Chapter §23.04 Remedies for Infringement of Design Patents

• Jurisdiction: United States

§23.04 Remedies for Infringement of Design Patents

[A] Statutory Basis: 35 U.S.C. §289

The potential remedies for infringement of a design patent differ from those available for infringement of a utility patent. "A design patentee may recover damages under 35 U.S.C. §284 or [the infringer's profits] under 35 U.S.C. §289, entitled 'Additional remedy for infringement of design patent.' "¹⁵⁵

Since 1946, the general damages provision for utility patent infringement (today set forth at 35 U.S.C. §284¹⁵⁶) has not included the remedy of an accounting of the profits of an adjudged infringer,¹⁵⁷ sometimes referred to as "disgorgement."¹⁵⁸ However, the current Patent Act still provides for recovery of the infringer's profits when a design patent has been infringed:

§289. Additional remedy for infringement of a design patent

Whoever during thve 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.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title [35 U.S.C.], but he shall not twice recover the profit made from the infringement. ¹⁵⁹

In Nike, Inc. v. Wal-Mart Stores, Inc.,¹⁶⁰ the Federal Circuit reviewed the history of §289. Congress in 1887 enacted the predecessor provision of §289 in order to legislatively overrule a series of Supreme Court decisions that had effectively denied any recovery to the owners of infringed patents covering the designs of carpets. In the Dobson cases,¹⁶¹ the Supreme Court had applied a rule of apportionment that required the design patentees to show "what portion of their losses or the infringers' profits was due to the patented design and what portion was due to the unpatented carpet."¹⁶² Because the patentees in the Dobson cases were unable to make that showing, the Supreme Court held that the infringers were liable for "only nominal damages" of six cents.¹⁶³

Congress responded promptly to the Dobson decisions. The Act of 1887 removed the apportionment requirement when a design patent owner sought to recover an infringer's profits.¹⁶⁴ Thereafter, Congress in the 1952 Patent Act codified the Act of 1887 provisions for design patent remedies in 35 U.S.C. §289 but deleted the requirement that the infringement be "knowing."¹⁶⁵

[B] Apportionment of Infringer's Profits for Multicomponent Products: Samsung v. Apple (U.S. 2016)

Under pre-2016 Federal Circuit case law interpreting 35 U.S.C. §289,¹⁶⁶ enforcement of design patents appeared potentially quite lucrative. A primary draw was the remedy of an infringer's total profits on its sales of an entire product, even though only some but not all design features of the product infringed. This prospect held especially true for multicomponent products (e.g., a smartphone or other consumer electronics device as compared to a dinner plate).

However, the Supreme Court in December 2016 announced that the remedy of recovering total profits computed on sales of an entire multicomponent product having only some infringing design features will not always be available. For the reasons examined more fully below, the Court held unanimously in Samsung Elecs. Co., Ltd. v. Apple, Inc.¹⁶⁷ that the "article of manufacture" referred to in §289 encompasses "both a product sold to a consumer and a component of that product."¹⁶⁸ The Court's decision drastically contracted the potential monetary recoveries for design patent infringement. The remainder of this subsection charts the progression of the relevant case law.

In a May 2015 decision, the Federal Circuit relied on the Nike v. Walmart¹⁶⁹ exposition of section 289's history (detailed in the previous subsection of this treatise) in affirming a jury verdict that awarded a design patentee the infringer's total profits on sales of the entire product encompassing the patented features as well as many non-patented features. Apple Inc. v. Samsung Elecs. Co., Ltd.,¹⁷⁰ in which the Circuit refused to apportion infringer Samsung's total smartphone profits between infringing and non-infringing features, is one of many court decisions in the long-running battle between two electronics giants over utility-and design-patented features of smartphones and tablets.¹⁷¹

After substantial reduction by the district court, the total jury award to Apple for infringement of its asserted design and utility patents and trade dress amounted to approximately $600 million.¹⁷² Apple received the majority of the award ($399 million) for Samsung's design patent infringement, the "entire profit Samsung made from its sales of the infringing smartphones."¹⁷³

