Scotus: Damages for Design Patents can be based on parts
The Supreme Court of the United States (SCOTUS), by unanimous decision, reversed yesterday a damages award against Samsung of approximately $400, in Samsung Electronics Co., Ltd. v. Apple Inc., 580 U. S. ____ (2016). The damages award had been granted by a lower court to Apple for infringement by Samsung of several utility and design patents regarding mobile technology. At the core of the decision lies the finding by the SCOTUS that damages for infringement of design patents can be based on profits from sales based on individual components, as opposed to profits from sales of the whole end product, as they were before.
Damages for designs patent are ruled by 35 U.S.C. §289, which states:
“Whoever 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, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.”
In the past, the “article of manufacture” in 35 U.S.C. §289 was interpreted to be the end product sold to a consumer because consumers are not able to purchase isolated components. In consequence, the “total profit” was calculated based on the sales of the end product, as it was in this case, resulting in headlining damages awards. According to yesterday’s decision, an “article of manufacture” in 35 U.S.C. §289 may be a component of the end product, with the consequence that the calculation of the total profit may be based on that component alone.
The SCOTUS did not provide a test on how to determine which is the “article of manufacture” in a particular case, and left this question to be decided by the Federal Circuit.