Will Homer Simpson sway the Apple v. Samsung design patent damages retrial jury?

It would have been preferable to give the Apple v. Samsung design patent damages re-retrial jury in San Jose (Northern District of California) a chance to render a verdict before the weekend. In that case, jurors might have put an end to this disruption of their lives. But the way things worked out, they're now going to think about what position to take on Monday morning when official deliberations begin. In the meantime, they're not allowed to talk to anyone about the case or to take a look at any media reports (whether some jurors do so anyway is another question, but they're not supposed to).

As in the previous trials in this case, and as I mentioned a few days ago, Apple's lawyers portrayed Samsung as an intentional infringer, an unrepentant copyist, with Samsung being barred from presenting some evidence that could have shed a different kind of light on that question.

The holdings that (i) Samsung infringed those three design patents (a long time ago) and (ii) that those patents are valid are "law of the case" and the re-retrial jury must presume both to be the case. It is worth noting, however, that courts in other jurisdictions looked at international equivalents of those intellectual property rights (and at devices from the same generation of Android-based Samsung products) and reached rather different conclusions. But things are the way they are for the purposes of this U.S. case, so the focus is just on damages, and the single most important question in this regard is what "article of manufacture" a disgorgement of Samsung's profits should be based on: the entire device (which was considered a foregone conclusion in previous trials, but the Supreme Court and, previously, the United States Department of Justice disagreed with Judge Koh, the United States Court of Appeals for the Federal Circuit, and Judge Lucy H. Koh) or one or more components?

In that context, the most surprising tweet from the courtroom (thanks to Mike Swift, Joshua Sisco and Stephen Shankland for some excellent coverage!) indicated that Apple's lead counsel, Bill Lee, could live with a $370 million verdict:

Before the break, Apple's Lee in his Wagner cross tried to give the jury other damages options between Samsung's $28M and Apple's $1.067B - $370M if jury concludes the AOM is the full phone, but adopts Samsung's cost deductions. #appsung

— Mike Swift (@Swiftstories) May 18, 2018

Given that Apple's own damages demand is almost three times as high, the above observation suggests more than a crack in the shell. As I followed the trial on Twitter, I felt that Samsung's lawyers and experts drove some very important points home, though Apple also made some good points, considering that Apple's position is a very extreme one in this case. Is Apple now happy with getting a little bit less for those design patents than before? Or is it simply waving a white flag because it's afraid the jury might arrive at a much lower figure? W won't ever know.

If stakeholders could file amicus curiae briefs with this jury, Apple would really be in trouble and even the $370 million "compromise" proposal would be ambitious. Hardly anyone wanted to support Apple's "entire device" position in filings with the Supreme Court. Most of those who supported Apple said they just wanted to ensure that a disgorgement of infringer's profits under 35 U.S.C. § 289 would continue to be available in other cases (such as with respect to running shoes).

The world outside that San Jose courtroom overwhelmingly prefers a component-based damages determination. This InsideSources article on the problems that an excessive damages amount in the Apple v. Samsung case could cause tech and non-tech companies alike is a good example. But jurors won't have the benefit of such information on the wider ramifications of what they're required to decide.

The tech sector at large (with a few exceptions merely proving the rule) is also concerned about patents on screen designs. The D'305 patent covers a screen layout. That one is a software patent styled as a design patent because it wouldn't meet the patentability (including, but not limited to, patent-eligibility) standards for utility (i.e., technical) patents. While I can imagine Samsung saw the most immediate threat in this case in the original "it must be a complete device" standard for the determination of the relevant article of manufacture, it was very unfortunate that Samsung didn't additionally ask the Supreme Court to hold such subject matter ineligible for design patents. Now Samsung's lawyers say that a screen is the proper article of manufacture for a software user interface patent. That would mitigate the damage to Samsung, but it doesn't alleviate my concern, as an app developer, over patents like D'305 in the slightest.

Apple has some of the best lawyers in the world, and they dug up something that might have impressed the jury (this post continues below the YouTube video):

That video shows Homer Simpson with an iPhone, and what makes the iPhone particularly identifiable is the app menu matrix everyone knows. Actually, most non-iPhone devices have such a matrix as well. They still do, despite Apple's lawsuits against Samsung, Motorola, and HTC (the three leading Android device makers earlier this decade, i.e., when Apple's patent assertions against Google's ecosystem began). In other words, this is iconic and hard to protect at the same time. And the reason it's hard to protect is because it's just a very logical screen layout.

