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Apple v. Samsung: How juries calculate damages in patent lawsuits

Guesswork and dart boards?
Wed Aug 29 2012, 11:45
Samsung Galaxy Nexus and iPhone 4S speech recognition

AT AN EVENT hosted by UCL's Institute of Brand and Innovation Law earlier this summer, Randall Ray Rader, chief judge of the US Court of Appeals for the Federal Circuit, valiantly attempted to defend the jury system in patent cases in the face of some trade mark provocation.

Judge Rader, who has tried "as many patent jury trials as anyone", argued that juries "do as well as judges" and, when interviewed afterwards, explained that the juries showed that "they do understand complex technology". But do they understand complex technology and damages calculations?

The judge's statement and the question with which the previous paragraph concludes are both worth holding up to scrutiny in light of the jury ruling in the Apple v Samsung dispute in the US. Even readers of the red-top press and children's comics will probably be well apprised of this case by now, although they might be forgiven for confusing this case with the seeming millions of other Apple v Samsung, Apple v The World and The World v Apple disputes that have been plaguing courts across the globe.

In summary, in this latest US installment of the saga, Apple brought a patent infringement case against Samsung for infringement of three patents - US Patent No. 7,469,381 relating to "list scrolling and document translation, scaling and rotation on a touch-screen display", US Patent No. 7,844,915 relating to an "application for programming interfaces for scrolling operations" and US Patent No. 7,864,163 relating to a "method for displaying at least a portion of a structured electronic document", as well as four design patents: US Patent Nos. D504,889, D593,087, D618,677 and D604,305.

The main design patent at issue was the '889 design patent which claimed "the ornamental design for an electronic device" with depictions of the rounded cornered tablet. Samsung counterclaimed for infringement of six of its own patents.

After a three-week trial, the jury gave its verdict. Seven Californian men and two women found that Samsung had infringed all Apple's patents and design patents, except the famous '889 design patent. They also found that Apple had not infringed any of Samsung's patents.

And how did the jury calculate damages? Well, armed with these jury instructions, they did what most people seem to do when faced with the dark art of calculating patent infringement damages: they stuck their nine figures in the air, filled out a form, and came up with a number. Apple sought damages based on lost profits for some of Samsung's sales and a reasonable royalty on the rest of Samsung's allegedly infringing sales.

To prove lost profits, Apple had to show that, but for Samsung's infringement, there was a reasonable probability that it would have made the sales that Samsung made if the infringing products had not been on the market. Importantly, presiding District Judge Lucy Koh, who charmed the world when, after a receiving a 75-page briefing from Apple with 22 listed rebuttal witnesses, asked Apple's lawyers if they were "smoking crack", instructed the jury that:

"You must allocate the lost profits based upon the customer demand for the patented feature of the infringing products. That is, you must determine which profits derive from the patented invention that Samsung sells, and not from other features of the infringing products."

 

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