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Design Patents Face Another 400 Million Dollar Question
December 7, 2016

By Randolph J. Huis

In its December 6, 2016 ruling, the U.S. Supreme Court signaled a further blow to what was originally a billion dollar verdict for Apple against Samsung for allegedly copying various patented features of Apple’s iPhone in Samsung’s competing Galaxy phone line up.  A large portion of the damages for infringement of several utility patents had previously been reduced on appeal to the Federal Circuit (Apple v. Samsung, 768 F.3d 983 (Fed. Cir. 2015)). About $400 million dollars in damages related to an award of total profits for the Samsung products at issue due to infringement of design patents covering a black rectangular front face with rounded corners, a rectangular front face with rounded corners and a raised rim, and a grid of 16 colorful icons on a black screen.

The Federal Circuit had previously affirmed the $400 million damages award by applying § 289 of the patent statute which specifies damages for design patent infringement as being the infringer’s total profits for any “article of manufacture” to which the patented design was applied.  Samsung had unsuccessfully argued that: “the profits awarded should have been limited to the infringing ‘article of manufacture’“—for example, the screen or case of the smartphone—“not the entire infringing product”—the smartphone.  786 F. 3d 983, 1002 (2015).” Samsung Electronics Co. v. Apple, Inc., Slip Opinion at 4 (December 6, 2016).

The U.S. Supreme Court has clarified the patent statute on design patent infringement stating that:  “The term ‘article of manufacture,’ as used in §289, encompasses both a product sold to a consumer and a component of that product.” Id. at 6 (underline emphasis added), reversing the Federal Circuit’s overly narrow reading of “ ‘article of manufacture’ in §289 to cover only an end product sold to a consumer [which] gives too narrow a meaning to the phrase.” Id.

The U.S. Supreme Court left open whether in this case the relevant ‘article of manufacture’ for the purpose of calculating damages is the entire smartphone or a smartphone component.  This was remanded to the Federal Circuit – thus the $400 million question.

While most commentators are speculating that the damage award should be substantially reduced, there is no clear path forward for the appeals court since there is no test set forth for identifying what the “article of manufacture” should be in this case or what value should have been assigned to it.

For future design patents, determining what the ‘article of manufacture’ is should be taken into consideration in preparing the application by possibly including more of the article to which the design is applied, as well as filing designs of differing scope that claim only portions or all of the article represented as the claimed design.

Contact your IP specialist or the undersigned for further insight into this case.