Illogical: Judge Refuses Lost Profits in Apple, Samsung Damages Retrial

| Analysis

Judge Lucy Koh told Apple that it can't go after lost profits as part of the damages related to four of the five patents in its damages retrial against Samsung based on an assumption as to when the company might have started working around the iPhone and iPad maker's patents. That's good news for Samsung and a perplexing position for Apple because the ruling doesn't seem to follow any sort of logic.

Judge Koh's ruling on Apple's profit loss: IllogicalJudge Koh's ruling on Apple's profit loss: Illogical

The presumption in this case is that Samsung, at least hypothetically, would have started working around Apple's patents when the infringement actually started instead of when it was notified. Assuming that's what Samsung did, the four patents in question would fall outside the time frame Apple's complaint covers.

While the idea that Samsung would design a feature for their smartphones, then later realize it infringes on Apple patented technology, and then immediately take action to work around the issue to avoid infringement sounds nice, that doesn't seem to fit Samsung's pattern. Instead, Samsung  has shown that it will find ways to sidestep Apple's patents only after the features in question become part of an infringement case.

Florian Mueller of FOSS Patents called the logic "absurd," and offered up an example to demonstrate how it fails, saying,

Which driver would accelerate way beyond a speed limit and then hit the brakes with full force for no reason? But if a driver is speeding and suddenly sees the flashing red light of a traffic enforcement camera, then the instinctive reaction is to hit the brakes, though it's too late anyway if your car triggered it.

The ruling doesn't preclude Apple from seeking damages for the patents, but it does limit the scope those damages can cover. The company can continue to seek damages for lost profits on the fifth patent, too.

Judge Koh's ruling came at the end of last week after Apple senior vice president Phil Schiller took the stand to say that Samsung's ongoing infringement is harming his company.

"At the end of the day, there's a cumulative effect of doing all of this that's incredibly damaging," he said. "As this [infringement] has been occurring, it's harder for us to get new customers and bring them into our ecosystem."

The two companies are facing off in court to determine what damages Apple is owed for several products that were included in its big patent infringement win against Samsung last year. Apple was awarded over $1 billion in damages, but part of that was set aside because the Jury improperly calculated the amount Samsung owed.

The current retrial is looking at those specific devices and a new Jury will determine what Samsung must pay in damages for that part. The remaining portion from the original $1 billion award still stands. Whether or not Samsung infringed on Apple's patents is not in question.

The court's ruling on lost profits could prove to be a sticking point, especially if there is an appeal later on. The court is using a hypothetical scenario to determine when Samsung chose to work around Apple's patents, where Apple claims that time frame is a matter of fact. In essence, Judge Koh is ruling based on what Samsung could have potentially done, independently of what they actually did, to avoid infringement.

"Why would Samsung have started to work on designarounds when actually shipping infringing products? Why not start right after releasing the infringing program code to manufacturing?" Mr. Mueller said. "To me, this is more arbitrary than it is logical."

Judge Koh, however, doesn't see her ruling as arbitrary. Considering the likelihood of an appeal in this case is high, we'll very likely get to see if the Appellate Court agrees with her logic.

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3 Comments

Bosco (Brad Hutchings)

This is precisely the problem with Mueller as a source. He has a terrible track record of predicting what the judges will do, what will be appealed, what will be sent back to lower courts as a result of appeal, etc. See the whole Oracle v. Google fiasco, where he was wrong about exactly everything on which he opined. So what he is saying here is that the judge’s opinion is incorrect and would be overturned on appeal.

That assumes that either party would appeal. Because one side appealing on various technical points opens things up for the other side to appeal on various technical points as well. The appellate court, seeing this, is not going to rule on the various technical points, just as Judge Koh is not moving this along on various technical points. I hear you all asking “WTF Brad?”.

As we should have learned from Judge Alsup in Oracle v. Google, the courts are not here to rubberstamp maximally claimed IP rights of mega-corporation plaintiffs. What the judges in US courts are trying to do is find a way to get the parties to sit down and come to a private resolution. The problem these judges face is that the costs of litigation and even judgements to both parties are rounding error at best. Meanwhile, the benefits of just litigating, win or lose, are pretty high. Apple gets to say it’s fighting for innovation. Samsung gets to say it’s fighting for choice.

Back to Mueller… He gets to say he’s an expert, even though he is worse than a fair coin predicting these outcomes. He gets to sell his expertise, to clients who pay for his distilled “wisdom” and to client like Oracle who pay him to affect what the content of that wisdom is.

Punchline… And because Apple fans naturally want to agree with what Mueller is saying his wisdom is, they eat it up. Even when in this case, where he questions the logic of a sitting judge, he’s way out of bounds.

ibuck

Analogy?
Defendant could have just walked out of the house and not committed the murder, or could have just struck the victim with a fist, so the murder charge is dismissed. We’ll proceed with assault.

Paul Goodwin

Does anyone really believe Samsung modified their infringing design as soon as they themselves realized they were infringing? No way. They still don’t believe they did anything wrong. They won’t change their behavior until every bit of profit from their infringing design is awarded to Apple.

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