During oral arguments on Tuesday, justices of the U.S. Supreme Court grappled with the appropriate standard by which to assess damages for infringement of design patents, as Justice Anthony Kennedy admitted he “wouldn’t know what to do” if he had been a juror tasked with calculating damages for Samsung’s infringement of Apple, Inc.’s design patents in developing various models of the Samsung Galaxy smart phone.
At issue is a $399 million portion of a $930 million damage award which a district court jury ordered Samsung to pay in 2012 for infringements of design patents which relate, among other things, to the rectangular shape and rounded corners of the Apple iPhone. Specifically, the $399 million covers Samsung’s total profits on eleven smart phone models which were found to infringe upon the iPhone design. Samsung has argued that a design patent “on the portion of the appearance of a phone should not entitle the design patent holder to all of the profit on the entire phone.”
Although an 1887 law cited by the Federal Circuit Court in the case at hand permits the collection of total profits for design patent infringement, an attorney for the U.S. Justice Department advised the justices that application of the 1887 law has the potential to overcompensate patent holders in certain circumstances. On the question of whether smart phone design patents should be separated from technological utility patents for the purpose of assessing damages, counsel for Apple told the justices that damages covering total profits was appropriate in this instance as the design and functional components of the iPhone cannot be separated. Attorneys for Samsung, meanwhile, suggested that jurors should narrow down the “article of manufacture” described in the patent in order to calculate how much that article contributes to total profits, arguing that if the article of manufacture is the iPhone screen, experts could separate the cost of the screen from the overall cost of the phone in assigning a profit margin to that article.
Kennedy, meanwhile, drew a comparison to the distinctive rounded design of the Volkswagen Beetle, highlighting the potential ramifications if Volkswagen had patented the exterior design of the Beetle when the vehicle was introduced to the U.S. market. While acknowledging that good reason exists for “separating the body from the innards,” Kennedy questioned the fairness of ordering an infringing manufacturer to pay only for the value of the body design if that design had been the result of a “stroke of genius” that took just days to complete as opposed to the inner workings of the engine which represents perhaps a hundred thousand hours of engineering time. The court is expected to issue its decision by mid-2017.