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Speaker 1: Samsung has won the latest legal battle in its patent

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Speaker 1: war with Apple over copying the design of the iPhone,

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Speaker 1: with a unanimous decision from the Supreme Court, but the

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Speaker 1: decision does not end the battle that dates back five

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Speaker 1: years and span the globe. The Court ruled that Samsung

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Speaker 1: may not have to pay all the profits had earned

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Speaker 1: from phone models because the features had copied from the iPhone.

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Speaker 1: The patented flat screen, the rounded rectangular shape, and the

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Speaker 1: layout of the icons were only a part of Samsung's smartphones.

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Speaker 1: The Supreme Court upended the Federal Circuits interpretation of the

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Speaker 1: phrase article of manufacture. However, it did not lay out

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Speaker 1: a test for how damages should be calculated, leaving that

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Speaker 1: to the Federal Circuit, which had sent the case back

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Speaker 1: to At stake is the three million dollars Apple one

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Speaker 1: for Samsung's infringement. Our guests today are Matt Larson, Bloomberg

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Speaker 1: litigation analyst, and Michael Rish, professor at Villanova University Law School.

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Speaker 1: Michael explain how the Court came to its vision despite

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Speaker 1: the traditional interpretation of the language of the statute. Sure,

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Speaker 1: the Court did a relatively straightforward statutory interpretation. It's said,

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Speaker 1: on the one hand, you can get a design patent

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Speaker 1: for an article of manufacture. And we have long recognized

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Speaker 1: for at least fifty years or more, that an article

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Speaker 1: of manufactured to get a design patent can be something

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Speaker 1: less than a whole product. Uh. And I can give

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Speaker 1: an example that in a little bit, if you'd like. Uh. So,

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Speaker 1: if we're going to be consistent, then an article of

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Speaker 1: manufacturer when we're talking about damages must have the same meaning.

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Speaker 1: And if it has the same meaning, that means that

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Speaker 1: article manufacture can be less than the entire product. Uh.

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Speaker 1: It's as simple as that. It's a relatively short opinion. Well, Matt,

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Speaker 1: it is a relatively short opinion, but it does seem

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Speaker 1: to raises my questions as it answers it did the

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Speaker 1: court now say that the that the pieces of that

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Speaker 1: were infringed, the parts of the phone that we're infringed

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Speaker 1: are separate from other parts, or what does the Federal

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Speaker 1: circuit have to look at here? You know that that's

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Speaker 1: a great question. The Federal Circuits certainly has a lot

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Speaker 1: to work with. The court didn't say a whole lot,

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Speaker 1: which you know, frankly sometimes in patent cases is for

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Speaker 1: the better. Um. You know this case is an area

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Speaker 1: design patents generally differ very much between you know, when

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Speaker 1: you look at something like jewelry, where where a design

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Speaker 1: patent might cover an entire article, as opposed to a

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Speaker 1: to a smartphone, where the design patent may just be

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Speaker 1: on the shape of the screen or a button or

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Speaker 1: something like that. It can be difficult to to bring

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Speaker 1: both of those together. So, you know, assuming that the

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Speaker 1: parties don't settle before additional litigation, I think the federal

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Speaker 1: circuit is going to have to parse through how do

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Speaker 1: you identify what the article of manufacturer is? Design patents

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Speaker 1: don't include a whole lot of written description. It's most

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Speaker 1: just a just a picture that you look at um

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Speaker 1: and it says you know a design according to to

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Speaker 1: what's depicted. And so, assuming the case moves forward, there's

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Speaker 1: gonna be a lot of room for parties to argue.

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Speaker 1: How do you go go through and determine what that

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Speaker 1: what that component is, what the separate article is as

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Speaker 1: opposed to the whole device, you know, as an article

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Speaker 1: of manufacturer, something that's that's put together separately and then

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Speaker 1: all piece together. Is it what you can see based

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Speaker 1: on the based on the picture. There are a lot

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Speaker 1: of inquiries that that can be raised on this next

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Speaker 1: time around. Now the Supreme Court once again is reversing Michael,

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Speaker 1: the decision of the Federal Circuit, which specializes in patent law.

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Speaker 1: Shouldn't there be a certain amount of deference to the

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Speaker 1: experts on the Federal Circuit instead of turning things upside down?

