Last month, the Supreme Court heard arguments in a design patent case for the first time in over 120 years. The case centered on the dispute between Apple and Samsung that has lingered since Apple filed suit against its competitor in 2011.
By Colleen Gray
Last month, the Supreme Court heard arguments in a design patent case for the first time in over 120 years. The case centered on the dispute between Apple and Samsung that has lingered since Apple filed suit against its competitor in 2011. While the case originally claimed infringement of trade dress, utility patents, and design patents related to the iPhone, only three design patents are still at issue: U.S. Design Patent Nos. D618, 677, claiming the front face of the phone, including the rounded corners and rectangular shape, D593,087, claiming the bezel surrounding the display, and D604,305, claiming the graphical user interface, including the colorful grid of sixteen icons.
Samsung no longer contends non-infringement of the patents at issue, but only argues that the jury award of $399 million—the total profits of eleven infringing Samsung smartphones—clashes with the language, history, and policy behind Section 289 of the Patent Act. Section 289 allows the owner of a design patent to recover the total profit of the infringing article of manufacture. It reads, in relevant part:
Whoever, during the term of a patent for 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.
By the time the case reached the Supreme Court, neither party claimed that a plaintiff is entitled to total profit of the entire infringing product per se under Section 289. The argument of the parties now focuses on what is the relevant "article of manufacture" on which a plaintiff may recover damages, who bears the burden of proof in demonstrating the relevant article of manufacture, and whether Samsung or Apple met that burden in the case at bar.
While affirming the jury award, the Federal Circuit appeared to adopt a standard that permits recovery of the profit of the entire product where the product cannot be broken down into distinct articles of manufacture that are sold separately in commerce. However, always awarding profits on the entire product even where the infringed design is a small component of that product can lead to absurd results, such as allowing recovery of all profits of a refrigerator where a refrigerator latch design was infringed, or allowing recovery of all profits of a car where a cup-holder design was infringed.
The Federal Circuit cloaked this seemingly new statement of law behind the long-standing prohibition against apportionment in design patent cases. Apportionment would otherwise allow recovery of only the portion of the profits that the plaintiff could demonstrate was directly due to the design and not to other elements of the product. However, Congress enacted Section 289 in response to the Supreme Court decision of Dobson v. Dornan which allowed apportionment and limited recovery of profits to those "attributable to the use of the infringing design itself."
The proposed approach adopted by both Apple and Samsung of differentiating articles of manufacture within an overall product and only awarding profits on the relevant article is on its face strikingly similar to the apportionment standard undone by the enactment of Section 289. However, the proposed approach differs both conceptually and in practice. The article of manufacture approach allows for recovery on the relevant article even where profits cannot be directly attributed to the design itself, a recovery that would fail under the apportionment standard.
The question is how to determine the relevant article of manufacture. In its brief as amicus curiae, the United States recommended four factors to make such a determination, although it suggested that the fact finder should adopt a totality of the circumstances approach. These factors include: (1) the scope of the design claimed in the patent; (2) the prominence of the design in the overall product; (3) whether the design is conceptually distinct from the overall product; and (4) the physical relationship between the design and the overall product.
Unsurprisingly, Samsung argued that the plaintiff in such cases has the burden of proof on the profits of the relevant article of manufacture, and since Apple presented no evidence on profits of anything other than the phones as a whole, the case should be dismissed or, alternatively, remanded for further proceedings. Apple argued that, while the plaintiff traditionally bears the burden of proving the infringer's profits, the defendant should bear the burden of proving that the relevant article of manufacture is anything less than the entire product as sold. According to Apple, because Samsung presented no evidence to establish that the relevant article of manufacture was anything less than the entire phone, the jury award should stand.
In practice, it is likely that placing the burden on the defendant will be the most effective. A plaintiff would have no motivation to argue that the relevant article of manufacture is anything less than the entire product, as this could drastically reduce its recoverable profits. On the other hand, the defendant is in the best position to argue for a limited article of manufacture as this would reduce its potential payout.
The Supreme Court's opinion on the case is expected by June 2017, when this court's term ends.