By now this is old news, but I was away when this news broke and my hotel unbelievably didn’t provide free wi-fi, despite our $40 per night resort fee. But Since I’ve been following this case so closely I think it deserves a post, and better late than never.
As you may recall, a California jury found that many Samsung phones and tablets infringed on Apple’s patents and trade dress and awarded Apple $1.05 billion in damages. Notably, the jury deliberated for less than three days. There has been lengthy post-trial motions by both parties, including a motion by Samsung to vacate the jury verdict and damages award based on alleged misconduct by the jury foreperson, which was denied.
On Friday, March 1, Judge Koh ruled on another series of motions relating to damages. With regard to supplemental damages, which are damages from continued infringement after trial, Judge Koh:
(1) Sided with Samsung and determined that the computing of damages should begin on the date of the verdict rather than the June 30 date that evidence submitted at trial specifically covered.
(2) Sided with Samsung that the appropriate way to calculate supplemental damages relating to post-verdict sales is to take the jury damages award per device, divide each amount by the number of units those devices sold prior to the verdict to reach a per-unit damages amount. Then calculate the number of units of each particular device sold post-verdict and multiply it by the per-unit damages amount. Apple had argued for a broader calculation that didn’t differentiate between devices.
(3) Concluded that supplemental damages are appropriate in this case, and that the court will look at post-verdict sales figures after the appeals process.
With regard to pre-judgment interest on the amount owed by Samsung, Judge Koh also decided that the 52-week Treasury bill rate, as argued by Samsung, should be used in calculating prejudgment interest, rather than the higher prime rate as advocated by Apple.
Finally, in evaluating the jury damages award, Judge Koh determined it was appropriate to evaluate the jury award, and while Judge Koh upheld much of the jury’s award, she found the following issues that warranted vacating parts of the award:
(1) The jury improperly calculated damages relating to the Galaxy Prevail, which only infringed utility patents, based on lost profits. The Court vacated $58 million from the damages award and ordered a new trial on damages.
(2) The jury incorrectly awarded Samsung’s profits for infringement of utility patents in eight devices - Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, and Epic 4G – while the correct remedy for infringement of utility patents is either a reasonable royalty or Apple’s lost profits. The Court was unable to determine the proper amount of damages with regard to these eight devices from the jury award, and accordingly vacated $383 million from the award and ordered a retrial on damages.
(3) The jury used a notice date that was too early in calculating damages with regard to five devices - Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform – and Judge Koh vacated $9 million from the damages award and ordered a new trial on damages.
All in all, Judge Koh vacated $450.5 million in damages relating to 14 devices - Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform. The damages awarded in the new trial could be higher, the same, or lower.
I think it was a pretty good day for Samsung’s lawyers, as they got half the jury verdict vacated (though an even higher damages award could be returned by the jury in the re-trial), Judge Koh sided with them on the interest rate issue, and they delayed the calculation of supplemental damages (based on my experience, any delay is good for a defendant). Still, Samsung took a big hit in this trial and is on the hook for at least $599 million pending appeal, though I doubt it will hurt their bottom line in light of how dominant they have became in the smartphone market. And another thing to keep in mind is that this case is just one of many being litigated worldwide between these parties.