Maschoff Brennan



Supreme Court Unanimous in Samsung v. Apple Decision

December 8, 2016

The Supreme Court issued the Samsung Elecs. Co. v. Apple, Inc., 580 U.S. __ (2016) decision today regarding design patent damages. In a unanimous decision authored by Justice Sotomayor, the Supreme Court clarified the standard for damages under 35 U.S.C. § 289. A design patent holder can seek damages under either § 284, as with utility patents, or alternatively, under § 289. Section 289 states that a person who manufactures or sells “any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.”

The Supreme Court held that the analysis requires two steps: first, to identify the “article of manufacture,” and second, to determine the total profit on that article of manufacture. Samsung, slip op. at 5. The Federal Circuit had previously held that the term “article of manufacture” was to be the article that a consumer could purchase. See, e.g., Samsung Elecs. Co. v. Apple, Inc., 786 F.3d 983, 1002 (2015) (the “innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers”). The Supreme Court reversed, making a narrow holding that the article of manufacture can include a component of a product sold to a consumer, rather than only being the entire product. Samsung, slip op. at 6.

This holding has a number of implications. First, the holding fails to provide a rule or standard by which a court or jury is expected to determine what the actual “article of manufacture” may be. Several factors were suggested and considered during oral arguments, but the Supreme Court specifically declined articulating a test without “adequate briefing by the parties.” Id. at 8. This uncertainty as to what is an article of manufacture will require briefing at the Federal Circuit, and a decision from the Federal Circuit. Second, this holding undermines the potential damages available under § 289, while likely increasing the cost to prove such damages. For example, there will likely be expensive expert testimony and possibly consumer surveys as to what should be considered the article of manufacture, and likely even more expensive, what component of profits are attributable to that component. Ultimately, it is likely to shift to an apportionment problem. Additionally, this holding and the increased cost associated with proving damages under § 289, may shift damages theories for design patents away from § 289 and towards § 284 where treble damages are still a possibility.

Adam Smoot