On December 6, 2016, the U.S. Supreme Court, in Samsung Electronics Co. Ltd., v. Apple Inc., 580 U.S. ____ (2016), unanimously ruled that in multicomponent products, the “article of manufacture” subject to an award of damages under 35 U.S.C. §289 is not required to be the end product sold to consumers but may only be a component of the product.
In 2007, when Apple launched the iPhone, it had secured several design patents in connection with the launch. When Samsung released a series of smartphones resembling the iPhone, Apple sued Samsung, alleging that the various Samsung smartphones infringed Apple’s design patents. A jury found that several Samsung smartphones did infringe those patents. Apple was awarded $399 million in damages for Samsung’s design patent infringement, the entire profit Samsung made from its sales of the infringing smartphones. The Federal Circuit affirmed the damages award, rejecting 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 Supreme Court reversed and remanded the case back to the Federal Circuit. In its unanimous opinion, the Court reasoned that for purposes of a multicomponent product, the relevant “article of manufacture” for arriving at a damages award (based on 35 U.S.C. §289) need not be the end/finished product sold to the consumer but may be only a component of that product. The Court determined that “The Federal Circuit’s narrower reading of the ‘article of manufacture,'” limiting it to the end product, “cannot be squared with the text of §289.” How to arrive at §289 damages? According to the Supreme Court, “Arriving at a damages award under §289 thus involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.”
This decision could have potential impact on future design patent infringement cases, especially when calculating infringement damages. It remains to be seen, what kind of guidance the Federal Circuit will provide in addressing the scope of the “article of manufacture” for multicomponent products.
If you have any questions regarding the topics discussed in this bulletin, please contact Robert S. Rigg at +1 (312) 609 7766, Sudip K. Mitra at +1 (312) 609 7617 or your Vedder Price attorney with whom you have worked.