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Supreme Court Addresses Design Patent Damages for First Time in 120 Years: New Era of Design Patent Damages Dawn

On December 6, 2016, the United States Supreme Court threw out a $399 million damages award against Samsung for infringing three design patents, opening the door on a new era in design patent infringement damages and the value of certain design patents. Reversing the Federal Circuit, the decision enables juries and courts to determine that an infringing “article of manufacture” is less than a product as sold in toto, potentially reducing the value of damages available to patentees. The lower courts have been left to determine the details of the ruling, and we will be closely monitoring these developments.

Section 289 of the Patent Act prohibits the unlicensed “appli[cation]” of a “patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale” or the unlicensed sale or exposure to sale of “any article of manufacture to which [a patented] design or colorable imitation has been applied.” 35 U.S.C. § 289.  The Act goes on to state that an infringer is “liable to the owner to the extent of his total profit, but not less than $250.”  Id. (emphasis added). 

In the litigation, the damage award was based on profits attributable to sales of the infringing products as whole, rather than on profits attributable only to the infringing components.  Samsung challenged the long-standing approach of awarding damages for the profits on the sale of an entire product versus a component thereof.  Samsung’s argument requires the statutory term “article of manufacture” to apply to components of a product, and not merely refer to the entire product.

The Supreme Court began its analysis by defining the term “article of manufacture.”  Specifically limiting the scope of its ruling, the Court said that the only question it is resolving is whether, “in the case of a multi-component product, the relevant ‘article of manufacture’ must always be the end product sold to the consumer or whether it can also be a component of that product.”  Relying on dictionary definitions from 1885 and 2011, the Court held that “article of manufacture” can mean “both a product sold to a consumer and a component of that product.”  Components can be integrated into a larger product, and can be sold as a part of a whole, or potentially sold separately.  In so holding, the Court expanded the potential definition of “article of manufacture.” 

The Court, however, declined to rule on whether the relevant article of manufacture in the dispute is the smartphone in toto or a particular component thereof.  The case was remanded to the Federal Circuit for further proceedings consistent with the Court’s opinion.  We expect the Federal Circuit to articulate a test to determine the relevant “article of manufacture” in design patent cases. 

Regardless of the parameters of this test, damages in design patent cases will now involve a new analysis.  This new approach may also warrant differentiated patent prosecution strategies depending on the design in question. 

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About this Author

Jacob S Wharton, Womble Carlyle, Intellectual Property Attorney, Home Furnishings industry Lawyer

Jake devotes his practice primarily to intellectual property dispute resolution, including patent, trademark, and copyright infringement litigation; proceedings before the Trademark Trial & Appeal Board; trade secret misappropriation litigation; antitrust matters; and related intellectual property disputes. Jake has also counseled clients on defamation and trade libel matters. Prior to focusing on dispute resolution, Jake prepared and prosecuted patent applications in the pharmaceutical, agriculture, biotechnology, and life science technologies. Jake has counseled institutional,...

John F. Morrow, Jr., Womble Carlyle Law Firm, Intellectual Property Attorney, Trademark Infringement Lawyer

John currently chairs Womble Carlyle’s Intellectual Property Litigation Group, where for the past 17 years he has focused his practice on handling all aspects of patent infringement, trademark infringement, unfair competition, copyright infringement, trade secret misappropriation, false advertising, and antitrust lawsuits.  John has vast experience in each arena, having served as first and second chair in state or federal courts sitting in North Carolina, Nevada, Texas, Wyoming, Pennsylvania, Delaware, Massachusetts, Ohio, New York, New Jersey, Connecticut, Georgia, South Carolina, Utah, and Virginia.

David Crowe, Womble Carlyle, Patent Attorney, intellectual property law, infringement legal counsel, automotive industry lawyer

David Crowe is a registered patent attorney and an associate in Womble Carlyle’s Intellectual Property practice group.  David’s practice focuses upon all aspects related to the acquisition of patent rights, including patentability studies, as well as application preparation and prosecution for both utility and design applications filed in the U.S. and abroad.  David also provides the firm’s clients with competitive analysis in the area of IP rights to minimize the client’s risk of infringement, including requests for reexamination of competitor’s patents.