Should Apple get many hundreds of millions of dollars, or theoretically even a billion dollars, then Homer Simpson--or, in the real world, Homer's creator, Matt Groening--deserves a commission.

One of the questions that jurors will be asking themselves this weekend is likely whether (again, basing everything on the previous findings of infringement and validity, irrespectively of what courts in other countries concluded) Samsung should face the maximum penalty, a slap on the wrist, or something in between.

For more than one reason, there's no way I could ever have ended up on that jury. If--in a hypothetical alternative reality--I had to make a decision, I wouldn't agree with either party, but I'd sooner award Apple two or three times of what Samsung considers reasonable than half or a third of Apple's demand. The primary reason for this would be that such components are manufactured separately and can be bought as replacement parts--and there are hundreds of thousands of other potentially-patentable elements in a smartphone, not just three design patents.

That's why this is not a question of whether one respects Apple's designs, Apple's investment in design and innovation, or Apple's right to defend the uniqueness of its products. Over the course of almost eight years, this blog has repeatedly stated that Apple couldn't be different and think different if everyone else was allowed to "copy." Even the fact that Apple founder Steve Jobs once said that "good artists copy, great artists steal" and that Apple had "shamelessly" stolen other people's creations doesn't mean too much in this context.

The problem is just that, no matter whether a screen layout covered by a design patent appeared in a Simpsons episode, the kinds of products at issue in this Northern California case contain many technical components--hundreds of thousands of at least potentially patentable concepts--and so many visual designs (for instance, many other screen layouts than just the app matrix) that a damages award over a very few patents just shouldn't be excessive. Otherwise everything else in such a phone would be implicitly devalued, and that would neither be fair not would it be in the interest of consumers who expect an electronic device not only to look good but also to be fully functional.

When it's not about design patents, Apple itself is a proponent of the "smallest salable patent-practicing unit" (SSPPU) rule (damages or royalties should be determined based on the smallest component that is deemed to infringe or practice a patent) as opposed to complete products. I've supported Apple's related thinking in disputes with Google/Motorola, Ericsson, Qualcomm, and... Samsung. After all those years, I'm not going to be inconsistent. That's why I hope the jury will do precisely what Apple advocates when the shoe is on the other foot, and focus on the smallest salable patent-practicing unit(s).

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Copying allegations could--but shouldn't--decide the Apple v. Samsung retrial on design patent damages

There we go again. For the fourth time in six years (minus a few months), Apple and Samsung will square off again, starting today, in the San Jose building of the United States District Court for the Northern District of California. It's the third trial in the first Apple v. Samsung case (the related complaint was filed in April 2011) and the fourth in total (if we add the 2014 trial in the second case, filed in 2012).

Via Twitter I provided the parties with a link to the Guinness Book of Records website. This might be a new record: four trials between the same two parties in one federal district court within less than six years.

In some ways, it's déjà vu all over again, or Groundhog Day, as Korean-American Judge Lucy H. Koh calls it. But not in all ways. Samsung scored a major victory in the Supreme Court in 2016 on what should be considered the appropriate article of manufacture for determining design patent damages in the form of a disgorgement of unapportioned infringer's profits under 35 U.S.C. § 289. Apple had been awarded huge amounts at two previous trials, based on a standard overthrown by the highest court in the land. Now it will be up to a jury whether the ultimate outcome will, or will not, be reflective of Samsung's SCOTUS victory.

There's the legal part, which is a test that the U.S. government laid out in an amicus curiae brief filed with the Supreme Court. That one is suboptimal, and people far more qualified than me to discuss design patent law find it wanting. There are various restrictions on the parties, especially on Samsung, as to what kind of evidence and testimony they're allowed to present and what kinds of argument they're allowed to raise. And what may ultimately decide is psychology: whether the jury will, or will not, buy Apple's portrayal of Samsung as a copyist.

It's impossible to go into full detail here on all these questions, but let's take a quick look at a few of them. My loyal readers know that I like both Apple and Samsung much better when they're defending themselves against patent infringement allegations and overreaching remedies than when they're playing the offensive part.

