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Why Facebook and Google are siding with Samsung in its Supreme Court battle with Apple
yahoo
The Supreme Court will hear a long-running corporate battle on Tuesday over how much Samsung should have to pay its rival Apple (AAPL) for copying the iPhone’s design.
The dispute has attracted over a dozen amicus curiae (“friend of the Court” briefs) arguing the case has wide-ranging implications. One of those briefs came from major tech companies—including Facebook (FB), Google (GOOG, GOOGL), Dell and Hewlett Packard (HPQ)—which asserted the dispute “presented a question of enormous practical importance” to them.
This is the first time the High Court has taken a look at design patents in well over 100 years, four years after a lower court jury found Samsung had copied part of the iPhone’s design and awarded Apple nearly $1 billion in damages that were later reduced.
That question is not whether Samsung copied parts of the iPhone’s design—including its rounded corners, a “bezel” or surrounding rim, a grid of 16 colorful icons and the phone’s “distinctive front face”—among other features, according to Apple’s description.
Rather than deciding the issue of infringement, the Supreme Court justices will decide whether Samsung owes Apple all the profits it made from its infringing phones—or just those profits attributable to the infringing features.
Samsung Electronics North America President & CEO Gregory Lee delivers opening remarks at the introduction of the Samsung Galaxy S5 smartphone at the Samsung Galaxy Studio, in New York, Monday, Feb. 24, 2014. (AP Photo/Richard Drew)
This decision will interpret a design-patent statute passed in 1842, long before the world even contemplated something like the iPhone or its alleged copycats. It was originally used to protect the designs of simple products like wallpaper, rugs and fireplace grates, the tech companies noted in their amicus brief.
But the world is a lot different now, with companies like Samsung making “complex, multicomponent technological products,” the brief noted. If certain elements of those products infringe design patents, then the maker should only have to pay damages attributable to the offending components, according to the amicus brief.
Those tech companies—and Samsung, for that matter—are asking the Supreme Court to overturn a decision last year by the US Court of Appeals for the Federal Circuit that ruled in Apple’s favor. That decision found Apple was entitled to “total profit from the article of manufacture bearing the patented design.”
If it’s allowed to stand, that decision could pave the way for frivolous lawsuits that could hamper tech companies and stymie innovation, the tech companies argue. From the brief:
As predicted by numerous commentators, the Federal Circuit’s decision has already prompted so-called “patent trolls” to threaten design-patent litigation against Samsung and its amici. Meanwhile, companies are applying for and obtaining record numbers of design patents, which are certain to be asserted at similarly growing rates. The ensuing litigation, and threats of litigation, will further undermine innovation and the research and development efforts of amici—a particularly troubling development in light of the spurious quality of many design patents
While a jury initially awarded Apple $930 million back in 2012, the award was later reduced to $548 million. If Samsung succeeds in the Supreme Court, it could stand to get back $399 million of that amount, which was attributed to profits it gained from selling the infringing phones.
Samsung suggests in a statement that this isn’t just about the money, noting, “Samsung took this case to the Supreme Court because we believe the way design patent law has been interpreted is not in line with modern times because it discourages competition, innovation and consumer choice.”
Apple CEO Tim Cook Lucy Nicholson | Reuters
For its part, Apple has contended in a Supreme Court brief that it spent billions of dollars developing the iPhone and that its design played a key role in its success.
A product’s design enables a manufacturer like Samsung to sell a particular product and make a profit in the first place, Apple’s brief notes. “Samsung’s smartphones are sold as single, unitary articles to ordinary purchasers,” the brief notes, “and their infringing designs are closely intertwined with the phones’ hardware and software to create the products’ overall look and feel.”
Apple’s brief also suggests Samsung’s infringement was brazen, noting, “The evidence showed how assiduously Samsung copied Apple’s iPhone in response to its ‘crisis of design,’ and instantly increased its market share,” the brief noted.
In its own brief supporting Apple, the shoemaker Crocs also touched on the importance of design patents. “From its very inception, Crocs has devoted substantial resources to researching, developing, and bringing to market innovative and iconic footwear designs,” the company noted. “Indeed, Crocs’ designs are almost one and the same with its brand.”
Erin Fuchs is deputy managing editor of Yahoo Finance.
