After years of battling in lower courts between the nation’s No. 1 and No. 2 makers of smartphones, that billion-dollar-plus feud over patent rights reached the Supreme Court on Monday — maybe only the first of several potential appeals. This thoroughly modern case is actually an attempt to get the Court to take up an issue it has not touched in 120 years: who can claim a monopoly right on what a product looks like?
This is the long-neglected field of design patents, but it has already led to a half-billion-dollar victory for Apple, the leading maker of those handheld marvels that are so much more than a two-way telephone. Samsung, the runner-up in this market, on Monday handed over to Apple a check of about that amount, but it hopes, ultimately, to get it back. To do so, it has to convince the Supreme Court that Apple has claimed a lot more originality of design than it should have.
Back in the late 1800s, when the industrial revolution was still dealing with more down-to-earth things, and the digital universe was not even a pipe-dream, the Supreme Court ruled on exclusive rights to the designs of a such things as a spoon handle, a rug, a carpet, and a saddle. Maybe there was something about such inquiries that soured the Court, but, in any event, it gave up that legal project for good, or so it had seemed. Samsung is bidding to revive it.
The patent wars between Samsung and Apple have focused not only on smartphones, but also on tablets, and both will continue to be fought over in lower courts as Samsung singles out the design dispute over phones for its appeal to the Supreme Court. It is asking the Justices to scuttle three patents that Apple has on phones, and to undo a verdict that at one time would have topped $1 billion but has since come down a bit.
It has raised two questions for the Court: first, must a patent be limited to specific ornamental features of a product that qualify as unique designs, not the whole device containing such features, and, second, must the money damages a jury can order to be paid be limited to only those profits that can be traced to the original design and not everything a company took in by selling the whole product.
Locking up the whole product in a design monopoly, Samsung is arguing, can shut out competitors and kill off innovation in the dynamic field of combining a cellphone and a computer — a device that has hundreds of thousands of features “that have nothing to do with a phone’s design.” It is challenging specifically Apple’s claim to the rectangular front face with rounded corners, the rim around the outside that protects it if dropped, and a display grid of colored icons. Only the surface appearance, Samsung has contended, may be ornamental, and yet the patents shield the multitude of other elements.
“No one may own a rectangle, round corners, the color black of the concept of a grid of icons,” the petition contended, and yet the U.S. Court of Appeals for the Federal Circuit has given its approval to letting a panel of jurors proceed to find patent infringement by just looking at what a design seems to include.
What is also troubling, the Korean manufacturer is claiming, is the winner-take-all approach that the Federal Circuit has endorsed: if a product includes a design that qualifies for patent protection, a finding of infringement gives the patent holder every dime of profit the rival made on selling the whole product.
In Samsung’s case, a finding of infringement on the three patents led to a verdict totaling $399 million — the figure that now represents 100 percent of what Samsung earned by selling its competing smartphones. The Federal Circuit, the petition argued, relied on a misunderstanding that the entire pile of profits is the reward mandated by patent law, but the law does not specify what part of a product that includes a patented design must yield up the money that particular feature earned. The law, it asserts, does not mandate recovery of the entire take in corporate gains for Samsung phones.
In an era when the Supreme Court itself has seemed to grow increasingly skeptical about grand claims to originality and uniqueness in the world of patents, now is not the time for the Court to support “a vehicle for design-patent holders to obtain unjustified windfalls far exceeding the conceivable value of any inventive contribution,” according to Samsung’s petition.
Now spreading among high-tech companies, Samsung asserted, is “grave concern…about a new flood of extortionate patent litigation, especially in the field of high technology.”
Samsung has chosen, in the appeal, to avoid raising any question about the Apple “utility patents” that it has been found to have infringed. Some of those are tied up in continuing litigation. It is clear from the petition’s content that Samsung sees the potential for litigation abuse to be much greater with design than utility patents.
It is easier and cheaper to get a design patent, it noted, and the rewards to be won against an infringer are all of the profits yielded by a product containing a protected design, while the reward for infringement of a utility patent is only the amount of money to compensate for the infringement.
Samsung’s claim for the legal relief is also built on its story of the development of the smartphone industry, in which it describes itself as the pioneer and Apple as the latecomer.
The Samsung-Apple case that now begins to unfold is the second major legal fight involving Apple to reach the Supreme Court. Apple has pending its own appeal (Apple v. United States, docket 15-565) challenging an antitrust ruling against it for the marketing tactics it adopted when it moved into the e-books market to joust with the dominant firm, Amazon. The government has been given until early January to answer that petition.
It is doubtful that either that case or Samsung’s design patent challenge will be ready for decision by the Court during the current Term, even if the Justices do agree to review both of them.
