Why it matters: On March 21, 2016, the Supreme Court granted in part the petition for writ of certiorari filed by Samsung Electronics Co., Ltd. (and other Samsung entities) in December 2015 in connection with the Federal Circuit's decision to uphold a $399 million jury verdict against it for infringement of three Apple, Inc. design patents. The Court's review will be limited to the second question presented in Samsung's Petition, which is whether a design patent owner can recover the total profit from the defendant's sale of the infringing product—regardless of the extent to which the patented features contributed to the value of that product and/or its commercial success.
Detailed discussion: On March 21, 2016, the Supreme Court agreed to review the second question presented in the petition for writ of certiorari (Petition) filed by Samsung Electronics Co., Ltd (Samsung) in December 2015 in connection with the Federal Circuit's decision to uphold a $399 million jury verdict against Samsung for infringement of three Apple, Inc. (Apple) design patents. The issue presented by Samsung that the Court agreed to review is as follows:
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?
The Apple Design Patents
According to Samsung's Petition, the three design patents at issue cover specific, limited portions of a phone's design (rather than the entire design of the phone). These are: (1) a particular black rectangular round-cornered front face; (2) a substantially similar rectangular round-cornered front face plus the surrounding rim or "bezel"; and (3) a particular colorful grid of 16 icons.
The Question Presented
Samsung took issue with the Federal Circuit's affirmance of the damages award that allowed Apple to recover Samsung's entire profit from its sale of the infringing phones, no matter how little (or how much) the patented design features contributed to the value of the Samsung products (i.e., Apple gets 100% of Samsung's profits, even if Apple's patented features contributed only 1% of the value of the Samsung phones). In fact, Samsung claimed the Federal Circuit never disputed that such a result is "ridiculous," "absurd," and "makes no sense in the modern world." However, according to Samsung, the Federal Circuit believed its decision was nevertheless compelled by the clear language of the statute (i.e., Section 289 of the Patent Act, which provides that anyone who applies the patented design to any "article of manufacture" shall be liable to the owner of the patent to the extent of his "total profit"), and held that the phrase "article of manufacture" means an entire item "sold separately" to ordinary purchasers. Samsung responded by asserting: (1) that the phrase "article of manufacture" is never defined in the statute as the entire product, rather than the portion of the product depicted in the design patent; and (2) that nothing in Section 289 suggests that Congress exempted design patents from the principles of causation and equity. Samsung also argued that the Federal Circuit's position cannot be reconciled with the requirement in Section 289 that the patentee "shall not twice recover the profit made from the infringement" (emphasis included).
Samsung argued that design patent owners are now being rewarded far beyond the value of any inventive contribution they made (leading to an "unjustified windfall"). Indeed, the very first paragraph of Samsung's Petition recounted that the Supreme Court has not reviewed a design patent case in 120 years, and asserted that 21st century technology (e.g., smartphones having a multitude of features and applications) has bypassed 19th century law (e.g., cases involving the design of spoon handles, saddles, and rugs).
Procedural History and Status
Apple filed its Brief in Opposition on February 3, 2016. Apple's Opposition emphasized its position that: (1) its iPhone revolutionized the mobile phone market; (2) Samsung copied Apple's patented designs (and failed to introduce any expert testimony at trial supporting its non-infringement arguments); (3) design patents are fundamentally different from utility patents with respect to, among other things, their available statutory remedies; (4) the iPhone's commercial success was due "in no small part" to its innovative design; (5) Congress has declined opportunities to modify the remedy for design patent infringement; and (6) the Federal Circuit merely applied the Section 289 "infringer's profits" statute and well-settled law.
Samsung filed its Reply on February 16, 2016. Several amicus briefs were also filed in January of 2016 (including briefs by Dell, et al.; The Computer & Communications Industry Association; and 37 intellectual property professors). The Supreme Court granted certiorari as to the second question presented in Samsung's Petition on March 21, 2016. Oral argument has not yet been scheduled.
See here to read the Petition for Certiorari filed by Samsung on 12/14/15 in Samsung Electronics Co., Ltd., et al. (Petitioners) v. Apple Inc. (Respondent).
See here to read the amicus brief in Samsung Electronics Co., Ltd., et al. (Petitioners) v. Apple Inc. (Respondent).
For more on this topic, read the Federal Circuit's 5/18/15 opinion in Apple Inc. v. Samsung Electronics Co., Ltd., et al.