Supreme Court Rules for Samsung in Apple Patent Case
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UPDATED: Mar 22, 2017
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The latest battle in the smartphone wars between Apple and Samsung has ended with at least a partial and potential victory for Samsung.
As the New York Times reported, the U.S. Supreme Court ruled that Samsung may not have to give up the $399 million in profits it made from selling phones that copied Apple’s patented designs.
The design elements Samsung copied included the black rectangular face of the iPhone, with its rounded corners, and colorful app icons arranged in a grid pattern.
U.S. patent law protects both functional inventions — thousands of patents protect the working “guts” of smartphones — and the non-functional design elements.
In 2012, a federal jury determined that Samsung had infringed the Apple design patents and awarded Apple $399 million in damages. This was only part of a total award of over $1 billion. The amount of the damages was based on the amount Samsung had earned in profits from sales of its infringing smartphones.
Under patent law, someone who infringes a design patent that covers an “article of manufacture” is liable to pay damages based on the infringer’s total profits. The case went up to the Supreme Court to clarify the meaning of the phrase “article of manufacture.”
“Article of Manufacture”
Justice Sonia Sotomayor, writing on behalf of the unanimous Supreme Court, said that “article of manufacture” could have different meanings depending on the context.
Sometimes, she wrote, an article might be the entire product — such as an entire smartphone. But in other cases the “article” might be only some aspect or feature of a product:
In the case of a design for a single-component product, such as a dinner plate, the product is the “article of manufacture” to which the design has been applied. In the case of a design for a multicomponent product, such as a kitchen oven, identifying the “article of manufacture” to which the design has been applied is a more difficult task.
The Supreme Court didn’t actually decide what the proper rule should be. It sent the case back to the Federal Circuit (which handles patent cases) for further consideration based on the Supreme Court’s analysis.
The result could be (but may not be) a reduction in the $399 million damage award.
Smartphone Patent Wars
As smartphones have become a seemingly indispensable tool (and toy) of modern life, legal battles over smartphone-related patents have raged across every continent except Antarctica.
Just as one battle ends in the courts (or via settlement), another one pops up somewhere else.
Most recently, as the Times reported, lawsuits have been filed in 11 countries (including the US and Germany) over Nokia patents used in Apple iPhones.
Nokia is a Finnish company that had its cellphone business almost destroyed due to competition from Apple and others. Apple has been paying Nokia what the Times calls a “modest royalty” for use of its patents, but that license expired December 31, 2016.
Nokia makes more than a billion dollars per year licensing its patents and brands.
At issue in the new Apple-Nokia cases is determining what’s a “fair” price for a patent license and whether Nokia is conspiring with third-party patent monetization firms (sometimes called “patent trolls”) to raise the prices for patent licenses in violation of U.S. antitrust laws.