Tuesday, November 27, 2012

Apple files terminal disclaimer for a design patent the California jury found Samsung to infringe

Apple just notified the court of its filing of a terminal disclaimer for U.S. Design Patent D618,677, which is one of the patents that a California jury found Samsung to infringe. Apple's notice says: "This disclaimer moots Samsung's Motion for Judgment as a Matter of Law, as set forth in Samsung's reply brief, that Apple's U.S. Patent No. D618,677 is invalid for obviousness-type double patenting over U.S. Patent No. D593,087."

The effect of this terminal disclaimer is that the D'677 patent won't be enforceable beyond the term of the D'087 patent. It continues to exist, but it can't exist after expiration of the earlier-filed patent allegedly covering essentially the same invention. This means that even if Samsung was right and both patents were duplicative, Apple wouldn't have extended the term of its design monopoly by filing two different patent applications, at different times and therefore with different expiration dates, on essentially the same invention.

Apple clarifies that this terminal disclaimer does not constitute an admission of invalidity.

While Apple cites two Federal Circuit decisions that it summarizes as holding that "obviousness-type double patenting is cured by terminal disclaimer", I doubt that Samsung will agree that its motion is mooted by Apple's unilateral action. Apple asserted both the D'677 patent and the D'087 patent at the summer trial, but the lists of accused products aren't identical, and several of the products found to infringe the D'677 patent were cleared of infringement of the D'087 patent. Samsung will presumably argue that it was prejudiced by the fact that Apple filed for two patents on allegedly the same invention and asserted both of them at the same trial.

If the D'677 patent was held invalid, roughly 50% of the billion-dollar verdict might have to be vacated because of a need to have the court or, if necessary, a new jury determine damages for multiple products. That's because the court had rejected Samsung's demand that the jury provide damages figures not only on a product-by-product basis but also in a more disaggregated form, which would have shown how much of the damages figure for a given product was attributable to which particular intellectual property right. Since there are only total per-product figures, it's not possible to simply deduct a particular amount that relates to the D'677 patent: according to a theory Samsung presented shortly after the verdict, a whole new damages trial would be needed for any product with respect to which any part of the liability findings is later overturned.

The products accused of infringing the D'677 patent were the Fascinate, Galaxy Ace, Galaxy S (i9000), Galaxy S 4G, Galaxy S II (AT&T), Galaxy S II (i9100), Galaxy S II (T-Mobile), Galaxy S II (Epic 4G Touch), Galaxy S II (Skyrocket), Galaxy S Showcase (i500), Infuse 4G, Mesmerize, and Vibrant. The jury found Samsung to infringe the D'677 patent with all of those products except the Galaxy Ace.

Since Samsung argued that the D'677 patent and the D'087 patent are pretty much identical (to the extent that their co-existence amounts to double-patenting), Apple would have a strong point if it argued that double patenting is irrelevant to the damages figures relating to products that were found to infringe both these design patents. But the list of products accused of infringing the D'087 patent was shorter. The Galaxy S (i9000), Galaxy S 4G and Vibrant phone were deemed to infringe both patents. The Galaxy S II (in the AT&T, i9100, Epic 4G Touch and Skyrocket) versions and the Infuse 4G were cleared of infringement of the D'087 patent. The other D'677-infringing products were not even accused of D'087 infringement.

These are the damages figures for products found to infringe the D'677 patent but not the D'087 patent:

ProductDamages Award
Galaxy S II (AT&T)$ 40,494,357
Galaxy S II (9100)- (not sold in U.S.)
Galaxy S II (T-Mobile)$ 83,791,708
Galaxy S II (Epic 4G Touch)$100,326,988
Galaxy S II (Skyrocket)$ 32,273,558
Galaxy S Showcase (i500)$ 22,002,146
Infuse 4G$ 44,792,974
Mesmerize$ 53,126,612

Samsung will want to get those $520 million in damages vacated until there is a new damages award by a court or a jury. A new award could theoretically be even higher than what Apple won last time, but it could also be much less. A new damages trial would be a gamble for both parties. But since Apple won so much last time, it stands more to lose at this stage.

Apple's strategy is interesting but I'm not sure that it will be able to convince the court that a terminal disclaimer affecting the expiration date of the D'677 patent further down the road (at a time when it probably won't even be commercially relevant anymore) really cures the problem with a view to Samsung, considering that approximately 50% of the jury's total damages award relates to products found to infringe the D'677 patent but not the D'087 patent. I have taken a quick look at the two Federal Circuit opinions Apple cites, and there's no indication in them that a terminal disclaimer had occurred after a jury awarded damages based on a patent that maybe should never have been filed from a double-patenting point of view. Here, Samsung is probably going to argue that the jury trial might have had a very different outcome if Apple had not engaged in the alleged double-patenting.

A patentee-friendly perspective is that if there are two duplicative patents, any finding of infringement based on at least one of them should benefit the patent holder, regardless of any other findings. But a defendant-friendly position is that if a product is not found to infringe both of these patents (either because one of them is deemed not to be infringed, or because no infringement contention was brought in the first place), then there's too much doubt about whether there really is an infringement since a strong case for an infringement should result in consistent verdicts with respect to either duplicative patent. A more moderate variation of this would say that infringement is not proven if a jury looks at both patents and arrives at inconsistent results, clearing the accused product of infringement of one of them (while not holding it against the patentee if some products weren't even accused of infringement of both patents). In this case, $361,427,056 of the damages figure relates to products that were found to infringe the D'677 patent but were cleared of infringement of the D'087 patent. With so much money at stake, there will be some controversy over what implications Apple's terminal disclaimer has at the post-trial stage of this litigation.

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