Despite agreeing with Apple that a court is required “to give great deference to jury awards, and to uphold them where they are supportable by evidence in the record” Judge Koh found that the jury relied on an impermissible legal theory in coming to its damages calculation over $1 billion. As a result Judge Koh reduced Samsung’s damage award by $450,514,650, and ordered a new trial to determine the proper damage award for the remaining products.
There are two components of Judge Koh’s decision to vacate portions of the damages award. First, the jury impermissibly calculated damages by looking only at Samsung’s profits, and granted a flat percentage of 40% of that profit as an award to Apple, and sometimes awarding exactly half of the reasonable royalty proposed by Apple’s expert. As the court points out, Apple did not deny that the reverse-engineering of the awards led to this conclusion. In some instances the court was able to figure out proper damages despite this error. However, the jury’s second error complicated the matter for other products.
Second, Judge Koh determined that the jury used an improper notice date with respect to the infringed patents. The notice date is critical for calculating damages, especially in a scenario such as this in which the plaintiff is seeking damages based on the infringing party’s profits. As Judge Koh explains “[u]nder 35 U.S.C. § 287(a), there can be no damages award where a defendant did not have actual or constructive notice of the patent or registered trade dress at issue. Thus, it is improper to award damages for sales made before the defendant had notice of the patent, and an award that includes damages for sales made before notice of any of the intellectual property (‘IP’) infringed is excessive as a matter of law.”
For some products, the court was able to figure out the proper calculation of damages, and the court did not reduce or throw out those awards. However, for other products, the combination of the wrong date and the impermissible damages theory makes it impossible for the court to determine an award. This is because the jury calculated damages based on profits for a period of time before Samsung had notice of the patent in question. As Judge Koh explains:
[T]he jury awarded an impermissible form of damages for some period of time, because Samsung had notice only of utilityAn invention must useful to be patentable. Very few inventions are invalidated as lacking utility. Perpetual motion machines, for example, are typically found invalid for lacking utility. patents for some period, but an award of infringer’s profits was made covering the entire period from August 4, 2010 to June 15, 2012. For these products, the Court cannot remedy the problem by simply subtracting extra sales.
The final result is that $450,514,650 of Apple’s damages has been stricken, leaving $598,908,892 and an order for a new trial.