Supreme Court Chucks $399M Verdict in Apple-Samsung War

WASHINGTON (CN) – Reversing Apple’s $399 million patent win, the Supreme Court ruled Tuesday that entire phones cannot be considered infringing even though the “innards of Samsung’s smartphones were not sold separately from their shells.”

Smartphone “innards” had preoccupied the Federal Circuit last year in upholding a jury verdict for design-patent infringement against Samsung. The $399 million verdict accounted for the entire profit Samsung made by selling products that infringed on Apple’s iPhone.

On appeal, Samsung had argued that the damages should be limited to the infringing “article of manufacture,” as in the screen or case of the smartphone, not the entire phone itself.

Nearly two months after its hearing on the case, the Supreme Court reversed Tuesday for Samsung.

“The Federal Circuit found that components of the infringing smartphones could not be the relevant article of manufacture because consumers could not purchase those components separately from the smartphones,” Justice Sonia Sotomayor wrote for the unanimous court.

“But, for the reasons given above, the term ‘article of manufacture’ is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading ‘article of manufacture’ in §289 [of the Patent Act] to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.”

Apple was represented by Seth Waxman of the firm WilmerHale, and Samsung by Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan. Neither has immediately returned an email seeking comment.

A spokeswoman for Samsung gave thanks Tuesday night to “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.”

“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,” added the spokewoman, who declined to give her name for attribution.

Sotomayor noted that there was no reason at this time to resolve whether the relevant article of manufacture is the smartphone or a particular smartphone component for each of the design patents at issue.

“Doing so would require us to set out a test for identifying the relevant article of manufacture at the first step of the §289 damages inquiry and to parse the record to apply that test in this case,” the 9-page opinion concludes.

Though the United States suggested a test in an amicus brief, Sotomayor noted that neither Samsung nor Apple briefed the issue.

“We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties,” Sotomayor wrote. “Doing so is not necessary to resolve the question presented in this case, and the Federal Circuit may address any remaining issues on remand.”

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