Friday, August 31, 2012

Apple's award against Samsung too high?

Law professor Brian J. Love of Santa Clara University, writing in the Los Angeles Timesseems to think so:
The award, the third largest in the history of U.S. patent litigation, will likely cruise into first place next month when U.S. District Court Judge Lucy Koh decides what additional amount Apple should receive from Samsung based on the jury's finding that much of the infringement was "willful."

But even without that enhancement, which could add another $2 billion to Samsung's tab, the jury's $1 billion-plus verdict breaks down to just under $48 for each of the roughly 22 million infringing phones sold by Samsung. To the jury, 50 bucks per phone must have sounded like a reasonable figure, and it may well to you too.

But it's not — it's way too high — and here's why: The average smartphone may arguably infringe as many as 250,000 patents, not to mention myriad copyrights and other design-related intellectual property. (Companies don't sift through every patent coming out of Washington before engineering and releasing a product; they create devices and battle claims as necessary.)

If you were to divide the average retail price of a smartphone — about $400 — by those 250,000 potentially applicable patents, you'd find that each one would account for just $0.0016 of the phone's value. And, in reality, even that's too much, once you factor in the costs of raw materials, labor, transportation and marketing, which also contribute to a phone's value.

Yet for infringing just a handful of Apple's patents, Samsung faces a minimum payment of $48 per phone, a shocking 30,000 times the average per patent value. Put another way, if the owners of all the 250,000 inventions that might be present in Samsung smartphones were awarded damages at the same level as Apple, Samsung would have to charge a ludicrous $2 million per phone just to break even.

But wait, you say, the San Jose jury no doubt included some level of punishment in its award, in order to "send a message." But, by law, patent damages are meant to compensate not punish, as the jury was expressly instructed.
I'm no lawyer (though I've played one on TV) but that seems like sound logic. I don't know if it holds any weight in a courtroom, though.


1 comment:

  1. Apple Jury Foreman: Here's How We Reached a Verdict


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