Earlier this week, in a non-precedential decision, the United States Court of Appeals for the Federal Circuit remanded Apple, Inc. v. Samsung Electronics Co. back to Judge Lucy Koh of the United States Federal District Court for the Northern District of California. In December 2016, the Supreme Court overturned a $400 million damages award for design patent infringement. In it’s ruling the Supreme Court explained that damages may be limited to revenues attributable to a component of an article of manufacture and not the entire article itself. See Samsung Electronics Co. v. Apple, Inc.
Apple requested that the Federal Circuit keep the case and the panel review the decision in light of the Supreme Court’s ruling, while Samsung requested that the Federal Circuit remand the matter to the district court for a new trial on damages. The Federal Circuit adopted neither suggestion. Instead, the Federal Circuit chose to remand the case for further proceedings, which the panel explained may or may not include a new trial on damages. Judge Koh will decide whether a new trial on damages is necessary.
The Federal Circuit panel wrote in a per curiam decision:
In short, the parties dispute what jury instructions the current trial record supports. Because the district court is better positioned to parse the record to evaluate the parties’ competing arguments, we remand for the district court to consider these issues in the first instance.
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. Accordingly, we remand this matter to the district court for further proceedings.
“It’s not surprising that the Federal Circuit decided to give the district court wide latitude to reconsider the merits of the damages case after the Supreme Court’s ruling,” said Christopher Loh, a partner with Fitzpatrick, Cella, Harper & Scinto. “The Supreme Court didn’t provide specific guidance on how to apply its rulings to the facts of the case, so the Federal Circuit wisely determined that the details were best left to the person most familiar with those facts: Judge Koh.”
So now the dispute will return to the Northern District of California.
“It will be interesting to see whether and to what extent Judge Koh allows Samsung to present additional evidence in its favor, and whether Judge Koh will in fact proceed with a new trial,” said Loh.
Thumbnail Sketch of the Dispute
This design patent dispute relates to the ongoing patent war between two technology giants. A jury in the Northern District of California found that Samsung infringed Apple design patents, Apple utility patents and also diluted Apple’s trade dresses. The infringed design patents are U.S. Design Patent Nos. D618,677 (“D’677 patent”), D593,087 (“D’087 patent”), and D604,305 (“D’305 patent”), which claim certain design elements embodied in Apple’s iPhone. The infringed utility patents were U.S. Patent Nos. 7,469,381 (“’381 patent”), 7,844,915 (“’915 patent”), and 7,864,163 (“’163 patent”), which claim certain features in the iPhone’s user interface. The diluted trade dresses are Trademark Registration No. 3,470,983 (“’983 trade dress”) and an unregistered trade dress defined in terms of certain elements in the configuration of the iPhone.
Following the first jury trial, the district court upheld the jury’s infringement, dilution, and validity findings over Samsung’s post-trial motion. The district court also upheld $639,403,248 in damages, but ordered a partial retrial on the remainder of the damages because they had been awarded for a period when Samsung lacked notice of some of the asserted patents. The jury in the partial retrial on damages awarded Apple $290,456,793, which the district court upheld over Samsung’s second post-trial motion. On March 6, 2014, the district court entered a final judgment in favor of Apple, and Samsung filed a notice of appeal. All totaled, the amount won by Apple as a result of the infringement (i.e., damages as well as pre-judgment and post-judgment interest) reached to $399 million.
On appeal, the Federal Circuit affirmed the jury’s verdict on the design patent infringements, the validity of two utility patent claims, and the damages awarded for the design and utility patent infringements appealed by Samsung. The Federal Circuit also reversed the jury’s findings that the asserted trade dresses are protectable. See Apple v. Samsung (Fed. Cir. May 18, 2015).
The Federal Circuit’s decision from May 2015 upheld the traditional interpretation of §289, finding that the whole of the infringing Samsung smartphone products was the only permissible article of manufacture because consumers could not buy the smartphone in individual components. In oral arguments presented to the Supreme Court on October 12th, Samsung’s counsel made the case that the damages award should not be derived from the entire profits on the sale of design patent-infringing smartphones when those design patents only covered a portion of the device’s appearance.
In its December 2016 decision, the Supreme Court explained that determining the proper damages award under §289 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.” The Supreme Court would go on to conclude that the term “article of manufacture is broad enough to encompass both a product sold to a consumer as well as a component of that product.” Having reached that conclusion the Supreme Court had little difficulty concluding that the narrow interpretation of §289 by the Federal Circuit, which found that the article of manufacture could only cover an end product sold to consumers, was inappropriate.