U.S. Supreme Court gives victory to Samsung over Apple

The U.S. Supreme Court ordered a lower court Tuesday to reconsider the $399 million in damages it ordered Samsung Electronics to pay Apple in 2012 for infringing its design patents.

It was considered a major victory in an epic legal battle. And Samsung may actually be reimbursed part of the $399 million it paid Apple last December.

The highest court in the United States said in a unanimous opinion that damages for design patent infringement can be based only on the part of the device that infringed the patent, not necessarily on the entire product, which were early models of Samsung smartphones.

The 2012 ruling was based on a federal law that stipulates that a party copying and applying a patented design to “any article of manufacture” is liable “to the extent of his total profit.”

But the “article of manufacture” designation is broad enough to encompass both a product sold to a consumer and a component of that product, according to Justice Sonia Sotomayor.

“This Court declines to resolve whether the relevant article of manufacture for each design patent at issue here is the smartphone or a particular smartphone component,” Justice Sotomayor wrote in the opinion for the court.

The Supreme Court ordered the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. to resolve that issue.

The ruling will prolong a legal tug-of-war between the two largest smartphone producers in the world that began in April 2011 when Apple sued Samsung for violating its patents and copying the design of its iPhone, seeking $2.5 billion in damages.

Much of the original jury verdict in 2012 as well as the Samsung appeal that followed focused on the look of Samsung’s older models and the value of Apple’s designs.

Samsung was ordered to pay $1.05 billion in damages to Apple in 2012, which was reduced on appeal to $930 million. In May 2015, the U.S. Court of Appeals for the Federal Circuit stripped about $382 million from that, saying the iPhone’s appearance could not be protected through trademarks, to $548 million last December.

Of the total, $399 million - equivalent to Samsung’s entire profit from the sale of the infringing smartphones - was based on findings that Samsung had copied three patented designs for the black rectangular front face with rounded corners and its colorful grid of 16 icons. Transmitting the $548 million, Samsung said in a petition to the high court that the penalty was disproportionate and contended that Apple was not entitled to profits from the entire phone, but only profits from the components that infringed its patents.

Samsung welcomed the court ruling.

“The U.S. Supreme Court’s landmark decision today is a victory for Samsung and for all those who promote creativity, innovation and fair competition in the marketplace,” said Samsung in an official statement. “We thank our supporters from the world’s leading technology companies, the 50 intellectual property professors, and the many public policy groups who stood with us as we fought for a legal environment that fairly rewards invention and fosters innovation.”

Apple said in reaction that its “case has always been about Samsung’s blatant copying of our ideas, and that was never in dispute,” according to spokesman Josh Rosenstock.

“We will continue to protect the years of hard work that has made iPhone the world’s most innovative and beloved product,” he continued. “We remain optimistic that the lower courts will again send a powerful signal that stealing isn’t right.”

Analysts say the verdict may curb litigation by patent holders reaping massive profits out of infringements of a component - a growing concern for large tech firms.

“That is absolutely wonderful! Large parts of the (U.S. and global) tech industry will breathe a sigh of relief now,” said Florian Muller, an intellectual property analyst who writes a closely followed patent blog Foss Patents.

“As I said at different points in time, I believe the Federal Circuit’s extreme position wouldn’t have been good for Apple either - thinking of longer-term implications, not just this one Apple v. Samsung case.”

After the upbeat ruling and a recent announcement of plans to boost shareholder value, Samsung Electronics shares reached an all-time high price of 1,772,000 won ($1,517) on Wednesday, up 1.37 percent.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]