Today the U.S. Supreme Court issued its decision in the Apple v. Samsung design patent case on the limited of question of what constitutes an “article of manufacture” under the design patent statute, ruling that “The term ‘article of manufacture,’ as used in [35 U.S.C.] §289, encompasses both a product sold to a consumer and a component of that product.” The decision is not surprising given the circumstances of this case and the unique statutory provisions for design patents, which are distinct from–and should not be confused with–the more commonly known and discussed utility patents (such as standard essential patents). Below is a top-level summary of the decision, followed by a more detailed discussion.
Generally speaking, design patents cover how something looks–i.e., an “ornamental design.” Importantly, design patents cannot include a shape or design that has some functional benefit, such as some novel shape that also has a functional benefit that makes something easier to carry, use, faster or the such. Only utility patents can cover such functional innovations; thus, utility patents by and large have been the focus of patent law, including standard essential patents. In contrast, design patents generally have been a niche’–almost obscure and somewhat confusing–area of law. So much so that when practitioners, the courts and the general public talk about “patents” they usually mean “utility patents”; patent practitioner’s will specifically say “design patents” if they happen to be referring to that specialty.
Unlike the reasonable royalty remedy for infringing utility patents under 35 U.S.C. §284, the §289 design patent remedy requires that the infringer “shall be liable to the owner to the extent of his total profits” for selling an “article of manufacture” that infringes a design patent. Samsung’s mobile phones were found to infringe Apple design patents generally directed to the look of the housing and screen icons of the mobile phone. Apple argued that the “article of manufacture” was the entire Samsung mobile phone and it was entitled to the “total profits” made from selling the phone; Samsung argued that the “article of manufacture” would just be the patented design components of the phone– e.g. housing–and the damages should be limited to the “total profits” made from selling such components within the phone. The Federal Circuit ruled below that “articles of manufacture” always must be the entire end product because only the end product–not an individual component–is sold to consumers.
Thus, the specific issue presented in this case was whether, under the design patent statute, an “article of manufacture” for which “total profits” are awarded always must be the entire end product or could such article of manufacture be individual components of the end product. The Supreme Court today disagreed with the Federal Circuit and decided that an “article of manufacture” under the design patent statute may be either the end product or a component–i.e., in some circumstances it may be the end product and in other circumstances it may be the component. The decision stopped there without deciding whether in this case the relevant “article of manufacture” is the mobile phone or only some of its component. Rather, the Supreme Court has sent the case back down to the Federal Circuit for further consideration based on its limited ruling here.
This is an important case for design patent law in determining remedies for infringing a design patent. The many open questions will require much more future development of design patent law.
Understanding what the Court did and did not decide here also is important:
- The decision concerns the unique design patent statute’s mandatory “total profits” remedy and not the utility patent statute’s reasonable royalty remedy.
- The decision does not address whether the design patent statute remedy is (a) an award of all total profits without further analysis or (b) an award limited to only total profits made because of the infringement–e.g., show that the infringing ornamental design caused any of Samsung’s sales and resultant profits where there are a host of other factors that contribute to sales.
- The decision does not address how to determine whether the relevant “article of manufacture” is the end product or component.
In sum, the Supreme Court decided that, in determining statutory damages for infringement of a design patent, an “article of manufacture” is not always required to be the end product, but also could be components of that end product. We await future developments in this interesting and often overlooked area of design patent law.
In 2011, Apple sued Samsung on various patent, trade dress and other grounds, including infringement of three design patents that are directed to certain ornamental design features of Apple’s iPhone:
- U.S. Design Patent No. D618,677 (“the D’677 Patent”) focused on design elements on the front face of the iPhone.
- U.S. Design Patent No. D593,087 (“the D’087 Patent”) directed to other ornamental design features of the front face that extent to the bezel of the iPhone.
- U.S. Design Patent No. D604,305 (“the D’305 Patent”) directed to the ornamental design of icons displayed on the iPhone screen.
Unlike utility patents, design patents do not have textual claims at the end of the patent that verbally describe what the patent covers. Rather, design patents have one or more figures that show the claimed ornamental design in a solid line with unclaimed features shown in dotted line. Below are figures from the three design patents at issue here that illustrate how design patents “claim” ornamental designs:
A jury found that Samsung’s accused mobile phones infringed all three design patents and Apple was awarded Samsung’s total profits on the entire mobile phone devices: about $400 million.
Samsung appealed to the Federal Circuit: Apple v. Samsung, 786 F.3d 983 (Fed. Cir. 2015). Samsung argued that it did not infringe and that the damages award should not have been based on Samsung’s entire profits from the infringing phones.
Samsung argued that, under “basic causation principles,” the design patent damages should be limited to the profit actually attributable to Samsung’s infringement: “Apple failed to establish that infringement of its limited design patents … caused any Samsung sales”; rather, such sales were based on a host of other factors. The Federal Circuit ruled that this was the same “causation” argument that Congress rejected when it removed an “apportionment requirement” from the design patent damages statute–i.e., a requirement that the patentee show “what portion of the infringer’s profit, or of his own lost profit, was due to the design and what portion was due to the article itself …” The Act of 1887 removed the apportionment requirement, and it is not part of §298 for design patent damages.
