Apple’s damages in suit against Samsung still unclear; new trial may be required
News
Monday, July 31, 2017

Apple’s damages in suit against Samsung still unclear; new trial may be required

By Mark Engstrom, J.D.

After two jury trials and subsequent decisions by the Federal Circuit and U.S. Supreme Court, the federal district court in San Jose, California, has concluded that Samsung did not waive its objection to an allegedly erroneous jury instruction about the "article of manufacture" that was used to calculate damages in Apple’s successful lawsuit against Samsung for the infringement of its iPhone design. According to Samsung, the court’s jury instructions on damages improperly precluded, or at least misleadingly avoided, the fact that the "article of manufacture" on which damages were based could be a "component" of the infringing product that was sold to consumers, rather than the entire product. Although Samsung had preserved its objection to the jury instructions, the court deferred its decision on whether a new trial was appropriate. The proper test for identifying the "article of manufacture" needed to be resolved first, the court explained, along with other relevant issues (Apple Inc. v. Samsung Electronics Company, Ltd., July 28, 2017, Koh, L.).

In 2016, the U.S. Supreme Court ruled that the proper "article of manufacture" on which total profits could be awarded for the infringement of a design patent—in this case, U.S. Patent Nos. D618,677, for a black, rectangular "front face" of a phone with rounded corners); D593,087, for a rectangular front face of a phone with rounded corners and a raised rim; and D604,305, for a grid of 16 colorful icons on a black screen—was either "a product sold to a consumer [or] a component of that product." However, the High Court declined to establish a test for identifying that article for the purpose of 35 U.S.C. §289.

On remand, the parties submitted briefings on: (1) whether Samsung had waived its argument regarding the validity of the court’s jury instructions on the article of manufacture (i.e., whether the article could be a component of the infringing phone) and (2) whether a new trial was warranted. In its brief, Samsung argued that the Final Jury Instructions, which stated that "you may award Apple [Samsung’s] total profit attributable to the infringing products," showed that the jury had been misled to believe that Samsung’s infringing "products"—rather than the "part or portion" of the products that incorporated the subject matter of the patent—were the relevant "articles of manufacture" within the meaning of §289.

The court noted that its judgment could be altered based on an erroneous jury instruction if: (1) Samsung had made a proper and timely objection to the court’s jury instructions; (2) the jury instructions were legally erroneous; (3) the resulting error had a prejudicial effect on Samsung; and (4) Samsung had proposed alternative instructions that would have remedied the error.

Proper and timely objection. According to the court, Samsung had preserved the "article of manufacture" issue by objecting to the exclusion of its Proposed Jury Instruction because the proposed instruction—and Samsung’s objection (which stated that the exclusion of the Proposed Instruction would result in an "[in]correct statement of law")—were sufficient to bring the court’s attention to Samsung’s contention that the Final Jury Instructions would cause the jury to believe that the articles of manufacture were necessarily Samsung’s infringing phones.

Legally erroneous instruction. Even if Samsung had adequately objected to the exclusion of its Proposed Jury Instruction, Apple argued, Samsung failed to show that the Final Jury Instructions were legally erroneous. The court disagreed. The jury was simply not told that an article of manufacture could be "a product sold to a consumer [or] a component of that product." Without that instruction, the court explained, the Final Jury Instructions would direct the jury to find that the infringing products and the articles of manufacture were identical.

Apple further argued that the Proposed Jury Instructions: (1) incorrectly stated that the article of manufacture had to be less than the product that was sold and (2) included Samsung’s legally precluded "apportionment" theory. However, even if those proposed instructions were legally incorrect, they still raised the "article of manufacture" issue in compliance with Rule 51 of the Federal Rules of Civil Procedure, and once an issue was raised to the district court, the fact that the proposed instruction was misleading did not, by itself, permit the court to summarily refuse to give any instruction on the topic.

Finally, Apple argued that the evidence in the record lacked the necessary foundation to find an "article of manufacture" that was less than the entire infringing phone. The court deferred consideration of that issue because a determination of whether an adequate foundation was present would necessarily would a require finding that the record evidence did not establish, as a matter of law, that Samsung’s entire phones were the relevant articles of manufacture. The court thus decided to consider that issue when it determined the proper test for identifying the relevant articles of manufacture under §289. Similarly, the court deferred the issue of determining the proper basis for calculating Samsung’s profits.

Prejudicial error. Because the substance of a "harmless error" analysis would require the court to determine what evidence would be legally sufficient to show that an article of manufacture was something less than the entirety of Samsung’s phones, the issue of prejudicial error was better considered once the court resolved other outstanding issues, such as the establishment of a test for identifying the relevant article of manufacture for the purpose of §289. The court thus deferred its consideration of that issue. The court similarly deferred consideration of Apple’s alleged waiver of the "harmless error" argument because that issue was "better considered alongside the substance of Apple’s harmless error argument."

Alternative instructions. The court also deferred consideration of the final issue—i.e., whether the Proposed Jury Instruction would have rectified any asserted legal error in the Final Jury Instructions—until the court could determine whether the Final Instructions were legal error.

Conclusion. Overall, the court found that Samsung had preserved its "article of manufacture" argument by objecting to the court’s exclusion of its Proposed Jury Instruction. However, the court could not determine whether a new trial was warranted. It thus deferred any consideration of whether a new trial was warranted until further briefings were proffered on other questions and issues.

The relevant questions for the briefings were: (1) what was the proper test for identifying the relevant "article of manufacture" for the purpose of §289?; (2) was the identification of an article of manufacture a factual question, a legal question, or a mixed question of law and fact?; (3) what issues should be decided by a jury and what issues should be decided by the court?; (4) who bears the burden of proof to identify the relevant article of manufacture for the purpose of §289?; and (5) who bears the burden of proof to show total profits on an article of manufacture for the purpose of §289?.

Other issues included the identification of: (1) the relevant article of manufacture for each of the three design patents at issue; (2) evidence in the record that supported each party’s asserted article of manufacture for each of the three design patents; and (3) evidence in the record that supported the total profit for each party’s asserted article of manufacture for each of the patents.

The case is No. 11-CV-01846-LHK.

Attorneys: James L. Quarles III (Wilmer, Cutler, Pickering, Hale and Dorr, LLP) for Apple Inc. Kathleen Marie Sullivan (Quinn, Emanuel, Urquhart and Sullivan, LLP) for Samsung Electronics Co. Ltd. and Samsung Electronics America, Inc.

Companies: Apple Inc.; Samsung Electronics Company, Ltd.; Samsung Electronics America, Inc.

MainStory: TopStory Patent TechnologyInternet CaliforniaNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More