Samsung Electronics Co., Ltd., et al. v. Apple Inc.
On Friday, August 5, 2016 our Firm filed an amicus curiae (friend of the court) brief in support of Apple in the United States Supreme Court in the Samsung v. Apple case. The brief was written by Perry J. Saidman.
Signatories to the brief were diverse design-conscious companies, including: Bison Designs, LLC; Deckers Outdoor Corportation; Design Ideas, LTD; Kohler Co.; KRC Capital B.V.; Lutron Electronics, Inc.; Method Products, PBC; Novo Nordisk, Inc.; Nuelle, Inc.; Nuvasive, Inc.; Oakley, Inc.; Sun Products Corporation; SZ DJI Technology LTC. and Thule Group.
The sole issue before the Supreme Court is whether application of the total profit remedy for design patents under 35 U.S.C. 289 should depend in-part upon whether the design patent in issue covers the entire product as sold, or only a portion of the product as sold.
In relevant part, 35 U.S.C. 289 says:
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.
Apple’s design patents were held valid and infringed by 18 Samsung smartphones, and the jury awarded Apple $399 million based on Samsung’s total profit on sales of its 18 smartphones. The jury award was affirmed on appeal by the U.S. Court of Appeals for the Federal Circuit.
Before the Supreme Court, Samsung has argued that the profit awarded should be apportioned between the so-called value of the design and the value of the entire product to which it had been applied. Samsung argued essentially that because the design patents of Apple covered portions of the smartphone rather than the entire smartphone, the total profit should be apportioned, while Apple argued that the designs claimed in the design patents were inextricably interwoven with the entire smartphone and the jury’s award of total profits made by Samsung on sales of the 18 infringing smartphones was proper.
Following is a summary of the argument made in the amicus curiae brief:
The importance of design patents is hard to overstate. Without effective design protection, the visually striking products of innovative companies could be copied with impunity. It is the total profit remedy of Section 289 which gives teeth to design patents by bringing design predators – that have no investment in design innovation, research and marketing – to the negotiating table to settle disputes. This is especially critical for small businesses which do not have the resources of large, big box retailers whose business model is “first-to-be-second” with respect to popular products.
As found by the Federal Circuit below, passage of Section 289 by Congress clearly removed apportionment from the calculus of determining total profit of the article of manufacture to which a patented design has been applied. Determination of the article of manufacture is a question of fact, and the Federal Circuit treated it as such in affirming the jury’s award of total profits on the sale of Petitioner’s infringing smartphones.
Because courts over the years have shown an ability to properly deal with cases where the article of manufacture is not necessarily the entire product sold to consumers, adoption of factors for making such a determination is not necessary.
The fearful outcomes posited by Petitioner and its amici are speculative, unrealistic and grossly exaggerated. Moreover, they have not occurred in the nearly 130 years that the total profit rule has been on the books.
The decision of the Federal Circuit should be affirmed.
Apple’s brief, filed July 29, 2016, is here.
The case is set for oral argument before the Supreme Court on October 11, 2016.