The Supreme Court Emerges From Its Carbon Freeze on Design Patents

by Dorsey & Whitney LLP

When we last left our story, Jedi combatants Apple and Samsung were circling the Supreme Court imploring it to review their dispute involving design patents—an area of the law that the Court has not touched in over a century.  This epic battle centers on what should be the correct measure of damages for infringement of a design patent.  The judgment in favor of Apple of almost $400 million had been upheld by the Federal Circuit.  Briefs to the Supreme Court were drawn with laser precision.  Now, the Court says it will weigh in on the question of damages in the realm of design patents.

In its lengthy petition for a Writ of Certiorari, Samsung requested the Court consider two questions:

  1. Where a design patent includes unprotected non-ornamental features, should a district court be required to limit that patent to its protected ornamental scope?
  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 Samsung strenuously argued in its brief that the design features in Apple’s patents were primarily functional and thus could not be considered to have any ornamentality, only the second question on the issue of damages will be considered by the Court.

Regarding the proper measure of damages, Samsung argues that the damages statute for designs should not be viewed outside the context of traditional principles of causation and equity and that the Federal Circuit’s literal reading of the statute fails to consider such principles.  Therefore, Samsung argues that the district court should not have awarded Apple all of Samsung’s profits for sales of phones found to infringe the design patents, but rather the damages award should be limited to the relative value of the design aspects to the value of the product as a whole.  This may seem like a reasonable argument.  On the other hand, a statute traditionally provides a rule for addressing an issue that supersedes how the issue might otherwise be considered under the common law.

In its response, Apple relied on the plain language of the statute and the legislative history of its enactment.  Apple further noted that various aspects of the damages provision for utility patents has been modified over the years, whereas the language related to design patent damages has not changed.

According to Apple, the pertinent statute, 35 U.S.C. § 289, is clear on the measure of damages for infringement of a design patent.  The statute provides, in relevant part, that:

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.  Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement. (emphasis supplied)

This is a different damages standard than that for utility patents provided by 35 U.S.C. § 284, which states that:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

Samsung presents a compelling argument in its brief asserting that the term “article of manufacture” in 35 U.S.C. § 289 should not extend to the whole product if the patented design is particular to certain components or features of the product.  Samsung argues that the designs at issue are specific to the shape of the face and the bezel and the arrangement of icons on the smartphone screen.  Therefore, it is only the value of those component articles, i.e., the bezel, glass face, and icon arrangement, that should be considered, not the value of the entire phone.  In this vein, Samsung cites Young v. Grand Rapids Refrigerator Co., 268 F. 966 (6th Cir. 1920), where the Sixth Circuit affirmed the denial of all profits from the sale of refrigerators where the infringed patent related only to the design of the refrigerator’s door latch.  According to Samsung, that court explained that it was not even “seriously contended” that the patentee could recover all profits from sales of refrigerators containing that latch.

An interesting comparison can be drawn to the eBay Inc. v. MercExchange, L.L.C. decision (547 U.S. 388), which concerned the institution of almost automatic injunctive relief in patent infringement cases.  This analogy is drawn by the petitioner in the case of Systems, Inc. v. Nordock, Inc., which is waiting for a decision on its petition for Certiorari in a very similar case involving the limits on design patent damages.  The traditional view of a patent right is that it is a right to exclude others from practicing the patented invention.  Therefore, the courts had provided a presumptive gloss of irreparable harm and thus regularly entered injunctions.  The Court held that this was improper, that the traditional four-factor test for providing such equitable injunctive relief must be undertaken, and that irreparable harm could not be presumed merely because the case involved a patent.  Systems, Inc. argues by analogy that equitable principles should be considered even when determining damages under a statutory regime.  However, it should not be overlooked that the patent statute actually requires that injunctions in patent cases may only be entered “in accordance with principles of equity.”  (35 U.S.C. § 283)  There is no similar statutory directive to consider traditional equitable principles when  determining damages for design infringement, which is where the analogy may break down.

A number of groups filed amicus briefs in support of Samsung’s position, arguing for various reasons that the damage award in this case is improper and unreasonable.  A group of law professors argues that entire-profit disgorgement for design patent infringement “makes no sense in the modern world,” leads to “absurd results,” is “draconian,” and is not required by the statute.  Apple argues, on the other hand, that the professors are essentially asking the Court to ignore the statute and “legislate” a more “reasonable” outcome.  The Electronic Frontier Foundation raises a concern that if the award stands it will promote a new era of design patent litigation trolls.  Other groups have argued for a narrow interpretation of what constitutes the “article of manufacture” referenced in the statute in order to place a reasonable limit on the scope of damages.  If one believes the Court is in a position to place some restraint on the level of damages afforded by the statute, this seems to be the most credible approach within the bounds of statutory construction.

It will be interesting to see how the Court rules in the face of a particular statutory distinction between the types of remedies for utility and design patents.  Whether the measure of damages in a design patent infringement scenario is fair, equitable, or just is a reasonable question to ask.  Whether the Supreme Court can address this concern without moving to the dark side of judicial legislation will be the test of their awakened force.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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