AAPL Apple Inc

WASHINGTON—Apple Inc. and Samsung Electronics Co. will battle at the Supreme Court on Tuesday over $399 million—and a legal issue that dates back more than a century before smartphones were invented.

The justices are considering how much Samsung owes Apple after jurors in 2012 found the South Korean electronics giant infringed patents on the iPhone's design.

Apple's design patents were a key part of its case against Samsung, which was ordered to pay about $930 million in damages. The high court, which will hear an hour of oral argument, is giving Samsung the opportunity to challenge a $399 million portion of that award. That sum amounted to the company's total profits on 11 smartphone models that jurors found to infringe Apple's design.

The Supreme Court took the case to decide whether a company can be required to pay all of its profits on products that infringe someone else's patented design, or whether infringement damages should be limited only to the portion of profits specifically attributable to the device's design.

Samsung argues an all-profits rule is unfair when applied to complex, multicomponent products like smartphones. It says consumers bought its phones for other features that had nothing to do with a particular part of the phone's design.

The company in court papers argues that requiring it to forfeit all profits could lead to absurd outcomes in other design-patent cases such as "the award of the entire profits on a car for infringement of a patented cup-holder design."

Apple says Samsung is attempting to upend longstanding legal rules. The company says it spent billions of dollars developing the iPhone, whose success "was directly tied to its innovative design including its distinctive front face and colorful graphical touch screen user interface."

The iPhone maker argues that collecting total profits from an infringing competitor often makes sense because the design of a product can be the central selling feature. It says that Samsung's warnings of absurd results are far-fetched. "A jury would never confuse a car with a cupholder design," it said in a court brief.

The Supreme Court has regularly intervened in patent cases in recent years, but those cases involved so-called utility patents, which are the more common type of patent that covers how an invention works as opposed to its ornamental look.

The high court hasn't taken up the issue of design-patent damages since the 1880s, when in a series of cases involving carpet designs it awarded only nominal damages for patent infringement. Congress responded by making changes to federal patent law that rejected the Supreme Court's decision and allowed the collection of total profits for design-patent infringement.

The Obama administration is participating in Tuesday's argument and filed a friend-of-the-court brief in the case that takes a middle-ground position. The administration agrees with parts of Apple's arguments but says the total-profits rule has the potential to overcompensate patent holders in some circumstances.

When multicomponent products are involved, there are times when a patent holder may only be entitled to the total profits of the component that infringes a design patent, as opposed to the profits on the finished product, the administration argues.

The Supreme Court's decision is expected by June 2017.

For all the money involved, the case is likely to have little impact on smartphone consumers. Despite court losses to Apple, Samsung has been able to continue selling phones and has moved on to newer models.

The most intense period of the wave of smartphone patent wars already has ended. Apple and Samsung have resolved their patent disputes outside the U.S., and the domestic cases are nearing the finish line.

In a separate case last week, Apple won an appeals court ruling that reinstated a $120 million patent infringement verdict against Samsung over a different set of patents covering multiple phone functions.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

October 11, 2016 05:55 ET (09:55 GMT)

Apple (NASDAQ:AAPL)
Historical Stock Chart
From Mar 2024 to Apr 2024

Apple (NASDAQ:AAPL)
Historical Stock Chart
From Apr 2023 to Apr 2024