Client Alert - Supreme Court Reverses Apple’s $399 Million Patent Damages Award Against Samsung
On Tuesday, in the first patent design case heard by the Supreme Court in over a century, the Court unanimously overturned a $399 million damages award granted to Apple that had been based on Samsung’s infringement of Apple’s patent in design feature of its iPhones.
Unlike utility patents, which generally cover how a product works, design patents protect certain novel aspects of the look of a product. Damages available for design patent infringement include the infringer’s profits realized from sales of the “article of manufacture” that unlawfully incorporates the design patent. The Court of Appeals for the Federal Circuit, which specializes in patent disputes, held that the relevant “article of manufacture” must always be the entire end product sold to the consumer. The jury in the Apple case had awarded damages of profits realized by Samsung on the sales of its entire smartphone, even though Samsung argued that, at most, only certain elements of the phone, such as its front face and icon arrangement, allegedly infringed Apple’s design patent.
Overturning the Federal Circuit’s ruling, the Supreme Court held that, where a product has multiple components, the damages award may be limited to the profits realized from only the component(s) that infringed the design patent. Looking to the plain meaning of the text of the Patent Act and relevant dictionary definitions, the Court held that an “‘article of manufacture’ . . . encompasses both a product sold to a consumer and a component of that product.” “That a component may be integrated into a larger product . . . does not put it outside the category of articles of manufacture.”
The Supreme Court did not decide whether the “article of manufacture” in the case before it was the entire smartphone or one or more component(s) thereof, leaving such determination for the lower court. Nor did the Court provide guidance to the lower court on how to make such a determination, noting only that: “In the case of a design for a single-component product, such as a dinner plate, the product is the ‘article of manufacture’ to which the design has been applied… In the case of a design for a multicomponent product, such as a kitchen oven, identifying the ‘article of manufacture’ to which the design has been applied is a more difficult task.”
Despite any uncertainties in the application of this decision, it is now clear that liability in a patent design case no longer is an “all or nothing” proposition, which likely will cause plaintiffs and defendants in such cases to re-evaluate the economics of the litigation, especially where a product contains thousands of components, only one of which may be infringing.
For further information, contact your attorney at CLL.