Intellectual Property > IP Newsflash > Supreme Court to Decide Whether Lost Profits Are Still Appropriate for Design Patents on Complex, Innovative Technology After Samsung Ordered to Pay All Profits on Smartphone Sales Despite Patent Covering Only Component of Smartphones
16 Jun '16

On March 21, 2016, the Supreme Court granted certiorari in Samsung v. Apple, No. 15-777, on the issue of damages for infringement of a design patent. Samsung Elecs. Co. v. Apple Inc., 136 S. Ct. 1453 (U.S. 2016). Specifically, the Court granted the petition for a writ of certiorari limited to the question of “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?” 35 U.S.C. § 289 provides for an “[a]dditional remedy for infringement of design patent” wherein “[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.”

In 2012, Samsung was ordered to pay 100 percent of its profits, $1 billion, for the sale of several models of Samsung phones after a jury’s finding that Samsung infringed Apple utility and design patents. Samsung argues that this amount was “ridiculous,” contending that the features covered by Apple’s design patents were only a small contribution to the overall phones. Samsung Elecs. Co. v. Apple Inc., No. 15-777, Petition For A Writ Of Certiorari, 2015 U.S. S. Ct. Briefs LEXIS 4654 at 13 (U.S. December 14, 2015). According to Samsung, Section 289 of the Patent Act is being misapplied to complex products, such as smartphones, because the Act only contemplates awards of an infringer’s total profits on “relatively simple products.” Large tech companies, such as Dell, eBay, Facebook and Google, are supporting Samsung’s petition to the Supreme Court with an amicus brief. The companies state that “[t]he 1886 Congress did not have complex, multicomponent products in mind—much less products incorporating modern technologies.” Samsung Elecs. Co. v. Apple Inc., No. 15-777, Amicus Brief for Dell Inc., ebay Inc., Facebook Inc., Google Inc., HP Inc., Hewlett Packard, Enterprise Co., Newegg Inc., Pegasystems Inc., and Vizio, Inc., at 10 (U.S. January 15, 2016). Apple, on the other hand, argues that Samsung was an egregious infringer and relies upon the Federal Circuit’s finding that Section 289 “explicitly authorizes the award of total profit.” Samsung Elecs. Co. v. Apple Inc., No. 15-777, Brief of Respondent (U.S. February 3, 2016); see Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983, 1001 (Fed. Cir. 2015).

In December 2015, as part of a joint agreement, Samsung paid Apple $548 million, but preserved its right to appeal. The present case will be the first time in more than a century that the Court has heard a design patent case. Samsung will have the opportunity to recover as much as $399 million of the $548 million it paid to Apple. More importantly, however, the Court’s decision is expected to clarify the measure of damages a design patentee may recover when the patent covers only a single component of a larger product.

Samsung Elecs. Co. v. Apple Inc., 136 S. Ct. 1453 (U.S. 2016).