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The big question at the heart of the insider trading case heading to the Supreme Court this week
yahoo
On Wednesday the Supreme Court will hear an insider trading case for the first time in two decades, and it will once again have to weigh the issue without a definition of the practice from Congress.
The case involves a grocery wholesaler named Bassam Salman who’s accused of trading on tips from a brother-in-law who worked for Citigroup. Prosecutors accused Salman of making nearly $1 million from trading on information involving Citigroup mergers, and he was sentenced to three years in prison for conspiracy and fraud.
The question the Supreme Court has to decide is this: In order to prove insider trading, is it necessary to show that a tipper like the brother-in-law got cash or something valuable in exchange for the tip — or is it enough to show the tipper and tippee were close family members?
There is another question that the case itself raises, though: Why doesn’t the United States have a specific law on the books to regulate insider trading?
“What there ought to be is a statute on insider trading,” University of Michigan Law School professor Adam Pritchard told Yahoo Finance. “The SEC has resisted that.” The agency has pushed back against an insider-trading statute, in part, because “murky” rules give it more leverage during settlement negotiations, Pritchard contends.
Congress ‘lurking in the background’
In the absence of a specific statute, the SEC can file civil cases involving insider trading under anti-fraud provisions of federal securities laws and the Justice Department can file criminal cases using the same laws — since insider trading can be either a civil or a criminal action. The SEC paved the way for many insider trading cases in 1961, when it ruled that two key fraud provisions of the Securities and Exchange Act of 1934 applied to corporate “outsiders” like Salman.
Following the 1961 ruling by the SEC, lawmakers have introduced laws to ban insider trading but none have passed. Meanwhile, the European Union has a “very clear and a very broad” law banning insider trading, Peter J. Henning, a professor of law at Wayne State University, told Yahoo Finance.
Congress’s own inaction on the issue is “lurking in the background” of the insider trading case the Supreme Court will hear this week, Georgetown Law professor Donald Langevoort said.
“Everybody has said it is something of an embarrassment that in the US, which 50 years ago invented the law of insider trading,” Langevoort said, “we’re now essentially the only country in the world that doesn’t regulate it by statute.”
Without a specific law on the books to regulate insider trading, it’s been largely up to the courts to define what constitutes insider trading, as it must do in the Salman case. The Supreme Court took its first modern-day stab at defining illegal insider trading in a 1983 case called Dirks v. SEC, ruling that insider trading could involve quid pro quo or an insider making “a gift of confidential information to a trading relative or friend.”
More than 30 years after Dirks, the US appeals court in New York shook up the world of insider trading when it ruled that friendship alone between a tipper and tippee wasn’t enough to establish fraud. Some lawyers contended that the New York case, US v. Newman, actually changed the law though others argue the case is consistent with Supreme Court precedent.
In light of the disagreement about Supreme Court case law, one might argue that Congress should step in once and for all to ban — and define — insider trading. But that doesn’t seem likely.
‘A political nightmare’
While the SEC may have resisted an insider trading statute, Wall Street would also likely push back against a law specifically banning the practice. That would make it difficult to pass an insider trading ban, especially in light of the Supreme Court’s 2010 Citizens United decision, which makes it easier for corporations to spend money on political campaigns, Langevoort, the Georgetown professor pointed out.
“It’s a political nightmare, in a post-Citizens United world, especially, where money talks as loudly as it talks, the hedge funds and Wall Street are going to be up there looking out for their own interests,” Langevoort noted. “And their own interests are not in aggressive insider trading enforcement.”
That said, he noted, if the Supreme Court were to issue an opinion that narrowed the definition of insider trading — in favor of Salman, the grocery wholesaler — it could spur Congress to act.
When the Supreme Court hears the Salman case on Wednesday, and when it issues its decision later in the term, it will do so without one of the justices who decided to take it up in the first place: Antonin Scalia.
The late justice was particularly keen on hearing an insider trading case, and he may have used the Salman case as an opportunity to make it harder for prosecutors to bring those charges.
Erin Fuchs is deputy managing editor at Yahoo Finance.
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The one reason Europeans are willing to put their countries' economy at risk

Leave supporters hold flags as they stand on Westminster Bridge during an EU referendum campaign stunt in which a flotilla of boats used by supporters of Leave sailed up the River Thames, outside the Houses of Parliament, in London, June 15, 2016. (AP Photo/Matt Dunham)
UK voters sent shockwaves through the global markets last week and sent their own pound plummeting when they voted to break off from the European Union.