Over the years I've had a handful of different iPhones and Samsung Galaxy phones. It's true that the earliest Galaxy products looked much more similar to the iPhone than later ones do. That's why this re-retrial is about old products. A blast from the past.

Apple will argue that Samsung's phones had a rather different look prior to the iPhone launch than subsequently to it (and will point to that old "crisis of design" email):

On the left side one can see that those older phones usually had physical keyboards. While it's true that early Galaxy S phones looked more iPhone-like, what had happened in between was that Android came out, Samsung adopted it, and physical keyboards were history. But in none of those trials did Samsung get the chance to make its strongest defensive point--nor it will it get it this week. Even before the iPhone, Samsung's designers had created some touchscreen phone designs that had various visual elements that are now considered "iPhone-like":

Even if--just for the sake of the argument--one agreed with Apple that Samsung was a copyist, had a major benefit from it (relative to other Android device makers such as Motorola and HTC, not vis-à-vis Apple), and should pay the price, that still doesn't mean that a draconian remedy--disgorgement of entire profits--is a fair and just outcome.

Fairness would require new legislation. § 289 would have to be amended in order to allow apportionment. Then we could have a rational conversation about the extent to which a particular device maker's success depends on certain designs or, more accurately, certain design elements. But Congress hasn't touched that statute in ages, so the law of the land is what it is for the purposes of this trial. Faced with the choice between a devastating AoM definition that will encourage abusive litigation by others and a scenario in which Apple would get less than it deserves, but still an amount far closer to a reasonable apportionment than the "nuclear option," let's hope that jurors will mitigate the damage.

Judge Koh could have adopted a different test (set of criteria) for determining the article of manufacture. The Department of Justice is part of the executive branch of government; its positions are neither law (unless Congress likes and adopts its ideas) nor precedent.

Professor Sarah Burstein, who studied design and the law, wrote a very interesting paper last fall, published by the Harvard Journal of Law & Technology, about the "Article of Manufacture" question and proposed going back to the original definition, which excluded machines. No machine would mean "no smartphone."

Carl Cecere, an appellate attorney, authored an article for law.com. He, too, considers the adopted test a threat to patent holders and their competitors alike. Like Professor Burstein, Mr. Cecere is concerned about lay jurors having to make a determination without sufficient guidance.

Furthermore, I'd like to point to articles on law360.com and IPWatchdog.com.

But the San Jose jury will have to hand down a verdict under the chosen test. It's free to do pretty much anything. Unfortunately, it won't have as much help as it could have been given:

• With respect to the second AoM factor (relative prominence of design), the word "relative" would be given more meaning by highlighting other features and components not affected by the design. There's a whole lot of technology in those phones, and one would totally devalue it by finding that the entire device is the AoM for design patent damages purposes.

• As for the third factor (whether the design is conceptually distinct from the product as a whole), the Department of Justice had said that "[i]f the product contains other components that embody conceptually distinct innovations, it may be appropriate to conclude that a component is the relevant article." This is just an example of how much more specific the instructions to the jury could have been.

• Finally, a Samsung expert, Mr. Wagner, conducted a survey in order to show that design is only one of various factors influencing smartphone purchasing decisions. But the court did not allow him to employ that particular methodology.

Jury trials are unpredictable. Apart from how much the jury's thinking may be influenced by the "copying" allegations that Samsung can't fully counter because it's not allowed to present its independent pre-iPhone designs, a lot will depend on how much weight the jury will give to the fourth factor: whether one can purchase a separate component that embodies a design. In this regard, Samsung will be able to show some evidence such as replacement parts offered on Amazon.com.

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German court dismisses Apple lawsuit over Samsung's copying of iPhone design elements

Today the Landgericht Düsseldorf (Düsseldorf Regional Court) has dismissed an Apple complaint according to which Samsung violated Germany's Unfair Competition Law by exploiting the iPhone's product image through a derivative imitation of its key characteristics. The decision was announced almost three months after a trial at which the court actually appeared inclined to agree with Apple. I didn't attend the announcement but asked a spokesman for the court. In this lawsuit, Apple accused six Samsung smartphones (Galaxy S I, Galaxy S Plus, Galaxy S II, Galaxy Ace, Galaxy R, and Galaxy Wave M) and one Samsung media player (Galaxy S WiFi 4.0) of constituting unlawful imitations of its iPhone and iPod products.

