Samsung was handed a major legal victory Tuesday by the U.S. Supreme Court, which ruled unanimously that the South Korean electronics giant may not be liable for $399 million in damages which Samsung had been ordered to pay Apple, Inc. for infringing design patents which relate to the rectangular shape, rounded corners and other ornamental features of the iPhone.
Tuesday’s ruling is the first in a century to be handed down by the Supreme Court on the subject of design patents, and a related 1887 law that specifies “it is the design which sells the article.” Although Samsung does not dispute that it infringed the design patents in question, Samsung asked the high court to consider whether the company should be forced to pay damages amounting to its entire profit on affected smart phone models, which contain thousands of other noninfringing technologies. In 2012, Samsung was ordered to pay Apple $930 million in damages for infringing various iPhone patents in the development of eleven Galaxy smart phone products, out of which $399 million in damages relate specifically to the iPhone design. Ruling in Apple’s favor, the Federal Circuit Court of Appeals later concluded that the 1887 law “explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.”
With the backing of various technology firms, Samsung advised the Supreme Court that the 1887 law is obsolete in the modern era in which smart phones and many other products contain thousands of patented technologies which relate to the function of a product and not just to the outward design or appearance of that product. Apple, in turn, solicited the input of independent designers in arguing that, because design remains a central element in the sale of many products, patent violators should be held liable for damages that cover their full profit on the products in question. In the end, however, the high court concluded that the Federal Circuit had erred in ruling that “the relevant ‘article of manufacture’ must always be the end product sold to the consumers.” As such, the justices remanded the case to the lower court for further consideration of the appropriate damage award. Writing for the court, Justice Sonia Sotomayor cited the dictionary definitions of “article” and “manufacture” in describing an article of manufacture as “simply a thing made by hand or machine.” Though declining to offer specific guidance on the “article of manufacture” as it relates to the case at hand, Sotomayor thus maintained that “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 Samsung executive applauded the ruling as one that represents “a victory . . . for all those who promote creativity, innovation, and fair competition in the marketplace.” Emphasizing that “our case has always been about Samsung’s blatant copying of our ideas,” an Apple spokesman told reporters that his company remains “optimistic that the lower courts will again send a powerful signal that stealing isn’t right.”