In the late 1980s and early 1990s, Apple sought to enforce a copyright for a graphical user interface against Microsoft and Hewlett-Packard.[ii] Apple asserted that the copyright protected the look and feel of its interface. Apple, however, was unsuccessful. The Ninth Circuit ruled that much of the allegedly infringing visual displays were licensed, and, more importantly, that copyright protection did not extend so broadly.[iii] In rejecting Apple’s arguments, the Ninth Circuit stated “Apple cannot get patent-like protection for the idea of a graphical user interface . . . .”[iv]
Despite the Ninth Circuit’s pronouncement, it turns out Apple has gotten pretty close. In 2011, Apple filed suit against Samsung alleging infringement of a number of patents, including three design patents. As shown below, these design patents are directed to a shiny black screen, a rectangle with rounded corners, and, lastly, a graphical user interface.
In a familiar refrain, Apple is now asserting that these design patents protect the “look and feel” of Apple’s iPhone. [v]
To date, Apple has been pretty successful with these design patents in court. They were the basis for hundreds of million dollars in a nearly billion dollar judgment against Samsung in district court. And a three-judge panel from the Federal Circuit recently affirmed that portion of the judgment in May. The full Federal Circuit also declined to rehear the case or to stay the issuance of its mandate.
But the case is not over. Samsung has stated it is going to file a petition for certiorari later this year with the Supreme Court. In its petition, Samsung is likely to challenge, among other things, the Federal Circuit’s analysis of the district court’s claim construction and what these design patents truly cover. Samsung likely will also challenge the award of hundreds of millions of dollars (the total profits Samsung received on the phones found to be infringing). While it is difficult to predict Samsung’s chances of success in obtaining Supreme Court review, with the numbers at stake and novel legal questions, it certainly seems reasonable.
But there are also other fronts in the smart phone war between Apple and Samsung. First, the patentability of one of Apple’s design patents that formed the basis for Apple’s judgment against Samsung is being questioned by the U.S. Patent and Trademark Office. The Patent Office recently issued a non-final rejection in an ex parte reexamination finding that Apple’s U.S. Patent No. D618,677 is unpatentable on multiple grounds.[vi] In doing so, the Patent Office also concluded that Apple’s design patent is not entitled to claim priority back to earlier applications. The result is that Apple is facing an uphill battle in the Patent Office.
Second, immediately after the Federal Circuit refused to stay the issuance of the mandate, Apple filed a letter with the district court requesting entry of partial final judgment in excess of $500 million dollars—the majority being based on the three design patents. Samsung unsurprisingly opposed. Faced with a flurry of letters and motions, the district court ordered the parties not to submit any additional briefing. The district court then granted Apple’s request for entry of partial judgment—in the face of an impending certiorari petition and decision of the Patent Office finding one of the design patents unpatentable (as well as a finding of unpatentability of one of the three utility patents at issue in the case). The order could require Samsung to immediately pay Apple any portion of the judgment affirmed by the Federal Circuit. Samsung has indicated it will appeal that order to the Federal Circuit once again.
In view of the importance of this ongoing litigation, this article examines the legal issues at stake and the merits of delaying action at the district court to allow the other fronts, namely possible Supreme Court review and the Patent Office reexamination, to proceed.
