Samsung’s counsel of record Kathleen M.
Sullivan, right, answers questions from the media outside the U.S.
Supreme Court following oral arguments on Tuesday, Oct. 11, 2016 in
Washington. (Credit:
Kevin Wolf/AP Images for Samsung)The Supreme Court finally held a hearing Tuesday on a years-long dispute between Apple and Samsung over smartphone patents. What it ultimately decides will have major impact on how tech companies think about design patents–Apple supporters say keeping the original law will protect individual design, and Samsung supporters say the law needs to change or it will stifle tech innovation.
At the core of this dispute, which could have dramatic implications for the future of Silicon Valley, is how the Supreme Court should interpret a law written in 1887 – a mere 11 years after Alexander Graham Bell invented the first telephone, and 60 years before Bell Labs built the first transistor.
Apple says that Samsung infringed on three of its patents: one for a phone with a black face and a rectangular shape with rounded edges, another for the phone’s front face and bezel, and the third for a colorful display with 16 icons. The courts have previously found that Samsung did infringe on these patents with its smartphones. That’s not the issue before the Supreme Court. What is at issue is how much Samsung owes Apple for infringing on those patents. Apple argues Samsung owes it the total profits for the phones that used these designs (Apple asked for $2.75 billion originally), and Samsung argues that it only owes a small, specific portion of those profits that can be attributed to those specific designs.
“There’s only one question that the Court agreed to hear,” says Sarah Burstein, a professor of law at the University of Oklahoma and expert in intellectual property law. “It’s from a law written in 1887 and exists today in basically the same form that it did then. That statute says, if someone infringes on your patent you’re entitled to at least $250 or the profits from the value of the total product. So the question is what counts as the article of manufacture.”
The outcome of this case will affect how much companies are liable for infringing on patents. And the kicker is that the damages are the same whether a company intentionally or unintentionally infringed a patent. That could have a chilling effect on innovation by new, small companies, who may not want to risk all of their profits in a single lawsuit. ”For small startups, this isn’t a battle you want and you could be deterred if the Court rules the value for the article of manufacture is the whole product,” Burstein says.
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Even big companies like Microsoft and Google might find themselves slowing down on new products if the Court finds in Apple’s favor. They’re more likely to end up defendants than plaintiffs in a patent dispute by virtue of their place in the industry. So if the Court finds that the value of damages for a design patent violation is all of the profits from an infringing product, that could put billions at risk. That kind of money would also incentivize “patent trolls” –people and shell companies that file or buy patents solely to make money by suing on companies that actually produce the products.
“Awarding all of the profits for a single patent devalues the contributions of the hundreds of thousands of other patents in a smartphone,” a Samsung spokesperson said. “We are hopeful that the Supreme Court will give a sensible and fair reading to the design patent statute. That would be a win for businesses and consumers alike.” Apple did not respond to FORBES’ request for comment.
No matter what, experts expect the Court to offer some form of new guidance moving forward. “The fact that they took the case tells you that they maybe thought there was something wrong with the decision from the lower circuit decision,” says Mark Lemley, a professor of law at Stanford and the director for the Stanford Program in Law, Science and Technology. “Samsung starts with an edge because there was no conflict among the circuit, so the Supreme Court wouldn’t take the case just to say we agree with the lower circuit.”
Burstein, who was in the courtroom for the hearing Tuesday, said early questions from the justices indicated they were leaning toward a multi-factor test to give juries to make decisions on a case-by-case basis. “A lot of questions for all of the advocates focused on how to instruct the jury and what types of expert testimony might be used,” she said.
The Court is expected to make a decision in early 2017.
source - http://www.forbes.com