This week a unanimous Supreme Court reversed a $339 million damage award in a design patent infringement case Apple brought against Samsung. While the decision is an important victory for Samsung, the case is not over. Lower courts will now have to reconsider damages with only limited guidance offered by the Supreme Court’s ruling.
In 2011, Apple charged Samsung with infringement of several design patents related to the IPhone. A jury found that several Samsung smartphones infringed Apple’s patents and awarded $399 million in damages, the entire profit Samsung made from its sales of the infringing smartphones.
Design patents have a unique remedy available to their owners. 35 U.S.C. § 289 states:
Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.
On appeal, Samsung argued that the profits awarded should be limited to the shell covered by Apple’s design patents, and not the entire infringing product including what is inside the shell. The Federal Circuit rejected Samsung’s argument and affirmed the jury’s verdict. The Federal Circuit reasoned that “limit[ing] the damages” award was not required because the “innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.”
The Supreme Court addressed the threshold issue of the scope of the term “article of manufacture.” Justice Sonia Sotomayor, writing on behalf of the entire Supreme Court stated “[t]he only question we resolve today is whether, in the case of a multicomponent product, 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.”
The Court held that “the term ‘article of manufacture’ is broad enough to encompass both a product sold to a consumer as well as a component of that product.” Lower courts will need to figure out which applies in a specific case.
The Supreme Court refused to offer any opinion as to how a judge or jury might decide whether the relevant profits to be applied when assessing damages are the profits for the entire product, or instead are the profits related to an individual component shown in the infringed design patent. The problem, per the Court, was inadequate briefing. “We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties.”
For patentees going forward, it may be strategic to patent both the components of a design as well as the entire product. This would perhaps give design patent owners two bites at the apple (no pun intended).
Nikolai & Mersereau, P.A. can assist you with obtaining and enforcing design patents covering the ornamental appearance of your articles of manufacture.