The Panel’s Decision
A brief discussion of the panel’s decision is helpful to frame the issues that the Supreme Court may face. To begin with, the panel affirmed the district court’s claim constructions for the three design patents. The district court instructed the jury that the design patents claimed the “ornamental designs” shown in the respective figures. The panel found that sufficient.[vii]
The panel recognized that precedent states “the scope of the claim must be construed in order to identify the non-functional aspects of the design as shown in the patent.”[viii] But it sought to distinguish that precedent by noting the functional elements were not excluded in their entirety.[ix] The panel cited to the Federal Circuit’s prior decision in Richardson where the district court had highlighted the ornamental aspects of the disputed design as part of its claim construction, which included the ornamental aspects of the otherwise functional elements.[x]
The panel also concluded that the district court properly accounted for the prior art. Under the test for design patent infringement, an ordinary observer compares the differences in the patented design and the accused product in view of the prior art to determine if they are substantially the same such as to deceive the ordinary observer into purchasing one believing it to be the other.[xi] Thus, the prior art provides context for the infringement analysis and may affect the scope of the asserted claim. The district court instructed the jury that the infringement analysis “will benefit from comparing the two designs with prior art” and that they “must familiarize [themselves] with the prior art admitted at trial” in making the infringement determination.[xii] The district court also provided the jury with a series of “guidelines” that “may be helpful,” three of which involved prior art considerations. Notably, these guidelines did not specifically address any of the references raised by Samsung. Nevertheless, the panel found it sufficient that the jury was instructed that it “must” consider the prior art admitted at trial.[xiii]
Finally, having dealt with claim construction and infringement, the panel considered Samsung’s arguments against the award hundreds of millions of dollars for design patent infringement. Samsung had argued, in part, that damages should be limited to its profits resulting from the infringement of Apple’s design patents, i.e., there is a causal requirement. Because Apple’s design patents are directed to less than the whole phone, Samsung argued its entire profits from sale of the phones was not the correct measure for damages. Similarly, Samsung also argued that the “article of manufacture” accused of infringement could be less than the entire phone. The panel disagreed on both points. It concluded that the causation requirement advocated for by Samsung was the same as apportionment, which Congress removed from the statute in 1887.[xiv] The panel also found that the patented designs were not distinct elements sold separately from the accused phones, and thus not distinct articles of manufacture.[xv] The panel affirmed the award of Samsung’s entire profits for the infringing phones.[xvi]
Samsung’s Possible Petition for Certiori
Samsung informed the Federal Circuit that it planned to file a petition for certiorari with the Supreme Court when it requested a stay of the issuance of the mandate. Samsung indicated it will challenge the panel’s decision on a number of grounds. A review of Samsung’s petition for rehearing en banc sheds some light on the arguments that Samsung is likely to make to the Supreme Court.
In its petition for rehearing, Samsung first argued that it was inadequate for the district court to simply append “ornamental” to the figures in describing the scope of the claims and leave matters for the jury to sort out.[xvii] Rather, the district court had a duty under controlling law to construe the claims to exclude the functional elements of the designs.[xviii]
Samsung also argues that the panel erroneously affirmed an award of all of Samsung’s profits on the phones found to infringe Apple’s design patents.[xix] According to Samsung, the statutory text of 35 U.S.C. § 289 refutes the panel’s conclusion.[xx] Samsung also takes issue with the panel’s “separately marketed” test for identifying the infringing “article of manufacture” for purposes of assessing damages under § 289.[xxi]
The arguments have merit. Beginning with claim construction, as I noted in an earlier article,[xxii] the Supreme Court recently reiterated in Teva that courts, not juries, are responsible for construing patent claims.[xxiii] The Supreme Court also made clear that this duty is no less present where a court is resolving subsidiary factual disputes relevant to claim construction, stating “[i]n cases where subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that extrinsic evidence.”[xxiv]
Here, the district court did not provide a construction to the jury taking into account the functional components of Apple’s patented designs. The district court’s rationale that such filtering is only appropriate where the court decides infringement as a matter of law is contrary to Teva. The Supreme Court did not mince words in tasking the courts with that responsibility, not juries.
Additionally, the panel’s reliance on Richardson is problematic. Federal Circuit precedent is clear that design patents must be construed where functional elements are present. And the district court in Richardson did just that.[xxv] The Richardson district court provided a detailed explanation as to what aspects were functional and unprotected, and what aspects were ornamental and within the scope of the claim.[xxvi] But that is not what happened in the district court in Apple v. Samsung. Simply adding “ornamental” and referring to the figures invites the jury to resolve the subsidiary factual disputes—e.g., functionality and prior art—that are solely the province of the court under Teva.
It would be one thing if the panel had concluded that there were no functional elements to exclude, but that is not what it did. Instead, the panel adopted a formulaic standard where it is sufficient to include the word “ornamental” when referring to the figures.[xxvii] That conflicts with the weight of Federal Circuit precedent, including the recent Ethicon Endo-Surgery, Inc. v. Covidien opinion where the panel noted “because each of these components has a functional aspect, the underlying elements must be excluded from the scope of the design claims at this general conceptual level.”[xxviii] Supreme Court guidance on this topic would be very useful, particularly if the damages aspect of the panel’s decision is affirmed.
