Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

SCOTUS Makes Big Decision Regarding Design Patent Damages

Author: Scarinci Hollenbeck, LLC

Date: December 21, 2016

Key Contacts

Back

U.S. Supreme Court Clarifies Design Patent Damages

design patent damages

The U.S. Supreme Court recently issued its much-anticipated decision in , which revolved around how to calculate damages in design patent infringement cases. In a unanimous decision, the Court held that Samsung could be liable for only those profits associated with the infringing components of the phone rather than the whole device.

Determining Design Patent Damages

Section 289 of the Patent Act makes it unlawful to manufacture or sell an “article of manufacture” to which a patented design or a colorable imitation thereof has been applied. It further 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 and Apple’s intellectual property dispute centers on a series of design patents that protect various aspects of the iPhone’s iconic design, including its rectangular front face with rounded edges and a grid of colorful icons on a black screen. After Samsung introduced smartphones with similar features, Apple filed a design patent infringement lawsuit.

The 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 damages should be limited because the relevant “articles of manufacture” were the front face or screen rather than the entire smartphone. According to the Federal Circuit Court of Appeals, a design-patent holder is entitled to an infringer’s entire profits from sales of any product found to contain a patented design, without any regard to the design’s contribution to that product’s value or sales, because the components of Samsung’s smartphones were not sold separately to ordinary consumers and thus were not distinct articles of manufacture.

Supreme Court’s Narrow Patent Ruling

The Supreme Court held that the relevant “article of manufacture” for determining a damages award is not limited to the end product sold to the consumer, but may also be only a component of that product. The decision rested exclusively on the Court’s interpretation of the statute and avoided the larger issues raised on appeal.

As interpreted by the Court, “an article of manufacture … is simply a thing made by hand or machine.” Accordingly, the justices held that term is “broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not.” Moreover, the justices concluded that “reading ‘article of manufacture’ in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.”

While the Supreme Court decision brings some clarity to design patent damages, it did not establish a clear 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.

Going forward, it will be up to the Federal Circuit to establish a standard. Given the ongoing litigation between Samsung and Apple, it would not be at all surprising if the Federal Circuit’s test ends up back before the Supreme Court.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Shane Birnbaum, at 201-806-3364.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
When to Settle and When to Fight: A Litigator's Framework post image

When to Settle and When to Fight: A Litigator's Framework

Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]

Author: Sean M. Pena

Link to post with title - "When to Settle and When to Fight: A Litigator's Framework"
A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now post image

A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now

Few situations create more uncertainty than learning that an employee has filed a whistleblower complaint. Questions arise immediately: Is the allegation legitimate? Should the employee be placed on leave? Do we need to notify our insurance carrier? Are we now prevented from disciplining the employee if there are unrelated ongoing work related issues? There is […]

Author: Sean M. Pena

Link to post with title - "A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now"
Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses post image

Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses

When a business reaches the point where it can no longer service its debts or otherwise resolve its liabilities, management is often faced with a difficult question: is a bankruptcy filing necessary or is there another way to perform an orderly liquidation or sale of the business assets? While Chapters 7 and 11 of the […]

Author: John D. Giampolo

Link to post with title - "Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses"
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know post image

Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know

For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]

Author: George McGowan

Link to post with title - "Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know"
Estate Planning for Digital Assets Under New Jersey Law post image

Estate Planning for Digital Assets Under New Jersey Law

As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]

Author: Marc J. Comer

Link to post with title - "Estate Planning for Digital Assets Under New Jersey Law"
The Role of Representation and Warranty Insurance in M&A Transactions post image

The Role of Representation and Warranty Insurance in M&A Transactions

In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]

Author: George McGowan

Link to post with title - "The Role of Representation and Warranty Insurance in M&A Transactions"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!