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Speaker 1: Once again? There should be, But this is you know,

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Speaker 1: this was a difficult case. The Federal Circuit was basically

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Speaker 1: relying on law and applying the statute as it's been

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Speaker 1: applied for a long time. Uh. Now, maybe that it's

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Speaker 1: been applied the wrong way, but nobody ever asked the

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Speaker 1: Supreme Court before. So on the one hand, you you

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Speaker 1: should have deference to the Federal Circuit on how the

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Speaker 1: patent law should apply the intricacies of how patent law

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Speaker 1: cases work. On the other hand, one benefit of the

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Speaker 1: Supreme Court is that it is a generalist court, and

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Speaker 1: so it uses generalist statutory principles. And so we've seen

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Speaker 1: that a lot of these reversals over the years have

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Speaker 1: really been about a battle between rules and standards. Do

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Speaker 1: we have bright line rules? Do we have generalized standards? Uh?

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Speaker 1: In time and again, the Supreme Court has said, Look,

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Speaker 1: we'll defer to the Federal Circuit generally, but we're not

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Speaker 1: going to have bright line rules when the law actually

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Speaker 1: has a more ambiguous I shouldn't say ambiguous, vague is

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Speaker 1: probably a better word standard that should apply here, uh,

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Speaker 1: in our generalized statutory interpretation. Well, you know, it doesn't

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Speaker 1: feel that like the Supreme Court has had a lot

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Speaker 1: of difference for the Federal Circuit over the last few years.

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Speaker 1: In fact, that they keep reversing them and sometimes in

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Speaker 1: opinions that feel pretty caustic, and the way they talk

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Speaker 1: about the Federal circuits rulings, Well, why is there some

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Speaker 1: general problem that they're having with the Federal Circuit that

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Speaker 1: causes them to keep changing the way the patent laws

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Speaker 1: is being interpreted? You know, I think that's the question

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Speaker 1: that that a lot of practitioners ask on a daily basis.

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Speaker 1: And not only is it um, you know, questions to

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Speaker 1: how much deference the Supreme Court lots of the Federal Circuit,

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Speaker 1: but then um, when issues come back to the Federal Circuit,

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Speaker 1: how much are they uh kind of going along with

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Speaker 1: the spirit of what the Supreme Court has set forth

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Speaker 1: versus um you know, maybe just minorly adjusting their their

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Speaker 1: prior precedent at the federal circuit level. So you know,

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Speaker 1: there's patent law. There's constantly this back and forth between

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Speaker 1: the between the Federal Circuit and Supreme Court UM, and

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Speaker 1: you know, on on issues like this you sometimes get

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Speaker 1: highly technical UH standards or inquiries at the Federal Circuit

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Speaker 1: sets forth. They they deal with patent practitioners day in

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Speaker 1: and day out, and so, you know, I agree with

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Speaker 1: the comments that it's actually good to have a generalist

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Speaker 1: court take a look at something, say on a you know,

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Speaker 1: if we if we take a step back, does this

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Speaker 1: make sense, UM, in the current case when you look

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Speaker 1: at how you're valuing a design patent? You know, should

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Speaker 1: should somebody be awarded full patents on a multi component

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Speaker 1: complex device like a phone where only the screen infringes

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Speaker 1: infringes a design patents that starts to UH, starts to

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Speaker 1: distort the economic reality of how much the components are valued,

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Speaker 1: and UM kind of what damages maybe should be at

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Speaker 1: stake from you know, kind of an analyst perspective when

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Speaker 1: when you're moving into these cases, and so you know,

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Speaker 1: the difference certainly doesn't help out patent lawyers a whole lot,

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Speaker 1: but it's it can sometimes clarify issues from an economic perspective.

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Speaker 1: We're talking about a Supreme Court decision considering design patent

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Speaker 1: something that hasn't done in more than a century and

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Speaker 1: giving Sam Sung something of a reprieve in the Apple

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Speaker 1: patent case over the iPhone. Our guests are Michael Risch,

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Speaker 1: professor at Villanova University Law School, and Matt Larson, Bloomberg

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Speaker 1: Litigation and List. Matt, let's talk about exactly what's going

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Speaker 1: to happen now that the Supreme Court has made this

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Speaker 1: ruling but sent this back to the Federal Circuit. Yes,

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Speaker 1: so the Federal Circuit made its ruling and remanded for

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Speaker 1: for further determinations. The Supreme Court's decision was pretty limited

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Speaker 1: and just establishing that part of a device could be

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Speaker 1: an article of manufacturing, not just the entire thing, for

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Speaker 1: the purpose of figuring out what profits are UM. Realistically,

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Speaker 1: the big question in my mind is do Apple and

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Speaker 1: Samsung actually continue to live ate this. Do they take

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Speaker 1: it back down to the Federal Circuit and advocate um

