A five-year battle between two of America’s biggest tech firms, Apple Inc. and Samsung Electronics Co. Ltd., has become the first patent case to reach the nation’s highest court in more than 120 years. And it’s no surprise that the impact of the case will extend far beyond Silicon Valley.
The initial patent suit stems back to 2011, when Apple sued Samsung alleging infringement on several patented features of its cellphones — including software and physical design features.
In August 2012, a nine-person jury sided with Apple on most of its patent infringement claims against Samsung and awarded the tech giant more than $1 billion in damages — essentially the profits the firm made on the infringing product. (Samsung was eventually able to lower the amount it paid Apple, to $548 million, through a series of appeals. In its decision on a countersuit by Samsung, the jury also sided with Apple, refusing to award Samsung the more than $422 million it sought.)
The initial ruling supported the long-held interpretation of the law that the owner of a patent should claim the full profits of an infringing product even if just part of the product infringed on its design patent.
The dueling tech giants fought their way to the U.S. Supreme Court, which is now tasked with answering the question: “Where a patented design is applied only to a component of a product, should an award of infringer’s profits be limited to profits attributable to that component?”
Experts say the Supreme Court’s answer to that question could shake up the fashion industry as we know it.
If Apple wins — while it would be viewed as a ruling that upholds the legal status quo — some analysts suggest that they expect a significant uptick in design innovation and creativity as more designers feel the pressure to avoid accusations of patent infringement. Some believe that such an outcome could also serve as a deterrent to design counterfeiting, hence the reason so many designers have come out in support of Apple.
A ruling in favor of Samsung, on the other hand, could devalue design patents, experts have said. But supporters of Samsung have argued that putting so much value on design patents is precisely the problem in the first place. Trade groups that support Samsung believe that many companies are making a profit by suing excessively over design patents.
Since Samsung is not disputing the fact that it infringed on several of Apple’s design patents but is instead arguing that it should only have to pay back profits relevant to the infringing design components, there could also be some issues with applying a ruling in Samsung’s favor to other fashion design cases.
If infringers only have to disgorge a portion of their profit, it may be difficult to calculate the portion of a company’s profit that’s relevant to that particular patented design component.
Ultimately, the Supreme Court will have to strike a balance between a ruling that doesn’t stifle competition but also spurs innovation, experts contend.
The court heard oral arguments in the case on Oct. 11 and should issue a final ruling by the end of June.