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March 22, 2016Client Alert

Supreme Court Agrees to Review the Appropriate Measure of Design Patent Damages

On March 21, 2016, the Supreme Court agreed to hear Samsung Electronics Co.’s appeal regarding what it must pay Apple Inc. for infringing the design of Apple’s iPhone. This will mark the first time in over a century that the Supreme Court will hear a case involving design patents.

In 2012, a jury found that Samsung infringed Apple utility and design patents and awarded Apple $1.05 billion in damages. On appeal, damages were nearly cut in half to $548 million, which Samsung later agreed to pay to settle the dispute, all the while reserving its right to appeal to the Supreme Court.

Samsung has challenged the Federal Circuit’s decision that the company must pay its entire profits from smartphones that infringed Apple’s design patents, which amounted to $399 million. In making the damages determination, the Federal Circuit relied on Section 289 of the Patent Act, which dates to the 19th century and provides in relevant part: “[w]hoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) 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.” 35. U.S.C. § 289 (emphasis added).

A number of tech companies, including Google and Facebook, submitted a brief in support of Samsung’s petition. In the brief, those companies argued that Section 289 is outdated and when enacted, failed to contemplate “products with significant functional features at all.” Thus, Section 289 is obsolete and should not govern awards involving the complex products available today.

When the Court hears the case later this term, the specific question it will address is, “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?”

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