In January 2012 an appeals court (the Oberlandesgericht Düsseldorf, or Düsseldorf Higher Regional Court) upheld a preliminary injunction against the Galaxy Tab 10.1 on unfair competition grounds while the lower court had not reached the question of unfair competition after finding a Community design (EU equivalent of U.S. design patent) infringement. Presumably Apple will appeal today's decision to that same appeals court, and it's possible that the appeals court will once again agree with Apple on an unfair competition claim.

The basis for today's decision was a comparison of Apple and Samsung's products, not an analysis as to whether a particular product infringes a given patent (or other registered right). Samsung and Google's "patent on rounded corners" propaganda was wrong anyway, and I debunked it a year ago by showing that the design patents at issue in the California litigation cover only the combination of a variety of design elements, and that combination has several more limitations than just "rectangular shape" and "rounded corners". But it's a fact that patent offices frequently grant overbroad patents and aren't aware of all of relevant prior art. Furthermore, there can be differences between a patented design and the products the same company builds -- not every "iPhone patent" was or is actually practiced by the iPhone. Here, the test under German unfair competition law has nothing to do with who registered or granted what kind of right at a certain point in time.

Just this week Samsung brought a couple of motions in its first California litigation with Apple that involved (not exclusively, but primarily) requests that the court bar Apple from making "copying" allegations at the limited damages retrial in November. Samsung claimed that Apple intended to "smear" it this way, and to "inflame the jury". It doesn't want judges, juries and the general public to hear this story.

I don't mean to engage in Samsung bashing. It's simply common sense that Samsung deliberately built iPhone-like products; what's more complicated is the question of legality. More recently Samsung has made more of an effort to design all of its products, even the Galaxy range, to be more distinguishable from Apple's. This shows that Apple's enforcement has an effect, regardless of how many cases there may be in which a court doesn't hold Samsung liable. There was a time when "copying" was a key part of the plan. This slide from the California case shows what Samsung's phones looked like before and after the iPhone:

A TV comedian, Conan O'Brien, made fun of Samsung's denial of copying in a video.

I've bought various Samsung Galaxy devices already and plan to buy more in the future. The problem with copying is one of originality, not of quality. At the same time, it wouldn't be rational to blame Apple for enforcing its rights -- be it through patent litigation as in the United States or through unfair competition litigation as in this Düsseldorf case. Even if there are cases that Apple doesn't win, its enforcement efforts at least deter copying. If Apple never enforced, too many phones would look like the iPhone. Unfettered plagiarism would really limit consumer choice at the end of the day. Even lawsuits that Apple doesn't win help to draw the line. Of course, when Apple wins, the benefits are far greater. But even a non-win is not the same as a loss.

There were some judges in the UK who wanted to deprive Apple of the right to fight for uniqueness. They sought to humiliate Apple through "publicity" orders that I believe have no place in a free and democratic country. Dictatorships may require dissidents to speak out in public against their beliefs; democracies, however, favor pluralism. I couldn't understand the UK approach to Apple's design rights enforcement, especially since the UK courts normally enjoy a great reputation -- and especially a reputation for rationality -- in connection with intellectual property. The most Apple-hostile one of those judges showed what I consider rather poor judgment by joining Samsung's litigation team (in a non-Apple case) only a few months later. No Samsung-friendly foreign judge, however, can bar Apple from pursuing claims in Germany under unfair competition law. With a Community design (the EU equivalent of U.S. design patent) there's at least an argument that a court in one EU member state can adjudicate, if certain criteria are met, disputes on an EU-wide basis. Not so in the case of national unfair competition rules, which are inherently a country-by-country issue.

Apple is not even the only company to accuse Samsung of "copying". Just last week, British manufacturer Dyson announced a lawsuit (in the UK) accusing Samsung of a "cynical rip-off" in connection with vacuum cleaner technology.. Of course, this a different case with a different set of facts. What all of these cases have in common is that they are about striking the right balance between intellectual property and competition. Enforcement must be reasonable, but infringement must not be a profitable business strategy. If remedies represent merely a cost of doing business, innovation is in jeopardy.

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German court inclined to hold Samsung liable for unfair exploitation of iPhone design elements

On August 9, 2011 the Düsseldorf Regional Court shocked the wireless world by ordering a preliminary injunction against Samsung's Galaxy Tab 10.1 over a Community design (EU equivalent of U.S. design patent) held by Apple. Apple won several other cases against Samsung in different jurisdictions over a diversity of intellectual property rights, but Apple prevailed on design-related rights in only two countries: Germany and the United States.

