The U.S. Supreme Court issued a unanimous decision in Samsung v. Apple on Tuesday, December 6, 2016, less than two months after oral arguments. This case concerned the extent to which a design patent holder may recover infringement damages under 35 U.S.C. 289 when multi-component products are at issue. The Court's decision focused on the meaning of the term "article of manufacture" as used in 289, which will most likely wipe out Apple's $399 million damages award in the case.
Section 289 states that an infringer of a design patent "shall be liable to the owner to the extent of [the infringer's] total profit." The statute, however, refers only to the "article of manufacture" to which the design is applied. It does not address what happens when multi-component products are sold but only one component infringes the design patent. Both the district court and a panel of the Federal Circuit held that the relevant "article of manufacture" for which total profits are owed is always the entire product, even if only one component of a multi-component product embodies the patented design.1
The Court received oral arguments on October 11, 2016, during which there was apparent disagreement among the Justices regarding aspects of 289. (Please see Fried Frank's previous memorandum for a more in-depth discussion of the oral argument.) Despite the seemingly discordant bench, the opinion that issued was unanimous and focused only on the high level issue of whether the "article of manufacture" is always limited to the final multicomponent product sold to consumers, as the Federal Circuit determined.
Writing for the unanimous Court, Justice Sotomayor rejected this interpretation of 289, holding that the "term `article of manufacture' . . . encompasses both a product sold to a consumer and a component of that product."2 Using the dictionary definitions of "article" and "manufacture," Justice Sotomayor explained that an "article of manufacture" means nothing more than "a thing made by hand or machine."3 A component does not lose its status as something made by hand or machine simply because it is incorporated into a larger product.4 Nor is a component prohibited from being the "article of manufacture" just because it is not separately sold to a consumer.5 The Court, however, refused to adopt a specific test for identifying the relevant article of manufacture in this opinion because the parties had not briefed the question of what test should apply.6 Similarly, the Court did not determine the specific relevant article of manufacture in Samsung v. Apple.7
The Court's holding does not mean that a design patent owner is always limited to recovering the total profits attributable to the infringing component rather than from the larger product. Instead, it means that accused infringers are not prevented from arguing that damages should be so limited. The factfinder must still determine the relevant article of manufacture based upon the facts of each case.
The Court remanded the case to the Federal Circuit for further proceedings, but this case is far from over. The next chapter in the battle over design patent infringement damages will be how the relevant article of manufacture should be determined. The district court originally awarded Apple $399 million in damages for Samsung's design patent infringement.8 If the lower courts determine that the relevant article of manufacture is only part of the smartphone, such as the screen, that number will decrease dramatically. Regardless of what the courts determine the relevant article of manufacture to be, however, it likely will not be long before we will see another petition for certiorari in this case given the heated disagreement between the parties at oral argument and the test for determining the relevant article of manufacture already suggested by the United States as amicus curiae.