On December 6, 2016, the United States Supreme Court issued a very expected decision that should become one of the most significant rulings of the year in the intellectual property world. It is all the more important that it deals with the Apple v. Samsung case, one of the most commented cases of the decade.
Surely you know that Apple sued Samsung for infringing several design patents for smartphones (mainly covering the shape of the product and the screen). And most probably you remember that Samsung was ordered to pay Apple 399 million US dollars in damages.
The Federal Circuit Court made a strict interpretation of the relevant statutes: “Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250” (special statutory provision for damage awards in design patents – 35 U.S.C. § 289).
Samsung challenged this interpretation before the Supreme Court asking if the “article of manufacture” referred to in the provision necessarily meant the whole end product sold to the consumer or if it could also mean a component of that product.
Samsung’s intention was to allow the assessment of damages based only upon its profits associated with some of the components of the smartphones as opposed to calculating damages upon its profits made over all the smartphones sold to the consumers.
In a unanimous opinion written by Justice Sotomayor, the Supreme Court followed Samsung’s arguments and ruled that “the term ‘article of manufacture’ is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not.”
As a consequence, damages may be based either upon profits made on the whole end product sold to the consumer or limited upon profits made on one or several components of that product.
For procedural reasons, the Supreme Court did not set a test or any other method to determine how the courts should decide on which option to select when assessing damages for infringement of design patents. Lower courts will have to do so on their own on a case-by-case basis.
This is still a victory for Samsung of course, but a victory in principle only. Now the case will go back to the Federal Circuit and no doubt it will be difficult to assess Samsung’s profits based upon the infringing components among its profits based on the sales of the smartphones as a whole.