Samsung also argued that the profits should be limited to “the portion of the product as sold that incorporates or embodies the subject matter of the patent.” Samsung relied on a 1915 Second Circuit case on a design patent for a piano case where lost profits were based on the sale of the piano case, not the entire piano. But the Federal Circuit rejected that argument because purchasers considered the piano and piano case to be distinct articles of manufacture; in contrast, the Samsung phone “innards” were not sold separately from the their shells:
Samsung continues its quest for apportionment by arguing … that the profits awarded should have been limited to the infringing “article of manufacture,” not the entire infringing product. Samsung argues for limiting the profits awarded to “the portion of the product as sold that incorporates or embodies the subject matter of the patent.” Samsung contends that the Second Circuit had allowed an award of infringer’s profits from the patented design of a piano case but not from the sale of the entire piano. These Second Circuit opinions, however, addressed a factual situation where “[a] purchaser desiring a piano of a particular manufacturer may have the piano placed in anyone of several cases dealt in by the maker.” Bush & Lane Piano v. Becker Bros., 222 F. 902, 903 (2d Cir. 1915). That factual situation occurred in the context of the commercial practice in 1915 in which ordinary purchasers regarded piano and a piano case as distinct articles of manufacture. The facts at hand are different. The innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers. We thus do not agree with Samsung that these Second Circuit cases required the district court to limit the damages for design patent infringement in this case. [internal citations and emphasis omitted]
The foregoing block quote is the entirety of the Federal Circuit’s decision on this specific issue, which issue is the subject of the Supreme Court’s ruling in this case.
Supreme Court Decision
The Supreme Court granted Samsung’s petition to review the Federal Circuit’s decision based on the second question presented in the petition:
2. 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?
Although the question above would encompass Samsung’s “causation” argument–i.e., limit award to the “total profit the infringer made because of the infringement”–the Supreme Court did not address that issue because “Samsung abandoned this theory at argument.” So the Supreme Court’s decision was limited to whether Section 289 of the design patent statute could include a component of a product.
Section 289 states, in relevant part, as follows:
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 …
The Supreme Court first stated that the plain language of “total profits” means all of the profit:
“Total,” of course, means all. See American Heritage Dictionary 1836 (5th ed. 2011) (“[t]he whole amount of something; the entirety”). The “total profit” for which §289 makes an infringer liable is thus all of the profit made from the prohibited conduct, that is, from the manufacture or sale of the “article of manufacture to which [the patented] design or colorable imitation has applied.”
The Court then described the two steps required to determine §289 damages award:
- First, identify the “article of manufacture” to which the infringe design has been applied.
- Second, calculate the infringer’s total profit made on that article of manufacture.
The Supreme Court ruled that it was only addressing the limited “threshold” issue of what the design patent statute means by “article of manufacture”:
The only question we resolve today is whether, in the case of a multi-component product, the relevant “article of manufacture” must always be the end product sold to the consumer or whether it can also be a component of that product. Under the former interpretation, a patent holder will always be entitled to the infringer’s total profit from the end product. Under the latter interpretation, a patent holder will sometimes be entitled to the infringer’s total profit from a component of the end product.
The Supreme Court concluded that an “article of manufacture” could be either an end product or component, stating:
The term “article of manufacture,” as used in §289, encompasses both a product sold to a consumer and a component of that product.
The Supreme Court’s decision was based on the text of the statute, concluding that “article of manufacture” has “a broad meaning” that is “simply a thing made by hand or machine” based on dictionary definitions of “article” and “manufacture”:
- An “article” is just “a particular thing.” J. Stormonth, A Dictionary of the English Language 53 (1885) (Stormonth); see also American Heritage Dictionary, at 101 (“[a]n individual thing or element of a class; a particular object or item”).
- And “manufacture” means “the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man” and “the articles so made.” Stormonth 589; see also American Heritage Dictionary, at 1070 (“[t]he act, craft, or process of manufacturing products, especially on a large scale” or “[a] product that is manufacture”).
Accordingly, the Supreme Court construed “article of manufacture” broadly to include either the end product or a component within it, stating:
So understood, 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. A component of a product, no less than the product itself, is a thing made by hand or machine. That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.
Further, the Patent Office and courts have understood that design patents themselves can be “a design extending to only a component of a multicomponent product.” And Section 101 of the patent statute defines patentable subject matter to include a “manufacture”, which includes “the parts of a machine considered separately from the machine itself.” (quoting 1 W. Robinson, The Law of Patents for Useful Inventions §183, p. 270 (1890)). The Supreme Court, therefore, rejected the Federal Circuit’s interpretation of “articles of manufacture”, ruling that “reading ‘article of manufacture’ in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.”
The Supreme Court declined to decide whether the entire phone or just a component were the “article of manufacture” in this case. To do so would require devising a test to identify the relevant article of manufacture, but the parties had not brief that issue and deciding the issue was not necessary to resolve the limited question presented:
We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties. Doing so is not necessary to resolve the question presented in this case, and the Federal Circuit may address any remaining issues on remand.
Accordingly, we shall await the Federal Circuit’s review of this issue for further developments in this niche’ area of design patent law.