Apple v. Samsung: Jury Verdict Lacks Sufficient Detail To Support Enhanced Damages

High stakes design patent cases are rare.  The recently tried Apple v. Samsung case[ii] is arguably the most important design patent case to be tried in a U.S. court, particularly if one defines importance in terms of monetary exposure.  Now that the smoke has initially cleared on the field of battle in the district court, commentators can critically scrutinize the results i.e. “shoot the survivors.”  The primary thesis of this paper is that no more than 6.4% of the $1.04B monetary award in the jury verdict[iii] can be enhanced for willful infringement, without being vacated and remanded on appeal.  The reason for this assertion is that slightly less than 6.4% of the total monetary award is for infringement of only utility patents.  Additionally, due to the lack of detail in the jury verdict regarding which Samsung products were used to commit willful infringement, it is quite possible that no enhancement of damages for willful infringement will survive an appeal.

The relative paucity of design patent jurisprudence regarding the legal remedy of damages and the equitable remedy of an accounting for the infringer’s profits, makes clear that while an award of damages for patent infringement may be enhanced under 35 U.S.C. §  284 for willful infringement, an award of profits under 35 U.S.C. §  289, may not be enhanced under Section 284.[iv]  While this distinction may appear important to one who wishes to obtain an enhancement of the damages award for willful infringement, the jury verdict form in Apple v. Samsung leaves one clueless as to whether the monetary award for infringement of 18 Samsung devices was an award of damages, an award of profits, or some combination of the two.

Jury Questions 1-4 pertained to infringement of Apple’s utility patents.[v]  Jury Questions 5-7 pertained to infringement of Apple’s design patents.[vi]  Table A below summarizes the responses to Jury Questions 1-7.  As shown in Table A, the jury found that:

(a) 15 Samsung devices infringed at least one utility patent and at least one design patent;

(b) seven Samsung devices infringed only one or more utility patents; and

(c) three Samsung devices infringed only one or more design patents.

Either damages under Section 284 or the infringer’s profits under Section 289 are available for infringement of the 18 devices in categories (a) and (c).

Jury Question 22 asked:  “What is the total dollar amount that Apple is entitled to receive from Samsung on the claims on which you have ruled in favor of Apple?”[vii]  The way this question is phrased, one cannot discern the degree, if any, to which the jury’s response comprises an award of profits under Section 289 for any infringed design patents.  In its amended response to Jury Question 22, the jury responded “$1,049,393,540.”[viii]

Jury Question 23 asked: “For the total dollar amount in your answer to Question 22, please provide the dollar breakdown by product.”[ix]  For the seven products listed in Table A that infringed only one or more utility patents, Table B lists the jury’s responses to Jury Question 23.  As shown in Table B, the total “dollar amount” awarded for these seven Samsung products was $66,927,523.  This amount is slightly less than 6.4% of the total “dollar amount” awarded in response to Jury Question 22.

The jury instructions explained that only damages in the form of either Apple’s lost profits, or a reasonable royalty, were available for infringement of a utility patent.[x]  Assuming that the jury followed the jury instructions, there is a sound basis for concluding that the $66,927,523 monetary award summarized in Table B was an award of damages under Section 284, which may be enhanced for willful infringement.

What about the basis for the jury’s remaining monetary award of $982,466,017 for Samsung products found to infringe at least one design patent?  Your guess is as good as mine!  It is impossible to discern from the jury’s responses to Jury Questions 22 and 23, whether any portions of this amount was an award of Samsung’s profits under Section 289, which may not be enhanced for willful infringement under Section 284, pursuant to the Federal Circuit’s decision in Braun.[xi]

Thus the maximum amount of enhancement possible under these circumstances, assuming a trebling for willful infringement is $133,855,046.[xii]  If the district court were to enhance the monetary award for willful infringement by more than $133,855,046, I submit that such a decision likely would be vacated by the Federal Circuit and remanded for a new determination of enhanced damages.

