On Tuesday, the Supreme Court heard oral arguments in Samsung Electronics Co. v. Apple. Samsung and Apple have been involved in a corporate war of sorts spanning nearly half a decade, with legal battlegrounds in multiple countries. The case that just reached the Supreme Court began in 2011.
After years of secretive planning, Apple released the iPhone in 2007. The multi-touch glass screen, the sleek design and the utilization of only a single button (the home button) were unique, as were the phone’s multi-purpose functions. Shortly thereafter, competitors went to work to create phones on par with the game-changing iPhone. In the following years, competitors like Samsung began to infiltrate the market with their own designs. In 2010, Samsung released the Galaxy S phone. So began a string of legal battles that would cost billions of dollars in both legal fees and court-awarded damages.
In 2011, Apple filed suit against Samsung in California, for infringing on both design and utility patents. Lawyers for Apple claimed that the iPhone was unique to other phones at the time because its patented features “were combined in an elegantly designed product with a distinctive user interface, icons, and eye-catching displays that gave the iPhone an unmistakable look.” In addition, Apple argued that Samsung “created products that blatantly imitate the appearance of Apple's products to capitalize on Apple's success.” In response, Samsung reasoned that Apple’s designs were merely in line with the progression of phone designs. In 2012, a jury ruled in favor of Apple and awarded them $1.082 billion in damages, finding that Samsung infringed on Apple’s patents for "bounce-back effect,” "on-screen navigation,” and "tap to zoom,” and other design patents that cover features such as the "home button, rounded corners and tapered edges" and "on-screen Icons.”
After the decision, Apple sought to prevent Samsung from selling, promoting, or importing their smartphones into the United States. The injunction was originally denied; however, an appeals court sided with Apple, which momentarily stopped the sale of any of Samsung’s products that benefit from the disputed patent infringements in the United States. Yet shortly thereafter, Samsung was able to lift the injunction through more appeals.
In the years since, the courts have gone back and forth with their decisions. During one of the appeals, Samsung indicated that damages may have been awarded inconsistently and outside of the directions from the court. Also, because the technologies in the phones were complex and not interchangeable, Samsung argued that it was not responsible for paying the total share of profits from the products in question. After a long game of legal tennis, featuring multiple jury trials and a settlement, Apple appeared to have the upper hand.
The new Supreme Court case, likely to be decided by June 2017, is, in part, about how much of the original $930 million award must be paid to Apple. But it’s also about much more than that. The decision could redefine design patent law in the U.S., which some argue is extremely outdated and lacks the nuance to cope with fast-changing and increasingly complex technology of the new century.
In oral arguments on Tuesday, Kathleen Sullivan, representing Samsung, argued that smart phones contain “hundreds of thousands” of components that make them work. Therefore, infringing on the patents of just a portion of those components should not result in a total loss of profits on that product. The Samsung legal team claimed that awarding Apple damages for the total profit of the Galaxy S would be the equivalent of a car manufacturer being held accountable for the entire profit of a car when they infringed on a “cup-holder” patent. In essence, just because the phones had a similar appearance and some similar functions, it did not make them the same product.
To this point, Justice Sonia Sotomayor questioned how Samsung could prove the value that customers placed on specific aspects of the phone. “The phone could be seen by a public – a purchasing consumer – as being just that rounded edge, slim outer shell,” she said. “That might be what drives the sale.” Along with Justice Anthony Kennedy, Justice Sotomayor reasoned that, because these tests would be extremely difficult to implement and prove, a jury would have an extremely difficult time deciding the case.
Much of the remaining argument for Samsung was spent explaining how a company or manufacturer could accurately estimate the value on both the manufacturing side and the consumer side of a product’s specific components. This would be done through a number of tests which could help to instruct a jury. Furthermore, Sullivan argued that the lower court sided with Apple in awarding full damages because of a “legal error” in the “jury instruction.”
Seth Waxman, representing Apple, stated that there was “no basis to overturn the jury’s damages verdict in [the] case” because the evidence in Samsung’s original argument “was calculated based on the total profits to the phone.” In addition, he echoed the question of value on specific components of the phone in relation to its profits. Waxman asked the Justices to consider whether mimicking the patented design of a successful product could likely “cause consumers to purchase the infringing product thinking it to be the patentee’s product.” Apple holds that the infringed-upon patents are so elemental to the product’s appeal that they should not be considered separately in the ruling of damages.
Ultimately, Apple argued that the Court should not overturn the decisions of the district courts and the precedents in which those decisions are based. The company did agree, however, that the Court should better define existing patent law.
Samsung Electronics Co. v. Apple could come to redefine design patent laws that have been in place since the late 19th century. At that time, the Supreme Court confirmed the rule of “total profit” damages in design patent cases. However, that rule was made in an age where patent infringements were found in products as simple as an “ornamental spoon.” This case is clearly more complex. It is already accepted that Samsung infringed on numerous patented designs and utilities of the iPhone in an effort to compete for dominance in the market; it will be up to the Supreme Court to define the scale of and punishment for those infringements. Profits aside, the Court must consider the risk of either stifling innovation in the tech world or creating an avenue for “copycats.”Maggie Baldridge is an intern at the National Constitution Center. She is also a recent graduate of Dickinson College.
