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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.

Summary

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.
Continue Reading Supreme Court rules that design patent statute term “article of manufacture” can be an end product or component thereof (Samsung v. Apple)

Today the U.S. Supreme Court decided to review the Federal Circuit’s decision regarding international patent exhaustion in Impression Products, Inc. v. Lexmark Int’l, Inc.   Things to look for in whatever decision the Supreme Court ultimately reaches in this case is not only the mechanical aspect of applying the patent exhaustion doctrine generally, but whether the Supreme Court agrees with, strengthens or weakens the Federal Circuit’s en banc view that there are extraterritorial limits on the ability of foreign countries to control U.S. patents and access to U.S. markets.
Continue Reading Supreme Court will review international patent exhaustion doctrine (Impression Prod. v. Lexmark)

Today, the Federal Circuit issued a decision en banc that reversed a three-judge panel decision because it erroneously had relied on evidence outside of the record from the trial court below to change the claim construction and hold claims invalid on obviousness grounds.  This decision may lead to more deference to the district court and increase the likelihood that a district court’s decision on claim construction, infringement or validity will survive appellate review.   But the decision’s ambiguous procedural posture may lead to confusion and litigants debating what portions of the decision are cloaked with the binding deference due an en banc decision of the court.
Continue Reading Federal Circuit en banc decision limits appellate review to trial court record (Apple v. Samsung)

Today, in The Medicines Co. v. Hospira, the Federal Circuit en banc unanimously ruled that “a contract manufacturer’s sale to the inventor of manufacturing services where neither title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale under § 102(b).”

This case provides a good review of the on-sale bar and circumstances that may or may not constitute a sale that would trigger it.  The decision is based on § 102(b) as it existed before amendment in 2011 under the America Invents Act (AIA); but the decision may guide applying the on-sale bar under AIA § 102(a)(1) to patents that are subject to the amended provision–i.e., patents’ whose claims have an effective filing date on or after March 16, 2013.
Continue Reading En banc Federal Circuit clarifies what constitutes a “sale” triggering the on-sale bar (MedCo v. Hospira)

Today, the U.S. Supreme Court decided to review the Federal Circuit’s ruling of infringement under 35 U.S § 271(f)(1) based on supplying from the United States a component of a patented invention.  This case may provide the Supreme Court’s view of whether and to what extent a single component may be “a substantial portion of the components of a patented invention” under § 271(f)(1).
Continue Reading Supreme Court to review § 271(f)(1) liability for exporting a component of a patented invention (Life Tech v. Promega)

Today the Supreme Court issued its awaited Cuozzo decision and gave strong deference to the U.S. Patent & Trademark Office (“Patent Office”) power (1) to make an unappealable determination to institute inter partes review (IPR) of an issued patent and (2) to make both procedural and substantive rules governing the IPR process, including what standard the Patent Office wants to use when construing patent claims in an IPR proceeding.  The Court’s ruling on the specific Patent Office IPR regulations at issue here was generally expected.  The broader impact of the decision may be the Court’s indication of how much power Congress gave the Patent Office to regulate IPRs.
Continue Reading Supreme Court confirms Patent Office’s power to regulate inter partes reviews (Cuozzo v. Lee)

Today, the Supreme Court issued an opinion that replaces the Federal Circuit’s strict Seagate test for enhanced patent damages with a test that is easier for patent owners to meet.  Relying extensively on the Court’s recent Octane and Highmark decisions that created an easier standard to receive attorney fees in exceptional patent cases, the Supreme Court ruled as follows:

  1. Eliminated Seagate’s objective recklessness prong (that avoided an accused infringer’s subjective belief) and focused on a subjective basis for enhancing damages given an infringer’s egregious conduct in the particular circumstances of the case, which behavior goes beyond what is found in a typical patent case.
  2. Lowered the patent owner’s burden of proof from the “clear and convincing evidence” standard to the lower “preponderance of the evidence” standard generally applied to infringement.
  3. Adopted a simple “abuse of discretion” standard of review that requires the Federal Circuit to defer more to the district court’s decision whether to enhance damages.

