Posts Tagged: "design patent infringement"

On May 14th the next chapter in the Samsung v. Apple smartphone design patent dispute will commence in the United States District Court for the Northern District of California with a retrial to determine a new award in the case. The most notable moment in this long winding history was the unanimous Supreme Court decision where the Supreme Court sided with Samsung in its appeal in late 2016. But while the Supreme Court’s ruling should have modernized our antiquated law governing design patents to fit into the modern 21st century world, that important outcome is still in doubt pending the retrial. A key question remains – namely, how to determine the “article of manufacture” and appropriate remedy for infringement of multifaceted products. And could this open up potential grounds of consideration for utility patent interpretation?

The first design patent case to go to trial since Apple v. Samsung has given design patent owners hope that a ‘total profit’ award is still achievable… Patent owners are keeping a close eye on how juries respond to the new legal framework, and will be carefully attuned to appeals from these cases as the Federal Circuit addresses the standards that apply to design patent damages cases going forward. If patent owners continue to get total profits for design patent infringement, even after Samsung v. Apple, companies are likely to increase their efforts in obtaining design patents, particularly given the current climate facing utility patents.

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.

Boulder, CO-based shoe manufacturer Crocs, Inc. (NASDAQ:CROX) had a design patent rejected by the U.S. Patent and Trademark Office. The patent struck by the USPTO is U.S. Patent No. D517789. Issued in March 2006 and assigned to Crocs, it protected the ornamental design of footwear. The design patent illustrations attached to the ‘789 design patent showcase the well-known Crocs design featuring holes in the footwear material around the front of the foot and a strap behind to hold the footwear in place against a person’s heel… The Examiner refused to recognize a priority claims of earlier filed applications dating back to June 23, 2003. According to the Examiner, the shoe that is the subject of the ‘789 design patent was not adequately disclosed prior to May 28, 2004, making an earlier priority date claim impossible to recognize.

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.

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).

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.

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.

First, look at the merits of the infringement claim. They may be stronger than you think, and you can thank a 2008 ruling for that. That year, the United States Court of Appeals for the Federal Circuit unanimously ruled en banc in Egyptian Goddess, Inc. v. Swisa, Inc. that a design patent is infringed if an ordinary observer would think that the accused design is substantially the same as the patented design when the two designs are compared in the context of the prior art. The court removed the “point of novelty” and “non-trivial advance” standards that previously seemed to constitute a second set of criteria to prove design patent infringement. That ruling has made life much easier for plaintiff attorneys and it helped Apple in its lawsuit against Samsung.