The legal dispute between Samsung and Apple over the design of various smartphones and tablets is the subject of many press reports. A recent decision by the Supreme Court of the United States dealt with the damages to be paid by Samsung for the infringement of Apple’s design patents for the iPhone. The central question was whether the damages should be calculated based on the entire product or only on the affected components.
The relevant provision in US law, 35 USC § 293, states the following:
“Whoever […] sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit […]”
In the lower court, the CAFC, Samsung was ordered to pay Apple USD 399 million in damages. Samsung appealed against this judgment and the central question in the proceedings before the Supreme Court was whether the term “article of manufacture” necessarily refers to the entire end product as it is sold to the end customer or whether the term can also refer to just one component.
Obviously, the answer to this question has a direct influence on the amount of compensation.
The court decided this question as follows:
“The term ‘article of manufacture’ is broad enough to encompass both a product as sold to the consumer and a component of that product. A component of a product – no less than the product itself – is a thing made by hand or by a machine. The fact that a component can be integrated into a larger product does not – in other words – exclude it from belonging to the category of ‘articles of manufacture’.”
Despite this clear statement, the Supreme Court declined to decide what would constitute a relevant article of manufacture with respect to each of the Designs Patents underlying the case. The court stated that they would have to develop a test first, but neither party took a position on a possible test proposed in an amicus curiae submission by the US government. The case was therefore referred back to the lower court.
Many of today’s products have a complex structure. This plays an even greater role in technical patents than in design rights: a complex product can be covered by tens or hundreds of patents. For example, a patent may cover an electronic component of a smartphone, where the component is available for USD 0.50, but the entire smartphone is sold to the end consumer for USD 500. In the event of an infringement of the patent, the basis on which damages are calculated therefore plays a decisive role.
It is clear that the Supreme Court’s decision, or any test that may emerge from this litigation in the future, is not directly applicable to technical Patents. However, it may provide valuable guidance for such cases.
Left: https://www.supremecourt.gov/opinions/16pdf/15-777_7lho.pdf