Samsung owes Apple $1B
A patent trial between Apple and Samsung, two of the largest tech companies around, could end up looking like a trial between two of the largest car companies around.
On Friday, an eight-person jury began its deliberations at US District Court in San Jose, smack dab in the middle of Silicon Valley and a 10-mile drive to Samsung owes Apple for infringing three of its rival’s design patents and two utility patents when it sold millions of 16 now-obsolete phone models during 2010 and 2011.. They could return a verdict as soon as Monday about how much money
Where do cars come in? To help jurors wrap their brains around the issue’s complexities, each side is steering them to consider simpler analogies involving cars.
How the jury decides will help determine whether design patents increase in power — and likely in number too, as companies scramble to cash in on their ideas for styling and ornamentation. Such an increase could help the powers in tech stay powerful. And for Samsung specifically, it’ll determine whether the company pays the $28 million penalty it thinks is fair for its design patent infringement or the $1.07 billion Apple wants.
So it’s a big deal. Let’s walk through some of the details about what’s happened since this case began in 2011, what happened this week, and what happens next.
We’ll start with the car thing.
Cars and articles of manufacture
The central point in the case is how to determine what penalties Samsung owes. The statute governing design patents means the South Korean electronics giant must forfeit profits from sales of the “article of manufacture” that infringed Apple’s patents. Samsung lost to Apple in 2012 on whether it infringed, but it prevailed with an appeal to the Supreme Court, which determined in 2016 that those profits could come from a component of a product, not from the full product.
How you determine what exactly constitutes that artifact of manufacture is pretty confusing, though. District Judge Lucy Koh, who’s overseen all four of the trials in the Northern California District in this case, has adopted a laborious four-factor test to assess what the article of manufacture is and thus whether Samsung must pay its penalty on full phones or just some components.
Samsung and Apple have fixated on different car analogies for the situation. During an earlier trial, a Samsung expert witness said a penalty based on the full product would mean somebody who infringed a patented cup-holder design would have to pay damages based on profits from the sale of the whole car.
Apple attorney Bill Lee, during closing arguments Friday, said that’s ridiculous. “Samsung wants you to believe if Ford had decided to rip off the [Volkswagen] Beetle shape… the right article of manufacture would have been the exterior shell of the car,” he said. Instead, the artifact of manufacture would be the entire car in that case, and the entire phone in Samsung’s case.
Connect the dots
That brings us to another issue: what exactly Apple patented. One factor in the four-factor test is what’s actually claimed in the patent, and Apple and Samsung tussled over the issue. Design patents show what’s designed in images, with solid lines for the covered area and dashed or broken lines for areas not covered. The patents are very clear on the matter: “The broken lines in the figures show portions of the electronic device that form no part of the claimed design.”
One Samsung witness, designer Sam Lucente, emphasized this point by showing two of Apple’s design patents — US Patent No. D618,677 (D’677 for short), which describes a black, rectangular, round-cornered front face for an electronic device, US Patent No. D593,087 (D’087), which describes a similar rectangular round-cornered front face plus the surrounding bezel — edited to remove the dotted-line material altogether.
“First I showed the whole patent drawing, then I wanted to make it clear to the jury that this is what was actually claimed,” Lucente said.
Because Apple wants to emphasize the totality of the phone design, it argued that the dotted lines are important.
“He acknowledged it applies important context. He proceeded to erase all that context,” Apple attorney Joe Mueller said to jurors in his closing argument. “He took all that context out and told you not to pay attention.”
But Samsung attorney Bill Quinn countered during his closing argument by showing an Apple design patent, No. D789,926, one that’s not part of the trial and that Apple earlier tried unsuccessfully to keep jurors from seeing. The patent describes the design of the small cover that on original iPhones was for the SIM card tray. Almost all the patent illustrations, including a small drawer that appears on one end of the iPhone, are drawn in dotted lines.
“If somebody uses that little sliver on any kind of electrical device, they [Apple] get all the profits,” Quinn said.
