November 16, 2016
Westlaw Journal Intellectual Property
Authored by J. Michael Jakes
The Supreme Court is now considering its first design patent case in 120 years. Design patents have historically occupied a more obscure spot in the U.S. patent system as compared to the better-known utility patents, which are issued and litigated much more often than their design counterparts. But design patents have been increasingly used to protect the look of devices such as smartphones and other modern marvels. Now, with Samsung v. Apple,1 design patents have taken center stage with the spotlight of the Supreme Court shining brightly on this area of the law.
At issue in the Samsung case is an 1887 statute allowing design patent owners to recover the infringer’s "total profit" from a useful article that contains the infringing design. The case is part of a long-running patent fight between Apple and Samsung that tests the application of the "total profit" rule to complex products like smartphones. The U.S. Court of Appeals for the Federal Circuit ruled that Apple could collect the total profit on Samsung’s entire smartphones as sold to customers for infringing the Cupertino, California-based company’s design patents on the iPhone.2 Critics of the decision say the old law was not intended to cover products like smartphones, since there are any number of features that drive a phone’s value other than the design, such as the screen, operating system and battery life. Smartphones may embody hundreds if not thousands of patented features. The Supreme Court now has to decide how to apply design patent law—which was enacted in a different time—to modern, technologically complex products.
Since 1842, the U.S. patent system has given designers of useful articles the ability to obtain patents on their designs. Under the current statute, whoever invents any "new, original and ornamental design for an article of manufacture" may obtain a patent on the design.3 To qualify for patent protection, a design must present "an aesthetically pleasing appearance that is not dictated by function alone.4 A patented design may be a surface design, such as an ornament, impression, print or picture applied to a useful article, or it may be a design for the shape or configuration of the article itself.5
Design patents differ from other forms of protection. They fill a gap between copyright for authors and patent protection for mechanical or utility inventors. While utility patents protect functional inventions and copyrights protect artistic expression, design patents protect ornamental designs for useful articles. Design patents are also distinct from trade dress, which protects the distinctive visual appearance of goods to signal their source. A design patent is infringed when someone else makes, uses, offers to sell or sells a product containing a design that is substantially similar to the patented design.6
If a patent owner proves infringement in a design patent case, it has a choice of remedies. Section 284 of the Patent Act, which applies to both utility and design patents, provides that the patent owner can collect "damages adequate to compensate for infringement, but in no event less than a reasonable royalty" for the use of the invention or design.7 Design patent owners also have an alternative remedy that is not available for utility patents. Under Section 289, an infringer who applies the patented design to an article of manufacture for sale is liable to the patent owner "to the extent of his total profit."8 Congress added Section 289 to U.S. patent law when it enacted the Design Patent Act of 18879 in response to Supreme Court decisions that severely limited recovery in a design patent case. In those cases, the high court said the patent owner had not proved that the entire profit for the infringing article was due to the patented design.10 Before this amendment, a design patent owner could recover only the proportionate amount of profits that were proven to be attributable to the patented feature.
The dispute in Samsung v. Apple is over the meaning of Section 289. Samsung is faced with a nearly $400 million judgment for infringing several of Apple’s iPhone design patents.11 These patents cover the iPhone’s rectangular front face with rounded corners, the bezel surrounding the face’s rim and a grid of 16 colorful icons on a black screen. A jury found that Samsung’s designs for 18 different models of competing smartphones were substantially similar to the patented designs and awarded Apple the amount of Samsung’s profits from its sales of infringing phones. On appeal, the Federal Circuit upheld the design patent infringement ruling, which is no longer at issue, and the $399 million award, the total profits available under Section 289.
The Supreme Court took the case to address what Samsung says is an "unjustified windfall" for design patent owners, resulting in exorbitant awards that give design patents owners too much power and that invite abusive litigation. Samsung argues the "total profit" rule—applied to the entire article as sold to customers—would force an infringer of a cup-holder design to pay its entire profits on a car or an infringer of a windshield design to pay its entire profits on a boat. Instead, Samsung contends that profits should be awarded only on the part of the product that the design is applied to. In other words, Samsung says the award should be something less than the entire product as sold to a customer.
Surprisingly, Apple seems to agree on this point. It could have relied on the words of Section 289 and the law’s history to argue, much as the Federal Circuit reasoned, that total profits applies to the entire "article of manufacture" as sold to customers. Instead, Apple departed from the Federal Circuit’s decision in allowing that the article of manufacture could be just part of the end product in an appropriate case. But that doesn’t apply here, according to Apple. For Apple, the decision should be left to a jury, which found in this case that the article of manufacture was the entire phone, and Samsung never gave them evidence that it should be anything else.
