Apple versus Samsung – Every patent owner’s dream

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By David French

On August 24, 2012 a California jury issued a decision awarding just more than $1 billion to Apple against three Samsung Electronics companies. This ranks among the top patent awards in U.S. history.  But the case is not over. The final decision, once settled by the judge, will be subject to appeal to the Court of Appeals for the Federal Circuit in Washington. In other mega-patent cases this court has been proactive in terms of adjusting decisions, even those supported by a jury verdict.

On December 6, 2012 an important hearing before trial judge Lucy H. Koh will occur. Samsung has the right and will request the court to render a judgment notwithstanding the verdict issued by the jury, requesting dismissal of the action. This type of procedure is permitted and has occurred in the past, particularly where the jury’s conclusions are so unreasonable as to be perverse. But this is not likely to happen, subject to one new twist: one of the jurors who led the jury in its debates did not fully disclose his special interest and knowledge about patents when questioned before being allowed to join the jury.

At the same hearing, Apple will be asking for injunctions that would shut down the marketing by Samsung of the eight versions of its portable phones that were the subject of the litigation. Interestingly, one of the older version cell phones was held by the jury not to infringe. And no doubt due to careful planning, Samsung is now marketing its latest Galaxy Nexus and Galaxy S III versions of its cell phones which were not the subject of this particular patent litigation suit. Apple has started a fresh case based on these products but may argue on December 6 that the injunction they hope to obtain should be worded so as to reach the Galaxy Nexus and Galaxy S III. Even if an injunction is awarded, there is the prospect that the court may suspend operation of the injunction while an appeal is being processed on behalf of Samsung. Judge Koh will have heavy responsibilities to take home for review over the Christmas holidays.

These proceedings are part of worldwide litigation between Apple and Samsung. Here is another analysis of the U.S. case in particular that is very useful.  A $1 billion judgment in the U.S. stands out in the world arena. On the other hand, Samsung announced profits of US $7.3 billion for the July-September quarter of 2012.  Samsung’s cell phones have also been out-selling Apples’ iPhone. In this context, $1 billion may not be so outlandish.

A first impulse that patent enthusiasts may celebrate is that a patent can be worth $1 billion. This may be true if an injunction were to cut Samsung out of the cell phone market. Samsung might be willing to pay $1 billion or more to Apple in addition to the existing judgment for permission to carry on marketing its very successful products in the U.S. But the actual judgment for $1 billion is made up of a complex jury verdict that assessed the application of a number of Apple patents against a number of Samsung products. It was the total damages for past infringing sales that added up to $1 billion. It was not a single patent that supported a $1 billion recovery for past damages.

The subject patents are the following:

The images available at the U.S. PTO website provided above require a TIFF reader to view. A free reader can be downloaded from the U.S. PTO Images page using the “Help” link.  Or the patent number can be copied and pasted into a Google patents search which will then produce a PDF file that includes the image.  Or a patent number can be entered here to obtain a PDF copy with images.

The three utility patents all address the manner in which the display on the portable phone can be manipulated. The features addressed are:

  • US 7,469,381: the “bounce” feature by which when you drag a document partially off the screen with your finger, on lifting your finger the document returns to within the boundaries of the screen automatically.
  • US 7,844,915: distinguishing between a one finger “drag” command and a two finger “enlarge” command.
  • US 7,864,163: enlarging and centering a rectangular box icon selected by a finger touch from an array of rectangular box icons on the touch-sensitive display of a portable electronic device.  (This last patent reference is also interesting for the exceptionally large number of prior art references probably provided to the patent office by the Apple attorneys. The size of the list represents a major burden for potential litigants to assess.)

These utility patents demonstrate the power of claiming functionality in a popular device that has a human-to-machine interface. The classic example, which was not patented by Xerox Corporation in the 1970s, is the scrollbar on a standard computer having a graphics user interface (GUI) screen. There are at least four functionalities in a standard scrollbar, any one of which, if patented, would have made the inventor a billionaire.

Turning to the design patents, many people would not appreciate this distinct type of intellectual property document. In Canada and elsewhere, they are typically called “Registered Industrial Designs.” U.S. Design patents, unlike the more regular “utility” patents, address the look or appearance of an object.  Properly, a design patent is not intended to give its owner control over anything that is functional or useful. However, the boundaries and transition from ornamentation to utility are indefinite and juries particularly are not likely to keep these distinctions clear.

Taking the second design patent referenced above, D593,087 as an example, this document simply provides drawings of an “electronic device,”  in this case the Apple iPhone. The traditional patent claim in a design patent is reduced, as is usual, to the following:

  • CLAIM: The ornamental design of an electronic device, substantially as shown and described.

This means that you have to look at the drawings to decide what is being protected. Here are some of the drawings from this reference; dotted line features are not part of the design:

The U.S. test for infringement in the case of a design patent was established by a U.S. Supreme Court decision in an 1871 case involving an ornamental design for silverware handles, Gorham. It reads:

“[I]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.”

This could be a very powerful scope of protection. Essentially, this right guards against “duplicate” copying, at least in respect of appearance that is likely to cause confusion. Today with billions being spent on advertising and “image” considered to be an essential aspect of a product’s value, to market a product with a specific, distinctive “look” can be very valuable – think perfume bottles, which having an exclusive right of 14 years in the U.S., 10 years in Canada and 25 years in Europe . So, copiers, beware!

This is one of the lessons brought home to Samsung by this present litigation. On the other hand, the profits to be made are sometimes so great as to make the risks worthwhile.

David French is the principal and CEO of Second Counsel Services, which provides guidance for companies that wish to improve their management of Intellectual Property. For more information visit www.SecondCounsel.com.

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