Samsung wins Supreme Court fight with Apple

The Supreme Court ruled Tuesday that Samsung's violation of Apple's smartphone design patents may involve only a component, rather than the entire product — a decision that means Samsung might not have to pay penalties reaching into the hundreds of millions of dollars.

The unanimous decision from Justice Sonia Sotomayor was a much-needed victory for Samsung, beset with problems ranging from smartphones that burst into flames to washers with exploding tops. It initially faced nearly $1 billion in penalties, later reduced to $548 million, for imitating elements of the iPhone's design. Nearly $400 million is at stake in the current dispute.

The justices reasoned that the patent infringement could affect just a component of the phones, such as their appearance, rather than all their capabilities. During oral argument in October, Chief Justice John Roberts had noted Samsung did not infringe on "all the chips and wires."

"The term 'article of manufacture' is broad enough to embrace both a product sold to a consumer and a component of that product whether sold separately or not," Sotomayor wrote.

The legal battle between the two technology giants represented the first design patent case to reach the high court in more than a century. A jury in 2012 had ruled that because Samsung infringed on three of Apple's iPhone design patents, it must fork over the entire profits from the phones in question.

Samsung's attorney, Kathleen Sullivan, had told the justices the award was improper. "A smartphone is smart because it contains hundreds of thousands of the technologies that make it work," she said.

Now the case will return to the U.S. Court of Appeals for the Federal Circuit to determine what portion of its profits Samsung must pay — a process several justices predicted will be difficult. While some product designs may be relatively insignificant, others — such as a Volkswagen Beetle, some justices noted — are iconic.

"We decline to lay out a test for the first step of the damages inquiry in the absence of adequate briefing by the parties," Sotomayor said. "The Federal Circuit may address any remaining issues on remand."

The five-year-old battle between the world's two most successful smartphone makers had threatened to upend the tech industry. It was watched closely by companies with a stake in the outcome — from Facebook, Google, Dell and Lenovo on Samsung's side, to more than 100 designers from companies such as Nike and Calvin Klein in Apple's corner.

The decision, in essence, reshapes a more-than-century-old law on design patents, says Case Collard, a partner at the international law firm Dorsey & Whitney who focuses on intellectual property.

“No longer can a patent holder get all of the profits from the sales of a product infringing a design patent,” Collard says. “Instead, they may recover the profits attributable to the infringing feature.”