In Samsung Electronics Co. Ltd. v. Apple Inc., the US Supreme Court reversed the Federal Circuit's $399 million award to Apple for Samsung's infringement of Apple's design patents.
As background a design patent is limited to "any new, original and ornamental design for an article of manufacture." 35 USC 171. A design patent seeks to protect appearance. When infringement occurs a design patent holder may elect infringer's profits as a remedy. This is sought when profits exceed a reasonable royalty. US patent law states one who "applies the patented design ... to any article of manufacture ... shall be liable to the owner to the extent of his total profit ... but the owner shall not twice recover the profit made from the infringement." 35 USC 289.
Before the Federal Circuit Samsung had argued Apple's design patent applied to the case, while Apple argued it applied to the entire phone. The Federal Circuit agreed the "article of manufacture” was the entire phone, which, of course, includes hardware and software having considerable value.
Based on Samsung's petition for certiorari the Supreme Court agreed to consider the question: Where a design patent is applied to only a component of a product, should an award of infringer's profits be limited to those profits attributable to the component?
Before the Supreme Court Samsung argued the Federal Circuit held a district court need not exclude unprotected functional features from a design patent's protected ornamental scope and a design-patent holder is entitled to an infringer's entire profits from sales of any product found to contain a patented design without regard to the design's contribution to that product's value or sales, resulting in an award in profits far beyond the value of any inventive contribution.
The Supreme Court was persuaded and held Apple’s patented design applied to the case rather than the entire phone and more broadly stated the "article of manufacturer" may mean not the end product (i.e., phone) sold to consumers but a component of the end product.
The Supreme Court's decision to reverse an award based on Samsung's profit on its entire phone makes sense because to hold otherwise ignores the value of the hardware/software. What's missing in this decision, however, is guidance on how to determine the value of the case. I think the court should determine that value in light of the fact people give importance to how a smartphone looks, which of course is why more than Apple chose to go with the patented design.
Also see my related post: Supreme Court - Apple v. Samsung - SCOTUS Blog - Justices cautious about resolving Samsung-Apple dispute over design of cell phones.
Copyright © 2016 Robert Moll. All rights reserved.
