Apple v. Samsung: Supreme Court Agrees to Review Award Based on Design Patents

The United States Supreme Court recently agreed to hear Samsung’s appeal of last year’s Federal Circuit decision affirming an award of $548 million in favor of Apple. The Court’s decision not only prolongs the seemingly endless legal battles between the two heavyweights, but it promises to answer an important question with consequences for any company marketing goods in the U.S. The question to be decided, according to Samsung: “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?”

Section 289 of Title 35 of the U.S. Code provides that the infringer of a design patent “shall be liable to the owner to the extent of his total profit.” Courts, including the Federal Circuit in Apple v. Samsung, have typically interpreted this to mean that a party with an infringed design patent is entitled to an award of the total profit that the infringer garnered from the infringing product, even if the design patent only covered a single component of a larger product. Thus, Apple was awarded Samsung’s total profits from the sale of certain Samsung smartphones even though Apple’s three design patents only covered fairly limited aspects of the iPhone’s design.

Samsung set outs a number of arguments against the Federal Circuit’s interpretation of Section 289 in its Petition for Writ of Certiorari. Samsung argues that the total profit rule leads to “absurd and anomalous results” where the profits on an entire car “must be awarded based on an undetachable infringing cup holder.” Samsung also argues that changes in technology necessitate a different reading of Section 289: “A patented design may be the essential feature of a spoon or a rug. But the same is not true of smartphones, which contain countless other features that give them remarkable functionality wholly unrelated to their design. By combining a cellphone and a computer, a smartphone is a miniature internet browser, digital camera, video recorder, GPS navigator, music player, game station, word processor, movie player and much more.” Finally, Samsung highlights the fact that the total profit rule for design patents runs in stark contrast to the apportionment rule for utility patents, which rule allows Courts to award only that portion of the infringer’s profit that is attributable to the patented component.

More hangs in the balance than Samsung’s $548 million check to Apple. If the Supreme Court upholds the Federal Circuit’s interpretation of Section 289, then, as Samsung warns, defendants may face an increasing number of design patent infringement suits from companies and patent assertion entities looking for a big payout. On the other hand, if the Supreme Court accepts Samsung’s arguments and interprets Section 289 to limit the award of the infringer’s profits to those profits attributable to patented component, the recent uptick in design patent litigation may come to an abrupt end.