Samsung advances bid for new trial against Apple on design patent damages

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30 July 2017. By Mike Swift.

Samsung has cleared the first hurdle in its effort to secure a new trial that could drastically reduce the $399 million in design patent damages it owes Apple for infringing the shape and appearance of the first generation iPhone.

In the wake of a decision by the US Supreme Court last year that the term "article of manufacture" in federal design patent law could apply to either to a finished product or a component of that product, a federal judge in Silicon Valley ruled Friday that Samsung had adequately addressed that issue in motions it filed with the court following patent and antitrust trials against Apple in 2012 and 2013.

Apple had argued to US District Judge Lucy Koh that Samsung had failed to dispute Apple's view that "article of manufacture" applied to a complete product such as an iPhone or Samsung Galaxy smartphone before, during and after those trials. Therefore, Apple said, Samsung waived its right to argue that issue now.

But Koh disagreed. In disputing one of Koh's instructions to the jury following the first trial in 2012, "Samsung sufficiently preserved the article of manufacture issue," Koh said in an order issued Friday night.

That does not mean that Samsung has won the right to a new trial, in which it would argue that it should pay damages based on the value of discrete elements of the iPhone covered by Apple's design patents, including the rounded rectangular shape of the iPhone 3G. The approximately $399 million in design patent damages awarded to Apple as part of a $1.05 billion verdict in 2012 were based on the value of a full phone.

Koh said that before she reaches a decision on a new trial, she must first determine what test should be applied to determine the relevant "article of manufacture" in this case, and then confirm that the evidence presented in the trials does not establish that the relevant article of manufacture is a full Samsung Galaxy phone.

"The Court defers consideration as to whether there is an adequate 'foundation in evidence' in the record to find an article of manufacture that is less than the entirety of each infringing Samsung phone," Koh wrote in Friday's order.

"The determination whether there is an adequate foundation necessarily would require finding, for example, that the evidence in the record does not establish as a matter of law that the entirety of Samsung's phones are the relevant article of manufacture. Accordingly, the Court will consider this issue at the same time that the Court determines what test should be applied to identify the relevant article of manufacture under Section 289. Accordingly, the Court defers consideration of this issue," the judge said.

Koh ordered Apple and Samsung to file by Tuesday proposed briefing schedules for how the case should proceed. The two companies have a hearing scheduled before Koh on Wednesday in San Jose, California, where the judge may decide the path forward.

Koh said in Friday's order that she wants the two companies to answer several questions: "Is the identification of an article of manufacture a factual question, a legal question, or a mixed question of law and fact? What issues should be decided by a jury? What issues should be decided by the Court?"

Koh also wants to two companies to argue who "bears the burden of proof to identify the relevant article of manufacture for purposes of Section 289" of the Patent Act?

Design patents cover only the shape or appearance of something, not its function. The original 2012 verdict was based on Samsung's infringement of Apple's design patents, its software utility patents and Apple's trade dress on the iPhone. That federal jury rejected Apple's allegations that Samsung had violated US antitrust laws.

In the wake of the many appeals in the US Court of Appeals for the Federal Circuit, Samsung's infringement of Apple's trade dress was thrown out by the appeals court, which found that Apple's trade dress was unprotectable.

That meant that Samsung and Apple were already poised for another damages retrial regarding Samsung phones that were found by the 2012 jury to infringe Apple's trade dress.

It is unclear whether, should Koh order a new trial to set damages for design patents based on an article of manufacture that would be a component of the iPhone, whether the two issues would be rolled into a single trial or whether there could be two additional trials in the case.

A Samsung spokeswoman declined to comment. Apple did not immediately respond to a request for comment.

	Eliot Gao