Apple, Samsung take design patent spat to Supreme Court this week

The last time a design patent dispute landed before the US Supreme Court was more than 123 years ago, in 1893, when a manufacturing company in New York accused a business in Connecticut of copying its design for riding saddles.

The next such case, which the eight justices will hear Tuesday, stems from a 2011 lawsuit in which Apple Inc. accuses its smartphone-making rival Samsung Electronics Co. of mimicking the patented iPhone design.

While the case will directly impact each company's bottom line, it could also influence technological innovation more broadly, perhaps even charting a new course for the particular protections afforded by American law to patent-holding businesses.

The case could impact the way damages are calculated for all design patents moving forward, Michael Risch, a patent law professor at Villanova University, tells The Christian Science Monitor.

"If the court reverses the way it's been done in the past, then we might see fewer design patent cases because they won't be as lucrative," Professor Risch says.

Samsung, which was ordered late last year to pay more than $548 million, will argue that $399 million in damages were wrongly awarded to Apple because the design infringements involved only a portion of a complex device. Samsung argues it should not be required to pay the entirety of its profit on 11 smartphones, as The Wall Street Journal reported.

The basis for Samsung's argument is rooted in an ambiguously worded law passed by Congress in 1887 for the express purpose of overturning a Supreme Court decision, Risch explains. After the justices awarded virtually no monetary damages to a carpet maker whose design had been stolen by a competitor, lawmakers passed a measure requiring those who peddle patent-infringing goods to forfeit the entirety of their "profits," a word the law does not clearly define.

"So the question before the Supreme Court is whether or not the term 'profits,' which is ambiguous, means 'profits on the entire product' or if it means 'profits due to the infringement of the patent,'" Risch says.

Samsung has support from fellow technology heavyweights Facebook, Google, Hewlett-Packard, Ebay, Dell, and others, which submitted an amicus brief arguing the damages as awarded are "deeply flawed" and will have a devastating impact on companies that spend billions annually on research and development. The decision to hand Apple all of Samsung's profits for the infringing devices does not square with the law's text, history, or purpose, the companies argued in their court filing.

"But it is also problematic because it ignores the reality of modern, multicomponent technological products," they added. "Those complex products, which have become the norm throughout the consumer electronics industry, are not purchased primarily based on the design of one or more isolated components."

Advocacy groups Public Knowledge and the Electronic Frontier Foundation took a similar line in an amicus brief.

"It is virtually a tautology of the common law that compensatory damages must bear relation to compensation; indeed any civil award in law or equity must measure to the harm caused or wrongdoing done," they wrote. "Yet in this case the Court of Appeals rigidly interpreted a statute of patent law to require courts to award damages in a manner that can easily and often be grossly excessive compared to the relevant injury."

Even with such big names on its side, Samsung could be facing an uphill battle.

"It's a tough sell," Risch says, noting that there may be a gap between the most compelling case and the most compelling legal case. "On the one hand, I think Samsung has the better argument as a matter of public policy. On the other hand, this is kind of how the statute has been interpreted for 100 years or more."

The case headed to the high court is separate from a patent case in which the US Court of Appeals for the Federal Circuit reinstated a $119.6 million ruling in Apple's favor Friday, finding Samsung in violation. 

James Gibson, a professor at the University of Richmond School of Law, told Reuters in an email that Friday's ruling is a procedural matter, not a disagreement over how patent law should be interpreted.

"But this seemingly pedestrian ruling is an important precedent for those who want patent protection going forward – and it’s a big win for Apple," he wrote.

Material from Reuters was included in this report.