That said, Samsung’s arguments on damages likewise raise valid points and it is not certain that the panel’s decision on damages would withstand Supreme Court scrutiny. Indeed, while § 289 allows an award “to the extent of his total profits,” it later clarifies that this same award shall not exceed “twice the profit made from the infringement.”[xxix] Thus the express statutory language requires causation between the profit to be awarded and the infringement that is found, at least when capping liability. While quoting the statute, the panel decision does not address this language.[xxx]
Additionally, while the statute refers to articles of manufacture, it does not require that the articles be sold separately to ordinary purchasers as the panel suggests for profits to be separated. In fact, this case has striking similarity to one of the analogies articulated by the Second Circuit in Bush & Lane Piano Co. v. Becker Brothers.[xxxi] There, the Second Circuit noted:
A patent for a “book binding” cannot, either justly or logically, be so identified with the entire book as to give all the profits on a work of literary genius to the patentee of a binding, although the binding was manufactured with and for that one book, and has no separate commercial existence. The binding and the printed record of thought respond to different concepts; they are different articles.[xxxii]
Here, each of the three design patents covers different aspects of the iPhone, e.g., the front face, bezel and graphical user interface. None cover the entire device. As with the binding of a book, the front face, bezel and graphical user interface of the iPhone cannot swallow the remainder of the iPhone, including its software and functionality. They are different articles.
Interestingly, in opposing Samsung’s petition for rehearing, Apple is now asserting that its three design patents “do not cover a ‘small’ or ‘minor’ component of the smartphone” but instead protect the “look and feel” of Apple’s iPhone. [xxxiii] However, Apple’s belated assertion is contradicted by its earlier briefing providing detailed descriptions of what it believed the design patents claim.[xxxiv] The assertion is also contrary to well-settled law. The Federal Circuit recently reiterated in Ethicon that design patents are limited to the ornamental aspects of the design and not the “broader general design concept.”[xxxv]
Finally, Apple’s assertion is contrary to the entire history of the case. The jury instructions, district court’s findings, and even the panel decision do not refer to the design patents protecting the look and feel of Apple’s iPhone. That was never the standard by which validity, infringement, damages or any other issue in the case was measured. The Ninth Circuit rejected a similar argument in Apple’s case against Microsoft. While the Federal Circuit appears to have adopted Apple’s “look and feel” assertion to some degree, it is not clear the Supreme Court would take such an expansive view of Apple’s design patents.
What Could Have been Done at the District Court
One of the more fascinating aspects of this case is the situation recently presented to the district court. Apple requested partial final judgment, including judgment for the design patent infringement that was affirmed by the Federal Circuit. The amount is over $500 million dollars. Samsung opposed, noting that issues remain for each of the claims asserted by Apple. While Samsung had well-grounded legal arguments against a partial final judgment, the policy issues seemed to weigh even further against any immediate payment by Samsung.
As a threshold matter, the Patent Office has found one of the three design patents is unpatentable. While that decision is not final and could be appealed to both the Patent Trial and Appeal Board and the Federal Circuit, it casts a cloud over Apple’s damages verdict. As in cases such as Fresenius or ePlus, Samsung and Apple may become entangled in a race for final judgment. But there was nothing preventing the court from allowing the Patent Office proceeding to reach resolution prior to forcing Samsung to pay Apple. In fact, Samsung has posted a bond and any further delay is unlikely to harm Apple particularly if one of its key design patents is ultimately cancelled by the Patent Office.
Additionally, the Supreme Court has recently advised that decisions of the Patent Office can have preclusive effect and bar a court from re-deciding settled issues.[xxxvi] This gives weight to the idea that Article III courts may defer issues to administrative agencies in certain situations. This may be one. And while the Federal Circuit in Smartflash recently affirmed a district court’s denial of a stay post-trial in view of a Patent Office proceeding, it did so based on an abuse of discretion standard finding that the matter was at the district court’s discretion.[xxxvii] The majority’s reasoning—and the dissent’s—indicates that a trial judge probably has the discretion to stay the case under similar circumstances.
Delaying the entry of partial final judgment also would have made sense considering Apple’s latest arguments that collectively the three design patents cover the “look and feel” of its iPhone. If the Patent Office has found at least one of those design patents is unpatentable, it seems to follow that the “look and feel” of the iPhone is not protected (and not infringed). That also militates against awarding Samsung’s entire profits to Apple for infringement. Finally, there is the fairness aspect of awarding damages on a patent that the Patent Office has deemed unpatentable. Where Samsung has already posted a bond, and Apple does not appear to be prejudiced by a delay in payment, why not wait to avoid forcing payment for a patent that never should have issued?
