Courts Are Filling In Justices’ Design Patent Remedy Void

By Tracy-Gene G. Durkin and Gary Griswold

Law360 (April 23, 2019, 2:58 PM EDT) — On Dec. 6, 2016, the U.S. Supreme Court decided Samsung Electronics Co. Ltd. v. Apple Inc., its first design patent case in 150 years. This appeal involved the standard for assessing the “infringer’s profits” as a measure of the patentee’s compensation under the special design patent remedy found in 35 U.S.C. § 289.

The Supreme Court in Samsung v. Apple held that determining an infringer’s profits with respect to a product that is the subject of a patented design under Section 289 involves two steps. First, the court must identify the relevant “article of manufacture” to which the infringed design has been applied.[1] Second, the court must calculate the infringer’s total profit made on that article of manufacture.”[2] The term “article of manufacture,” as used in Section 289, encompasses both a “product sold to a consumer and a component of that product.”[3]

The court, in remanding the case, was abundantly clear that it was not setting out a relevant article of manufacture standard for the lower courts to apply:

The parties ask us to go further and resolve whether, for each of the design patents at issue here, the relevant article of manufacture is the smartphone, or a particular smartphone component. Doing so would require us to set out a test for identifying the relevant article of manufacture at the first step of the §289 damages inquiry and to parse the record to apply that test in this case. The United States as amicus curiae suggested a [four-part] test, see Brief for United States as Amicus Curiae 27-29, but Samsung and Apple did not brief the issue. We decline to lay out a test for the first step of the §289 damages inquiry in the absence of adequate briefing by the parties. Doing so is not necessary to resolve the question presented in this case, and the Federal Circuit may address any remaining issues on remand.[4]

Thus, notwithstanding some anticipation of a decisive holding by the Supreme Court, it left the standard for defining the relevant article of manufacture to the lower courts. The court pointedly made no substantive comment on the four-point test laid out in the brief for the United States, and certainly no comment at all on what was appropriate in that case.

The decision not to decide the issue of the controlling relevant article of manufacture standard produced considerable consternation by those who use design patents to protect their innovations — specifically, a concern that the Section 289 remedy option, which has proven to be a large deterrent against would-be copiers, might be seriously compromised by the lower courts. For this reason, the first cases in the district courts applying the newly interpreted Section 289 have been watched with much anticipation to see how they would fill the void left by the Supreme Court. ­­

The early assessment of the work of the lower courts suggests any sense of consternation was premature. A major erosion of Section 289 awards has not occurred. As important, there is little evidence that Section 289 will be applied to produce unreasonable, super-compensatory awards as some feared.

In the two cases (Columbia Sportswear North America Inc. v. Seirus Innovative Accessories Inc. and the Apple v. Samsung remand) that have been decided by juries since the Supreme Court’s Samsung v. Apple holding, the jury instructions have largely tracked the brief for the United States, including its “objective” and four-part test:

“In conducting this inquiry, the factfinder’s overarching objective should be to identify the article that most fairly may be said to embody the defendant’s appropriation of the plaintiff’s innovation.”[5] The United States’ brief then listed four factors to use in achieving that objective:

1. “First, the scope of the design claimed in the plaintiff’s patent, including the drawing and written description.”[6]
2. “Second, the relative prominence of the design within the product as a whole.”[7]
3. “Third, whether the design is conceptually distinct from the product as a whole.”[8]
4. “Fourth, the physical relationship between the patented design and the rest of the product … If the design pertains to a component that a user or seller can physically separate from the product as a whole, that fact suggests that the design has been applied to the component alone rather than to the complete product …The same is true if the design is embodied in a component that is manufactured separately from the rest of the product, or sold separately.”[9]

