The design patent dispute between Apple, Inc. and Samsung Electronics Co. has come full circle. In a recent ruling, the Court of Appeals for the Federal Circuit remanded the case back to the district court to determine the proper test for assessing design patent infringement damages.
Supreme Court Overturns Damages Award
After a five-year legal battle over whether Samsung infringed a series of design patents that protect various aspects of the iPhone’s iconic design, the case has come down to the proper calculation of damages. In 2011, a California jury found Samsung liable for infringement of Apple’s design patents and awarded Apple $399 million in damages, which represented Samsung’s entire profits from the sale of smartphones found to contain the patented designs.
On appeal, the Federal Circuit Court of Appeals rejected Samsung’s argument that patent design damages should be limited because the relevant “articles of manufacture” were the front face or screen rather than the entire smartphone. Section 289 of the Patent Act provides that one who "applies the patented design ... to any article of manufacture ... shall be liable to the owner to the extent of his total profit, ... but [the owner] shall not twice recover the profit made from the infringement." Samsung then took its case to the U.S. Supreme Court.
In December, the U.S. Supreme Court held that Samsung could be liable for only those profits associated with the infringing components of the phone rather than the whole device. According to the unanimous Court, the relevant “article of manufacture” for determining damages award is not limited to the end product sold to the consumer, but may also be only a component of that product.
In its decision, the Court failed to create a specific test for determining whether the profits should apply to a product as a whole or its individual components. “We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties,” Justice Sotomayor wrote. Instead, the justices remanded the case back to the Federal Circuit.
Federal Circuit Decision
In the wake of the Supreme Court’s decision, Apple requested that the Federal Circuit keep the case and reconsider its decision in light of the Supreme Court’s guidance. Meanwhile, Samsung requested that the Federal Circuit remand the case to the district court for a new trial on damages.
The Federal Circuit elected to let the district court determine how best to proceed. Its per curium opinion states:
On remand, the trial court should consider the parties’ arguments in light of the trial record and determine what additional proceedings, if any, are needed. If the court determines that a new damages trial is necessary, it will have the opportunity to set forth a test for identifying the relevant article of manufacture for purposes of § 289, and to apply that test to this case. Accordingly, we remand this matter to the district court for further proceedings.
The case now returns to Judge Lucy Koh of the United States Federal District Court for the Northern District of California. Since Judge Koh is clearly the most familiar with the facts of the case, it makes sense that she takes the first stab at creating and applying a design patent damages test that reflects the new guidance from the Supreme Court. Of course, one of the parties is likely to be unhappy with her decision, which makes it almost certain that the Federal Circuit will not be able to sidestep the issue forever.
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