It’s still not over. A recent ruling from the U.S. Supreme Court does not end the long iPhone design dispute between Samsung and Apple, but it promises to cut down the huge damages Apple was awarded by a jury.
‘Article of manufacture’: After Apple released its original iPhone in 2007 Samsung came out with a series of smartphones that closely resembled the iPhone. Apple sued in 2011 alleging Samsung’s phones infringed three design patents. A jury agreed and awarded Apple $399 million in damages.
Samsung appealed to the Federal Circuit, arguing that considering a phone was a multicomponent product, the infringer should not have to pay for profits it made on the sale of the entire phone but only on the infringing parts, such as the screen or case. In other words, just as with utility patents, damages should be apportioned to the infringing component(s). The court disagreed, citing a 19th century statute that prohibits the unlicensed application of a “patented design … to any article of manufacturer for the purpose of sale” and makes the infringer liable for “the extent of his total profit, but not less than $250.” According to the Federal Circuit, “article of manufacture” meant the entire phone since the “innards” of Samsung’s phones could not be sold separately from the phones’ shells.
Samsung, supported by the tech industry, asked the Supreme Court for clarification on whether the term “article of manufacture” always means the end product sold to the consumer or whether it also can mean a component of that product. In a world of multicomponent products, only the latter interpretation makes sense, Samsung argued.
The Supreme Court noted the term “article of manufacture” as used in the statute included “both a product sold to a consumer and a component of that product.” The Federal Circuit’s interpretation was too narrow, the high court said. Whether or not the article was sold to the consumer separately was not the decisive factor.
But the court declined to create a test for identifying the relevant article of manufacture in a given situation. Instead, it sent the case back to the Federal Circuit to set forth a test and then apply it to the case for each of the three design patents.
Takeaway: Samsung won in that the Supreme Court agreed that it is not per se liable for profits derived from the sale of the entire phone, but Samsung still does not know how much its liability to Apple is.
The case is Samsung Elecs. Co. v. Apple Inc, 2016 U.S. LEXIS 7419 (Dec. 6, 2016). A digest of the decision and the court’s opinion will be available soon at BVLaw.