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Supreme Court grills Apple, Samsung over value of design patents

The justices, who said they'd be confused if they were jurors, used the analogy of a Volkswagen Beetle to understand the two sides.

Even the US Supreme Court justices were a little befuddled over what to do with the legal saga between Apple and Samsung.

The two largest phone makers in the world squared off in the highest court in the land Tuesday over the value of design patents, marking the likely conclusion to a long-running battle that goes back to a 2012 case.

One nuance of the case -- how jurors were supposed to break out the value of a design from the overall product -- was a source of most of the questions. The justices wanted to know what instructions the jury would be given when looking at damages.

"If I were the juror, I simply wouldn't know what to do," Justice Anthony Kennedy said several times during the hour-long hearing here in Washington, DC.

The justices used the analogy of a Volkswagen Beetle in their questioning to understand the positions of Apple, Samsung and the Justice Department.

Some justices pointed out that the VW Beetle's design is what makes that car different from all the others, but Justice Samuel Alito remarked that some people don't care what a car looks like but instead want good gas mileage or other features.

A decision by the court, which is hearing its first design case since the 1800s, could have a ripple effect across the technology industry and ultimately affect the gadgets you buy. What's at question is how much money one company has to pay for copying the designs of another. Current law says an award can be collected on the entire profits of an infringing device. In this case, that's the $399 million Samsung paid Apple late last year.

The Supreme Court will likely rule on this case in the first quarter.

Samsung and its supporters are trying to limit the damages patent infringers have to pay. Samsung says an Apple victory would stifle innovation. Apple argues a Samsung win would weaken the protections afforded to new creations. Notably, the devices in question haven't been on the market in years.

"The justices certainly seemed to be thinking about establishing a new legal standard for how Section 289 [of the Patent Act of 1952] should be applied, and asked a lot of questions dealing with details like jury instructions and the kinds of evidence that would be needed," said Steve Chang, an intellectual property law attorney at firm Banner & Witcoff. He attended the hearing Tuesday.

Chang said while it was tough to tell which way all of the justices were leaning, at least one, Justice Stephen G. Breyer, seemed ready to send the case back to a lower court for further proceedings.

Long-running battle

The original Apple v. Samsung trial in 2012 captivated Silicon Valley and the tech industry because it exposed the inner workings of two notoriously secretive companies. It was just one of many cases around the world as the rivals sparred both in the marketplace and in the courtroom.

And yes, it's still going on now.

At issue in the original case were design patents for a black, rectangular, round-cornered front face; a similar rectangular round-cornered front face plus the surrounding rim, known as the bezel; and a colorful grid of 16 icons. Those icons were a particular point of contention because many of the images used by Samsung shared distinct similarities with their Apple counterpart (the phone, messages and contact icons, for instance, looked identical aside from minor superficial changes).

Those three patents are being considered in the Supreme Court case.

kathleen-sullivan-samsung-supreme-court.jpg

Kathleen Sullivan, Samsung's attorney who spoke before the Supreme Court, tells reporters after the hearing she's hopeful about the outcome.

Shara Tibken/CNET

"We firmly believe that strong design patent protection spurs creativity and innovation," Noreen Krall, Apple's chief litigation officer, said in a statement. "And that's why we've defended ourselves against those who steal our ideas. Eleven times now, Samsung has been found guilty of intentionally and blatantly copying the iPhone. Every court at every level has agreed. We think that's wrong and that it poses chilling risks to the future of design innovation."

Samsung attorney Kathleen Sullivan, a partner at law firm Quinn Emanuel, told reporters after the hearing that the precedent of court decisions awarding full profits for design patent infringement "devalues all of the [other] important patents that comprise a smartphone." She noted that a typical device has 250,000 patented features necessary for making it work, and design is a part of that. Sullivan also said she's "hopeful" about the outcome of the case.

"We're hopeful the Supreme Court will give a sensible and fair reading of the design patent damages statute, and we believe that will be a win for business and consumers alike," Sullivan said.

Highest court in the land

Sullivan kicked off Tuesday's argument by saying it makes "no sense" to give a patent holder the entire profits from a device for infringing narrow design patents. She was given 25 minutes to make Samsung's argument and answer questions, as well as four minutes at the end for a rebuttal.

She didn't get more than two or three minutes into her remarks before Kennedy stopped her with the first question. What he wanted to know was how juries would figure out the value a patented design has. "I'd have the iPhone in the jury room. I'd look at it [and] I just wouldn't know."

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Sullivan said Samsung has proposed jurors consider two factors when determining what a "relevant article of manufacture" is (in other words, what the infringing part of the device actually is): What does the design patent claim and what is the product to which it has been applied?

The Justice Department, meanwhile, has proposed four questions for juries to identify what a "relevant article of manufacture is." They must consider the scope of the claimed design, the extent to which that design determines the appearance of the product as a whole, whether the design is conceptually distinct from the product as a whole and the extent to which the various components can be physically separated.

Seth Waxman, a partner at law firm WilmerHale who spoke for Apple at the Supreme Court hearing Tuesday, said that Samsung in previous trials never tried to show the design applied to only a part of the device, not the entire phone.

"What's so easy about this case is that they never identified, to the jury, in either case, any article of manufacture other than the phone," Waxman said. And all of Samsung's "evidence was calculated based on the total profits to the phone."

All that's left is to wait for the justices to deliberate.

First published October 11, 8:39 a.m. PT
Updated 11:30 a.m. PT with additional details and with outside attorney comment.