If one thought it appropriate to label a company's in-house and outside counsel, collectively, a "Comeback Kid," the term would surely apply to Samsung's IP litigation group and Quinn Emanuel. Yesterday (Sunday), Judge Lucy Koh of the United States District Court for the Northern District of California determined that a new Apple v. Samsung trial on design patent damages, which Samsung had been fighting for in courts on both coasts of the United States since the 2012 verdict, is indeed going to happen. You can read her decision (as always, perfectly-structured and clear, whether one agrees or not) right below or, if you lack the time, my Reader's Digest version further below:
17-10-22 Order Requiring New Apple v. Samsung Trial on Design Patent Damages by Florian Mueller on Scribd
Samsung had originally asked Judge Koh for a retrial (in vain at the time), then the Federal Circuit (in vain), then requested an en banc (in vain), then petitioned for a writ of certiorari (successfully), then convinced the Supreme Court that the standard to design patent damages that had originally been applied was incorrect, then dissuaded the Federal Circuit from affirming the original ruling after the SCOTUS opinion, and, just last summer, persuaded Judge Koh that it had not waived its "article of manufacture" argument. But theoretically the retrial could still have been denied: Judge Koh explained that the test for the relevant article of manufacture (with respect to which Apple would be entitled to an otherwise-unapportioned disgorgement of infringer's profits) had to be determined first. The result could have been one under which Judge Koh would have held that, as a matter of law, the original approach of treating Samsung's entire products (certain smartphones) as the relevant article of manufacture had been undoubtedly correct, in which case the original jury instruction would probably have been deemed not to have been prejudicial to Samsung. Right for the wrong reasons, sort of.
Samsung has also taken this final pre-retrial hurdle, and no matter what the ultimate outcome of this case (which may even be ripe for a settlement now) may be, this is a heroic achievement by Samsung and Quinn Emanuel.
Since the Supreme Court had merely tossed the original approach but not (yet) established a new test, Judge Koh had three alternative proposed tests before her to choose from (short of coming up with her own):
Apple's proposal, which involved criteria Samsung criticized as being too vague and subjective;
Samsung's proposal, which was claim-centric (the article of manufacture actually claimed by a design patent would have played the key role) and, in Apple's opinion, overly restrictive; and
the one proposed by the United States Department of Justice last year in an amicus brief filed with the Supreme Court.
Judge Koh has adopted the DoJ's approach, as had the United States District Court for the Southern District in a different case. This was a safe choice for her in some respects, especially since counsel for both parties had expressed that it viewed the DoJ proposal far less negatively than that of the respective adversary. Based on what Judge Koh quoted, Apple merely said it thought it "could live with" the DoJ test, while Samsung's counsel even said it "has a lot of merit." So I guess neither party is downbeat right now, but presumably the folks at Samsung and Quinn Emanuel are a bit happier.
These are the winning factors:
"[T]he scope of the design claimed in the plaintiff's patent, including the drawing and written description";
"[T]he relative prominence of the design within the product as a whole";
"[W]hether the design is conceptually distinct from the product as a whole"; and
"[T]he physical relationship between the patented design and the rest of the product," including whether "the design pertains to a component that a user or seller can physically separate from the product as a whole," and whether "the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately."
This test presents challenges and opportunities for either party when arguing to the jury. Apple will have the benefit of a local jury, and all in all the wordings of the adopted test appear more favorable to Apple than to Samsung, but Samsung will still have plenty of opportunity to persuade the jury that the outcome would be absurd and devastating if a disgorgement of profits made with entire smartphones was awarded. Anything's possible, but there's a relatively high likelihood that Samsung will manage to bring the award down, even though the jury will be picked from Apple's backyard.
After adopting this test, which makes it possible (though far from certain) that disgorgement will relate to something other than the end product, the retrial was inevitable.
The question of the burden of proof has now been resolved as well. Apple will have to persuade the jury that those entire Galaxy phones are the appropriate articles of manufacture, while Samsung will have to prove an alternative article and any deductions. On this one, Samsung clearly got a rather favorable outcome.
The parties now have until October 25 to propose a case schedule and retrial date. There's enough money at stake that the retrial may indeed happen, but I believe there is at least a 30% chance that they will settle before. They're both fine with the DoJ test, they've both shown to the world (including Qualcomm and its increasingly-impatient shareholders, who shouldn't necessarily share Qualcomm's CEO's optimism about a favorable settlement in the forseeable future) that they're prepared to see this kind of litigation through over the course of many years, and they have bigger issues (again, Qualcomm) to focus on. Plus, since they work together so closely (on the iPhone X, for example), they can structure this settlement in a way that whatever Samsung might pay would just be compensated somewhere else. I would recommend to them that Samsung pay, for the design patent-related part per se, less than half of the $400 million portion of the award that is in dispute now, given that Apple's risk of the award being reduced to a relatively small amount is greater than Samsung's risk of Apple being awarded more than half of the original award next time. But right now they'd probably both disagree, and if they need a mediator, they'll find someone more qualified than a blogging app developer.
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