The jury in Columbia v. Seirus was given the four factors and then instructed that, “[i]n weighing these factors, your objective should be to identify the article of manufacture that most fairly can be said to embody Seirus’s appropriation of Columbia’s innovation.”[10] In the Apple v. Samsung remand, the jury was similarly instructed, “[i]n weighing these factors, your objective should be to identify the articles of manufacture that most fairly can be said to embody Samsung’s appropriation of Apple’s patented designs.”[11]

The juries were not asked to identify the article of manufacture on the jury form in either case. However, based on the actual awards and/or juror interviews at the conclusion of the trials, it is clear that the Columbia jury found the relevant “article of manufacture” to be the final product sold to consumers. In the Apple v. Samsung remand, the jury found the relevant article of manufacture to be the smartphone with respect to one of the three infringed design patents, and something less than the smartphone for the other two infringed design patents.

These decisions appear to be a reasoned application of the jury instructions (both the stated objective and four enumerated factors). If such reason holds in the future, it is likely that — where the patented design is the product as sold by the infringer — the article that most fairly embodies the infringer’s appropriation of the patentee’s innovation is likely to be (but not necessarily) the product as sold. Where the patented design is something less than the product sold, as in the Columbia case, the article that most fairly embodies the infringer’s appropriation of the plaintiff’s innovation may still be the product as sold, or — as found for two patents in the Apple v. Samsung remand — may be something less.

However, the U.S. Court of Appeals for the Federal Circuit has yet to weigh in on the issue, having made no comment on the two-step process for determining an infringer’s profit under Section 289 in the remand of the Apple v. Samsung case.

The court is not expected to do the same when it takes up the Columbia appeal later this year. In that appeal, both parties utilized the solicitor general’s four-factor test for determining the relevant article as the proper legal inquiry. Therefore, it is possible that the court may not comment on the objective or the factors themselves. However, there is an issue as to whether the factors even apply in this case and to what extent; that is, whether the Seirus products were single or multicomponent products. If they do apply, the court will consider whether the jury properly applied the factors. Also at issue is whether the jury instructions properly shifted the burden of persuasion on proving the article of manufacture to Seirius.

So, what might all this mean for future cases? If the Federal Circuit stays true to the “objective” and the purpose of the statute, the court should reach an outcome consistent with good policy, minimizing the prospect of unreasonably undervaluing the contribution of the patented design to the product sold. Doing so should also minimize the opportunity for outcomes that unreasonably overvalue the patented design’s contribution, a concern raised during the consideration of Section 289 at the Supreme Court.[12]

Tracy-Gene G. Durkin is a director at Sterne Kessler Goldstein & Fox PLLC and leader of the firm’s mechanical and design practice group.

Gary L. Griswold is a consultant and former president of and chief intellectual property counsel for 3M Innovative Properties Company.

The authors wish to thank Bob Armitage for his excellent contributions to the article.

Disclosure: Tracy-Gene Durkin helped Apple obtain the design patents at issue in the Apple v. Samsung litigation referred to in this article, but did not participate in the litigation. The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Samsung Electronics Co., Ltd., et al., v. Apple Inc., 137 S. Ct. 429 (2016), p. 5.
[2] Id.
[3] Id., p. 6.
[4] Id., p. 8.
[5] Brief for the United States as amicus curiae Supporting Neither Party, Samsung Electronics Co., Ltd., et al., v. Apple Inc., U.S. Supreme Court, No. 15-777 (June 2016), p. 26.
[6] Id., p. 27.
[7] Id., pp. 28.
[8] Id., pp. 28.
[9] Id., pp. 29.
[10] Jury Instructions, Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., No. 3:17-cv-1781-HZ (S.D. Cal. Sept. 29, 2017), p. 16.
[11] Final Jury Instructions, Apple Inc. v. Samsung Electronics Co. Ltd., No. 5:11-cv-01846-LHK (N.D. Cal. May 18, 2018), p. 41.
[12] See Samsung Electronics Co., Ltd., et al., v. Apple Inc., 137 S. Ct. 429 (2016). Read more at: https://www.law360.com/articles/1152550?copied=1