WASHINGTON (CN) - Some Supreme Court justices on Tuesday were wooed by a test the government proposes to help juries decide on awards in design patent cases like the one tech giants Apple and Samsung have been embroiled in for years.
Apple and Samsung's war is no longer over whether Samsung infringed on Apple's patented design, as a federal jury found that it had years ago. Instead, the fight has shifted to what Samsung owes Apple for its sin.
The $399 million jury award represents Samsung's total profits from the 11 phones a jury found infringed on Apple's design patent on the iPhone's distinctive full-phone screen and the colorful icon grid on the display.
The Federal Circuit later upheld the judgment and award on appeal.
Before the nation's highest court, the statute in question in the case is the Patent Act - specifically section 289. Samsung says the section, which governs how courts award profits in patent disputes, should allow it to pay only the portion of its profits that can be attributed to the infringing parts of the phone.
It claims these parts, called "articles of manufacture" in the Patent Act, do not always make up the entire product and are just one of the components that spur customers to buy a device.
Both parties now agree that the articles of manufacture are not always an entire product, though Apple and Samsung dispute how juries should be instructed to determine when they are and aren't.
At oral argument Tuesday morning Samsung suggested the justice adopt a two-part test that first seeks to define what exactly the article of manufacture is in a given case before turning to determining what portion of a product's total profit can be attributed to that article.
The test would give juries better instructions that would help them better divide up proposed award money, Samsung's attorney Kathleen Sullivan, partner with the firm Quinn Emanuel Urquhart & Sullivan, said in court.
It would also allow jurors to see that smartphones are complicated pieces of equipment that have far more parts that customers consider than simply design.
"A smartphone is smart because it contains hundreds of thousands of the technologies that make it work," Sullivan said.
Sullivan then suggested the portion of a product's profits attributable to the design patent be determined by looking at factors like the costs of the items that make up the patented design or the amount spent on the division of the company that created it.
But the question of how to define what the articles of manufacture in the Apple-Samsung case remained.
The justices kept coming back to a test the government proposed in an amicus curiae brief that seeks to define what the article of manufacture is in cases where that fact is in dispute.
This test would apply four factors to determining what the article of manufacture is in a dispute over a design patent: first, the scope of the design; second, the relative prominence of that design in the product; third, whether the design is wholly distinct from the entire product; and fourth, the physical relationship between the design and the product.
Assistant to the Solicitor General Brian Fletcher, who argued for the government, explained to the justices that this test could involve expert testimony from people familiar with the industry in question and that the proof required would depend on the specifics of each case.
Samsung's proposal, by comparison, would look only at the design drawn in the patent and then at the "accused product" to determine what the article of manufacture is in a case, Sullivan explained.
Once the government's test identifies the article of manufacture in a case, it would then be up to the patent holder to establish how much the design of a product contributed to its commercial success, which would then allow a jury to award damages.
The justices used the example of the Volkswagen Beetle throughout the hearing to form their questions about what portion of a design patent is attributable to a product's profitability.
If the government's test were applied to the Beetle, Justice Sonia Sotomayor proposed a situation in which the car's distinctive body, not its "innards," was determined to be an article of manufacture in a dispute over another company infringing on the design. After this fact was established, experts would testify as to how much of the profit the infringer made resulted directly from the distinctive curved shape of the car.
Sotomayor seemed to find the test logical when applied to the Beetle, asking Apple attorney Seth Waxman of the firm WilmerHale, "What's wrong with that analysis?"
Waxman warned the government's test could make it difficult to determine profits in situations where the article of manufacture is found to be something other than the whole product and that it could lead to small rewards that give copiers and incentive to continue their bad behavior.
This "runs headlong" into what Congress intended to stop when it first created the laws governing design patent disputes, Waxman said.
Sullivan allowed that Samsung does support the government's four-prong proposal, but that it believes its own suggestion would be easier for courts to administer.
She did distance Samsung from the government's proposal, however, saying the plaintiff in a patent dispute case should be responsible for proving what the article of manufacture in a case is rather than the defendant as the government suggests.
Samsung's chief complaint throughout oral arguments was with the instructions the jury received, which Sullivan said did not give the jury the ability to consider the article of manufacture as just a portion of the entire phone.
"This case was tried under the wrong rule of law," Sullivan said.
Justice Anthony Kennedy questioned how juries would respond to the instructions they receive and seemed dissatisfied with both sides' proposals to create clear instructions.
"Both parties, not the government, both parties kind of leave it up and say, 'Oh, give it to the juror,'" Kennedy told Sullivan. "If I were juror, I simply wouldn't know what to do under your test."
The high court will issue its opinion before it recesses for the summer in June.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.