IP lawyer: Jury awards Apple $533 million for design patent infringement based on four-factor test

On 24 May 2018 a federal jury at the US District Court for the Northern District of California determined in Apple Inc v Samsung Electronics Co (11-CV-01846-LHK) that Samsung must pay Apple $533,316,606 in damages for infringing three design patents asserted by Apple. The design patents at issue – D618,677, D593,087 and D604,305 – cover ornamental features of smartphone devices, including the face, bezel and graphical user interface (GUI).

The story so far

Apple initially sued Samsung in 2011, asserting a number of utility patents and the abovementioned design patents. After jury trials in 2012 and 2014, Apple was awarded $399 million in damages for infringement of the design patents – Samsung’s total profits for its infringing smartphones. Samsung appealed to the US Court of Appeals for the Federal Circuit, which in 2015 upheld the damages based on design patent infringement. Samsung then appealed the design patent damages issue to the Supreme Court, which reversed the decision in 2016. Following remands by the Supreme Court and Federal Circuit back to the district court, a new trial on damages was held between 14 and 18 May 2018.

The design patent damages statute provides that an infringer which applies a patented design to any article of manufacture will be liable to the extent of its total profit (35 USC §289). This calculation of damages – disgorgement of the infringer’s total profits – differs from damages for utility patents, which may be based on the lost profits of the patentee. Before the Supreme Court’s 2016 decision, Federal Circuit law had held that the relevant article of manufacture under 35 USC §289 is the entire product sold to a consumer to which the design is applied, even if the design covers only one component of that product. In an effort to reduce the basis on which its profits were calculated, Samsung argued that the article of manufacture should be limited to the component embodying the patented design. The Supreme Court agreed in part: it held the article of manufacture could be either the component or the entire product, depending on the facts of the case.

However, the Supreme Court failed to explain which applied to Apple v Samsung – the component or the entire product – or how to calculate damages based on a product component. The district court ended up adopting a test formulated by the US solicitor general during the Supreme Court proceedings. Specifically, the district court instructed the jury to consider four factors:

• the scope of the claimed design, including the drawings and written description provided by the design patent;
• the relative prominence of the design within the infringing product as a whole;
• whether the design is conceptually distinct from the product as a whole; and
• the physical relationship between the patented design and the rest of the product, including whether the design pertains to a physically separable component.

The jury

In the May 2018 trial, the jury awarded Apple $533 million in design patent damages. Although the jury’s verdict form breaks down this award among 16 infringing Samsung smartphones, it does not shed light on what exactly the jury determined to be the article of manufacture.

Some jurors who have since spoken to the media have indicated that they considered the relevant article of manufacture of Apple’s ’305 design patent covering the GUI to be the entire phone, because the interface cannot be displayed without the phone and its components. This suggests that for the Apple jurors the fourth factor carried significant weight with respect to the GUI patent.

If that was their reasoning, then design patents that cover GUIs and on-screen features of electronic products, as opposed to physical features of those products, may be at an advantage under the fourth factor. Defendants faced with such patents may have to undertake the relatively complex task of explaining to jurors exactly which product components are physically related to the patented features and which are not.

In that regard, on 7 June 2018 Samsung filed a motion asserting (among other things) that the jury had erroneously based damages for Apple’s ’305 GUI design patent on the entire phone. According to Samsung’s motion: “because Apple’s patented designs for certain externally visible components of a smartphone appears only on those visible components, as a matter of law – and as Apple admitted before the Supreme Court – such designs can be applied only to those external components and are not applied to the internal ‘chips and wires’ of Samsung’s phones.”

However, clarification of those issues will have to wait for another case – on 27 June 2018, Apple and Samsung settled their dispute and the district court dismissed Samsung’s motion.

Where next

When the Federal Circuit remanded to the district court after the Supreme Court’s decision, it provided no guidance on how to determine the article of manufacture. However, at least two other district courts have taken the same tack as the district court here, applying the solicitor general’s four-factor test. At least at this time, there appears to be a growing consensus on how district courts will instruct juries regarding design patent damages. And, as Apple v Samsung suggests, some factors may tend to favour certain kinds of design patent over others when presented to a jury.