On appeal to the Federal Circuit, infringer Samsung argued that the district court had legally erred in allowing the jury to award Samsung's entire profits on its infringing smartphones as damages. Rather, the damages for design patent infringement should have been limited to the profit attributable to the infringement because of " 'basic causation principles. . . .' "¹⁷⁴ Samsung contended that " 'Apple failed to establish that infringement of its limited design patents . . . caused any Samsung sales or profits.' "¹⁷⁵

The Federal Circuit rejected Samsung's "causation" arguments because they advocated "the same 'apportionment' requirement that Congress [previously] rejected."¹⁷⁶ The appellate court quoted its 1998 Nike v. Walmart decision: "Apportionment . . . required [the patentee] to show what portion of the infringer's profit, or of his own lost profit, was due to the design and what portion was due to the article itself. . . . The Act of 1887, specific to design patents, removed the apportionment requirement. . . ."¹⁷⁷ Congress thereafter codified the design patent infringement damages provisions of the Act of 1887 in Section 289 of Title 35.¹⁷⁸

The Federal Circuit in Apple Inc. concluded that the "clear statutory language" and legislative history of 35 U.S.C. §289 necessarily defeated Samsung's proposed "causation" rule.¹⁷⁹ The appellate court confirmed that "[i]n reciting 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 total profit from the article of manufacture bearing the patented design."¹⁸⁰ Thus, the appellate court read the statute's reference to "total profits" as impliedly mandating those profits be computed based on sales of the entire infringing product in the form sold to consumers. Although the Circuit acknowledged policy arguments of amici who contended that awarding a design patent infringer's total profits "ma[de] no sense in the modern world," those arguments needed to be addressed to Congress rather the Federal Circuit.¹⁸¹

In December 2015, Samsung filed a petition for certiorari with the U.S. Supreme Court that challenged, inter alia, the total profits award.¹⁸² The Court granted the petition in March 2016,¹⁸³ limiting its review to Question 2 presented in the petition:

2. Where a design patent is applied to only a component of a product, should an award of infringer's profits be limited to those profits attributable to the component? ¹⁸⁴

The Supreme Court heard oral argument in Samsung v. Apple on October 11, 2016.¹⁸⁵

In a unanimous but limited decision issued in December 2016, the Supreme Court in Samsung Elecs. Co. v. Apple Inc. reversed the Federal Circuit.¹⁸⁶ In the Supreme Court's view, the case turned not on any question about the meaning of "total profits,"¹⁸⁷ but rather the meaning of the phrase "article of manufacture" for which total profits should be computed. The proper analysis involved two steps:

First, identify the "article of manufacture" to which the infringed design has been applied. Second, calculate the infringer's total profit made on that article of manufacture. ¹⁸⁸

The Supreme Court in Samsung Elecs. rejected the Federal Circuit's marketplace-based interpretation that "components of the infringing smartphones could not be the relevant article of manufacture because consumers could not purchase those components separately from the smartphones."¹⁸⁹ Rather, the term "article of manufacture" as used in §289 should be interpreted "broad[ly]" to "encompass[] both a product sold to a consumer and a component of that product."¹⁹⁰ In other words, the Supreme Court's decision in Samsung Elecs. means that the relevant "article of manufacture" for which the remedy of an infringer's total profits are computed with respect to a multicomponent product may be only those design components that infringe. This holding represented a potentially momentous reduction in the amount of damages recoverable for design patent infringement.

The Supreme Court in Samsung Elecs. based its broad reading of the statutory phrase "article of manufacture" primarily on dictionaries, explaining that

[a]n "article" is just "a particular thing." J. Stormonth, A Dictionary of the English Language 53 (1885) (Stormonth); see also American Heritage Dictionary, at 101 ("[a]n individual thing or element of a class; a particular object or item"). And "manufacture" 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." Stormonth 589; see also American Heritage 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. ¹⁹¹

Thus interpreted, an "article of manufacture" was "broad enough to encompass both a product sold to a consumer as...