SCOTUS to Apple: not so fast

A few weeks ago, the Supreme Court released its opinion in Samsung v. Apple, which in effect will likely reduce Apple’s $399 million award that resulted from its 2011 patent suit against Samsung. (Yes, five years later and it’s still being litigated!) Samsung appealed to the Federal Circuit, which upheld the jury verdict. Among other things, the case involved section 289 of the Patent Act, which covers damages for design patent infringement. Design patents rarely make their way to the Supreme Court, but when $399 million is on the line, and the finding for that award is based on a precarious and questionable legal standard, a review of design patent law is probably called for.

Design Patents, Copyrights and Trade Dress

A quick review of patents generally. The purpose of and authority for our patent system can be found in Article 1, clause 8, section 8 of the US Constitution, which gives Congress the power to pass laws which “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” (This is also the clause from which copyrights derive.) There are two major types of patents: utility and design. Both patents give the patentee the exclusive right to bar others from practicing their invention for a specific period of time. New utility patents are for 20 years and for inventions that are “new, useful and non-obvious.” New design patents are for 15 years and for a “new, original, and ornamental design” of an “article of manufacture.” Our first patent laws, which did not cover design patents, were enacted under the 1790 Patent Act. This act was rather simple. Since that time the laws under which patents are awarded and enforced have expanded enormously. Design patents were incorporated in 1842.

Design patents are a somewhat odd piece of intellectual property. First, the prosecution process tends to be much simpler than that of utility patents. Design patents are actually more similar to copyright or trade dress than they are to utility patents. The process of obtaining one is different, but the design being protected is similar, and can often times be protected under any of those three legal doctrines, or a combination of them.

Copyright, generally, is afforded when a person authors a creative expression and fixes it in a tangible medium. Such a work affords the copyright owner the right to keep others from copying the work or creating something substantially similar. Copyrights last for 70 years after the life of the creator. And copyright attaches automatically once the creation is fixed in a tangible medium, although registration is often recommended.

Trade dress protection can be afforded when one uses a specific design or ornamentation that is used to identify the source of goods or services. Trade dress lasts for as long as it is used in commerce (i.e. indefinitely), and while registration is not necessary, it is beneficial (though it typically requires secondary meaning).

Design patents, unlike copyright and trade dress, must be applied for, and awarded, to afford protection. Many times when someone has infringed on a design patent, they have also infringed on copyright/trade dress rights.

So where do design patents fit? Why do we have them? Honestly, it can be hard to tell. Likely, it’s more about the develop of IP rights, generally (i.e. the expansion of rights in patents, trademarks and copyrights over decades), that have caused IP fields to cross-over, and therefore allow for different doctrines to protect the same thing. Whether or not we need design patents, for the time being they are awarded and enforced. And regardless, they are clearly used and can be quite an important piece of protection.

Samsung v. Apple

The issue in question in Samsung v. Apple was not whether or not design patents are valid (they are), but rather how should a monetary award be calculated when infringement is found? This may seem simple at first, but when you consider the underlying utility of most products that include a design patent — that utility sometimes having a patent of its own — determining the value of the design can be tricky. Working out this issue is the reason the Supreme Court took on the Apple case. As Justice Sotomayor explained in the Court’s opinion, determining value of a design would be easy for a product such as a dinner plate (of which a unique design is likely the reason for buying the plate in the first place), but not so easy for a product such as a kitchen oven (which may have a design that is important, but also likely the functionality of that oven matters). (During oral argument, Justice Kennedy referred to the  Volkswagen Beetle when discussing this issue.  The design of the Beetle is clearly important, but also important is that the car function properly. Neither design nor functionality is the sole reason for buying the car, and determining the value of each can be a challenge.)

Section 289 of the patent statute requires that the “total profit” made from “the article of manufacture” on which the infringing design was applied be the basis for the monetary award in a design infringement case. That is, when a business infringes on the design of another, the infringing business will be required to pay its total profit made from and directly related to that infringement. Therefore, a two-step process must be completed that is as follows: 1) identify the article of manufacture to which the design has been applied; 2) calculate the total profits made on that article.

For the Court, there was no dispute over what “total profit” meant. The question was, what is an “article of manufacture?” Is it the entire product on which the design is placed, even if only placed on one component of the product, or is it just a single component? In the Apple case, the question was about phone design (see the patents here, here and here), and whether the article of manufacture is the outer shell of the phone, or whether it is the entire phone, inner technology included. The Federal Circuit held that a component of the phones here could not be separate from the end product, and therefore the article of manufacture had to be the entire phone, not just the outer shell.

The Court disagreed. Following some simple statutory construction, it found the term “article of manufacture” is broad enough that it could include the entirety of a product to which a design is applied, but it could also just be a component of that product. Therefore, if an infringer is made to pay the total profit for the article of manufacture, it must be determined what portion of the product the article of manufacture is; whether the end result or a component. Then, the value of that article, however determined, will constitute the total profit that must be awarded to the plaintiff. The value may be easily separable and it may not be.

So the court determined one thing: article of manufacture can mean any part or all of a product. The Court, however, didn’t clarify much more. It’s now back to the Federal Circuit to give it another shot.