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Supreme Court Presses Apple And Samsung On The Value Of Design

The legal battle between the world's two largest phone manufacturers may have broad implications for the future of patent law and innovation.

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Several Supreme Court justices challenged Samsung's argument on Tuesday that the company should owe Apple less than $399 million for infringing on the design of the iPhone. Other justices, though, pressed Apple to show why its damages in the case should be connected to Samsung's profits made from the entire phone — rather than just the part of its exterior that Samsung was found to have copied.

The dispute between the warring phone companies revolves around the $399 million penalty Samsung was ordered to pay Apple, stemming from a lawsuit that began in 2011. A lower court found that Samsung infringed on three of Apple’s design patents: the iPhone’s rectangular face with rounded edges, the phone's bezel edge frame, and a home screen populated by apps arranged in a grid. The dollar amount comes from the total profits Samsung banked from eleven of its phone models that the lower court found ripped off Apple’s iPhone design. But exactly how much money Samsung must hand over is what the Supreme Court will decide.

Samsung tried to convince the Supreme Court that it shouldn’t have to forfeit all of the profits it generated from the phones, since only some parts of its devices were patented by Apple.

The law that the high court will interpret states that a design patent infringer is liable for “total profits” from the sale of an “article of manufacture.” But the oral arguments focused on pinning down what “article of manufacture” actually means: the justices could determine it refers to the entire phone, or just the components that were patented by the iPhone maker.

Apple, for its part, argued that the design of the iPhone is not merely ornamental — a minor aspect that that can be separated from the phone. The iPhone, when released, was a revolutionary product, Apple maintains, and its iconic design was integral to its success.

Chief Justice John Roberts needled Apple's attorney on the "article of manufacture" point, saying that Apple's design patent applies only to the phone's exterior, not its "chips and wires." Roberts said that the money awarded to Apple, if that's so, shouldn't be the total profits from the Samsung phones.

Samsung raised the issue of what it claims were problematic jury instructions in the lower court where this dispute began. Samsung argued that the jury should have been told to consider awarding Apple profits based on portions of the phone that could be economically tied to its design patent. Instead, the jury was instructed that if infringement did occur, Apple would be entitled to the total profit of the phone. Justice Anthony Kennedy, one of the more active participants on the dais, began his questioning by pointing to the confusion he might have serving on the jury under Samsung's proposed instructions. "If I was a juror, I simply wouldn't know what to do," he said.

Justice Sonia Sotomayor echoed justice Kennedy's remarks and said, "The phone could be seen by a purchasing consumer as being just ... that rounded edge, slim outer shell." Justice Ruth Bader Ginsburg asked Samsung to clarify how a jury might determine the value of a phone's design if these component parts aren't sold separately.

The US Department of Justice also appeared before the court, speaking in favor of neither party, but advocated a multi-pronged approach. According to the lawyer for the government, the justices should consider taking a dynamic, contextual reading of design patent cases, where infringement penalties are determined by the scope of the design and how important a design element is to a product as a whole.

An extended comparison deployed by several justices was to look at this case as if it involved the Volkswagen Beetle, and it's signature look. To determine what role the Beetle's exterior had in people's willingness to buy it, the government argued that expert witnesses from the industry could be brought in, along with consumer surveys.

Tech giants including Facebook, Google, Dell, and eBay are backing Samsung. In a brief to the court, they described Apple's stance as “out of step with modern technology,” pointing to the undue power design patents could potentially wield. Justice Stephen Breyer mentioned this brief several times, and pointedly asked Apple to explain why its Silicon Valley neighbors are mistaken. (While Justice Clarence Thomas did not pose a question, he put his glasses on and appeared to read case material after Breyer referenced the tech companies' brief. They leaned closer to each other as Breyer's case booklet was open a few moments later, with Breyer appearing to point him to a certain page.)

Samsung and its supporters have argued that a victory for Apple could lead to absurd scenarios, in which a company that infringes on a tiny percentage of another firm’s design could be held liable for 100% of its profits. This is like a car company being forced to hand over its earnings because it copied someone else's design for a backseat cup holder, Samsung has suggested. The company fears that a ruling in favor of Apple would breed a new class of patent troll, especially in the realm of technology where products are made up of thousands of complex parts, in addition to their design features.

Apple, in turn, claims more than 100 design professionals as allies, including Calvin Klein and Alexander Wang. The designers urged the court to consider that, in the minds of consumers, design often represents the product itself.

Samsung v. Apple was argued as both companies face heightened scrutiny from government officials around the world. In August, the executive arm of the European Union ordered Ireland to collect $14.5 billion in unpaid taxes from Apple. Meanwhile, Samsung phones have been exploding. The manufacturer has halted sales of the Galaxy Note7 amid a worldwide recall, following reports of the devices catching fire. The Federal Aviation Administration urged passengers Monday to "power down, and not use, charge, or stow in checked baggage, any Samsung Galaxy Note7" while aboard an aircraft.

As the justices contemplate the design patent case, the Supreme Court continues to operate with only eight members, following the death of Justice Antonin Scalia in February. While President Obama has nominated Merrick Garland to fill the vacancy on the court, Senate Republicans have refused to move forward on the nomination. For both Hillary Clinton and Donald Trump, the filling of that vacancy remains a galvanizing campaign issue. A question about how they would choose to fill the role drew sharp contrasts between them during the second presidential debate on Sunday night.

Hamza Shaban is a technology policy reporter for BuzzFeed News and is based in Washington, DC.

Contact Hamza Shaban at Hamza.Shaban@buzzfeed.com.

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