()
SAN FRANCISCO — When Samsung Electronics Co. appealed the $930 million in damages awarded to Apple Inc. in the “trial of the century” over smartphone design, it had help from 27 law professor amici curiae who argued that the law of design patent damages “makes no sense in the modern world.”
This week Apple fired back, bolstering its answer brief in the U.S. Court of Appeals for the Federal Circuit with citations to law review articles from six of the same professors.
“As several of Samsung’s amici have admitted elsewhere,” Wilmer Cutler Pickering Hale and Dorr partner William Lee wrote, Apple was entitled to all of Samsung’s profits on products that infringed Apple’s distinctive iPhone design, not just the portion of profits driven by the use of rounded corners, translucent screens and colorful icons.
If the jury had apportioned damages, Lee quotes Stanford law professor Mark Lemley from a 2014 article, that would be “right as a policy matter but wrong as a matter of law.”
Allowing apportionment “probably, though perhaps not necessarily, would require congressional action,” University of Minnesota law professor Thomas Cotter wrote earlier this year. “Design patents allow for much greater damages: all of the defendant’s profits,” Villanova University law professor Michael Risch explained last year.
Those statements seem somewhat at odds with the law professor amicus brief, which states that Section 289 of the Patent Act “contains ambiguities that should arguably be resolved in favor of apportionment.”
And they definitely seem at loggerheads with Samung’s argument that “no properly instructed jury could award Samsung’s entire profits for design-patent infringement.”
Apple won a jury award of $1.05 billion in 2012 in the most widely watched trial in Silicon Valley history. Following a retrial on damages this year, the award was reduced to about $930 million. By Samsung’s calculation, the jury awarded $399 million for infringement of three design patents, another $382 million was for trade dress dilution, and the remaining $149 million was for infringing utility patents on Apple’s touch-screen technology.
“The eye-popping judgment here thus resulted overwhelmingly from the supposed protection of mere appearances in complex, technological devices,” Samsung’s appellate counsel, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan, wrote in May.
Apple, who also is being represented on appeal by a Morrison & Foerster team led by Rachel Krevans, tendered its response Monday. The brief, signed by Lee, says the company “spent years and millions of dollars developing innovative designs and features for its iconic iPhone and iPad,” and is entitled to recover for what it has long characterized as Samsung’s “shameless copying.”
Samsung and its amici may wish the law were different, Lee writes, but Section 289 of the Patent Act clearly states that infringers of a patented design “shall be liable to the owner to the extent of his total profit.”
The law stems from an 1886 U.S. Supreme Court decision awarding 6 cents to the owner of a patented design on rugs. The high court stated that it could not separate the value of the design from the value of the rug itself, and so awarded nominal damages. Congress responded the next year by setting a minimum of $250 in damages “and the excess of such profit over and above.” The statute has been modified over the years but still refers to liability for “total profit.”
“It is by no means ‘absurd’ to award Samsung’s ‘total profit’ in this circumstance,” Lee wrote, noting the iPhone has been celebrated as “a beautiful and breakthrough handheld computer” and the iPad as a “beautiful new touchscreen device.” The words “beautiful” and “beauty” appear a total of 14 times in the 91-page brief.
As for trade dress and the utility patent, Lee argues substantial evidence supports the jury’s findings of infringement, dilution, validity and damages. “The damages award is by no means excessive,” he wrote, “given Samsung’s widespread infringement and dilution and the billions of dollars that Samsung reaped as a result.”
The law professors argue that much has changed since the rug case of 1886 and the law that overruled it. “As applied to a modern, multicomponent product it drastically overcompensates the owners of design patents,” they argue, “and correspondingly undervalues technical innovation and manufacturing know-how.”
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