Supreme Court wrestles with size of damages for Apple design patents

Justices appear to question why an award should be based on the total profits on infringing Samsung devices

The justices of the U.S. Supreme Court, hearing arguments in a long-running Apple and Samsung patent dispute on Tuesday, seemed to question a 19th-century law that allows huge infringement damages in design patent cases.

Questioning lawyers for the two companies, the justices repeatedly referred to a law that instructs courts to award patent damages based on the total profit from the infringing device, instead of from just the infringing pieces of the device.

The total-profit rule for design patents may work for simple products, but not for complex ones like smartphones, Justice Stephen Breyer said. "For wallpaper, you get the whole thing," he said, according to Fortune.com. "A Rolls-Royce with the thing on the hood? No, no, no you don’t get profits on the whole car."

Other justices questioned how juries could divide up the value of one piece of a product. "If I were a juror, I wouldn't know what to do," Justice Anthony Kennedy said, according to a Reuters report.

The case stems from a long-running patent dispute between Apple and Samsung. In 2012, a jury found that some older Samsung smartphones infringed three patents on aspects of the iPhone's design, including its face and rounded bezel design and the icon layout on its home screen.

The jury originally awarded Apple $930 million. An appeals court later cut the damages related to the design patents to $399 million but stood by the all-profits rule. Samsung, along with several other tech groups, has argued that huge infringement awards for small design elements of a product will inhibit innovation.

Justices appeared to question the original amount of damages, said Charles Duan, director of the Patent Reform Project at digital rights group Public Knowledge, which supported Samsung.

"The argument this morning reflected the Supreme Court’s deep concern for balanced patent law that provides an appropriate measure of damages to patent owners without overcompensating them with a windfall," he said in a blog post. "The justices largely seemed to agree that awarding damages for an entire complex product, like a smartphone, is inappropriate for a design patent that covers only a small portion of that product."

The Supreme Court appears ready to cut the appeals court's damage award against Samsung, said Matt Levy, patent counsel at the Computer & Communications Industry Association, a trade group that also supported South Korean company.

"Samsung, Apple, and the U.S. government all agreed that [the appeals court] was wrong to say that design patent damages must be based on the entire profits for the product sold to consumers," he said by email. "The justices seemed to be comfortable with this position as well, because they focused on the correct standards to use in applying the statute."

Apple defended its patents and the jury award. "Our designers and engineers are distinguished by their originality," Apple Chief Litigation Officer Noreen Krall said outside court Tuesday. "We firmly believe that strong design patent protection spurs creativity and innovation. And that’s why we’ve defended ourselves against those who steal our ideas."

Samsung said the current law doesn't make sense. "Awarding all of the profits for a single patent devalues the contributions of the hundreds of thousands of other patents in a smartphone," the company said in a press release. "We are hopeful that the Supreme Court will give a sensible and fair reading to the design patent statute. That would be a win for businesses and consumers alike."

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