Damages experts know that design patents are different. They are not subject to one of the key rules applicable in utility patent infringement cases: apportionment. But the rules may change. In its eternal fight with Apple, Samsung persuaded the U.S. Supreme Court to take a look at the applicable statute in the context of modern technology.
Failed ‘quest for apportionment’: The litigation goes back to 2011 when Apple sued Samsung for infringing critical features of the iPhone and iPad. The claims involved design patents related to design elements in the iPhone and utility patents related to the phone’s user interface. A jury awarded Apple just over $1 billion in damages, but the district court struck down about 40% of the damages. In the partial retrial on damages, the jury awarded Apple over $290 million. Samsung appealed the final judgment at the Federal Circuit.
In terms of design-patent-related damages, Samsung said the trial court committed legal error when it allowed the jury to award damages based on Samsung’s total profits from its infringing smartphones. Damages should have been limited to the “profit attributable to the infringement because of ‘basic causation principles.’” In essence, the patent holder should have to show what portion of the infringer’s profits, or its own lost profits, is due to the design and what is due to the article itself.
According to the Federal Circuit, Samsung was on a “quest for apportionment.” But, said the court, Congress specifically rejected apportionment for design patent infringement in Section 289 of the Patent Act (which is based on an 1887 law). The provision entitles the patent holder to “the total profit from the article of manufacture bearing the patented design.”
The Federal Circuit noted in passing that, in their “friend of the court” brief, law professors, supporting Samsung’s position on this issue, argued that allowing entire profits for design patent infringement “makes no sense in the modern world.” But the court declined to go there, saying this was a “policy argument” that should be made to Congress.
Out of step: Instead of taking the fight to the legislature, Samsung petitioned the Supreme Court for review. It argued that the lower courts’ reading of Section 289 is out of step with the times. Their interpretation rewarded “design patents far beyond the value of any inventive contribution." The Supreme Court recently granted the petition.
The exact question in front of the court is: “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?” Stay tuned.
For more on the parties’ and supporting briefs to the Supreme Court, click here. Find a digest and the Federal Circuit’s ruling in Apple, Inc. v. Samsung Electronics Co., 2015 U.S. App. LEXIS 8096 (May 18, 2015), at BVLaw.