A century-old twist in patent law leads to Apple’s $1 billion win

BVWireIssue #119-5
August 29, 2012

As our continuing reports on the tightening standards for recovery in patent infringement cases have made clear, federal courts now require financial experts to provide “in every case” an apportionment of damages between the unpatented and patented features of the product.

Here’s the twist: That strict apportionment standard, most recently articulated in Uniloc v. Microsoft as well as the Oracle v. Google litigation, applies only to suits based on infringement of utility patents. Compare that to the remedy under the Patent Act of 1887, which still entitles the holders of design patents to an “infringer’s entire profits” without the need to split damages between the patented design and the product bearing the design.

That standard came into play when Apple sued Samsung for infringement of its iPhone and iPad design. After Apple’s expert calculated its damages based on the century-old remedy, Samsung’s expert tried to rebut it with calculations that apportioned damages. Apple argued under Daubert that the expert’s report was irrelevant and contrary to the law—and in a pretrial opinion, the district court agreed, finding that the expert also failed to use an accepted methodology and incorrectly applied another legal precedent in patent cases (the Panduit factors).

Consequently, last Friday, a jury handed the American-based Apple an award of $1.05 billion against South Korean-based Samsung. Samsung has vowed to appeal, while Apple intends to use the victory—and the federal recovery standard for design patent infringement—to launch similar suits against other competitors in the smartphone and computer tablet industry. Read the complete digest of Apple, Inc. v. Samsung Electronics Co., 2012 U.S. Dist. LEXIS 90877 (June, 28 2012) in the October Business Valuation Update. The court’s Daubert opinion will be posted soon at BVLaw.

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