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By Tony Dutra
Since a jury granted Apple Inc. more than $1 billion in a patent infringement win against Samsung Electronics Co., decisions have generally gone against the mobile phone patent holder.
It got worse March 1 when Judge Lucy Koh of the U.S. District Court for the Northern District of California reduced the award by just under 43 percent (Apple Inc. v. Samsung Electronics Co., N.D. Cal., No. 5:11-cv-01846-LHK, 3/1/13).
The jury impermissibly awarded Apple a percentage of Samsung's profits on devices that infringed only utility--and not design--patents, according to the court. Over $450 million was stricken from the jury's award. Though the court ordered a new trial, it urged the parties to seek appellate review of the decision prior to proceeding with such a trial.
Apple did succeed, however, in its requests for supplemental damages relating to products sold by Samsung since the date of the verdict and prejudgment interest. Again, Koh did not make a final determination on either dollar figure, but rather postponed decisions until all appeals to the U.S. Court of Appeals for the Federal Circuit are resolved.
The particular 2011 complaint filed by Apple alleged patent and trademark infringement by 28 different models of Samsung Electronics Co.'s Android-based smart phones and tablets.
Prior to trial, Koh found that a design patent (U.S. Patent No. D618,677) and a utility patent (No. 7,469,381) likely were not invalid, that Samsung's Galaxy S and Infuse 4 4G phones likely infringed both patents, and that the Droid Charge and Galaxy Tab likely infringed only the utility patent. Apple Inc. v. Samsung Electronics Co., No. 5:11-cv-01846-LHK, 2011 BL 304343 (N.D. Cal. Dec. 2, 2011).
On Aug. 24, a jury awarded $1.05 billion to Apple after finding that different Samsung models infringed different utility (Nos. 7,469,381; 7,844,915; and 7,864,163) and design (No. D504,889) patents.
The design patents cover the entire products Apple is trying to protect--the iPhone and the iPad. Such protection could have created an advantage for Apple in its injunction requests, compared to utility patents on a single feature of a multi-component, multi-featured product. However, Samsung was Apple's primary target as to design, given evidence of Samsung's copying.
The utility patents, conversely, are of more general concern to smartphone manufacturers and to Android developer Google Inc., because the features found to infringe are supported under the Android standard.
Claim 19 of the '381 utility patent is directed to a “snap back” or “bounce back” feature, whereby when a user scrolls in one direction across the face of the device past the edge of an electronic document, the screen snaps back to the document. It was asserted against 21 of the models, and the jury said that each infringed.
The jury also found that most but not all devices infringed Claim 8 of the '915 patent, which covers a “pinch to zoom” feature--using two fingers to zoom in or out--or Claim 50 of the '163 patent, which similarly covers “tap to zoom” capabilities.
Apple filed a motion for a permanent injunction and for damages enhancements. The request for a permanent injunction was dealt with when Koh in a Dec. 17 decision declined to grant Apple the injunctive relief that it sought. 2012 BL 330890.
Then on Jan. 29, Koh issued two orders. One granted Samsung judgment as a matter of law that its patent infringement was not willful. 2013 BL 25223. The other order declined to enhance Apple's damage award pursuant to Section 1117(a) of Lanham Act, 15 U.S.C §1117(a). 2013 BL 25225.
As to the instant order, Apple had requested additur, supplemental damages, and prejudgment interest, and Samsung moved for a new trial on damages or for remittur.
The court readily denied Apple's additur request, but it granted the company's motions as to supplemental damages and prejudgment interest.
The court agreed to award supplemental damages on infringing Samsung products sold beginning Aug. 25, one day after the verdict. It will apply a specific royalty rate for each product found to infringe, because the jury's verdict was on a product-by-product calculation. The court will wait until all its post-trial orders have gone through Federal Circuit appeal, though, and it will require that Apple present evidence of the actual number of sales of infringing Samsung products.
As to prejudgment interest, the court rejected Samsung's argument that the Lanham Act-related findings tainted the prejudgment interest calculation for patent infringement.
“The Ninth Circuit has suggested that prejudgment interest is not available for Lanham Act claims not involving counterfeiting,” Koh acknowledged. However, she said interest was clearly appropriate for the patent infringement found here, and she saw no reason why the Lanham Act would have to authorize it as well.
Again, though, the court postponed the calculation until after appeals are exhausted.
The jury's damages award was per infringing Samsung product, with 23 listed. The court identified the jury's calculations to the dollar for each of the devices, other than one of the tablets, in light of quantity or profit information presented in court.
For 12 products, the jury awarded 40 percent of Samsung's profits. For another five, the jury not only awarded that percentage, but also awarded 100 percent of Apple's lost profits. The jury calculated 50 percent of Apple's royalties for awards on the remaining five.
The court ruled in favor of Apple regarding ways in which awards were calculated based on design patent infringement and as to Apple's testimony on how it calculated its lost profits.
The jury's error, according to the court, was its failure to heed the court's instruction that “infringer's profits are not a legally permissible remedy for utility patent infringement.” The jury found the Galaxy Prevail to infringe utility patents only, but it used the calculation of 40 percent of Samsung's profits nevertheless. The court thus rejected the jury's $57 million verdict and ordered a new trial on damages as to that phone.
A second error was present in Apple's damages expert's identification of when Samsung was first on notice of infringement of each of the patents. Each calculation stemmed from infringement beginning Aug. 4, 2010, but the evidence showed that Samsung was only aware of Apple's charge of infringement of the '381 patent as of that date. And some of the products for which the jury made awards did not infringe that patent.
The court was able to calculate an appropriate remittitur for some but not all of the affected products:
• If the jury also found trade dress infringement, the 2010 date was appropriate in any case, because, the court said, “Damages for dilution of unregistered trade dress do not require notice for an award of damages. … Moreover, infringer's profits are a permissible remedy for dilution of registered and unregistered trade dresses. See 15 U.S.C. § 1117(a).” Awards for five products were accordingly appropriate, the court said.
• For eight other phones that infringed the '381 patent and at least one of the design patents, the court was unable to determine which part of the award impermissibly applied the 40 percent of profits figure, since that would have been an acceptable damages basis for the design patent infringement. Since Apple did not provide adequate evidence of how an alternate theory of damages would apply absent the infringer's profits theory, the court saw no option but to vacate the entire amount awarded for those eight products and order a new trial.
• Three other phones were not found to infringe the '381 patent and thus deserved a later notice date. However, the products appear to have entered the market only after the true notice date, and since they also infringed the D'677 design patent, the percent of profits theory was acceptable, according to the court.
• Finally, for the awards as to the five phones based on 50 percent of Apple's proposed reasonable royalty, each had to be adjusted depending on the actual notice date. However, the court was unable to determine the exact number of infringing devices sold in the relevant time frames. It thus ordered a new trial on those models as well.
“The parties are encouraged to seek appellate review of this Order before any new trial,” Koh said in closing.
Michael A. Jacobs of Morrison & Foerster, San Francisco, represented Apple. Victoria F. Maroulis of Quinn Emanuel Urquhart Oliver & Hedges, Redwood Shores, Calif., represented Samsung.
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