Almost to the day two years later, on August 8, 2013, the same German court tentatively plans to announce a ruling on Apple's allegation that six Samsung smartphones (Galaxy S I , S Plus, S II, Galaxy Ace, Galaxy R, and Galaxy Wave M) and one Samsung media player (Galaxy S WiFi 4.0) constitute unlawful imitations of its iPhone and iPod products. Apple claims confusion of consumers about the origin of those products, exploitation of its reputation, and competitive harm arising from the systematic imitation of various of its products. This is not about Community designs or other registered rights. Apple's claims in this case are based on Article 4 para. 9 of German unfair competition law. This is all about the behavior of the parties and about Apple's rights as a market actor vis-à-vis a competitor (Samsung) as opposed to its rights as an innovator/creator.

I have information from an absolutely reliable and independent source that the court indicated to the parties at the outset of today's trial its preliminary position that Samsung has created a derivative imitation of key characteristics of the iPhone. The debate focused particularly on the question and implications of an exploitation of the iPhone's product image ("Rufausbeutung") by Samsung.

The same court had stayed a design rights-based case against multiple Samsung phones because of doubts that Apple's asserted Community designs would be upheld at the end of a revocation proceeding before the Office for Harmonization in the Internal Market, an EU agency in charge of Community (= Eu-wide) trademark and design registration. But Apple's unfair competition claims are about whether Samsung deliberately imitated the iPhone, not about whether other parties created prior art to an iPhone design patent.

German unfair competition law prohibits imitation of a unique product or service. The analysis is holistically based on the overall impression made by the parties' products. Imitation requires a defendant's knowledge of the imitated product, which is an established fact in this case (the evidence presented to the California jury spoke for itself). Independent creation does not count as imitation, nor does copying of a third party's creation. There are three different degrees of imitation: "unmittelbare Leistungsübernahme" (identical imitation); "nahezu identische Leistungsübernahme" (near-identical imitation); and "nachschaffende Leistungsübernahme" (derivative imitation, involving a greater amount of creative effort on the defendant's part than the other two degrees of imitation). The key test for the derivative imitation the court is inclined to find here is whether the design elements the defendant adopted (i.e., copied) are those who are characteristic of the plaintiff's asserted product.

I'm against overbroad monopolies. The "rounded corners" myth is just propaganda, though the first Düsseldorf ruling on the Galaxy Tab 10.1 (at a time when Samsung had not yet presented some of the prior art it identified later) came close to the notion of a monopoly over flat, rectangular devices with rounded corners. Design patents and Community designs can indeed be interpreted broadly in some cases. By contrast, an unfair competition claim based on intentional copying of key characteristics of a product faces a reasonably high hurdle. In this particular case, I think the court's inclination is right. Samsung's products didn't become iPhone lookalikes by happenstance (this CONAN video is a funny version of the story). Samsung wanted it this way. And under German competition law a business strategy centered around imitation exposes you to liability.

Apple alleged consumer confusion about the origin of those products. The court doesn't have to agree with that theory in order to hold Samsung liable. Nor does it have to be convinced that the iPhone's reputation was adversely affected. The intentional, unfair exploitation of the iPhone's product image will suffice.

The products at issue in this unfair competition case are rather old. Samsung's business in Germany won't be disrupted no matter what happens. But Apple could be entitled to a substantial amount of damages if the court's final ruling is consistent with the preliminary inclination indicated today.

Very importantly, a win in this unfair competition case involving Galaxy smartphones in a "neutral" country (where neither of the parties is headquartered) would buttress Apple's story of reckless copying by Samsung. In the public perception game and in psychological terms this would really benefit Apple.

In connection with the Galaxy Tab 10.1 Apple ultimately also fared better under German unfair competition law than on the basis of (European) Community designs. The August 2011 preliminary injunction was upheld by the appeals court (Düsseldorf Higher Regional Court) on a right-for-the-wrong-reasons basis: a Community design infringement was denied (due to Samsung's identification of additional, outcome-determinative prior art), but Apple's second claim, which the lower court had not reached at the preliminary injunction stage, succeeded in the appeals court. And that one was also based on German unfair competition law.

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