Supreme Court’s Apple Decision Opens a Can of Worms on Patent AwardsDec 06, 2016 Anheuser-Busch
Today the Supreme Court found an ambiguity in the Patent Act, reversing Apple’s $399 million infringement award against Samsung.
In the ongoing international litigation war between Apple and Samsung, Apple prevailed at the trial court level on a design patent infringement case regarding Apple’s rounded corners and user interfaces. Apple was awarded $399 million, representing Samsung’s total profits from sales of the infringing smartphones. Samsung appealed that Apple was only entitled to the profits based on the infringing aspects (the corners and interfaces) not the profits from the entire phone. The Federal Circuit disagreed, affirming the Apple award. In its appeal to the Supreme Court, Samsung ridiculed the lower court’s ruling, arguing that under the Federal Circuit’s logic “profits on an entire car – or even an eighteen-wheel tractor trailer – must be awarded based on an undetachable infringing cup-holder.”
The Supreme Court Decision
Justice Sotomayor, writing for a unanimous court, agreed with Samsung, finding that “the term ‘article of manufacture’ [in Section 289 of the Patent Act] is broad enough to embrace both a product sold to a consumer and a component of that product.” The Court acknowledged that the parties asked “us 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.” But the Court punted: “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 the test in this case.” Instead, the Court remanded the case back to the Federal Circuit.
So the Federal Circuit is tasked with determining (A) the proper test for whether, with regards to Samsung’s smartphones, the “article of manufacture” are the infringing components or the entire smartphone, and then (B) to calculate the proper amount of damages associated with the article of manufacture.
Patent Infringement Litigants (Their Attorneys and Damages Experts) Must Hold Their Breath
Like gamblers on a sporting event over which they have no control, parties litigating patent infringement actions can only hold their collective breath and wait to see which test the Federal Circuit devises and whether the test is pro-plaintiff or defendant. Undoubtedly, the losing party (Apple or Samsung) will argue the Federal Circuit got it wrong, and ask the Supreme Court for a do-over.