Copying iPhone Features Costs Samsung $539 Million in Damages

A California jury has ordered Samsung to pay $539 million in damages to Apple for infringing on the company’s iPhone patents | While the judgment has been welcomed by Apple, Samsung will consider the options at its disposal

Copying iPhone Features Costs Samsung $539 Million in Damages

In a years-long patent dispute between tech giants Apple and Samsung, a California jury has ruled in favor of the former, ordering Samsung Electronics Co Ltd to pay Apple Inc $539 million in damages.

The Thursday verdict came after nearly five days of deliberations, bringing the hard-fought legal battle between the tech rivals to a near conclusion, hopefully.

Back in 2011, Apple had filed a lawsuit against Samsung, accusing the South Korean company of incorporating patented iPhone features into their own products to reap unlawful benefits from copied technology.

Although Samsung was found guilty of infringing on some of Apple’s patents in a 2012 trial, disagreements over the penalty amount of $1.05 billion awarded to Apple led U.S. District Judge Lucy Koh to bring the damages down to $548 million.

With no consensus in sight, the matter escalated to the U.S. Supreme Court, in 2016, which ruled that a lower court would have to reassess $399 million of the $548 million awarded to Apple.

However, Samsung had already paid Apple the $548 million in December 2015, which included the $399 million that Supreme Court had asked a lower court to re-examine.

The Supreme Court’s ruling in favor of Samsung was based on the premise that profits made from a product shouldn’t be awarded in full if the patent infringement is limited to just one component of the product, which is a fair argument according to Sarah Burstein – a patent law professor at the University of Oklahoma.

Burstein, who has predicted that Samsung will take it to the U.S. Court of Appeals for the Federal Circuit, said that the decision seems like a middle path between the companies’ individual contentions and does not really offer much in terms of clarity on the question of awarding full profit for limited infringement.

“This decision just means we are going to have more uncertainty,” Burstein said. “Smart tech industry players are waiting to see what the Federal Circuit does. This is just one jury applying one test.”

The ruling was based on the argument that it was unfair to penalize Samsung for all the profits the company made from its products that had incorporated iPhone technology, when, actually, the infringement may have been limited to a few patents only.

In the course of the deliberations that led to Thursday’s judgment, Apple contended that Samsung was liable to pay the company more than $1 billion but Samsung’s lawyers argued that the $399 being reviewed should be reduced to $28 million.

However, the Thursday ruling took the middle path and held Samsung liable for $533.3 million for copying design patents and $5.3 million for infringement of utility patents, bringing the total damages to be paid by the Korean company to $538.6 million.

The court’s decision, however, didn’t go down well with Samsung, which said that the ruling was against the Supreme Court’s unanimous ruling in its favor and that the company would reconsider its options.

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

Apple, on the other hand, seemed pleased with the verdict, saying that the case was less about money and more about principles and that Samsung had blatantly infringed on its patents.

“We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers,” Apple said in a statement. “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.”

In the earlier trial, Apple’s legal representative Seth Waxman had based his case on the argument that design patent infringement meant the entire smartphone was in question and was not just limited to individual components.

He said that design patent included the entire “thing to which the design is applied” and that “design is not a component.”

Samsung lawyer Kathleen Sullivan’s counter-argument was that “a smartphone is smart because it contains hundreds of thousands of the technologies that make it work.”

Justice Elena Kagan had given the analogy of the Volkswagen Beetle at the time, saying that its design represented “the thing that makes the product distinctive,” but she sort of balanced that out by adding that “the car has to run, and it has to do all the other things that cars do.”

Intellectual property litigator and Goodwin Procter partner, Neel Chatterjee, argues that even though a computer does not work without a power cord, it doesn’t mean that the computer’s primary value depends on it.

“Some people could go to court and say without a power cord it wouldn’t work so I should get a bigger slice of the overall patent royalties due associated with the device. That’s an extreme example. But you can imagine when there are thousands of patents that cover something like a Samsung phone there’s going to be a lot of fight about relative importance, and what factors you look to determine their relative importance to value the patent.”

Before the start of this latest trial, Mark McKenna, a professor at the Notre Dame Law School, told USA TODAY that it wouldn’t be easy for the jury to determine the outcome of the case.

“The Supreme Court decision struck me as obviously right,” McKenna said.

“But it didn’t do anybody a favor by punting on the hard question which is ‘How do I identify those circumstances where this is worth less than the whole?’

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