Samsung Electronics Co., Ltd. v. Apple, Inc.
196 L. Ed. 2d 363, 137 S. Ct. 429 (2016)
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Rule of Law:
The term 'article of manufacture' under 35 U.S.C. § 289, for which a design patent infringer must pay its total profits, may be either the end product sold to a consumer or a component of that product.
Facts:
- In 2007, Apple Inc. released its first-generation iPhone.
- Apple secured several design patents for the iPhone, including for its black rectangular front face with rounded corners (D618,677), a similar design with a raised rim (D593,087), and its grid of 16 colorful icons on a black screen (D604,305).
- Samsung Electronics Co. also manufactures and sells smartphones.
- Following the iPhone's release, Samsung began selling a series of smartphones that resembled the designs covered by Apple's patents.
- The components of Samsung's smartphones, such as the screen or case to which the patented designs were applied, were not sold separately to consumers but only as part of a complete, integrated smartphone.
Procedural Posture:
- Apple Inc. sued Samsung in the U.S. District Court for the Northern District of California (trial court) for, among other things, design patent infringement.
- A jury found that Samsung had infringed Apple's design patents and awarded Apple $399 million in damages, which represented Samsung's entire profit from the sales of the infringing smartphones.
- Samsung, as appellant, appealed the damages award to the U.S. Court of Appeals for the Federal Circuit (intermediate appellate court), arguing damages should be limited to profits from the infringing components.
- The Federal Circuit affirmed the trial court's damages award, holding that the 'article of manufacture' was the entire smartphone because its components were not sold separately.
- The U.S. Supreme Court granted Samsung's petition for a writ of certiorari to review the Federal Circuit's interpretation of 'article of manufacture'.
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Issue:
Does the term 'article of manufacture' under 35 U.S.C. § 289, for the purpose of calculating an infringer's total profits from design patent infringement, refer exclusively to the final product sold to consumers, or can it also refer to a component of that product?
Opinions:
Majority - Justice Sotomayor
No. The term 'article of manufacture' under 35 U.S.C. § 289 is not limited to the final product sold to consumers but can also be a component of that product. The Court reasoned that the statutory text, 'article of manufacture,' has a broad meaning, defined as simply a thing made by hand or machine. A component of a product, no less than the product itself, fits this definition. The Court found this interpretation consistent with other sections of the Patent Act, such as § 171, which allows designs for components to be patented. The Federal Circuit erred by adopting a narrow reading that limited the term to only those articles sold separately to consumers, a limitation not found in the statute's text. The Court reversed the Federal Circuit's holding but declined to establish a specific test for identifying the relevant 'article of manufacture,' remanding that issue to the lower court.
Analysis:
This decision significantly alters the landscape of design patent damages, particularly for complex, multicomponent products in the technology sector. By rejecting the Federal Circuit's rigid rule that the 'article of manufacture' must be the entire product sold, the Court allows for a more nuanced and potentially smaller damages award based on the profits attributable to a specific infringing component. This ruling will likely reduce the threat of massive, full-profit disgorgement awards in future design patent cases. However, by declining to provide a clear test for identifying the relevant article, the Court has created uncertainty and shifted the focus of litigation to a new, fact-intensive inquiry that lower courts must now develop standards for.
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