The United States also weighed in as amicus curiae, agreeing with Apple that the relevant "article of manufacture" in Section 289 could be a component or part of the product as sold. Once that article is identified, the design patent owner can recover all of the profits from the sale of that article, not just the portion of the profits that the patent owner can prove was caused by or attributable to the design as opposed to other features, the United States said. The United States’ brief identifies several factors for determining what is the relevant "article of manufacture." These include the scope of the design claimed in the patent, the relative prominence of the design within the product as a whole, whether the design is conceptually distinct from the product as a whole, and the relationship between the physical design and the rest of the product.
Even if everyone agrees that the "article of manufacture" for awarding total profits under Section 289 can be something less than the product as sold, instructing a jury is another thing. At the oral argument, much of the discussion focused on how to determine what the article of manufacture is and how to instruct a jury of this determination. As Justice Anthony M. Kennedy said to Samsung’s counsel: "The problem is how to instruct the jury on that point. … If I were the juror, I simply wouldn’t know what to do under your test." Several other justices raised similar concerns, noting the difficulty of implementing a meaningful jury instruction and generally grappling with what an appropriate standard should be. While initially suggesting that examples might explain the standard to the jury, Justice Stephen G. Breyer seemed ready to let the lower courts figure it out: "We have a hard enough question trying to figure out what the standard is. Now, why can’t we just ask the lower court to listen to your arguments and theirs, and work it out?" Chief Justice John G. Roberts Jr., on the other hand, did not find the question that difficult, at least in this case: "It seems to me that the design is applied to the exterior case of the phone. It’s not applied to the—all the chips and wires [so] there … shouldn’t be profits awarded based on the entire price of the phone."
Based on the oral argument, it seems likely that the Supreme Court will vacate the $400 million damage award against Samsung and send the case back with an instruction that the article of manufacture for awarding total profits under Section 289 can be less than the product as sold. The challenge will be to come up with a workable way to decide what that article of manufacture is in a design patent case. The high court did not seem to favor any one particular standard. Patent lawyers and their clients like clear rules, but the Supreme Court has been reluctant to provide definitive tests in recent patent cases. So a list of factors, such as those suggested by the United States as amicus curiae, may be all that the lawyers get. But in shining a spotlight on design patents, the Samsung v. Apple case shows they now occupy a more prominent role in protecting commercial products, including sophisticated ones like smartphones.
1 Samsung Electronics Co. v. Apple Inc., No. 15-777, oral argument held, 2016 WL 5920144 (U.S. Oct. 11, 2016).
2 Apple Inc. v. Samsung Electronics Co., 786 F.3d 983 (Fed. Cir. 2015).
3 35 U.S.C.A. § 171(a). The statute enacted in 1842 gave protection to "any new and original design for a manufacture." Act of Aug. 29, 1842, ch. 263, § 3, 5 Stat. 543-44. Congress revised the statute in 1902 to its current definition, Act of May 9, 1902, ch. 783, 32 Stat. 193, which was carried forward in the Patent Act of 1952.
4 Bonito Boats Inc. v. Thunder Craft Boats Inc., 489 U.S. 141, 148 (1989).
5 In re Schnell, 46 F.2d 203, 209 (C.C.P.A. 1931).
6 Gorham Mfg. Co. v. White, 81 U.S. 511, 524 (1872); Egyptian Goddess Inc. v. Swisa Inc., 543 F.3d 665, 678 (Fed. Cir. 2008) (en banc); see also 35 U.S.C.A. § 171(b), 271.
7 35 U.S.C.A. § 284.
8 35 U.S.C.A. § 289.
9 Act of Feb. 4, 1887, ch. 105, § 1, 24 Stat. 387. Congress retained the "total profit" remedy in Section 289 of the 1952 Patent Act, which remains in effect.
10 Dobson v. Hartford Carpet Co.; Dobson v. Bigelow Carpet Co., 114 U.S. 439, 444 (1885); Dobson v. Dornan, 118 U.S. 10, 17-18 (1886).
11 Apple Inc. v. Samsung Electronics Co., No. 11-cv-1846, verdict returned, 2013 WL 8210290 (N.D. Cal. Nov. 21, 2013).
©2016 Thompson Reuters. Originally published by Westlaw Journal Intellectual Property. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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