Posts Tagged: "design patent damages"

The Apple-Samsung case has dragged on for about six years so far, with no end in sight. The first case, involving design patents, has had a trial, gone to the Federal Circuit, up to the Supreme Court, where a unanimous Court sided with Samsung. The case is now back at the district court, which has to decide which “article of manufacture” on the infringing Samsung phones includes the patented design. Apple is continuing to try to salvage its $400 million damages award by any means necessary, including effectively nullifying the Supreme Court’s decision.

In the calculation of design patent infringer profits, two key issues are the definition of the article of manufacture and the methodology for calculating total infringer profits… Depending upon the case, infringer profits may be based on the entire accused product or may be limited to a component of the accused product, but there is no test or guidance at this point for how to determine if the entire product is the article of manufacture or if only a component or certain components comprise the article of manufacture. Therefore, it may be prudent, depending upon the case, to calculate infringer profits based on one or more alternative assumptions as to what the article of manufacture is comprised of in the specific situation. In some cases, the design patent will cover most or all of the product in question but in other cases such as in the Apple case, it will cover only a minor portion of the product.

For patent holders in design patent infringement cases, having multiple component design patents for any given product will help maximize the potential damage award. A multiple design patent strategy is now more important than ever. Given the ease with which design patents are obtained and the relative inexpensive cost associated with obtaining a design patent (at least when compared to the cost of obtaining a utility patent) innovators who must rely on design patent protection will almost certainly need to more strategically acquire design patents as part of a truly robust design patent portfolio building strategy.

To come up with the list below I’ve reviewed all of our patent articles, and have come up with these top 10 patent stories for 2016. They appear in chronological order as they happened throughout the year. Just missing the top 10 cut were the Supreme Court denying cert. in Sequenom and the USPTO being sued for Director Lee declaring a federal holiday. As interesting as those stories may have been, there was far more consequential patent news in 2016. Also missing the cut, but particularly interesting were the rather egregious and insulting response filed in an Office Action in September, and the embarrassing concurring decision by Judge Mayer in Intellectual Ventures. While the latter two were truly train wreck moments, they were fleeting. Judge Mayer has completely marginalized himself on the Federal Circuit with no one embracing his extreme and inaccurate reading of Alice, and that type of albeit cringe-worthy and unprofessional response to an Office Action happens very rarely.

The relatively short opinion by Supreme Court standards – just over eight pages – puts it simply: “The text resolves this case. The term ‘article of manufacture,’ as used in §289, encompasses both a product sold to a consumer and a component of that product.”

On Tuesday, December 6, 2016, the U.S. Supreme Court issued a decision in Samsung Electronics Co. v. Apple which found by a unanimous 8-0 vote that a damages award for design patent infringement may be limited to revenues attributable to a component of an article of manufacture and not the entire article itself. Tuesday’s SCOTUS decision overturns a judgment reached in May 2015 at the U.S. Court of Appeals for the Federal Circuit, which would have awarded nearly $400 million in damages to Apple Inc. (NASDAQ:AAPL) for the infringement of three design patents by mobile devices marketed by Samsung Electronics (KRX:005930).

It is that time once again when we look back on the previous year in preparation to close the final chapter on 2016 and to look ahead toward 2017. With patent reform surprisingly stalled, the biggest news stories of the year may have been the Patent Trial and Appeal Board (PTAB)… As 2016 started and through at least the first half of 2016 it seemed as if the PTAB had become rather all-powerful and completely unsusceptible to judicial restraints. As we close 2016 and look forward to 2017 a decidedly different picture seems like it is emerging… The other big news story of 2016 was with respect to patent eligibility…

The Supreme Court need not wait for Congress to act. This is a case of first impression in interpreting the provision. Guided by its own law on design patent infringement and legislative history, the Court can reach the common sense result provided by the provision’s wording. Design owners should be made whole, but not unjustly enriched. Awarding the infringer’s total profits regardless of the contribution of the design to the end product’s value subverts patent law’s mandate to promote technological progress.

On Thursday, October 20, 2016, from 2pm to 3pm ET, Gene Quinn will host a free webinar discussion that will explore the genesis of the patent battle between Apple and Samsung, focusing on the design patent infringement fight currently at the United States Supreme Court. In addition to taking as many questions from the audience as possible, we will: (1) Ask the question “how did we get here” and provide a business/tech perspective on the battle. (2) Provide a quick primer on design patents and the test for determining if there is infringement. (3) Discuss the positions taken by Apple, Samsung and the Solicitor General at the Supreme Court. (4) Make predictions regarding what the Supreme Court will ultimately decide.

Much of the court’s line of questioning at times sought answers to whether a standard could be applied in a design patent infringement case in such a way that adequately identifies the amount of profit that could be attributed to a particular aspect of a product’s design. In the words of Justice Kennedy: “Once you’ve identified the relevant article, then it seems to me necessarily what you’re doing is apportioning profits. I just don’t see how we can get away from that word.” While it may have seemed that the oral arguments went well for Samsung, that is not always, or even usually, a good gauge of how the Court will ultimately decide. Of course, time will tell.

With over 205 billion in cash reserves at last count, Apple certainly doesn’t “need” the full nine-figure damage award. And, unless Congress steps in and amends the damage award statute, Apple will likely find itself defending its “total profits” for devices even where accused of infringing minor design features. Given the current statutory language the Supreme Court could very well agree with the Federal Circuit and find that it is bound by the clear statutory language. Clearly it is time for Congress to step in and amend Section 289, possibly to add apportionment.

Recent decisions from the U.S. Court of Appeals for the Federal Circuit regarding damages available in design patent cases highlight the court’s divergence from its damages jurisprudence in the utility patent context – specifically, the lack of an apportionment requirement between patented and unpatented portions of an infringing product. While this may make design patents increasingly desirable, the Supreme Court’s decision to review the issue now raises the possibility that the discrepancy will be resolved.

On Monday, March 21, 2016, the United States Supreme Court accepted certiorari in Samsung Electronics v. Apple, Inc., which relates to how much Samsung owes for infringing Apple design patents. The question accepted by the Supreme Court is: “Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?”