Bernstein Shur Business and Commercial Litigation Newsletter #34

November 2013 | Issue 34

By Paul McDonald and Dan Murphy

 We are pleased to present the 34^th edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight news that will have an impact on business and litigation, including articles and links addressed to notable jury awards in intellectual property cases and the introduction of optional appeal rights under the American Arbitration Association rules. We hope you enjoy the newsletter.

 In the News:

A federal jury in California has ordered Samsung Electronics to pay Apple, Inc. $290 million in damages based on infringement of 13 patents for smartphone technology. The award comes following remand to the trial court for a new determination of damages by the jury regarding the 13 patents. A jury award against Samsung on other patents remained unaffected, bringing the total aggregate award to $930 million. At issue in the trial was Samsung’s alleged misappropriation of Apple’s smartphone technology, including “pinch to zoom” features and on-screen navigation technology. Samsung, which has overtaken Apple as the largest smartphone manufacturer in the world, is also a major supplier of components to Apple. Although Samsung has indicated it will appeal the decision, it would have no difficulty satisfying the award. In the third quarter of 2013, Samsung earned $9.5 billion and also is sitting on a cash reserve of $39 billion. Read more about the case here and here. Separately, Apple successfully defended a patent infringement action commenced by an inventor who claimed that it infringed his patent for a handheld device that combines computer and communication functions over Wi-Fi and cellular networks. Although the jury was sympathetic to the inventor plaintiff, it could not reach a verdict that was unanimous, which is required under the federal rules of civil procedure. Read more about the case here.

A jury has awarded $1.2 million in damages to a freelance photographer who alleged that two media outlets willfully infringed the Copyright Act when they republished images obtained from his Twitter account.  In the case, photographer Daniel Morel posted photos of the Haitian earthquake on his Twitter account. An editor at Agence France-Presse accessed the photos through Twitter and then circulated them through Getty Images, resulting in wide dissemination through news outlets. Agence France-Presse originally sued Morel seeking a declaration that it did not infringe Morel’s copyright interests. However, a federal jury rejected these arguments, instead awarding statutory damages to Morel on his copyright counterclaims. Under the Copyright Act, statutory damages for “willful” infringement can reach up to $150,000 per violation. Read more about this development here.

The American Arbitration Association has introduced optional appellate rules, which provide for a right of review by an appellate panel for parties that agree to such review by contract or stipulation. Arbitration has been long viewed as a cost-effective alternative to court proceedings. Generally, discovery is limited in an arbitration proceeding and arbitration awards generally are subject to challenge only on very limited grounds, such as fraud or complete irrationality. In recent years, high stakes disputes have been resolved through binding arbitration, prompting concerns about limited ability to review arbitration awards. Under the new rules, parties that agree to provide for a right of appeal will be permitted to challenge awards based on material errors of law and clearly erroneous findings of fact. Appeal panels appointed by the AAA will be made up of three members, which can adopt or substitute an underlying award, or alternatively, request additional information. The new rules do not contemplate a new arbitration proceeding or hearing. Read more about this development here and access the new rules here.