Apple and Samsung recently faced off in the Supreme Court over the amount of damages that Samsung has to pay Apple for infringing three design patents directed to aspects of the iPhone. The current dispute is not about specific numbers, such as which Samsung phones infringed the Apple design patents, or how many phones Samsung sold; instead, the controversy is much more conceptual. The Supreme Court will address what constitutes an “article of manufacture” in the context of design patent infringement. Samsung hopes to reduce the award of $399 million that is due to Apple for infringement of design patents directed to three elements of early versions of the iPhone: the bezel shape, the black rectangular shape of the casing with rounded corners, and an arrangement of colorful icons on a black screen.
Many people are familiar with utility patents, which protect the structure or function of inventions. But a lesser-known type of patent is a design patent, which protects the look of a design applied to an object. The design could be primarily a surface ornamentation, such as wallpaper with a certain pattern, or the shape of an object, such as a chair backrest with a new shape. Design patents can protect designs applied to portions of objects as well as entire objects. One design patent might protect the look of only the backrest of a chair whereas another patent might protect the look of the entire chair.
When a patented design is infringed, a patent owner can recover as damages the total profit of the infringer for any article of manufacture to which the infringer has applied the design. Courts have consistently held that because the law says “total profit,” the damages payable to the patent owner cannot be limited to only the profit attributable to the design, but rather must include the profit attributable to sales of the entire article. Continuing with the example involving a patented chair: Because the chair provides value as a place to sit, the entire value of the chair is not derived solely from the appearance of the chair. Yet the patent owner can still collect the infringer’s total profit from the chair sales. That much is clear.
Less clear is the question of what to do when an infringed design patent is directed to only a part of a product, especially a product that has many components. Should total profit from the entire phone still be the resulting damages, as lower courts decided in earlier rounds between Apple and Samsung? Samsung and Apple agree that an entire product should not automatically be deemed the relevant article of manufacture in every situation. If this were the case, seemingly absurd damage amounts could result. As discussed during oral arguments, a patent owner with a design patent to a cup-holder should not recover the total profit from a competitor’s sale of a car which includes an infringing cup-holder.
As a result, the Supreme Court is wrestling with two main questions: how to determine what the article of manufacture is if the article may be less than the entire product; and how to determine the total profit associated with the determined article of manufacture.
Samsung argues that the relevant articles of manufacture should be the discrete components of the phones to which the designs of the design patents were applied. For example, Samsung believes the relevant article of manufacture should be the phone casing, not the entire phone. Samsung additionally argues that because Apple did not offer any evidence as to the profits associated with these discrete components, Apple’s attempts to recover the design patent damages should be dismissed.
Apple argues that the determination of what constitutes the articles of manufacture should be decided by the jury. To avoid a retrial, Apple further argues that in this particular case the jury reached the conclusion that the entire phone is the article of manufacture, and therefore the damages award should stand.
If the Court holds that an article of manufacture could be less than an entire product, which appears likely, the damages available for design patent infringement will be less than previously assumed in many cases. If the Court prescribes a test for what constitutes the relevant article of manufacture, and the test looks to what is claimed in the asserted design patent, companies may adopt a strategy of pursuing numerous design patents for a single product. Much like Apple has historically done, companies could pursue design patents directed to parts of a product, and also pursue design patents directed to the entire product.
If a prescribed test relates to whether components are physically separable or separately sold, companies may file design patent applications where the claimed design includes a main component and at least a small portion of one or more additional separable components so that the damages apply to a greater percentage of the product than if the claim design included only the main component. For example, if a company has a design patent for a chair cushion, they may additionally include a small part of the chair as part of the patent to include the entire chair as part of the damages calculation.
If a factor for a prescribed test includes assessing the prominence of a design within the product, companies may seek to protect what they deem to be eye-catching or otherwise significant to the appearance so that this factor weighs in favor of the entire product being the article of manufacture.
A precise formula for determining how much profit is attributable to an article of manufacture that is only a part of an entire product is not likely forthcoming. Instead, given the nearly infinite number of different situations that could arise, guidance in the form of factors to consider may be handed down by the Court.
Regardless of whether the Court sides with Apple or Samsung, or sends the case back down to the lower courts for further consideration, the decision will have a large effect on the determination of design patent infringement damages and strategic approaches when seeking design patent protection.