In Verizon Services Corp. v. Vonage Holdings Corp.,[xiii] the district court entered a judgment of infringement of three patents and awarded damages of $58M with no apportionment of the damage award among the three patents adjudicated to have been infringed.  The Federal Circuit reversed the district court’s judgment of infringement on one of the three patents-in-suit, vacated the entire damages award, and remanded the case for a new trial on damages for the two infringed patents, holding:

In light of our holding that a new trial is required on the issue of infringement of the ’880 patent, we also vacate the determination that Verizon is entitled to a damages award of $58,000,000 and a royalty rate of 5.5%, since the jury’s verdict gives no indication what portion of such damages were allocated to the infringement of the ’880 patent.  In a situation—such as this one—where the jury rendered a single verdict on damages, without breaking down the damages attributable to each patent, the normal rule would require a new trial as to damages. See Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 312 (1986) (“When damages instructions are faulty and the verdict does not reveal the means by which the jury calculated damages, the error in the charge is difficult, if not impossible, to correct without retrial, in light of the jury’s general verdict.”).[xiv]

In NTP, Inc. v. Research In Motion, Ltd.[xv] (“the Blackberry case”), the district court entered a jury verdict of $53.7M in damages for infringement of several claims of several asserted patents.  The Federal Circuit vacated the judgment of infringement as to several claims and vacated the entire damages award, holding:

because the jury verdict did not specify the amount of infringing sales attributed to each individual patent claim, or the specific devices and services determined by the jury to infringe each separately asserted claim, the district court will have to determine the effect of any alteration of the jury verdict on the district court’s damage award.[xvi]

The Federal Circuit’s decisions in Verizon and NTP illustrate the danger of not breaking down (granulating) the damages or profits award in a complex patent case, claim by claim, and device by device (or method by method).

There are several reasons why seasoned trial counsel might elect not to granulate the jury verdict form to this extraordinary degree, including but not limited to, not overtaxing the jury.  It is also not uncommon for a district court to refuse to granulate the jury verdict form to this degree.  However, in the Verizon and NTP cases, insufficiently detailed jury findings, resulted in jury awards of over $100M for patent infringement being vacated.  That amount is mere “chump change” compared to the 93.5% of the total $1,049,393,540 monetary award of in the Apple v. Samsung case, for which it is impossible to determine whether there is any award of damages for infringement under Section 284.

Readers who were devotees of the mid-1960’s Batman television series may recall that near the end of the first of each week’s episode, when Batman and Robin were caught in an ostensibly inescapable appointment with death, the announcer would proclaim “The worst is yet to come!”  The same is true for Apple with respect to its hopes of obtaining an enhancement of damages for willful infringement that will withstand an appeal.

Specifically Jury Question 10 asked:  “If you answered “Yes” to any of Questions 1-9, and then found that any Samsung entity had infringed and Apple patent(s), has Apple proven by clear and convincing evidence that the Samsung entity’s infringement was willful

(Please answer in each cell with a “Y” for “yes” (for Apple), or with an “N” for “no” (for Samsung).)[xvii]

The jury’s responses to the table in Jury Question 10 appear in italics in the above table.

Pursuant to the Federal Circuit’s en banc decision in In re Seagate, the first element for proving willful infringement is proving that the accused infringer “acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.”[xviii]  It is possible, if not likely, that the evidence relating to this element is not identical for each Samsung device found to infringe an Apple patent.  As summarized in Table A, the jury found that multiple Samsung devices infringed each of the six patents found to be infringed.  However, one cannot discern from Jury Question 10 and its response, which of the many adjudicated infringing devices for each patent was the basis for the jury’s willful infringement verdict.  Thus for any patent where the judgment of infringement is vacated for at least one Samsung device, any judgment of willful infringement for that patent should also be vacated because there is no way to determine whether Samsung committed willful infringement with the remaining infringing devices.[xix]

As we proceed with this analysis, things get worse for Apple. It appears unlikely that Apple will have the necessary gadgets in its utility belt to overcome the defects in this jury verdict form.  Even if every liability verdict in this case survives an appeal, the information provided by the response to Jury Question 10 should be found by the Federal Circuit to be inadequate to meet Apple’s clear and convincing burden of proof that the jury’s findings of willfulness apply to every Samsung device found to infringe any of the six patents where willful infringement was found.

There is no “one size fits all” doctrine for proving willful infringement.  The Seagate test for willful infringement must be applied to each infringing device, in order to enhance any award of damages for such device.  The first Seagate element, quoted above in now a question of law for the district court to adjudicate,[xx]  Thus, the district court could rule on this element on a device by device and patent by patent basis in the post-trial hearing on willfulness.  However, the second element of the Seagate willful infringement test is still a fact question.  That element is whether the objectively defined risk was either known or so obvious that it should have been known to the accused infringer.[xxi]  Unfortunately for Apple, the jury, has already been dismissed without making any findings on this issue on a device by device basis.

Despite the widespread reporting in the mass media that the $1.04B jury award to Apple may be trebled, one can see that the jury verdict will not support such an enhancement and Samsung’s additional monetary exposure for willful infringement is miniscule, in comparison to the $1.04B award of damages, or profits, or both.