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Patent Infringement as Applied in Samsung v. Apple

LA Lawyer
04/5/2017
Article originally appeared in Los Angeles Lawyers on 04/05/2017

THE U. S. SUPREME COURT’S recent decision in Samsung v. Apple1 creates a quandary for patent practitioners and clients alike. Most design patents are drafted to provide clients with the broadest protection possible by limiting the number of elements in the patented design. The fewer elements in the design, the easier it is to prove that accused products have substantially the same design as required for infringement.2 For example, in Samsung v. Apple, one of Apple’s design patents at issue claimed the top “surface” of the iPhone design rather than seeking patent protection for the design of the entire electronic device.3 That way, to show infringement, Apple only had to prove that the “surface” of Samsung’s accused Galaxy phones had the same design as Apple’s patent. Previously, in cases like this, the patent owner was able to recover the infringer’s profits on the entire device, despite the fact that the design patent was limited to a portion of the device, (e.g., the top surface of a smartphone). This provided an apparent windfall to patent owners. As an example, the U.S. Court of Appeals for the Federal Circuit awarded Apple $399 million in damages prior to the Supreme Court appeal. This damage award covered Samsung’s entire profits for its sale of infringing smartphones.4 However, the Supreme Court seemingly has ended this type of award, ruling that damages must now be apportioned so that the patent owner only recovers those profits attributable to the patented design. The Court noted that such apportionment would apply to cases involving multicomponent devices in which the patented design covers only a portion, such as the accused Samsung smartphones.5 As such, the Supreme Court reversed the finding of damages in Samsung v. Apple and remanded the case to the district court for a factual determination of what portion of Samsung’s profits are attributable to the designs covered by Apple’s patents.6 In light of this decision, for multicomponent devices, patent practitioners and their clients must now balance the competing interests of crafting their design patents broadly enough to be able to enforce them against would-be infringers while at the same time making sure not to limit the claimed design to a too narrow portion of a product, which may severely limit recoverable damages. This fine line must be walked to insure that the potential recovery from any design patent litigation is sufficient to warrant institution of a lawsuit in the first place. Otherwise, the cost of seeking a design patent may not be worth the now lower reward.

Infringement Standard

A design patent is infringed if the following test is met: [I]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.”7 In applying this test, all ornamental features as illustrated in the figures of the design patent must be considered.8 Thus, patent practitioners typically limit the ornamental features they include as part of the claimed design. This is particularly true in light of the Federal Circuit’s decision in Contessa Food Products, Inc. v. Conagra, Inc.9 Contessa Food Products involved a case of design patent infringement for a serving tray having an arrangement of shrimp. The design patent owned by Contessa included five drawings, with the top and side views showing the tray and shrimp arranged on the tray and a bottom view showing the underside of the tray.10 The allegedly infringing products were shrimp trays sold by Conagra having a similar design to the patented one. Contessa sought summary judgment of infringement, which was granted. In its analysis, the district court analyzed the top and side features of the tray including the shrimp arrangement; however, the district court discounted the importance of the underside, finding that, in the accused products, the grooves and features of the underside were covered by packaging at the point of sale and would not be visible to the ordinary observer (i.e., the purchaser).11 On appeal, the Federal Circuit disagreed. It reversed the finding of infringement, holding that the design of the underside of the tray was not sufficiently considered.

The Federal Circuit found that “the ‘ordinary observer’ analysis is not limited to those features visible at the point of sale, but instead must encompass all ornamental features visible at any time during normal use of the product,” where “normal use” includes “a period in the article’s life, beginning after completion of manufacture or assembly and ending with the ultimate destruction, loss, or disappearance of the article.”13 The Court explained that this holding was in line with its prior decision in Keystone Retaining Wall Systems, Inc. v. Westrock, Inc. Keystone involved a case of design patent infringement of a construction block intended to be combined with other blocks to form a wall.14 The Federal Circuit held that even though only the front face of the block was visible during its use in a retaining wall, the patented block comprised the entire retaining wall block, not just the front, and thus an accused product must include ornamental features from all faces of the block.15 In total, these cases led to the holding that “the ‘ordinary observer’ analysis is not limited to those features visible during only one phase or portion of the normal use lifetime of an accused product.... Instead, the comparison must extend to all ornamental features visible during normal use of the product.”16 The Keystone and Contessa Food Products cases have motivated practitioners to be very careful about what is included in their design

