By Nelson T. Rivera
As reported in CNET, “Samsung’s hopes of scuttling a massive fine on alleged patent infringement of Apple products have been dashed . . . The US Federal Circuit Court of Appeals decided on [August 13, 2015] that it would not grant Samsung’s request for a new trial on whether nearly two dozen of the company’s mobile devices infringed on Apple’s design patents.” It therefore appears that “Samsung must either dole out hundreds of millions of dollars in damages to Apple or attempt to have the US Supreme Court to hear the case.”
“Apple won the trial in 2012, with the jury awarding it $1.05 billion in damages.” However, that figure was reduced to approximately $548 million after a series of hearings and appeals. According to the San Jose Mercury News, “Samsung had urged the Federal Circuit to rehear the case with its full 12-judge roster, arguing that a three-judge panel erred earlier this year when it left intact a jury’s verdict that the South Korean tech giant’s smartphones and tablets infringed on Apple’s design patents.” The CAFC, however, rejected Samsung’s appeal, and sustained the three-judge panel decision that held a jury could have reasonably relied on evidence in the record to reach its infringement verdict.
The future ramifications of Apple v. Samsung are going to be very interesting to watch assuming that the Supreme Court does hear and then overturn the jury verdict. For instance, Professor Jason Rantanen suggests that “high damages claims for design patent infringement are going to be much more credible in the wake of Apple v. Samsung” and could lead to an “explosion of design patent assertions and lawsuits.” In a follow-up to Professor Rantanen’s analysis, former 3M president Gary Griswold points out that “[d]esign patents are nearly ideal assertion vehicles given that they are inexpensive to obtain with no cost to maintain, are not published prior to grant, and have a full term of protection beginning with grant rather than filing.” Further, according to Glenna Gilbert of Larkin Hoffman, “[u]nlike holders of utility patents, owners of design patents have the option of choosing between two different statutes with respect to the recovery of damages for design patent infringement– 35 U.S.C. §§ 284 and 289.”
Gilbert writes, “Under § 284, design and utility patent holders alike can seek a reasonable royalty or the patent holder’s lost profits resulting from the alleged infringement [in addition to injunctive relief under § 283]. However, unlike a utility patentee, the owner of a design patent possesses an additional remedy under 35 U.S.C. § 289.” Under § 289, a design patent holder can, according to Gary Griswold, “recover total profits of the infringer as the measure of damages. This ‘total profits’ recovery was once available for utility patents, but long ago removed from the utility patent law.” On the other hand, says Gilbert, “[a] design patentee cannot however recover both damages under § 284 and the profits of the infringer under § 289.”
“There are tactical reasons for choosing to pursue one or the other method of recovery,” Gilbert continues. “For instance, treble damages are only available under § 284. And in some cases, a patentee’s lost profits under § 284 may be more than the infringer’s net profits under § 289. On the other hand, under § 289, in establishing the infringer’s net profits, a patent holder is not required to demonstrate that the profits are attributable to the ornamental qualities of the item in the design patent. Rather, a patent holder is entitled to the entire profit obtained by the infringer resulting from the sale of an item containing the infringing design (and in no event less than $250).”
On the whole, this case has now brought more of a focus on the full commercial ramifications of the § 289 “total profits” recovery. For example, Professor Rantanen speculates that “Under the court’s ruling, it would seem entirely possible, as a hypothetical example, for an automobile manufacturer to be liable for its entire profits from a particular car model if that model contained, say, an infringing tail light.” This type of result is plausible since the court in Apple v. Samsungin applying § 289 stated, in pertinent part, “…that an ‘infringer shall be liable to the owner to the extent of [the infringer’s] total profit’, Section 289 explicitly authorizes the award of the total profit from the article of manufacture bearing the patented design…” Accordingly, this decision highlights the potential value of design patents but also raises questions about the potential unfairness and inappropriate application of § 289.
LaRiviere Grubman frequently counsels clients with respect to the patentability of their technical innovations. If you have questions about protecting your technology, contact us at (831)-649-8800 or email@example.com.