Samsung v. Apple and Design Patent Infringement Damages

DESIGN PATENTS

The Supreme Court issued a unanimous opinion in the Samsung Electronics Co., Ltd. v. Apple, Inc. case on December 6, 2016, concerning apportionment of design patent damages under 35 U.S.C. § 289. The Court answered the limited question of whether, in the case of a multicomponent product (e.g., a smartphone), the relevant “article of manufacture” must always be the end product sold to the consumer or whether it can also be a component of that product. Unlike the reasonable royalty remedy for infringing utility patents under 35 U.S.C. § 284, the design patent remedy under § 289 provides that an infringer “shall be liable to the owner to the extent of his total profits” for selling an “article of manufacture” that infringes a design patent.

To Apple’s chagrin and Samsung’s delight, the Supreme Court held that damages could be narrowed to the profits associated with individual components, rather than profits for the entire end product.

In overturning a nearly $400 million verdict against Samsung, the Court rejected the Federal Circuit’s determination that the relevant “article of manufacture” for calculating damages under § 298 must be the entire smartphone because the separate components that make up a smartphone are not available for consumer purchase. Apple’s design patents at issue included (1) a front face with rounded corners, (2) a rectangular face with rounded corners and a raised rim, and (3) a grid of colorful icons, drawings of which are reproduced above.

In reaching its conclusion, the Supreme Court performed a textual analysis of § 298 and reasoned that the ordinary definition of the term “article of manufacture” is broad enough to include a component of a product. Because an article of manufacture is simply a thing made by hand or machine, “[a] component of a product, no less than the product itself, is a thing made by hand or machine.” The Court went on to square its reading of an article of manufacture in § 298 with the language in 35 USC § 171(a) (which defines design patent subject-matter eligibility) and with a hat tip to Application of Zahn, 617 F. 2d 261 (CCPA 1980), reasoning that “the statute is not limited to designs for complete articles.”

As such, the Court shed light on Step 1 of the two-part step for calculating damages under § 298:

                Step 1: Identify the article of manufacture.

                Step 2: Calculate the infringer’s total profit made on that article of manufacture.

However, the Court (“in the absence of adequate briefing”) punted on the more cumbersome and arguably more consequential Step 1, which has been remanded for the lower court to hash out and develop a test for determining whether the relevant article or manufacture in this case is the entire smartphone or a particular smart phone component. 

So, Samsung is still on the hook for design patent infringement, but the check it writes to Apple could be less after the litigants head back to the trial court.

In the past, traditional utility patent prosecutors have frequently overlooked design patents as an afterthought or an alternative strategy where utility patent protection proved unattainable or cost prohibitive. Heads lifted with the Samsung/Apple litigation as the media shed greater light on prospects of obtaining total profits for the sale of a product infringing a design patent.  While I still believe that design patents are very valuable components in a client’s intellectual property portfolio, this decision could reduce the available damages for design patent infringement.  

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