While emphasizing that it “supports neither party,” the Department of Justice (DOJ) advised the U.S. Supreme Court on Wednesday to send back to the lower courts Samsung’s appeal of a May 2015 Federal Circuit court ruling upholding lower district court findings that Samsung is liable for infringing Apple iPhone patents in the design of Samsung Galaxy smart phone products.
Focusing on “design patents” which relate to the appearance and other ornamental features of a product, the case is the first of its kind to be considered by the high court in a century. Although the Federal Circuit pared down to $538 million the damage award of $930 million that a district court jury awarded to Apple in 2012, the appellate panel based that award on total profits accrued through the sale of Samsung products containing patented Apple design technologies. Arguing that Apple’s patented design features “contributed 1% to the value of Samsung’s phones,” Samsung has asked the Supreme Court to rule on whether it should relinquish all of its profits on infringing devices or only the money it makes on specific device parts or components that are deemed to violate Apple patents.
In an amicus brief, the DOJ told the Supreme Court that, while the Patent Act of 1952 “unambiguously permits a patent holder to recover the infringer’s entire profits from the ‘article of manufacture’ to which the design was applied,” the article of manufacture “will not always be the finished product that is sold in commerce.” Predicting that an “overbroad reading” of the term “article of manufacture” could result in “grossly excessive and essentially arbitrary awards” of damages in patent infringement cases, the DOJ cautioned that the Supreme Court’s final ruling could arm so-called “patent trolls” with “a “sword” they could use to extract settlements from companies. As it explained that “the plaintiff bears the ultimate burden of establishing the infringer’s total profit” and that the “defendant . . . should bear the burden of identifying any component that it views as the relevant article of manufacture,” the DOJ said it was “unclear” in the case at hand whether Samsung had produced enough evidence to support its claim that damage awards should be calculated solely on profits accrued from infringing smart phone components. As such, the DOJ wrote: “the Court should remand the case to allow the courts below to determine whether a new trial is warranted.”
While executives of Apple offered no comment, a Samsung spokesman welcomed the DOJ’s submission, declaring: “if left uncorrected, the Appeals court ruling could lead to diminished innovation, pave the way for design troll patent litigation, and negatively impact the economy and consumers.”