As design patents become a more popular method for businesses to protect their products, how damages are determined in the highly-publicized Samsung v. Apple litigation will merit close attention this year.
In early December 2016, the Supreme Court reversed the lower court’s decision that forced Samsung to pay $399 million in profits for violating three of Apple’s design patents and remanded the case for further consideration. The award accounted for the entirety of Samsung’s profit from the sale of the infringing smartphones. Samsung’s argument, however, is that damages should be limited to individual components covered by the patents. Thus, the case turned on a law that awards total profits based on an “article of manufacture” and the question was whether that phrase must be interpreted to mean the entire product or parts of it.
Under federal law, “[w]however during the term of a patent for a design, without license of the owner, applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or 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…” (emphasis added). 35 U.S.C. § 289.
The Supreme Court stated that the term “article of manufacture” is broad enough to include both a multicomponent product and individual components of that product. Justice Sotomayor added that the process for finding the value of design patent damages involved a two-step process: first, the court had to identity the “article of manufacture,” then “calculate the infringer’s total profit made on that article of manufacture.” Thus, on remand, the Federal Circuit will be tasked with determining whether the relevant “article of manufacture” for each design patent is the entire smartphone or a particular smartphone component.
The Federal Circuit’s determination will be highly anticipated as it may provide guidance in determining what constitutes an “article of manufacture” for the purposes of determining damages in design patent cases.