Apple chief executive Tim Cook has said he's willing to take the company's battle with the FBI over a smartphone used by one of the San Bernardino shooters all the way to the Supreme Court, but it looks like another one of the company's legal disputes will make it there first.
The Supreme Court said Monday that it will take up a lengthy patent battle between Apple and rival smartphone maker Samsung — a case that could help determine just how much companies have to shell out if they rip off patented design elements from other products.
In a statement, Samsung said it hopes that the justices' review "can lead to a fair interpretation of patent law that will support creativity and reward innovation." Apple declined to comment.
This will be the first design patent case to make it to the Supreme Court in more than 120 years. It dates back to a 2011 dispute where Apple accused Samsung of copying some basic design features of the iPhone in competing devices.
A jury sided with Apple in 2012, initially awarding the company more than $1 billion — the figure was reduced in appeals, but a panel of judges upheld an award of more than $500 million in damages to the tech giant last year.
The damages basically amounted to Samsung forfeiting all of its profits from the devices that allegedly infringed on Apple's patents. That's because of how the court interpreted a specific part of the law covering design patents that allows a patent-holder to go after an infringer's "total profit."
Samsung agreed to pay the figure last December, but on the condition it could get money back in the event of a successful challenge or appeal. Then Samsung petitioned the Supreme Court to review the case — and now the justices will take up a question the company raised about damages: "Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?"
Or, in plain English: Does Samsung have to give up all of its money it made from devices that infringed on some of Apple's design patents, or just money it made thanks to parts of the devices that infringed on the patents?
Just exactly how that might be broken down is a tricky question. But under the current decision, "even if the patented features contributed 1% of the value of Samsung’s phones, Apple gets 100% of Samsung’s profits," Samsung said in its request to the high court to look at the case.
Samsung's bid garnered support from a wide range of other tech companies. A brief supporting Samsung's challenge filed by industry giants including Facebook, Dell and Alphabet subsidiary Google called the damages decision in the case "deeply flawed" and said the precedent will "lead to absurd results" with a "devastating impact" on companies that develop complex technological products.
Some public interest groups including Public Knowledge and the Electronic Frontier Foundation also sided with Samsung. If it stands, the total damages awarded to Apple in the case could lead to a new wave of patent trolling focused on design elements because makers of multi-component technology may end up on the hook for all their profits due to one minor infringing feature, according to Charles Duan, director of Public Knowledge's Patent Reform Project.
"When you have a big disconnect between the value of a patent and the amount of money that can be awarded for the infringement of a patent, you end up with really bad incentives," he argued.
But in a filing opposing Samsung's bid for the Supreme Court's attention, Apple said that "Samsung blatantly copied the iPhone's design" and the case didn't break "new legal ground," but instead applied accepted legal standards to an "extraordinary record of infringement and copying."
The award of total profits is "a ceiling on the jury verdict, not a floor" under current law, and the jury in the case was merely instructed that they had the "option to award total profit," according to Apple's filing.
The case is expected to be heard before the high court this fall. But while one of the companies will emerge with some sort of victory, Duan argues that everyday people are ultimately hurt by extended patent battles.
"The losers here are the consumers" who end up effectively subsidizing patent disputes by paying higher prices for phones, he said.