Design patents take center stage as Apple and Samsung argue appeal of $930 million verdict before top patent court

3 December 2014. By Mike Swift.

Rarely does so much money ride on so few words in a courtroom.
With $930 million at stake, one lawyer representing Apple and one representing Samsung will get 30 minutes before the nation’s top patent court in Washington Thursday to argue why the verdict for Apple following the first patent and antitrust trial before the smartphone giants in 2012 should either be preserved, reduced or swept away.

While William F. Lee for Apple, and Kathleen M. Sullivan for Samsung, certainly have detailed presentations ready for the three-judge panel on the US Court of Appeals for the Federal Circuit, they are highly unlikely to get the chance to deliver them in full. Before either of the lawyers can unload more than a few carefully freighted sentences, they are sure to be interrupted by questions from
the judges. The three circuit judges have had time to chew over the written pleadings submitted by each company, and will be looking to expose or zero in on weaknesses in the arguments of each side.

The questions asked by the judges will likely provide clues as to whether the Federal Circuit is likely to embrace Samsung’s argument that the “unprecedented” $930 million in damages for infringement of Apple’s design patents, trade dress and utility patents should be reduced or wiped out, or whether it will accept
Apple’s argument that the damages should be affirmed.

History suggests that a reduced award is the most likely possibility. Samsung hopes the Federal Circuit judges will focus on its estimate that 84 percent of the $930 million verdict for Apple — $781 million — is due to Samsung’s infringement of Apple’s design patents and trade dress. That is intellectual property the Korean electronics giant says was improperly enforced by two juries and US District Judge Lucy Koh, who presided over the original trial in August
2012, and a damages retrial in November 2013, which dealt with Apple’s claims that Samsung “slavishly copied” the iPhone and iPad to compete with the runaway popularity of Apple’s mobile devices.

Samsung has told the Federal Circuit that it was in large part Koh’s improper failure to instruct the jury to “factor out” functional elements of the design of the iPhone and iPad that led to such a massive award, Samsung said in the initial brief it submitted to the Federal Circuit. Unlike utility patents that cover software and
other functional elements of a product such as a smartphone, design patents allow a patent-holder to recover all of the profits earned by the infringer’s sales, not just compensation for the lost sales of the patent-holder.

Samsung says the effect of the verdict is to give Apple a permanent monopoly over the rounded, rectangular shape of an iPhone, when a shape is something that is not patentable under US law.

“Such a verdict is unprecedented, and Samsung should not now be held liable under the Patent Act or trade-dress laws for designing and producing a rectangular, round-cornered, flat-screened, touch-screened phone,” the company argued in its appeal brief. “Those shapes and concepts may not be monopolized under patent
law, nor through the back door under the guise of trade-dress dilution law.”

At a minimum, Samsung says, it should be granted a new trial by the Federal Circuit.

Apple answered in its brief to the Federal Circuit that Samsung
“tellingly” never challenged the validity of Apple’s design patents in its arguments.

“Samsung also tries to downplay the extent of its mimicry, but overwhelming evidence demonstrated that Samsung faced a ‘crisis of design,’” Apple said, quoting an internal Samsung document that was an important piece of evidence in the trial, “and addressed it with shameless copying.”

Samsung’s interpretation of design patent law is incorrect, Apple has told the Federal Circuit, in holding that functional aspects of a product cannot be protected by a design patent only if the design element is necessary to the function of the product.

The degree of functional necessity is a gray area the Federal Circuit will have to delineate. One design patent at issue is Apple’s D’305 patent, which protects the graphical user interface, or GUI, of the colorful icons that launch apps from the home screen of an iPhone or iPad. Samsung says they are functional, arranged to be just the right size to allow a human finger or thumb to launch a piece of software. Apple executive Phil Schiller testified during the trial that a primary reason for the iPhone’s success was that “people find the iPhone designs beautiful.” The iPhone’s design, Apple said, was intuitive for consumers and made its products so attractive and easy to use.

The role of design patents in the case is being closely watched by patent scholars and companies ranging from toilet-makers to the makers of uniquely shaped Crocs shoes, who have submitted amicus briefs regarding the significance of design patents in the case.

“I think the most anticipated aspect of the appeal is what, if anything, the Federal Circuit will say about damages for design patent infringement,” said Brian Love, co-director of the High Tech Law Institute at Santa Clara University in Silicon Valley.

The names of the three judges who will hear the Apple-Samsung appeal won’t be revealed by the Federal Circuit until Thursday morning.

Formidable lawyers 

Both Lee and Sullivan, who will stand before the three judges Thursday morning, are formidable lawyers by any standard. Sullivan, the former dean of the law school at Stanford University where she remains on the faculty, has been mentioned as a candidate for the US Supreme Court, and has argued nine cases before the high court.

A specialist in Constitutional law and appellate practice, Sullivan is a named partner of the firm Quinn, Emanuel, Urquhart and Sullivan. Before an appellate court, the strength of her intellect can almost seem relentless. She seems to have the ability to effortlessly call up lines of argument and case references when hit by an unexpected question by an appellate judge.

Lee, meanwhile, has argued more than 75 cases before the Federal Circuit over a 35-year career in which he also served as associate counsel to Independent Counsel Lawrence E. Walsh in the Iran-Contra investigation in the late 1980s.

As co-managing partner of WilmerHale, a law firm with close ties to Apple, Lee has been cited by groups such as American Law Institute as the first AsianAmerican to lead a major US law firm. Lee this year became a senior fellow of the Harvard Corporation — Harvard University’s top governing body.

In court, Lee unfailingly projects an even-keeled presence, even during tense moments, and his pairing with the more mercurial Harold McElhinny during all three Apple-Samsung trials in San Jose was one reason why Apple was so successful.

During the first Apple-Samsung trial, Koh, frustrated by the voluminous filings of the combatants, angrily exploded in court one day that Lee must be “smoking crack” if he expected her to immediately rule on a 75-page motion filed by Apple.

“I can assure you,” an unruffled Lee replied without missing a beat, “I’m not smoking crack, your honor.”

Receive MLex Editor's Picks in Your Inbox

Complete this form to receive emails from MLex with selected highlights from our global coverage of regulatory risk and opportunity, as well as upcoming events, special reports and exclusive interviews.