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18 June 2018
On 24 May 2018, after a week-long trial and four days of deliberation, a federal jury determined that Samsung owes Apple $533,316,606 in damages for infringing three design patents asserted by Apple.(1) The jury also found Samsung liable to pay more than $5 million for infringing two utility patents. The design patents at issue – D604,305, D593,087 and D618,677 – cover ornamental features of smartphone devices, including their shape and graphical user interface.
This case has been pending for more than seven years. Apple initially sued Samsung in 2011, asserting:
After jury trials in 2012 and 2014, Apple was awarded $399 million in damages for infringement of the design patents – Samsung's total profits for its infringing smartphones. Samsung appealed to the Court of Appeals for the Federal Circuit, which in 2015 had upheld the damages based on design patent infringement. Samsung then appealed the design patent damages issue to the Supreme Court, which reversed the decision in 2016. Following remands by the Supreme Court and the Federal Circuit back to the district court, a new trial on the damages was held between 14 and 18 May 2018.
The design patent damages statute provides that an infringer that applies the patented design to any "article of manufacture" will be liable to the extent of its total profit (35 USC § 289). This calculation of damages – disgorgement of the infringer's total profits – differs from damages for utility patents, which may be based on the lost profits of the patentee. Prior to the Supreme Court's 2016 decision, Federal Circuit law had held that the relevant article of manufacture under 35 USC § 289 is the entire product sold to a consumer to which the design is applied – even if the design covers only one component of the product. In an effort to reduce the basis on which its profits were calculated, Samsung argued to the Supreme Court that the article of manufacture should be limited to the component embodying the patented design. The Supreme Court agreed in part: it held that the article of manufacture could be either the component or the entire product, depending on the particular facts of the case.
However, the Supreme Court did not explain which choice applied to Apple v Samsung or how to calculate damages based on a component of the product. After considering competing proposals by Apple and Samsung, the district court adopted a test formulated by the US solicitor general during the Supreme Court proceedings. Specifically, the district court instructed the jury to consider four factors:
In the May 2018 trial, the jury awarded Apple $533 million in design patent damages. Although the jury's verdict form broke down this award among 16 infringing Samsung smartphones, it did not shed light on what, exactly, the jury had determined to be the article of manufacture. On the one hand, the May 2018 award is comparable to the prior $399 million award, when the law required a calculation of the total profits based on the value of the entire product. On the other hand, the jury's award essentially split the difference between the $1 billion in total profits that Apple had sought and the $28 million that Samsung had argued to the jury was the appropriate figure.
When the Federal Circuit remanded the case to the district court after the Supreme Court's decision, it provided no guidance on how to determine the article of manufacture. However, at least two other district courts(2) have taken the same tack as the district court in this case, applying the solicitor general's four-factor test. There now appears to be a growing consensus on how district courts will instruct juries regarding design patent damages.
For further information on this topic please contact Christopher Loh or Andrew Kutas at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (firstname.lastname@example.org or email@example.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.
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