By Fritz Klantschi
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In 2016, the Supreme Court held that an “article of manufacture” under the law covering damages for infringement of a design patent could encompass either the entire finished product or a discrete component of the product. This distinction has had major implications on the amount of damages awarded to a design patent owner. In Microsoft Corp. v Corel Corp. a District Court ruled that Microsoft was not precluded from disgorgement damages under Section 289 because the infringing article of manufacture is a software product. Microsoft Corp. v Corel Corp., 2018 WL 2183268 at *4 [ND Cal May 11, 2018]. This article highlights what constitutes a design patent and the potential for monetary damages awards for design patent infringement.
Utility patents protect the way an invention works and how it is used. In contrast, a design patent protects the ornamental features of an article, such as its shape/configuration or surface ornamentation. A patent holder, whether utility or design, can seek damages under Section 284 of the Patent Act (lost profits or reasonable royalty). However, a design patent holder also has the option to seek damages under Section 289 which allows the patent holder to disgorge the infringer’s total profits from the infringing article of manufacture. Section 289 states that
“[w]hoever 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.” (emphasis added)
In 2011 Apple sued Samsung alleging that several of Samsung’s smartphones infringed three of Apple’s design patents covering the phone’s front surfaces and screen icon grid. A jury found that a number of Samsung’s smartphones infringed Apple’s patents and awarded $399 million in damages. This was the entire profit of Samsung’s sales of their infringing smartphones, rather than a portion representing only the features covered by the design patents. The U.S. Court of Appeals for the Federal Circuit affirmed the damages award, and rejected Samsung’s argument “that the profits awarded should have been limited to the infringing ‘article of manufacture’” (the screen or case of the phone, not the whole smartphone).
Samsung appealed to the Supreme Court (Samsung Electronics Co., Ltd., et al. v. Apple Inc., 137 S.Ct. 429 (Dec. 6, 2016), hereinafter “Samsung v. Apple”) which laid out a two-step process for determining damages award under Section 289. As a threshold step, the Supreme Court first defined what an “article of manufacture” is when considering a multicomponent product. Is it the end product that is sold to a consumer (i.e, a smartphone) or can an “article of manufacture” be a component of that product (i.e., a discrete feature of the smartphone)? The Court first looked at the definitions of “article” and “manufacture” and concluded that an “article of manufacture” is “a thing made by hand or machine,” which is broad enough to encompass both a product sold to a consumer as well as a component of that product. Id. at 434-435. The two-step process the Court established is to first identify the “article of manufacture” to which the infringed design had been applied and, second, to calculate the infringer’s total profit made on that article of manufacture. Id. at 434 The Supreme Court remanded the case to resolve whether the relevant article of manufacture for each design patent is the smartphone or a component of a particular smartphone. In the remanded case, the Court adopted the four factors proposed by the Solicitor General in his amicus brief to the Supreme Court in determining the relevant article of manufacture: (i) the scope of the design claim; (ii) the relative prominence of the design within the product as a whole; (iii) the conceptual distinctiveness of the design from the product as a whole; and (iv) the physical relationship between the patented design and the rest of the product. Apple, Inc. v Samsung Elecs. Co. Ltd., 2017 WL 4776443, at *8 [ND Cal Oct. 22, 2017]
Design patents can be a valuable tool for a patent holder and should be considered when protecting a new product. Section 289 of the Patent Act may potentially provide a significant higher damage award than what is available under Section 284 for an infringement of a design patent. When drafting a design patent application, a patent filer needs to consider the above four factors to be able to properly protect and enforce a patented design.