Supreme Court justices on Tuesday appeared to lean in favor of knocking down a $400-million verdict against Samsung for designing smartphones to look like Apple’s iPhone.
Some justices questioned whether the award was properly calculated.
The design reflects the “exterior case of the phone,” Chief Justice John G. Roberts Jr. told an attorney for Apple, so the award should not reflect profits “based on the entire price of the phone.”
His comment, midway through the argument, summed up Samsung’s contention that lower courts were wrong to say Apple was entitled to the “total profits” of Samsung’s smartphones because it held patents on their look and shape.
“That makes no sense,” Kathleen M. Sullivan, Samsung’s lawyer and a former Stanford Law School dean, told the justices. People buy smartphones because they contain thousands of technological advances, not because of the look of the screen, she said.
A federal judge in San Jose and a federal appeals court in Washington last year sided with Apple and said the owner of a design patent is entitled to all of the profits from the sale of the product.
“In other words, even if the patented features contributed 1% of the value of Samsung’s phones, Apple gets 100% of Samsung’s profits,” Sullivan said in her legal brief.
The case of Samsung Electronics Co. vs. Apple Inc. has drawn wide attention because it poses a far-reaching, big-money question involving patents, innovation and technology.
Typically, patent disputes turn on whether an invention has proved useful and improved the functioning of a product.
Design patents, by contrast, involve the distinctive look of a product. The Supreme Court has not dealt with disputes over design patents since the 1890s. Patent law dating from 1887 says that infringing the design of “any article of manufacture … shall be liable to the owner to the extent of his total profit.”
Most of the justices seemed troubled by the “total profits” rule, but several said they were not certain of what to do.
Sullivan advised the justices to decide that the “article of manufacture” in this case was the black rectangular shape of the phone with its rounded edges, not its working parts. She said the case should be sent back to California, where a judge and jury can decide how much Samsung should pay for copying the design features of Apple’s iPhone.
The Justice Department largely agreed, saying in its legal brief that “grossly excessive and essentially arbitrary awards” would result if a company holding a design patent can sue and win all the profits of a rival.
The argument was filled with examples drawn from automobiles. Samsung’s attorneys said the “total profits” rule would mean that an automaker could sue a rival and take all the profits from a line of new cars by showing the rival’s car infringed on the design of a patented cup holder.
Justice Anthony M. Kennedy cited the example of a Volkswagen Beetle, whose unique look made it a worldwide success. But he said it was not clear how a jury could decide what percentage of profits should be taken from a rival firm whose cars looked like the Beetle. “If I were a juror, I wouldn’t know what to do,” Kennedy said.
Sullivan conceded that in this example, VW might be entitled to most of the profits from a rival who copies the look of a Beetle or a Corvette. “It may be nobody wants to really pay much for the innards of the Corvette or the Beetle,” she said.
But Justice Samuel A. Alito Jr. said he didn’t think much of the Beetle example. “Nobody buys a car, even a Beetle, just because if its look,” he said. “What if it got two miles to a gallon and broke down every 50 miles?”
For its part, Apple’s lawyers argued that the justices should stick with the old law and award the total profits to a company whose patented designs were copied by a rival. Samsung’s own documents in this case show that officials of the South Korean firm sought to create something like the iPhone, Apple attorney Seth Waxman said. Having done that and been caught, they should be forced to turn over their profits, he said.
The justices are expected to issue a decision in the case in several months.
Last week, a federal appeals court in Washington upheld a separate $120-million verdict against Samsung for infringing other parts of Apple’s iPhone patents.
On Twitter: DavidGSavage