Judge Breyer’s concurring opinion explains his understanding of today’s decision and the limits on enhancing damages.  He sought to avoid the perception that the decision reverts back to pre-Seagate law where costly opinions of counsel were sought upon simply receiving notice of a patent and much litigation centered around such opinions and waiving privilege by relying on them.
Continue Reading Supreme Court ruling increases patent owners’ ability to get enhanced damages (Halo v. Pulse)

Last week, the Federal Circuit en banc ruled that the sale of a product abroad by a U.S. patent holder (or others) does not exhaust the patent owner’s U.S. patent rights, such as the right to exclude sale or importation of that product within the United States.  Further, the Federal Circuit ruled that, when a U.S. patent holder sells a product with expressed restrictions on resale or reuse of that product, the patent exhaustion doctrine does not preclude the patent owner from exercising its right to exclude resale or reuse of that product.  The Federal Circuit summarized its ruling as follows:

We hold that, when a patentee sells a patented article under otherwise-proper restrictions on resale and reuse communicated to the buyer at the time of the sale, the patentee does not confer authority on the buyer to engage in the prohibited resale or reuse.  The patentee does not exhaust its § 271 rights to charge the buyer who engages in those acts–or downstream buyers having knowledge of the restrictions–with infringement.  We also hold that a foreign sale of a U.S.-patented article, when made by or with the approval of the U.S. patentee, does not exhaust the patentee’s U.S. patent rights in the article sold, even when no reservation of rights accompanies the sale.  Loss of U.S. patent rights based on a foreign sale remains a matter of express or implied license.

This is a lengthy decision that provides insight into the Federal Circuit’s view of not only the patent exhaustion doctrine, but the fundamental patent right to exclude and extraterritorial limits that preclude U.S. law from reaching into other countries and, importantly, that precludes laws of other country’s from limiting U.S. patent rights.
Continue Reading Federal Circuit rules sale abroad does not exhaust U.S. patent rights (Lexmark v. Impression)

Last week, the Federal Circuit denied en banc review by the entire court of the three-judge panel decision in the Apple v. Samsung case that had revived the ability to obtain injunctive relief against multiple component products, such as smartphones (see our Sep. 17, 2015 post).  In doing so, the original three-judge panel (Prost, Moore and Reyna) issued an Order that withdrew their original opinion and issued a revised opinion that focuses on the patented feature being “one of several [features] that cause consumers to make their purchasing decision,” rather than the patented feature having to be “the exclusive or significant driver of customer demand” as prior decisions had intimated.
Continue Reading Federal Circuit revised injunction decision to emphasize patented feature being one of several that drive purchasing decision (Apple v. Samsung)

Today, a three-judge Federal Circuit panel (Prost (author),  Dyk and Hughes) issued its awaited decision in CSIRO v. Cisco that agreed-in-part and disagreed-in-part with Judge Davis’ damages award based on patents alleged to be essential to the IEEE 802.11 WiFi standard, but which patents did not have any FRAND or other standard-setting obligation (see our July 28, 2014 post on Judge Davis’ decision).  This is an important decision that provides incremental insight into proving and determining a reasonable royalty for a standard essential patent, which includes further insight into the Federal Circuit’s first decision on this issue a year ago in Ericsson v. D-Link that involved a standard essential patent that did have a FRAND obligation under the IEEE 802.11 WiFi standard (see our Dec. 5, 2014 post on the Ericsson v. D-Link decision).

This is an important decision to read directly to catch all the nuances and import of the decision, and the incremental guidance it provides in determining a royalty rate as a matter of patent damages law for past infringement of a patent that is essential to a standard.  A few particularly important points come from the decision.

First, the Federal Circuit soundly rejected as “untenable” the accused infringer’s argument that there is a “rule” that all patent damages methodologies always must start out using the smallest salable patent-practicing unit.  The smallest salable patent practicing unit is a principle that can aid courts to determine if a damages expert’s methodology reliably apportions to the patent only the value that the patented technology provides to the infringing product and not other unpatented features.  But it is not the only approach that may be considered, and different cases present different factual circumstances that could lend themselves to different reliable methodologies.  For example, damages methodologies properly may rely on real-world comparable licenses to reliably apportion value to the patented technology, whether the royalties are based on end products or components thereof.  This decision may very well put to rest arguments that there is some “rule” requiring use of the smallest salable patent-practicing unit or that there is any problem per se in royalties being based on the end product rather than its components.

Second, the Federal Circuit clarified that the need to apportion the value of the patented technology from the value of standardization applies whether or not a standard essential patent is subject to a FRAND or other standard setting obligation.  This is based on the long-standing, fundamental principal that statutory damages for infringement under 35 U.S.C. § 284 must be based on the value of the patented invention and not other unpatented features, whether that’s other unpatented technology in an infringing  product or the value of the patent being essential to a standard.
Continue Reading Federal Circuit provides guidance on royalty determination for standard essential patents (CSIRO v. Cisco)