Apple Questioned by Supreme Court on Size of Samsung Award

Apple Questioned by Supreme Court on Size of Samsung Award
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According to Bloomberg U.S. Supreme Court justices questioned whether Apple should be allowed to keep all of a $399 million patent award it won in a suit that accused Samsung copying the design of the iPhone.

Listening to arguments, the justices suggested they may return the case to a lower court for more hearings. But several of them said they weren’t sure how a jury or judge should decide how much Apple should collect because design is only one factor consumers consider when buying a phone.

A decision will help determine how much Samsung will have to pay Apple to end a legal dispute over smartphones that’s waged for six years. It may also impact other cases because design patents are increasingly used by tech companies and makers of consumer products to differentiate their products from competitors.

The justices used an analogy to Volkswagen’s Beetle to discuss how a court would determine if the German automaker could collect the entire profits of a competitor who copied the iconic design without permission. “Nobody buys a car, even a Beetle, just because they like the way it looks,“ Justice Samuel Alito said.

The issue before the justices was whether the owners of design patents are entitled to the entire profit from a product. A federal appeals court said Apple could collect Samsung’s entire profit from 11 phones found to have infringed Apple’s patents.

Instead, Apple, Samsung and the U.S. government agreed the patent award should be based on an “article of manufacture,“ which could mean just an aspect of a product. The hard part, the justices said, was how to determine what that means and how to explain it to a jury. “I simply wouldn’t know what to do“ as a juror, Justice Anthony Kennedy said. “Neither side gives us an instruction to work with.“

Design patents cover the ornamental look of an object rather than any functional aspect. The court hasn’t considered design patents since disputes involving spoon handles in the 1870s and carpets in the 1890s.

Google, Facebook, EBay and Hewlett Packard warned in filings that a victory for Apple would allow owners of design patents to extract unfair rewards on products that can have hundreds or even thousands of features.

Apple lawyer Seth Waxman said that, even if the court decides that the wrong standard was used, Apple was still entitled to the full amount set by the jury because Samsung never identified anything other than the entire phone as the basis of analysis. Samsung lawyer Kathleen Sullivan said that’s because Samsung was precluded from making any other arguments.

Cases involving rugs or things like the design for wallpaper, for instance, are easier to analyze, Justice Stephen Breyer said. The question is how to handle a product that has multiple components like the modern smartphone.