Samsung’s Patent Loss to Apple Is Appealed to Supreme Court


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A deconstructed iPhone 6 Plus. A modern smartphone is a dense bundle of intellectual property with more than 100,000 patents conceivably laying claim to some small aspect of the phone.

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Ifixit/Reuters

Less than two weeks ago, Samsung agreed to pay Apple $548 million in a settlement in a Federal District Court that could have ended their yearslong legal conflict.

But the clash is not yet over.

On Monday, Samsung, the Korean electronics company, filed an appeal to the Supreme Court, arguing that the legal framework for design patents — at the center of the suits between the companies – is outdated for the modern digital world. The issue at stake, Samsung says, extends well beyond the courtroom skirmishes of the two large corporations.

The case, if heard, could have far-reaching implications for design patents, which cover how a product looks, and the sort of financial penalties allowed under the law. Design patents are far less common than utility patents, which cover how a product functions.

The legal framework for design patents, according to Samsung, some other major technology companies and legal experts, is largely shaped by a 19th-century law intended to protect the designs of carpets, fireplace grates and ornamental spoons.

Back then, the design was the heart of such products, so seizing most or all of the gains of a copycat — known as the “total profit rule” — was justified. But today, a complex product like a modern smartphone is a dense bundle of intellectual property with more than 100,000 patents conceivably laying claim to some small aspect of the phone.

“The law was written for a time long before the smartphone was invented,” said Mark A. Lemley, a law professor and director of the Stanford University program in law, science and technology, who has previously filed a brief in support of Samsung.

Apple declined to comment publicly about the appeal. But the company has argued in the past that the three design patents Samsung is challenging represent the essence of the iPhone — the look of its user interface, its rectangular display and its rounded shape and flat front. A jury agreed with Apple, as did the federal appeals court that specializes in patent cases.

In its appeal on Monday, Samsung declared that the sweeping ruling against it, if left in place, would set a precedent “to reward design patents far beyond the value of any inventive contribution.”

In a supporting brief filed with the United States Court of Appeals for the Federal Circuit, eight technology companies including Google, Facebook and eBay and the former Hewlett-Packard said that the ruling on design patents against Samsung, if left to stand, would “lead to absurd results and have a devastating impact on companies.”

Several of the companies joining that brief in support of Samsung compete with Apple in one market or another. Most prominent among them is Google, whose Android mobile operating system runs most of the smartphones produced by Samsung, Apple’s leading rival, and other phone makers.

Mr. Lemley’s argument in support of Samsung, filed in the appeals court, was signed by more than two dozen law professors.

Stylish design defines Apple’s products and its corporate reputation. On two of the three patents in dispute, the named inventors include the two people most identified with Apple design, Steven P. Jobs, the company’s co-founder, and Jonathan Ive, its chief design officer.

In the jury trial, Apple submitted an internal Samsung memo saying the iPhone showed that Samsung faced a “crisis of design.” Apple’s evidence included a series of photographs of Samsung smartphones before and after the iPhone was introduced in 2007, and the models increasingly came to resemble Apple’s design.

Samsung, according to Apple, made a “deliberate and conscious” decision to copy the iPhone.

In early December, when Samsung agreed to pay Apple $548 million damages, it said it reserved the right to appeal the case to the Supreme Court. Last year, the companies agreed to drop all patent litigation outside the United States.

In the United States the legal standard for infringement of a design patent centers on the “ordinary observer” test, and whether that observer “would be deceived into thinking that the accused design was the same as the patented design.”

So while there are fundamental questions about the reach of design patents on modern high-tech products, and large damage awards, legal experts say the Supreme Court could well decide that this is not the case that cleanly presents the larger issues.

The Supreme Court is not expected to decide whether to take up the Samsung appeal until February at the earliest. And no matter what happens in the legal arena, the smartphone market has moved on, with generations of new models coming to market since Apple filed suit in 2011.

It is striking, analysts say, how little effect the court rulings seem to have had on the marketplace so far. Undeterred, Samsung has brought new, popular models to market that represent a steady evolution of the phones found to have infringed on Apple’s designs.

Samsung, analysts say, has forged ahead, perhaps with designs that are slightly modified, but not so much that an “ordinary observer” is likely to notice.

The business threat of copycats, in theory, is that their lower-cost offerings will eat into the profits of the innovator, undermining the leader’s incentive and ability to invest in future inventions.

But Apple has kept rolling out new products and recording record profits year after year. “It’s certainly not obvious that Apple needs more incentive to innovate,” said Josh Lerner, a professor at the Harvard Business School. “The market has rewarded Apple very richly as it is.”

Beyond this case, design patents will probably get more legal attention in the future, said David J. Kappos, a partner at Cravath, Swaine & Moore. As high-tech products become increasingly complex, the skill that yields a competitive advantage is making products easy to use. “And usability comes down to design,” said Mr. Kappos, a former director of the United States Patent and Trademark Office.



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