Samsung Tries a New Knife to Whittle Apple IPhone Patent Award

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(Bloomberg) -- Samsung Electronics Co. is trying again to chip away at Apple Inc.’s long-ago $1 billion victory in their legal fight over smartphone technology -- by disassembling the iPhone.

The companies on Monday will replay a battle that started in 2011. The retrial before before U.S. District Judge Lucy Koh in San Jose, California, isn’t about whether the South Korean company infringed its rival’s patents -- jurors will be told Apple has won on that count. Instead, the fight is about what damages Apple can extract from sales of an array of the Galaxy maker’s devices that haven’t been available in stores for years.

The $1.05 billion jury verdict of 2012 has been whittled down by a previous retrial in 2013, along with appeals and adjustments. After Samsung agreed to pay some damages, the case went to the U.S. Supreme Court in 2016 and was returned to Koh with an order to revisit a $399 million portion of damages.

This is the dregs of a fight that began six months before Apple co-founder Steve Jobs died in October 2011 and grew to dozens of lawsuits spanning the globe. Each side spent hundreds of millions on lawyers to prove who was the most innovative in a field that transformed cultures around the world.

The Supreme Court’s ruling allows Samsung to argue that damages should be based on the profits it made off the specific components that were found to infringe Apple patents -- rather than the entire device. A new jury will make that decision for three such design patents, including one covering the rectangular shape, rounded corners and black glass of the iPhone’s front face.

“At some point you have to decide what’s the thing being designed?” said Michael Risch, a law professor at Villanova University School of Law in Pennsylvania. “It could be the phone as completed with all the functionality built into it, or it could simply be the case.”

‘Kit and Caboodle’

The conundrum for jurors: Are damages based on “the whole phone, kit and caboodle, or just the shell of the phone -- into which Samsung put a bunch of stuff that’s unrelated to the patent?” Risch said.

“Apple’s going to say it wasn’t until you put it into our shape that you made any money on it, so you have to look at it holistically,” he said.

Samsung will argue Apple is only entitled to profits for “selling something of that shape, and not for the profits for selling the functionality that goes inside the shape,” Risch said.

Spoon Handles, Carpets

Before 2016, the Supreme Court hadn’t considered design patents since disputes involving spoon handles in the 1870s and carpets in the 1890s.

Jurors will use a different calculation for damages flowing from two utility patents, which protect functional aspects of how the phones work.

Whatever the outcome of this week’s trial, the jury’s verdict won’t carry any legal weight on how future fights over patents play out. That begs the question of why the companies are still fighting.

“It could be that Samsung wants to prove a point that patents shouldn’t be overused,” Risch said. “Samsung might want to say just because you have a design doesn’t mean you own the world. But they’re both taking a risk that the jury won’t go their way.”

Apple and Samsung both declined to comment.

The case is Apple Inc. v. Samsung Electronics Co., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).

©2018 Bloomberg L.P.

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