Illustration from Apple’s ‘087 patent.
Proceedings began with Samsung’s expert witness, accountant Michael J. Wagner, who was questioned about the Korean tech giant’s accounting practices, according to in-court tweets from CNET correspondent Stephen Shankland.
Specifically, Apple counsel Bill Lee in his cross examination asked Wagner if Samsung balances its sheets by tallying profits from front glass displays, bezels and other smartphone components. Wagner said “no” to each. With his line of questioning, Lee looked to prove Samsung also believes, through its accounting practices at least, that an article of manufacture is a whole phone, not its individual parts.
Samsung made $3.3 billion on the sale of 8.6 million smartphones found to have infringed Apple’s design patents, Wagner said. That sum, however, takes the whole device into consideration, not specific components covered found to have infringed on Apple’s IP.
It is this disagreement, over the legal term “article of manufacture,” that is central to Apple’s case.
In the U.S., damages in patent lawsuits are meted out based on profits from, or other financial gains made by, an article of manufacture. Prior to Apple v. Samsung, calculations were applied to whole device sales, but Samsung in a Supreme Court petition successfully argued a more modern reading of the term is needed in an age when consumer electronic devices contain hundreds or thousands of smaller components, each made by different manufacturers.
The highest court in the land agreed that article of manufacture can be construed as components of a product, a decision that when applied to Apple v. Samsung greatly reduces Samsung’s onus. Instead of paying out damages based on entire phone sales, the Korean tech giant would be responsible for single components deemed to have infringed on Apple’s designs.
As per Judge Lucy Koh’s instructions, jurors will apply the following four rules to determine an article of manufacture:
1. The scope of the design claimed in Apple’s patent, including the drawing and written
2. The relative prominence of the design within the product as a whole;
3. Whether the design is conceptually distinct from the product as a whole; and
4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.
For its part, Samsung argues the article of manufacture, as derived from Apple’s three design patents, are a phone’s round-cornered, black glass front face, surrounding rim or bezel and display screen. Apple, on the other hand, contends the patents-in-suit adequately cover the entirety of Samsung’s found-infringed handsets.
Jurors will have a chance to go hands-on with prototype iPhone units to better determine the extent to which Samsung copied Apple’s designs, and whether article of manufacture in this case extends beyond individual components as Apple claims.
As noted by MLex reporter Mike Swift, another bone of contention is whether Samsung can deduct research and development expenses associated with the released phones from the final damages total. Apple argues no, while Samsung says yes.
In summing up its case, Apple lawyer Joe Mueller reiterated arguments made earlier in the week.
“The fact you can pull apart a phone means absolutely nothing,” Mueller said, according to Shankland’s account. “The question is what did they apply those designs to. It’s not a pane of glass. It’s not a display screen that doesn’t show a GUI. It’s the phone.”
Apple’s expert witnesses, including former Mac designer Susan Kare, said much the same on the stand just two days ago.
Apple marketing VP Greg Joswiak and VP of industrial design Richard Howarth returned to court for today’s closing arguments. In testimony delivered on Tuesday, Joswiak said Apple was “betting the company” on the success of iPhone, a point hammered home by Mueller on Friday.
“Mr. Howarth, sitting right there, was one of the two lead designers for the original iPhone,” Mueller said, according to Swift. “They were really risking everything they had. They were risking everything that made Apple successful at that time.”
Samsung lawyer John Quinn presented a different take on Apple’s IP during his closing.
“The Apple design patents do not cover anything on the inside of the phones. They don’t even cover the entire outside,” he said, according to Shankland. “Under the law, Apple is not entitled to profits of any article of manufacture to which the design was not applied.”
Lee was last to have a crack at the jury. In his closing argument, the Apple lawyer chided Samsung for revisiting issues decided by another jury in 2012. He also recited reactions the original iPhone design team had after seeing the infringing Samsung phones for the first time.
“Samsung wants you to believe [that] if Ford had decided to rip off the Volkswagen Beetle shape… the right article of manufacture would have been the exterior shell of the car,” Lee said, according to Shankland.
Jurors were given final instructions and brief period to deliberate on Friday, but were unable to reach a verdict. They will reconvene on Monday and work toward a final judgment.