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Speaker 1: some kind of bright line test or or rule or

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Speaker 1: a series of hurdles that you have to uh to

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Speaker 1: hop over before you can classify something as an article

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Speaker 1: of manufacturer for the purpose of litigation. Uh. My view

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Speaker 1: is that it's going to settle before it actually gets

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Speaker 1: down to the Federal Circuit. The reason being the money

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Speaker 1: at stake. Uh. You know, initially it was million. It'll

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Speaker 1: get chopped down and light of the Supreme Court argument

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Speaker 1: or the Supreme Court decision, isn't a whole lot of

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Speaker 1: money for either party. So realistically, I think that they

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Speaker 1: have legal precedent that they both can be happy with. UM.

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Speaker 1: So maybe you cut your losses and settle. But you know,

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Speaker 1: one of the things that the Federal Circuit, if it

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Speaker 1: gets the case, is going to look at is how

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Speaker 1: do we really parse through this and actually define what

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Speaker 1: the what the articles at issue you are? Um, that's

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Speaker 1: that's in a way that's kind of in the same

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Speaker 1: spirit as the Supreme Court decision. Well, Michael, that that

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Speaker 1: is the question. What you know, because the Federal Circuit

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Speaker 1: could conceivably say that the device is so integrated you

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Speaker 1: can't separate the separate out the design components, or it

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Speaker 1: could say that you have to value each one and

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Speaker 1: in this case you should do it separately, or probably

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Speaker 1: some other things how do you think that the Federal

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Speaker 1: Circuit is likely to look at this case in light

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Speaker 1: of what the Supreme Court has said? Uh yeah, I

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Speaker 1: think that's I think those points are right, and I'd

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Speaker 1: add that it's a little more complex than that when

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Speaker 1: you say value it out, because remember, it's all the

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Speaker 1: profits associated with the article of manufacture. So even if

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Speaker 1: you identify the article of manufacture, you actually have to

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Speaker 1: identify what profits came from it, and so there's going

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Speaker 1: to be a dispute about whether or not the profits

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Speaker 1: came from the design patent or came from something else,

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Speaker 1: and how you allocate that. So I think it's difficult,

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Speaker 1: but I also think there's precedent for some of this.

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Speaker 1: There's precedent in how we determine whether an article of

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Speaker 1: manufacture has been in fringed. So we look at you know,

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Speaker 1: we look at the design patent in which parts are patented,

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Speaker 1: and so when we look at what the article of

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Speaker 1: manufacturers it's infringing. We can look at the parts of

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Speaker 1: the infringing device and compare it to the design patent

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Speaker 1: generally and get a sense. So for example, in this case,

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Speaker 1: it's the rounded edges and the rectangular shape so we

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Speaker 1: look and we can identify the rounded edges and the

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Speaker 1: rectangular shape. UH. We also have UH at least some precedent,

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Speaker 1: although there's lots of dispute in every case about how

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Speaker 1: we apportion UH profits to the value of patent and inventions.

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Speaker 1: Some expert reports on this are better than others, but

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Speaker 1: they have surveys about the reasons why people bought products,

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Speaker 1: surveys about functionality, surveys about UH the importance of design

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Speaker 1: in the purchase. And so I think what we're gonna

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Speaker 1: see is the Federal Circuit coming up with a general

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Speaker 1: framework whereby economic experts are going to testify about where

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Speaker 1: the value is coming from so they can be up

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Speaker 1: to profits. So this case has yet to be settled,

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Speaker 1: and if it goes wrong, will it again go up

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Speaker 1: to the Supreme Court? Questions to think about. Thank you

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Speaker 1: both for being on Bloomberg Law. We appreciate your input

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Speaker 1: in this. And that is Matt Larson. He's a Bloomberg

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Speaker 1: litigation analyst. And if you want more on Matt's litigation analysts,

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Speaker 1: you can go to b I go on the Bloomberg terminal.

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Speaker 1: And thank you to Michael Risch, professor at Villanova University

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Speaker 1: Law School who specializes in patent law. Coming up on

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Speaker 1: Bloomberg Law, We're going to be turning to the election

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Speaker 1: recounts and also the the electoral delegates who are saying

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Speaker 1: that they don't want to vote for Donald Trump, and

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Speaker 1: some are going to court to say that and to

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Speaker 1: establish that will these attempts stop Ump, to stop Trump

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Speaker 1: have any effect on the coming inauguration that's coming up

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Speaker 1: on Bloomberg Law straight ahead. I'm June Brosslo with Michael Best.

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