IP Law Daily Federal Circuit punts Apple/Samsung design patent damages dispute to district court
Tuesday, February 7, 2017

Federal Circuit punts Apple/Samsung design patent damages dispute to district court

On remand from the U.S. Supreme Court after it reversed a Federal Circuit decision upholding a jury’s award of damages to Apple Inc. based on infringement of its design patents by Samsung, the Federal Circuit has remanded the dispute to the federal district court in San Francisco, so that the district court could evaluate the parties’ competing arguments in the first instance. On remand, the Federal Circuit recalled its mandate only to the extent it related to the measure of damages awarded in connection with the district court’s partial final judgment on Apple’s design patent claims. At issue in the dispute over Apple’s mobile device patents, is whether, in the case of a multicomponent product, the relevant "article of manufacture" under the Patent Act must always be the end product sold to the consumer or whether it can also be a component of that product (Apple Inc. v. Samsung Electronics Co., Ltd., February 7, 2017, per curiam).

Procedural history. In August 2012, a jury awarded $399 million to Apple for Samsung’s infringement of Apple’s mobile device utility patents, design patents, and trade dresses. On May 18, 2015, the U.S. Court of Appeals for the Federal Circuit upheld the jury’s determination that Samsung infringed Apple’s utility and design patents and that the patents were valid, but the court reversed the verdict as to Apple’s trade dress, finding that the asserted trade dresses—covering certain design features of Apple’s iPhone—were invalid as directed to functional elements.

The Federal Circuit affirmed the jury’s award of Samsung’s entire profits from sales of products that infringed Apple’s design patents, finding that Apple provided sufficient evidence to allow the jury to account for any functional aspects in the asserted design patents. The court rejected Samsung’s argument that damages should be limited because the relevant "articles of manufacture" were the front face or screen rather than the entire smartphone. The court reasoned that such a limit was not required because the components of Samsung’s smartphones were not sold separately to ordinary consumers and thus were not distinct articles of manufacture.

The Supreme Court granted Samsung’s petition for a writ of certiorari on the issue of whether, where a design patent is applied to only a component of a product, an award of the infringer's profits be limited to those profits attributable to the component. Samsung maintained that when a design patent is applied to a component of a phone or product, or when a design patent is applied to an article of manufacture within a multi-article product, Section 289 entitled the patent-holder only to the total profit on the article of manufacture to which the design patent is applied, and not the profits on the total product.

Looking to the statutory text, the Supreme Court concluded that the term "article of manufacture," as it is used in § 289, "encompasses both a product sold to a consumer and a component of that product." The Court declined, however, to "set out a test for identifying the relevant article of manufacture at the first step of the § 289 damages inquiry." Instead, the Court remanded the case to the Federal Circuit.

The Federal Circuit’s ruling on remand. On remand, Apple argued that the appellate court could affirm the design patent damages award without additional briefing or argument because Samsung never asserted that the relevant article of manufacture was anything other than Samsung’s entire phones. Samsung submitted that the Federal Circuit should remand to the district court for a new trial on design patent damages. According to Samsung, the district court’s § 289 instruction was erroneous in light of the Supreme Court’s decision.

Because the district court is better positioned to parse the record to evaluate the parties’ competing arguments, the case should be remanded for the district court to consider these issues in the first instance, the Federal Circuit decided. On remand, the trial court should consider the parties’ arguments in light of the trial record and determine what additional proceedings, if any, are needed. If the court determines that a new damages trial is necessary, it will have the opportunity to set forth a test for identifying the relevant article of manufacture for purposes of § 289, and to apply that test to this case, the Federal Circuit observed.

The case is Nos. 2014-1335 and 2015-1029.

Attorneys: William F. Lee (Wilmer Cutler Pickering Hale and Dorr LLP) for Apple Inc. Kathleen M. Sullivan (Quinn Emanuel Urquhart & Sullivan, LLP) for Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC.

Companies: Apple Inc.; Samsung Electronics Co., Ltd.; Samsung Electronics America, Inc.; Samsung Telecommunications America, LLC

MainStory: TopStory Patent FedCirNews

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