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Samsung Secures 8-0 Win in the Supreme Court Reversing Apple's $400 Million Damage AwardAuthored by: Douglas W. Kim and Lance A. Lawson, P.E.
December 7, 2016

The Supreme Court of the United States handed Samsung a victory yesterday by reversing a $400 million judgment previously won by Apple for infringement of several of Apple's design patents. In a unanimous 8-0 decision, the Supreme Court stated that design patent infringement does not mean that the patent holder is always awarded damages for the entire product covered by the design patent. Rather, in a multi-component product, the damages may be limited to the relevant component covered by the design patent (https://www.supremecourt.gov/opinions/16pdf/15-777_7lho.pdf).

According to U.S. patent law, "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." (35 U.S.C. §289) For multi-component products, the question distills into what does "article of manufacturer" mean: the entire product or just a component of the product?

In its opinion, the Supreme Court held that, "[s]o understood, 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...." Therefore, damages calculation for infringement of Apple's design patent need not always be based on the entire iPhone. In this case, because Apple's design patents may cover only components of a device and not the entire device, the damages should be recalculated. The Supreme Court stated that "[a]rriving at a damages award under §289 thus involves two steps. First, identify the 'article of manufacture' to which the infringement design has been applied. Second, calculate the infringer's total profits made on that article of manufacturer." Practically, this means the determination of the article of manufacture will pay a critical role in calculating design patent damages. Further, design patents on inventions that are also covered by utility patents may prove to undermine the design patent damages. 
  
It should be noted that the Supreme Court expressly declined to provide a test for determining what constitutes an "article of manufacturer" and left that task to the Federal Circuit. The Supreme Court remanded the case to the Federal Circuit for further consideration of the damages to be award to Apple for Samsung's infringement.

When considering design patents, we will monitor future guidance provided by the Federal Circuit. We anticipate, however, that the effect of the Supreme Court's Apple decision will be that design patents for multi-component products have lost some of their teeth from a potential damages perspective. In the meantime, we would encourage you to work with an experienced patent attorney and carefully consider the issues and your options as part of a meaningful intellectual property strategy.
 
If you have questions, please contac the authors of this alert, Douglas W. Kim and Lance A. Lawson, members of the firm's Intellectual Property and Litigationpractice groups.