Samsung has a point, Sarah Burstein, a University of Oklahoma law professor who studies the article of manufacture issue, said in an interview.
“Only the claimed part has to ‘match’ for there to be infringement, so the universe of potentially infringing products is much larger,” said Burstein, who’s not involved in the case. “If Apple ultimately prevails here, we may see more applicants build similar portfolios of piecemeal design fragment claims that would allow them to mix and match to form the kind of Frankenclaim Apple keeps trying to assert here.”
Apple witnesses on the stand
After jury selection on Monday and opening arguments Tuesday, Apple and then Samsung called witnesses. Apple executives such as Richard Howarth, a senior director of the company’s design team, and Greg Joswiak, Apple’s vice president of product marketing, spent time talking about Apple’s design-first philosophy and griping about how distressed they were to see Samsung phones they felt “ripped off” the iPhone.
But Apple’s outside design experts shouldered much of the burden by arguing that phones are “unitary or monolithic” devices, in the words of industrial designer Alan Ball. Perhaps the biggest celebrity of the trial was Susan Kare, a graphic designer who created the original Macintosh icons in the early 1980s and who testified that Apple’s US Patent No. D604,305 (D’305), which describes a grid of colorful icons, applies to an entire phone.
Gazing on images of the first iPhone, from 2007, Kare said, “It glows and jumps out at you because it’s so colorful. It draws you in with the all the ideas of what it might be able to do.” That’s not directly relevant, but Apple’s side spent a lot of time extolling a phone design that really did change the world.
Samsung’s witnesses aimed to show that the infringing articles of manufacture are front glass faces, screens with bezels, and displays.
They took pains to spotlight some of the thousands of components that make up a smartphone and to show how Samsung opened an entire factory to repair them. One of the four factors for determining an article of manufacture is whether it can be separated from the rest of the product.
Phones have many elements that don’t come close to the patented designs, Samsung argues: batteries, video cameras, 4G network radios, text-messaging software, and more. Ultimately, that array of technology that’s separate from black phone faces and icon grids should be compelling, said Tom Engellenner, an intellectual-property attorney at law firm Pepper Hamilton who’s unaffiliated with the trial.
“I was impressed by Samsung’s testimony … that its Galaxy smartphone has as many as 10 different antennas — for various telecom carriers, radio, Bluetooth, GPS, etc.,” Engellenner said. “I’ll be surprised if Apple is able to convince the jury the second time around that it was entitled to all of Samsung’s profits on its whole phone as damages for infringement of its design patents that only focused on the shape, display and beveled edges of the iPhone.”
The evidence and arguments ended late Friday, so the case now is in the hands of eight jurors.
They’re equipped with a 45-page set of instructions, a cart loaded with binders packed with thousands of pages of evidence, a laptop for peering at spreadsheets, and a jumble of archaic Android phones they can try out. (No playing games, though, the jury instructions say.)
The jurors must weigh the arguments and then do some math. The form they’ll return when done is simple: a list of the infringing phone models down one side of the page and the amount Samsung owes for each down the other side.
Most of the damages will be from the three design patents. For the two utility patents, Samsung didn’t challenge Apple’s expert calculation of a damages payment of $5.3 million — enough to buy a nice house in Palo Alto, California, but a mere pittance compared to the billion-dollar fine possible with the design patent.
Lawyers say they’ll be ready at five minutes’ notice to hear the jury’s verdict. They don’t have a deadline, but Koh said she’d be surprised if deliberations lasted more than a few days.
The case likely will be appealed, though, and ultimately it’ll probably end up in the hands of the US circuit court, which will have to tackle the thorny issue of the four-factor test for the article of manufacture, Burstein said. “So, really, we’ll all have to keep holding our breath,” she said.
Tech companies already have learned a big lesson about patents, though.
“Whether Apple walks away with a billion dollars or half that much, I think the message has already been heard by companies,” Engellenner said. “Design patents are not oddities but rather valuable weapons for protecting well-designed products.”