Here's important legal news for product designers, manufacturers and distributors.
The U.S. Supreme Court has decided that infringing a patented design no longer entitles the patent holder to a percentage of the infringer's profits on the entire object incorporating the design. As a result, plaintiffs in patent infringement cases are likely to see smaller awards. Here is a summary.
Samsung Electronics Co. Limited v. Apple Inc.
The Supreme Court's unanimous opinion in Samsung Electronics Co. Limited v. Apple Inc. reversed a $399 million damages award in a design patent dispute between the two technology behemoths. In doing so, the Court set aside a longstanding aspect of design patent law, and required the lower court to devise a new test for calculating damages in these types of cases. Whatever new test the court devises will substantially alter the landscape of legal protections afforded to the appearance of three-dimensional objects.
A lower court jury had found that Samsung infringed several of Apple's design patents covering the appearance of its iPhones. The jury awarded damages based on profits from the sale of Samsung's phones incorporating the infringing designs, relying on a 19th Century statute decreeing that the infringer of "any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner [of the patent] to the extent of his total profit." Until now, courts uniformly interpreted this statute to mean that if any portion of a product infringed a design patent, damages must be calculated using the profit derived from the entire product. This prohibition on apportioning damages, even when only one component of a product was infringing, made design patents uniquely potent weapons for protecting three-dimensional designs.
A new rule
The Supreme Court has now abandoned that rule. Relying primarily on dictionary definitions of "article" and "manufacture," the Court concluded that juries and courts cannot simply award the profit derived from the sale of completed products to consumers, but must instead determine whether to award only the profit on infringing components. The Court remanded the case to the Federal Circuit to devise the appropriate test for determining what the relevant "article of manufacture" is for products consisting of many components.
Design patents are one of the three primary mechanisms, along with copyright and trademark/trade dress, for providing legal protection for three-dimensional products and their design. The Supreme Court's reversal of this large damage award alters the calculus considerably as to which type of legal protection to pursue and how to defend claims over product designs. The Court is also currently considering the availability of copyright for three-dimensional products in Star Athletica v. Varsity Brands, which is expected to be decided shortly.
Frankfurt Kurnit advises designers, manufacturers and distributors of products in which such rights exist, and enforces those rights via enforcement programs and through litigation.
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