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Supreme Court Dismantles $400M Apple Design Patent Award Against Samsung

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In Samsung Electronics Co. v. Apple Inc., the Supreme Court of the United States today reversed the Federal Circuit’s decision upholding Apple Inc.’s nearly $400 million design patent award against Samsung Electronics Co., Ltd. Apple secured the award after a jury found that Samsung infringed Apple’s design patents covering the iPhone’s iconic front face with rounded corners and 16 colorful icons on a black screen.

Section 289 of the Patent Act permits a design patent holder to recover an infringer’s total profits from the sale of any “article of manufacture” to which the infringing design has been applied.  The Federal Circuit upheld the award because the relevant “articles of manufacture” could be only Samsung’s smartphones in their entirety, given that “the innards of Samsung’s smart phones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.”  The Supreme Court disagreed, holding that the relevant “article of manufacture” in a multicomponent product is not necessarily always the end product.  It might be the end product; but it also might be a component of the end product.

The Supreme Court set forth a two-part test for determining a damages award under § 289: “First, identify the ‘article of manufacture’ to which the infringed design has been applied.  Second, calculate the infringer’s total profit made on that article of manufacture.”  Yet, citing inadequate briefing on the issue, the Court declined requests from the parties and amicus curiae to identify a test for determining the relevant “article of manufacture” under the first prong.

In KSR Int’l Co. v. Teleflex, Inc. (2007), the Court similarly struck down the Federal Circuit’s “teaching, suggestion, or motivation” test for nonobviousness without providing an alternative.  Without an alternative test for “article of manufacture,” it remains to be seen what the practical outcome of future cases will be, or whether the Federal Circuit will reach any different result on remand.