Jury awards Apple $538.6 million in damages following trial against Samsung

31 May 2018 7:47am
iPhone Screen

24 May 2018. By Mike Swift and Amy Miller

Samsung must pay Apple a record $538.6 million for infringing three design patents for the shape of the iPhone and the grid of software icons on its screen, a federal jury said in a verdict handed down Thursday in Silicon Valley, a figure that also includes about $5 million in damages for two utility patents.

If it holds up to Samsung's inevitable appeal, the verdict would be the largest design patent verdict in US history. It signals that the jury, at least for the patent for the “graphical user interface,” or GUI — the grid of icons on the iPhone’s screen — accepted Apple’s argument during a five-day trial that individual elements of the iPhone’s design are indivisible from the value of the complete product.

The jury of eight ultimately ruled that for the patent on the grid of software icons, Apple’s D’305, Samsung had to pay damages based on the value of the complete phone, “because you need the phone to use it," one of the jurors, Christine Calderon, told MLex.

The four days of deliberations were difficult, said Calderon, who sent a note out Wednesday asking US District Judge Lucy Koh to clarify some points Calderon did not understand. “I thought we were going to be a hung jury, but then we found out we had to make a decision,” Calderon said.

While Apple had sought $1.067 billion, Thursday’s verdict in San Jose, California still added about $140 million to the then-record design patent damage award of $399 million from two previous trials, a damage award Samsung had sought to reverse in an appeal that reached up to the US Supreme Court.

"We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers," an Apple spokesperson said in a statement. "This case has always been about more than money. Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design."

Samsung signaled it is likely to appeal the verdict in its response after the verdict.

"Today’s decision flies in the face of a unanimous Supreme Court ruling in favor of Samsung on the scope of design patent damages,” the company said in a written statement provided by a spokesman. “We will consider all options to obtain an outcome that does not hinder creativity and fair competition for all companies and consumers."

The jury of five women and three men reached their verdict after nearly four full days of deliberations over the damages Samsung must pay. Their deliberations began in earnest Monday morning after the trial concluded Friday.

While the verdict was purely about money, the size of the award hinged on the jury’s definition of the “article of manufacture” that is the basis for design patent damages. Unlike functional utility patents, design patents allow a patent holder to recover the total profit of the infringer, rather than just the profit due to the infringement.

Samsung argued it should pay only $28 million for infringing Apple’s design patents. This was based on the company's argument that the articles of manufacture, as defined under a four-factor test that Koh ordered the jury to use, were the components of the phone, not the complete product.

A federal jury in the initial Apple-Samsung trial in 2012 found that Samsung infringed the three design patents at issue in last week's five-day trial, as part of an initial $1.05 billion award. But a long series of appeals by Samsung that ultimately reached the Supreme Court reinterpreted a century of design patent law. The high court in 2016 ruled that an “article of manufacture” for a complex product like a smartphone could be either the full product or a patented component of a complex product such as a smartphone.

For design patents, long the forgotten, dusty attic of patent law, the Apple-Samsung case has been unprecedented in terms of damages, even at the lower $399 million figure, experts said.

Any figure above the initial $399 million award "would be, by far, the largest award for design patent infringement," said Sarah Burstein, a law professor at the University of Oklahoma who is an authority on design patent law.

Some experts have suggested the size of the damages won by Apple could be an incentive for other design patent cases, including suits intended to frighten defendants into paying a settlement to avoid the cost and risk of a trial. Others, however, say the facts of this case are so unique that the verdict is unlikely to fuel a surge in design patent litigation.

During closing arguments Friday, Apple lawyer William Lee told the jury the case was about right and wrong, not just whether Apple should be paid $1.067 billion in infringing profits.

“If they are allowed to keep that much money, there will be a celebration in the halls of Samsung, I can promise you that. At the end of the day, this case is about this special remedy for this special circumstance,” Lee said. “This case is about accepting responsibility.”

Samsung had told the jury that the specific patent elements — the graphical user interface, the rounded rectangular shape of the iPhone, and its black face surrounded by a metal bezel — “are different ideas than a smartphone.”

The Apple design patents “don’t even cover the entire outside of the phone,” Samsung lawyer John Quinn told the jury on Friday. All can be sold separately and are manufactured separately and sold to Samsung by other vendors, he said, one reason why the articles of manufacture have to be the components and not the full phone.

The trial was the third in this case, and the fourth overall between Apple and Samsung, during their seven-year litigation war over whether Samsung, as Apple alleged, had “slavishly” copied the form and function of the iPhone in 2010. That copying, Apple said, allowed Samsung to grow its share of the US smartphone market from 5 percent to 20 percent over the two years from mid-2010 to mid-2012.

In early 2010, Apple’s lawyers told the San Jose jury last week, Samsung’s top executives realized that the company faced a “crisis of design,” and embarked on a campaign to comprehensively copy the iPhone.

During the initial trial in 2012, Apple alleged that Samsung had also committed antitrust violations over its abuse of standard-essential patents. The initial jury found in favor of Samsung, however.

Samsung already paid $548 million to Apple in damages in 2015, which included the $399 million in design patent damages, before the Supreme Court agreed to hear the case. Thursday's verdict means that  Apple is expected to seek an additional $139 million from Samsung.

Samsung would file any appeal with the US Court of Appeals for the Federal Circuit, potentially on how the jury was instructed by Koh on the article of manufacture test.