Jumping into one of the fiercest tech industry battles in recent memory, the U.S. Supreme Court on Monday agreed to hear the five-year-old patent fight between Apple and Samsung — raising the stakes in a case that has centered on claims the South Korean tech giant copied the iPhone to build its own smartphone empire.
In a brief order, the justices announced they will consider a key part of Samsung’s appeal of its loss to Apple, a 2012 verdict that eventually forced the maker of Galaxy smartphones and other popular devices to pay hundreds of millions of dollars in damages. The Supreme Court is likely to hear arguments in the case during the next term that starts in October.
The justices, in deciding to take the case at last Friday’s closed-door conference, agreed to hear one of two questions posed by Samsung’s appeal: how damages should be assessed for patent violations when the technology involved is just one of many ingredients that go into a device like an iPhone. The Supreme Court indicated it would not be reviewing a second issue raised by Samsung involving the law surrounding design patents, which were in play in the trial because of findings that the iPhone’s basic look and feel had been duplicated.
For Apple, the high court’s decision solidifies a finding that Samsung copied some iPhone technology, but threatens to further stagger the Cupertino company’s relentless legal campaign to prove Samsung mimicked Apple’s smartphones and tablets. The appeals courts have repeatedly stripped away many of Apple’s early triumphs in the federal court fight, and losing in the Supreme Court on the damages issue would essentially force Apple to send money back to Samsung.
“Apple’s win (in the first trial) may be secure, but the amount of damages it is ultimately awarded is likely to be significantly reduced,” said Brian Love, a Santa Clara University law professor.
Tech giants such as Google, Facebook and Hewlett Packard Enterprise had urged the Supreme Court to take up Samsung’s appeal of its patent loss to Apple over the copying of iPhone technology, warning that the outcome against Samsung “will lead to absurd results and have a devastating impact on companies” because of the implications of how patent law is applied to technology products such as smartphones.
Legal scholars also had pushed the Supreme Court to tackle the damages question.
“This is an area of law that has not kept up with the modern world, and I hope they will fix it,” said Mark Lemley, a Stanford University law professor who urged the Supreme Court to review Samsung’s appeal. “I am hopeful that we will bring the law of design patents a bit more in line with the economic realities of the smartphone era.”
The Washington, D.C.-based U.S. Federal Circuit Court of Appeals last year rejected Samsung’s arguments in a ruling largely backing Apple — leaving the Supreme Court as the only legal option left for Samsung to try to overturn the adverse jury verdict. Samsung maintains that a three-judge Federal Circuit panel erred when it left intact a jury’s 2012 verdict that the South Korean company’s smartphones and tablets infringed Apple’s design patents.
That part of the verdict — which has been pared from an original $1 billion judgment — accounts for the $548 million in damages Samsung still had to pay Apple from their first trial. U.S. District Judge Lucy Koh rebuffed Samsung’s effort to stall paying Apple until the Supreme Court appeal was resolved, forcing Samsung to provide the money to Apple in December.
Koh is scheduled to hold yet another retrial on remaining damages issues on March 28, with perhaps hundreds of millions of dollars still at stake. But that trial may now be scratched with the Supreme Court set to address legal uncertainty surrounding how to assess damages in the evolving smartphone industry. Koh on Monday indicated she will quickly consider Samsung’s request to put that trial on hold while the Supreme Court hears the broader appeal.
In the Supreme Court appeal, Samsung suggested it would be repaid the money it already has sent to Apple if it prevails on the damages question. That question could guide the tech industry on the value of design patents for products such as the iPhone, which Samsung maintains involved such basic features as rounded corners and colorful icons that they were irrelevant to consumer choice and profits.
Samsung warned the Supreme Court that companies such as Apple should not be entitled to a “windfall” for basic patent designs, but Apple has countered that its iPhone features were vital to establishing its pre-eminence in the marketplace. Other tech leaders have largely sided with Samsung on the issue thus far, expressing concern about being unfairly punished by being forced to relinquish profits for one design in products that may have dozens of patented ingredients.
The Computer & Industry Communications Association said it was “breathing a sigh of relief” that the Supreme Court agreed to hear the issue. “The misinterpretation of this law by the Federal Circuit could have disastrous effects on innovation,” Matt Levy, the association’s patent counsel, said. “The lower court could green light a new breed of design patent trolls that use design patents to threaten companies’ entire profits.”
Samsung appealed a San Jose jury’s August 2012 verdict that it violated Apple’s patent or trademark rights in 23 products, such as the Galaxy S2 smartphone, as well as originally about $930 million in damages awarded to the iPhone maker. The case, known as “Apple I,” was the first of two trials between the feuding tech titans.
Another federal jury later found Samsung copied iPhone technology in more recent products but awarded $120 million in damages, a fraction of what Apple sought. A federal appeals court in February overturned the verdict in that second trial, handing Samsung its most important legal win to date.
Apple is considering whether to appeal that ruling.
Howard Mintz covers legal affairs. Contact him at 408-286-0236 or follow him at Twitter.com/hmintz