The decision by 52% of Britons who voted for the so-called Brexit may not be in their best interest economically, but it will likely stem immigration to the UK — a top concern for many Europeans.
In fact, a new research note from HSBC indicates that Europeans prioritized immigration over other major economic issues. In 2015, Europeans were more concerned with immigration than the economic situation, unemployment or public finances, according to the HSBC note, which cited the European Commission’s Eurobarometer survey.
In the UK, immigration was a major theme of the Brexit debate. The Independent polled 2,100 voters before last week’s referendum and found 52% thought it would be easier to control immigration if the UK were outside of the EU.
The UK’s most anti-EU county, a London borough called Havering, has experienced rapid growth in recent years, NPR reported last week, citing data from the online polling firm YouGov. The increased commute times there and influx of apartments rather than houses has frustrated locals, according to the NPR report.
“It has nothing to do with color and race necessarily,” a local councilman named Lawrence Webb, who was campaigning for the Brexit, told NPR. “People perceive that their quality of life is diminished.”
The immigration debate has also been framed around the issue of national security. Throughout Europe, the debate over migration and safety intensified following the terrorist attacks in Brussels last March. And after this month’s attacks in Orlando, Florida, Britain’s “leave” campaign suggested the UK would be safer if it separated from the EU.
Other countries that might want to leave the EU might also try to capitalize on fear and anti-immigrant sentiment. “We know that migration and the role of Brussels have been concerns for the electorate across much of Europe, not just the UK,” HSBC mentioned in its recent note.
That note added: “The UK may have opened a Pandora’s box in demonstrating that the EU is willing to negotiate terms.”
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What's next for the UK explained in 2 quick paragraphs

A Vote Remain supporter walks past a Vote Leave supporter on Downing Street in London, June 24, 2016, after Britain voted to leave the European Union. (Reuters/Kevin Coombs)
The news this week that a majority of UK voters opted to split off from the European Union caused immediate market turmoil, but the Britons’ divorce from the EU won’t be a quick one.
The UK’s widely watched vote on Thursday — in which 52% of Britons voted to leave the EU — was an advisory referendum that won’t have an immediate effect and in theory could be ignored by UK lawmakers. But, as a recent Wells Fargo note pointed out, members of Parliament aren’t likely to ignore the will of the people.
These two paragraphs from that note spell out the drawn-out process that will ensue in order for lawmakers to make the people’s will a reality:
So does yesterday’s result mean that the UK will soon be leaving the EU? Not exactly. For starters, the referendum is actually not legally binding. Only Parliament can pass the requisite legislation to leave the EU, and three-quarters of the Members of Parliament (MP) are on record as being personally opposed to Brexit. That said, a MP likely would be committing political suicide if he or she went against the wishes of their constituents on such an important issue as Brexit.
Assuming that Parliament eventually approves legislation to leave the EU, the UK would then begin negotiations with the EU over the terms that would govern most of their bilateral economic interactions going forward. Under the terms of the Single Market, there currently is free movement of goods, services and people between the UK and the 27 other members of the EU (EU-27). The UK and the EU would have a minimum of two years after Parliament approves Brexit to renegotiate new terms regarding trade in goods and services and movement of individuals. In reality, the negotiations could stretch on for longer than two years. In the meantime, a period of uncertainty will set in as the negotiations take place.
It’s that uncertainty that likely sent stock markets everywhere nosediving on Friday, when the Dow (^DJI) plummeted 610 points or 3.4%, as Yahoo Finance’s Sam Ro pointed out.
“Although the uncertainty of the UK’s EU membership vote is now behind us, the uncertainty of how this will proceed is now a real issue,” ING’s Rob Carnell said in a note cited by Ro. “Messy politics in the UK, and an uncertain reaction from the EU in terms of how to treat a departing member, all make for a period of heightened risk aversion.”
Read more:
What the Brexit vote means for the US economy
A single word explains why financial markets everywhere are nosediving
Currency expert warns the British pound faces a ‘grave danger’ in the weeks ahead
The UK may have committed ‘an act of economic self-harm with global ramifications’
One chart captures the night of insanity as the Brexit vote counts trickled in
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