$533 Million Apple v. Samsung Verdict Highlights Importance of Design Patents

May 30, 2018

*This IP Alert was written in May 2018. Apple and Samsung settled the case in June 2018.


Summary

In a long-running smartphone case that made headlines when it reached the Supreme Court in 2016, a California jury decided last week that Samsung owes Apple $533 million for infringing three design patents, while awarding only $5 million for infringing two of Apple’s utility patents.

The verdict hinges on a key distinction between design patents and utility patents: owners of design patents can recover the infringer’s total profits for infringement. The jury’s ruling also reinforces the role of design patents in protecting high tech products where the look and feel of the device is used to differentiate from the competition.

Background

A design patent
protects the look of an inventive design as applied to an object, whereas a utility patent protects the structure or function of an invention. In this case, one of the infringed Apple design patents protects the look of an early iPhone: rectangular shape with a black, reflective surface and rounded corners. A second design patent is directed to the bezel and round home button. Finally, the third design patent claims an arrangement of color icons on the display screen.

Unlike with utility patents, when a design patent is infringed, a patent owner can recover as damages the total profits of the infringer arising from the accused design. Prior to the Supreme Court’s ruling two years ago, courts had consistently looked to the total profits made on the entire end product that included the patented design, even if the patented design was applied to only a portion of the product. For example, a design patent covering a chair leg could result in a damages award for the total profits of an infringer on the sales of the entire chair.

Samsung succeeded at the Supreme Court in challenging the view that the entire end product is always the relevant article for calculating profits. The Supreme Court ruled that the relevant “article of manufacture” could instead be one or more components of the end product. Unfortunately, the Supreme Court did not provide any guidance on how to determine whether the total profits award should be based on the entire end product or only a component. The task for devising the appropriate legal standard for what constitutes the relevant article of manufacture has been left for the lower courts. A first attempt at defining the new methodology was made by the trial court and applied by the jury in this recent decision.

Legal Standard and Jury Verdict

Apple contended the whole phones are the articles of manufacture, while Samsung contended various components of the phones constitute the articles of manufacture, such as the display screen. The judge provided a list of four factors for the jury to consider when identifying the articles of manufacture:
  1. The scope of the design claimed in the patent;
  2. The relative prominence of the design within the product as a whole;
  3. Whether the design is conceptually distinct from the product as a whole; and
  4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, whether the design is embodied in a component that is manufactured separately from the rest of the product, or whether the component can be sold separately.
This case is not necessarily over, as Samsung will undoubtedly appeal to the Federal Circuit. Additionally, a separate design patent case addressing the standard for determining the relevant article of manufacture has been appealed to the Federal Circuit in Columbia Sportswear v. Seirus Innovative Accessories. A Federal Circuit decision in either appeal could refine or change the legal standard for identifying the articles of manufacture.

Takeaways

Design patents can provide great value even when an entire end product is not assumed to be the article of manufacture from which profits are calculated.

Additionally, because the scope of a design patent claim could affect what a jury determines an article of manufacture to be, thoughtful consideration should be given to design applications at the drafting stage. In view of the factors set forth by the judge in this case, it may be advisable to pursue multiple design patents of varying scope for a given product. Such an approach may provide strategic flexibility when considering whether to enforce design patents against infringing products.

Please feel free to contact us if you have any questions or would like to discuss design patents as part of your IP strategy.