Samsung owes Apple $539M for infringing iPhone patents, jury finds

Samsung must pay Apple $539 million for infringing five patents with Android phones it sold in 2010 and 2011, a jury decided Thursday in a legal fight that dates back seven years.

The unanimous decision, in the US District Court in San Jose in the heart of Silicon Valley, is just about halfway between what the two largest mobile phone makers had sought in a high-profile case that reaches back to 2011.

The bulk of the damages payment, $533,316,606, was for infringing three Apple design patents. The remaining $5,325,050 was for infringing two utility patents. Samsung already had been found to infringe the patents, but this trial determined some of the damages.

The figure is a step back for Samsung, which had fought earlier damages findings. This trial had reconsidered $399 million of Samsung's earlier payments, so $539 million is a significantly larger sum. The jury's rationale isn't clear, but the figure is high enough to help cement the importance of design patents in the tech industry. Even though they only describe cosmetic elements of a product, they clearly can have a lot of value. That's good news for designers in Silicon Valley, where Apple products like the iPhone and MacBook have helped elevate design's role in product success. But it could also concentrate power in the hands of the bigger businesses that have the resources to obtain and defend patents. Samsung: Verdict isn't supported

"Obviously, we have some issues that will be addressed in post-trial motions," Samsung attorney John Quinn told US District Court Judge Lucy Koh, but didn't seek to keep her from dismissing the eight-person jury. "We don't think it's supported by the evidence," he said of the verdict.

And in a statement, Samsung showed its displeasure and indicated the fight isn't over.

"Today's decision flies in the face of a unanimous Supreme Court ruling in favor of Samsung on the scope of design patent damages. We will consider all options to obtain an outcome that does not hinder creativity and fair competition for all companies and consumers," Samsung said.

Apple didn't specifically address the damages amount but reiterated its focus on design in a statement Thursday.

"We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers. This case has always been about more than money. Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple."
Jurors: Apple persuasive on one patent, Samsung on another

Jurors found both Apple and Samsung persuasive when it came to determining what exactly a design patent applies to, two jurors said. In the case of one Apple patent, describing the round-cornered, black front face of a phone, they went with Samsung's argument and found the infringing product was the display assembly -- the screen and accompanying electronics. But for another, which describes a grid of colorful icons, they saw things Apple's way.
Apple Samsung juror Cait Bravo

Cait Bravo, jury foreperson in a patent damages trial between Apple and Samsung, emerges from the federal courthouse in San Jose after nine days of testimony and deliberation.
Stephen Shankland/CNET

"There wasn't any meaningful way to separate it from the phone," said jury foreperson Cait Bravo, 35, manager of an area Barnes and Noble bookstore. "The graphical user interface requires more than just the display screen."

Juror Christine Calderon, 26, a technical writer for network equipment maker Cisco Systems, saw things the same way. And she expressed sympathy for Apple's design-first ethos.

"I do understand that process -- how important design is," she said. Calderon took copious notes during the trial, and afterward, she offered Quinn advice on how Samsung could have made its witnesses easier to understand.

The jury instructions required the jurors to apply a four-factor test to determine what Samsung product infringed -- a component or an entire phone. That test wasn't a very specific guide, Bravo said. For example, it said nothing about which factor to weight strongest.

The split view on the patents means neither side can claim outright victory, and there's not a lot more clarity for legal cases regarding the scope and power of design patents. But give the increased damages and Samsung's dissatisfaction, it's clear Apple came out ahead even with the payment a little over half of what it wanted.
$28 million or $1 billion?

Samsung had argued a $28 million penalty was an appropriate penalty for infringing three Apple design patents, but Apple sought $1.07 billion. Apple believes Samsung's stance would mean a carmaker could build something just like a Volkswagen Beetle but then pay damages only based on the outside shell, but Samsung thinks Apple's stance would mean a company infringing a cupholder design would have to pay patents on an entire car. Samsung didn't fight Apple's suggested $5.3 million penalty for infringing two utility patents.

A trial in 2012 determined that in 2010 and 2011, Samsung sold 15.3 million phones that infringed on five Apple iPhone design patents. Three of those are design patents, which describe ornamental features, and two are utility patents, which cover how a product works. This trial determined the thorny issue of calculating exactly what damages Samsung must pay Apple -- thorny because of uncertainty about exactly what profits Samsung must cough up.

Apple argued the payment should be the profit from sales of the entire phone. Samsung argued it should only be the components. A 2016 Supreme Court decision bolstered Samsung's case but didn't define with any precision exactly how courts should do the math. Design patent value

The case has put design patents in the spotlight. "Samsung can afford to fight this type of claim, not every accused infringer can," said Sarah Burstein, a University of Oklahoma law professor who studies design patents. She's not affiliated with the case.

Apple's three design patents in the case are US Patent No. D618,677 (D'677 for short), which describes a black, rectangular, round-cornered front face for an electronic device; US Patent No. D593,087 (D'087), which describes a similar rectangular round-cornered front face plus the surrounding bezel; and US Patent No. D604,305 (D'305), which describes a colorful grid of icons.

In effect, Apple wanted to have it both ways with its design patents, Burstein said.

First, Apple told the US Patent and Trademark Office that its design "is just the screen, which gives it a broader scope of protection -- the patent will be infringed if anyone else uses the same screen, regardless of what the rest of the phone looks like," Burstein said. "Then it tells the jury its 'design' is the whole phone."

The case put some notable people on the witness stand. Richard Howarth, a senior director of the company's design team, and Greg Joswiak, Apple's vice president of product marketing, spent time talking about Apple's design-first philosophy and griping about how distressed they were to see Samsung phones they felt "ripped off" the iPhone. The closest thing to a celebrity, though, was Susan Kare, who created the original Macintosh icons. She's been an independent graphic designer for decades and testified in Apple's favor that the D'305 grid-of-icons patent applies to the entire phone, not just to its display.

Another factor muddied the waters when it comes to damages: how much Samsung wanted to deduct as expenses when deriving profits. Samsung argued costs like research, development and sales should be included.
Four-factor flaws

Any court looking to this case for guidance on design patents and the four-factor test to determine the article of manufacture probably will have to keep looking.

"It's obvious they didn't completely buy either side's damages narrative," Burstein said of the jury's verdict.

That test may extend this case for many more years,.

"Judge Koh's four points...seem to muddle the issue more than clarify it," said Tom Engellenner, an intellectual property attorney at law firm Pepper Hamilton. "It's not clear to me that the Federal Circuit will agree that these factors are the determinant points," he said. And even if an appeals court does agree, "the Supreme Court has reversed the Federal Circuit many times on overly complicated tests," he said. He's not affiliated with the case.

The four factors are the scope of the patented design, the prominence of that design in the overall product, the degree to which the design is distinct from the overall product and the physical relationship linking the two -- for example whether the design can be separated from the rest of the product.

"This case may go for many more years," Engellenner said.