Scott Graham, From The Recorder

Samsung won a partial reversal Monday of Apple’s smartphone “trial of the century” verdict, putting $382 million of the $930 million award potentially back in play.

The U.S. Court of Appeals for the Federal Circuit threw out findings that Samsung diluted the trade dress of Apple’s distinctive iPhones and iPads. Chief Judge Sharon Prost wrote for a unanimous panel that the rounded corners, colorful icons and clear touch screen are not only stylish, they also make the phone work better and easier to manufacture, rendering those features ineligible for trade dress protection under Ninth Circuit case law.

“The evidence showed that the iPhone’s design pursued more than just beauty,” Prost wrote in Apple v. Samsung.

But it was unclear how much good the ruling will do Samsung as a practical matter. The court affirmed the remainder of the verdict in all respects, including damages for design and utility patent infringement, and ordered judgment entered immediately on all of the products that weren’t the subject of trade dress claims.

Those six remaining products have already been found to infringe Apple’s design patents, so on remand Apple will get a new opportunity to argue for patent infringement damages on those devices.

“Apple may well be correct that the jury would have awarded the same damages for those products absent trade dress infringement,” Santa Clara University law professor Brian Love said in an email. “But we cannot say that for sure” without a retrial.

The Federal Circuit also turned back Samsung’s argument—backed by a group of law professors, including Love—that the law of design damages is outdated and that awards of infringer’s profits ought to be apportioned when it comes to complex, multi-component tech products. “Those are policy arguments that should be directed to Congress,” wrote Prost, who was joined by Judges Kathleen O’Malley and Raymond Chen. “We are bound by what the statute says, irrespective of policy arguments that may be made against it.”

The appellate court also affirmed a discovery sanction imposed in the case by U.S. District Judge Lucy Koh. The judge had excluded evidence that Samsung was working on its own smartphone before the iPhone was unveiled, saying Samsung and its Quinn Emanuel Urquhart & Sullivan counsel waited too long to disclose it.

Apple and Samsung last year settled all of their litigation outside of the smartphone cases in Koh’s courtroom. With “the vast majority of damages” now set in stone, Love said he could imagine the parties settling rather than going yet another round before Koh. But he said they also may prefer to await a Federal Circuit decision in a second case that was tried before Koh in 2014.

University of Denver law professor Bernard Chao said the parties are probably experiencing “litigation fatigue” at this point, and have more information now about how juries value their claims. “When you have better information and fatigue, you have a higher likelihood of settlement,” he said.

Quinn Emanuel partner Kathleen Sullivan and Wilmer Cutler Pickering Hale and Dorr partner William Lee argued the case to the Federal Circuit in December. Over an hour and a quarter the judges signaled some doubts about the trade dress findings. Apple argued that the phones were designed to be beautiful, but Prost reasoned Monday that the rounded corners helped the devices fit in pockets and protected them when dropped, and the colorful icons helped users locate applications.

“Apple focuses on the ‘beauty’ of its design, even though Apple pursued both ‘beauty’ and functionality in the design of the iPhone,” Prost wrote.

Remand is necessary because the verdict form awarded damages by product, instead of allocating it further by damages theory, said Chao, who has critiqued the practice.Chao said Supreme Court review is unlikely, with the slight exception of the design damages apportionment issue. Congress has specified that a design infringer must disgorge all of its profits, without allocating for the infringing portion. But the law was written decades ago for simple products like rugs, and Samsung, plus academics including Chao, Love and Stanford law professor Mark Lemley, argue that it makes no sense when applied to a product like a smartphone where design is just one of hundreds of valuable features. “Often this rule leads to gross overcompensation of design patent holders, and arguably that is the case here,” Love said Monday.

Love said he found it somewhat odd, from a policy perspective, that the court would throw out Apple’s trade dress claims while affirming its design patent rights, since both are supposed to cover only ornamental features. “Logically, if not legally, it seems like these determinations should stand or fall together,” he said. The outcome derives in part from the fact that the Federal Circuit applies its own case law to design patent issues, but regional circuit law to trade dress issues. “Here, that means the court had to apply Ninth Circuit trade dress law, which the court stresses has a very low bar for ‘functionality.'”

IMAGE: Chief Judge Sharon Prost, U.S. Court of Appeals for the Federal Circuit

Diego M. Radzinschi / The National Law Journal

For more on this story go to: http://www.therecorder.com/id=1202726831333/Samsung-Scores-Partial-Reversal-of-Smartphone-Verdict#ixzz3aax88TKr