Los Angeles Lawyer April 2017 11 patents, lest they narrow the scope of the design in a way that exculpates potential infringers. To this end, for multicomponent devices, practitioners either depict only the portion of a product they are claiming or use dashed lines to designate the portion of the product, which is provided for context but not included in the claimed design. Apple followed the latter of these practices by depicting everything in dashed lines save the top “surface” of its smartphone in U.S. Design Patent No. 618,677 (the “D’677 Patent”), one of the three Apple patents at issue in the Samsung v. Apple case. The other two Apple patents at issue were likewise limited to a top portion of an electronic device, with U.S. Design Patent No. 593,087 (the “D’087 Patent”) covering “a rectangular front face with rounded corners and a raised rim,” and U.S. Design Patent No. 604,305 (the “D’305 Patent”) covering “a grid of 16 colorful icons on a black screen.”17 At trial, a jury found that Samsung’s accused smartphones infringed all three of these design patents and Apple was awarded $399 million for the entire profits of Sam - sung’s smartphone sales.18 On appeal to the Federal Circuit, Samsung argued that these damages should be limited because, pursuantto Section 289 of the Patent Act, damages for design patent infringement are limited to the “total profits” for the “article of manufacture to which [a patented] design or colorable imitation has been applied.”19 Sam - sung argued that the relevant “article[s] of manufacture” were the front face or screen of the smartphone rather than the entire smartphone, and thus the damages must be limited to the profits attributable to those portions. The Federal Circuit, however, re - jected this argument and affirmed the large damages award. 20 The Federal Circuit reasoned that such a limit was not required because “[t]he innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.”21 The Supreme Court overruled the Federal Circuit on this point. The Court focused onthe term “article of manufacture,” criticizing the Federal Circuit’s decision as limiting an “article of manufacture” to include only distinct products sold to consumers.22 The Court held that the term is not so narrow: “Article of manufacture” has a broad meaning. An “article” is just “a parti - cular thing.” J. Stormonth, A Dic tion - ary of the English Language 53 (1885) (Stormonth); see also Ameri can Her i - tage Dictionary, at 101 (“[a]n in divi dual thing or element of a class; a particular object or item”). And “man u facture” means “the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man” and “the articles so made.” Stor month 589; see also American Her itage Dictionary, at 1070 (“[t]he act, craft, or process of manufacturing products, especially on a large scale” or “[a] product that is manufactured”). An article of manufacture, then, is simply a thing made by hand or machine. So understood, the term “article of manufacture” is broad enough to en - compass both a product sold to a consumer as well as a component of that product.23 The Court found this broad meaning to be consistent with both the legislative history and other statutory interpretations of the term. For example, Section 171(a) of the Patent Act, which makes “new, original and ornamental design[s] for an ‘article of manufacture’ eligible for design patent protection, has been understood by the Patent Office and courts to extend to components of a multicomponent product.24

The Supreme Court also pointed out that an “article of manufacture” in Section 171 includes what would be considered a “manufacture” within the meaning of Section 101, which allows a person to obtain a utility patent on a “process, machine, manufacture, or composition of matter.”25 The term “manufacture” in Section 101 has likewise been construed broadly to include “parts of a machine.”26 While the Supreme Court answered the question of what qualifies as an article of manufacture, it declined to set forth a new test to determine what portion of a product (or if the entire product itself) is considered to be the “article of manufacture.” The Court simply remanded the Samsung v. Apple case to the lower courts and stated that the Federal Circuit could address this and any other remaining issues if needed.27 However, the Court noted that the United States had proposed a test in its amicus brief. The proposal suggests a case-specific, factual determination that takes into account which characterization of “article of manufacture” would “appropriately compensate (rather than over-compensate) the patentee for the contribution of the patented design to the value of the infringer’s finished product.”28 The United States suggested several factors that should be considered, including:

1) the scope of the design claimed in the patent;

2) the prominence of the design within the product to determine if the design affects the appearance of the product as a whole;

3) whether the design is conceptually distinct from the product as a whole; and

4) the physical relationship between the patented design and the rest of the product, which may reveal if the design adheres only to a component of the product.29

The United States cites Federal Circuit Figure 1 of the D’677 Patent Figure 1 of the D’087 Patent Figure 1 of the D’305 Patent precedents in support of the factors,30 and the Federal Circuit may look to include some of these factors in a test for “article of manufacture” should it choose to enumerate one. However, the question still remains as to what the exact standard is that patent practitioners must meet in order to make sure any design they patent is able to recover profits on a significant enough portion of a product to make enforcement of the patent worthwhile.

Practice Pointers

While a more specific damages standard hopefully is forthcoming, there are strategies patent practitioners can suggest in the meantime so that clients can best protect their designs. As a starting point, practitioners should first determine whether the design patent seeks to cover the design of a singlecomponent product (such as a dinner plate) or the design of a portion of a multicomponent product (such as a kitchen oven). If the design covers even a portion of a single-component product, apportionment should not apply, according to Samsung v. Apple,31 and the client can seek design patent protection without the worry of a reduced damages standard. However, if the design only covers a portion or component of a multicomponent product, Samsung v. Apple could apply and the practitioner may want to consider filing multiple design patents. Since design patents are reasonably affordable, especially when compared to utility patents, practitioners should consider obtaining both design patents on certain components, increasing the chances of establishing liability, and at the same time obtaining design patents directed to the entire product. While it may be harder to show infringement of the latter comprehensive design patent, if infringement is found, the degree of apportionment of the profit damages, if any, should be much less. In addition, having both types of patents available at trial may help further settlement because, even if the defendant believes he or she can avoid the comprehensive design patent, the threat of liability based on the more narrow design patent will still exist.

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