What Everyone Is Forgetting About the Samsung v. Apple Case

The Supreme Court case is deciding how much the iPhone's rounded corner design is worth. Even though it's almost obsolete.

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Oct 12 2016, 7:18pm

Image: Wikimedia

Tuesday morning, the Supreme Court heard arguments in the long-running smartphone war litigation between Apple and Samsung. The arguments centered on the value of certain iPhone designs—the famous rounded-corner rectangles—that Samsung's phones used.

There has been much commentary on the millions of dollars at stake and the importance of the case. But what hasn't been said is that the designs can't be worth much, since hardly anyone uses them anymore.

The lawsuit dates back to 2011, when Apple charged Samsung with infringing a number of iPhone design patents. Unlike regular patents, which are granted for inventions, design patents are given for the appearance of useful things like the shape of a piano, the design of a rug, or the contour of a smartphone.

So when Samsung was found to have infringed Apple's rounded-corner patents, Apple demanded all the profits on Samsung's lookalike phones.

Design patents also have an unusual feature that makes them especially valuable compared to other patents. According to a law dating back to 1887, if a court rules that a design patent is infringed by another product, then the infringer must pay not just damages relating to the design, but rather must pay the infringer's "total profit."

So when Samsung was found to have infringed Apple's rounded-corner patents, Apple demanded all the profits on Samsung's lookalike phones—even though many of the profits were based on features of the phones that had nothing to do with the rounded-corner designs. And a federal appeals court agreed, interpreting that 1887 law to require payment of all the profits on "the product as sold," that is, on the whole phone.

At the Supreme Court, everyone—Apple, Samsung, the justices—agreed that the appeals court was wrong, and that the "total profit" award should be limited to what the 1887 law calls the "article of manufacture," rather than the whole product as sold. In the case of design patents on rounded corners of phones, Samsung argued that only the profits on the front face of the phone casing, not the entire phone, were owed to Apple.

So much of the argument revolved around a related question: how does one separate out the profits on the front casing from the profits on the "innards" of the phone? The lawyers offered differing theories, but one particular fact that did not come up in the argument stands out in my mind: the version of the iPhone that was at stake in the case. The lawsuit was filed in 2011, and the patents predated the lawsuit by several years. Those patents dealt with the design of the iPhone 3.

A figure from U.S. Design Patent No. D593,087, one of the patents in the lawsuit. Image: United States Patent and Trademarks Office

That phone model, of course, is long gone. In 2011 it was replaced with the much more angular iPhone 4. The more curved form factor would not reappear until (arguably) the most recent iteration, the iPhone 7.

That the lawsuit was over a long-obsolete iPhone design is important for two reasons. First, it shows how little importance people place on the design of smartphones. Apple spent much of its argument (and the lawsuit) trying to show that the phone design was the primary reason that people chose their phones. But when a radically new design was released, iPhone users did not hold onto their phones because they loved the shape so much; they practically all upgraded to have the latest and greatest features. A study earlier this year found that the iPhone 3 accounted for 0.03 percent—less than one in three thousand—of phones currently in use.

Several of the justices noted the oddity of the idea that people buy useful products like phones purely for the design. Much discussion was over a hypothetical design patent on the Volkswagen Beetle, which the attorneys described as an "iconic" car shape. But Justice Alito observed:

"I can't get over the thought that nobody buys a car, even a Beetle, just because they like the way it looks. What if it, you know, costs, I think, $1800 when it was first sold in the United States? What if it cost $18,000? What if it got 2 miles per gallon? What if it broke down every 50 miles?"

Just like cars, people buy phones for the practical features. Indeed, if the design were the only important thing, then people would be perfectly satisfied with the noPhone, a functionless piece of plastic that has the shape of an iPhone.

The second reason that the changes in iPhone design are important is that they reflect how the design industry actually works. Even a successful design company like Apple can't rest on its laurels with a single smartphone shape; it must constantly develop new designs and appearances for its products. That again cuts against the idea that design is all-important to value. How much can a particular phone shape be worth, after all, if that shape is going to be discarded after a year in favor of a new look and feel?

In the end, the justices of the Supreme Court looked willing to reject the idea that Apple deserves all the profits on Samsung's phones, instead opting for an option that would more closely cabin Apple's design patent infringement award to something reasonable. That is obviously a game changer for the smartphone wars, but it's also important to the whole technology industry, which depends on balanced patent laws that don't turn patents on rounded corners into billion-dollar lawsuit tools.

Charles Duan is the director of the Patent Reform Project at Public Knowledge, a consumer advocacy group that promotes the public interest in technology policy and law.

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