Design patent: Award of profits

The district court then denied Samsung’s post-trial motions to overturn the jury’s infringement, dilution, and patent validity findings and upheld $639,403,248 in damages.  That court also ordered a partial retrial on the remainder of the damages.  The jury in the partial retrial awarded Apple $290,456,793 and the district court denied Samsung’s post-trial motion to overturn the award of those damages.  The total damages awarded in the final judgment were $929,860,041 exclusive of interest.

On appeal, the United States Court of Appeals for the Federal Circuit decided to affirm the jury’s verdict on the design patent infringements, the validity of two utility patent claims, and the damages awarded for the design and utility patent infringements.  The Federal Circuit reversed the jury’s findings that the asserted trade dresses are protectable and vacated the jury’s damages awards against the Samsung products due to trade dress dilution.  The court remanded for further proceedings consistent with its opinion.  Apple Inc. v. Samsung Electronics Co., Ltd., 786 F.3d 983 (Fed. Cir. 2015).  The Federal Circuit panel therefore directed entry of a final judgment awarding damages and infringer’s profits for the design and utility patent infringement.

Later, the Federal Circuit vacated the district court’s decision to deny Apple’s motion for a permanent injunction against infringement by Samsung.  Apple Inc. v. Samsung Electronics Co., Ltd., 801 F.3d 1352 (Fed. Cir. 2015), petition for en banc review granted and panel opinion to be modified and superseded on rehearing, 808 F.3d 517 (Fed. Cir. 2015), petition for rehearing en banc denied, 808 F.3d 518 (Fed. Cir 2015).  The superseding panel opinion on the permanent injunction is reported at 809 F.3d 633 (Fed. Cir. 2015).  (Apple Inc. v. Samsung Electronics Co. Ltd., ___ F.3d ___ (Fed. Cir. February 26, 2016) involves appeals from a separate case involving patents not mentioned in the 2015 decision reported at 786 F.3d 983.)

Samsung petitioned the Supreme Court for a grant of certiorari.  Samsung Electronics Co., Ltd. v. Apple Inc., docket no. 15-777.  The Court granted certiorari on March 21, 2016, limited to the following issue: “[w]hether, where a design patent is applied to only a component of a product, an award of infringer’s profits should be limited to those profits attributable to the component.”

Limitation of an award of the infringer’s profits to the profits due to the design of a “component” of an article as opposed to the total profits on the article is called “apportionment.”  The Federal Circuit rejected apportionment based on its case law, in particular Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1441 (Fed. Cir. 1998), in which it held that Congress made the decision to award the infringer’s total profit on the article when it enacted the design patent damages statute, codified at 35 U.S.C. § 289 (“shall be liable to the owner [of the infringed design patent] to the extent of his total profit”).  The articles are the accused Samsung smartphones and the outer cases of the smartphones are not sold separately from the electronics inside them.  Samsung’s objection to the Federal Circuit’s case law is understandable given the value of the electronics in the smartphones.

The Apple Inc. v. Samsung case has not yet been set for argument.  It should be heard during the Court’s next term, which begins as always on the first Monday in October (October 3, 2016).