Nonetheless, at Apple’s behest, the court entered the final judgment ordering Samsung to pay the $548 million in damages – damages that still remain very much in question. It will be interesting to see in the coming weeks whether Samsung again appeals that decision. Also interesting will be any impact activity at the PTO and ultimately perhaps the Supreme Court will have on the ultimate resolution of this case.
In sum, the Supreme Court is going to be presented with novel and important legal questions that may affect the damages award, both the underlying finding of liability and the proper measure of damages. As noted above, these arguments have merit and could help reshape this increasingly important area of law. Additionally, the foundation of Apple’s damages award is crumbling at the Patent Office, with one of the key design patents being rejected on multiple grounds. Given these circumstances, it would have been appropriate and fair for the district court to defer any partial final judgment. What happens next in the ongoing saga will surely continue to keep the interest of the legal and tech community.
[ii] Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1434 (9th Cir. 1994).
[iii] Id. at 1443-44.
[iv] Id. at 1443.
[v] Plaintiff-Appellee Apple Inc.’s Response to Defendants-Appellants’ Petition for Rehearing En Banc at 14.
[vi] The Patent Office also rejected one of Apple’s utility patents directed to the pinch-to-zoom feature. But this article focuses on the design patents at issue in the Apple Samsung dispute.
[vii] Apple v. Samsung Electronics Co., Ltd., No. 14-1335, 15-1029, slip op. at 21 (Fed. Cir. May 18, 2015).
[viii] Id. at 19-20.
[ix] Id. at 20.
[xi] Id. at 22; see also Gorham Co. v. White, 81 U.S. 511, 528 (1871). To be clear, evidence of actual deception (or the lack thereof) is not required but may be relevant to the ultimate infringement analysis.
[xii] JA01394 (Final Jury Instruction No. 46).
[xiii] Apple v. Samsung Electronics Co., Ltd., No. 14-1335, 15-1029, slip op. at 23 (Fed. Cir. May 18, 2015).
[xiv] Id. at 26-27.
[xv] Id. at 27-28.
[xvi] Id. at 28.
[xvii] Samsung Petition for Rehearing En Banc at 6-7.
[xviii] Id. at 7.
[xix] Id. at 10-11.
[xx] Id. at 10.
[xxi] Id. at 13-14.
[xxii] Teva and What It Means for Apple v. Samsung and Design Patents, IPWatchdog (March 3, 2015) (last accessed August 10, 2015).
[xxiii] Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015).
[xxiv] Id. at 841.
[xxv] Richardson v. Stanley Works, Inc., 610 F. Supp. 2d 1046, 1049-51 (D. Az. 2009).
[xxvii] Apple v. Samsung Electronics Co., Ltd., No. 14-1335, 15-1029, slip op. at 22 (Fed. Cir. May 18, 2015).
[xxviii] Ethicon Endo-Surgery, Inc. v. Covidien, Inc., No. 2014-1370, slip op. at 40 (Fed. Cir. Aug. 7, 2015).
[xxix] 35 U.S.C. §289 (emphasis added).
[xxx] Apple v. Samsung Electronics Co., Ltd., No. 14-1335, 15-1029, slip op. at 26 (Fed. Cir. May 18, 2015).
[xxxi] Bush & Lane Piano Co. v. Becker Bros., 234 F. 79 (2d Cir. 1916).
[xxxii] Id. at 81-82.
[xxxiii] Plaintiff-Appellee Apple Inc.’s Response to Defendants-Appellants’ Petition for Rehearing En Banc at 14 (“But Apple’s design patents do not cover a ‘small’ or ‘minor’ component of the smartphone (Pet. 2, 11); they cover the overall appearance of the device’s distinctive front face, bezel, and graphical user interface—in other words, the iconic look and feel of Apple’s iPhone.”).
[xxxiv] Brief for Plaintiff-Cross Appellant Apple Inc. at pp. 7-9.
[xxxv] Ethicon Endo-Surgery, Inc. v. Covidien, Inc., No. 2014-1370, slip op. at 35 (Fed. Cir. Aug. 7, 2015).
[xxxvi] B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015).
[xxxvii] Smartflash LLC v. Apple Inc., No. 2015-1701, slip op. at 8 (Fed. Cir. July 30, 2015) (nonprecedential).