The Supreme Court handed down its opinion in the Samsung v Apple design patent infringement suit that has held the attention of the tech sector for years.
In a unanimous reversal of the Federal Circuit's ruling, the Supreme Court determined that damage awards in design patent infringement suits should not necessarily be based on the total sales of the fully assembled consumer product.
Section 289
The case posed one fundamental question to the Supreme Court: what is the “the article of manufacture”, according to Section 289 of the Patent Act?
In this case, several of Samsung’s smartphones were found to have infringed two of Apple’s design patents for the rounded-edged face of the iPhone and for a grid of colourful icons against a black background.
In a jury trial, the Northern District of California ruled that Samsung owed Apple the entire value of the profits it had made from the infringing phones. After initially overturning that decision the Federal Circuit affirmed it.
The damages award was based on both courts’ interpretation that the article of manufacture was an entire phone, as a consumer would purchase it, rather than its components, which are not available for sale.
The Federal Circuit’s definition of the article of manufacture meant that Apple and companies holding design patents for complex technologies, such as smartphones, could potentially collect very high damage awards, even if the design patent that had been infringed was for only a part of the technology. In this case, those damages amounted to $399 million.
A new type of apportionment
Samsung v Apple is the first design patent case to be heard by the Supreme Court in over 100 years, so this case presented an opportunity for the Supreme Court to clarify the proper treatment of design patents in the modern context of far more complicated products.
Richard LaBarge, partner at Marshall Gerstein, says that this decision “opened the door to a new type of apportionment by ruling that the portions of the smartphone that bear the claimed design can be construed as a separate ‘article’ for damages purposes”.
In the opinion, Justice Sotomayor said: “This case requires us to address a threshold matter: the scope of the term ‘article of manufacture.’”
The Court did so by analysing the conflicts between the lower courts’ readings of Section 289 and other case law and sections of the statute, looking with particular attention at the treatment of utility patents.
The justices found the district court’s and Federal Circuit’s readings of Section 289 to be too narrow.
The Court also examined dictionary definitions of article of manufacture, and concluded that it is “simply a thing made by a hand or machine” and “is therefore broad enough to encompass both a product sold to a non-consumer as well as a component of that product”.
Case remanded
The Court declined to rule on what the article of manufacture here was, citing “the absence of adequate briefing by the parties” to make that determination.
The justices instead remanded the case and did not instruct the lower courts on how to determine the value of the article of manufacture in this instance.
The Court’s choice to provide no further instructions is cause for concern for some, such as Jeanne Gills, vice chair of Foley & Lardner’s IP department.
Gills thinks that practitioners can “expect damages analyses in design patent cases to become as difficult and as murky as we have seen in utility patent cases”.
While the Federal Circuit may devise a clearer test, the Samsung v Apple saga is, for now, due to continue.
