December 06, 2016

Supreme Court Decides Samsung Electronics Co. v. Apple Inc.

On December 6, 2016, the United States Supreme Court decided Samsung Electronics Co. v. Apple Inc., No. 15-777, holding that in the case of a multicomponent product, the “article of manufacture” that is the basis for an award of damages under Section 289 of the Patent Act (35 U.S.C.§ 289) for infringement of a design patent need not be the end product sold to the consumer, but may be only a component of the product to which the patented design has been applied. 

Apple holds design patents on the front face of its iPhone smartphone. In general, the patents cover a black rectangular front face with rounded corners, a rectangular front face with rounded corners and a raised rim, and a grid of 16 colorful icons on a black screen. After Apple released the iPhone in 2007, Samsung released a series of smartphones that resembled the iPhone.

Apple sued Samsung for infringement of its design patents. A jury found that Samsung infringed Apple’s design patents and awarded Apple damages under Section 289 of the Patent Act, which provides that whoever applies a patented design to “any article of manufacture for the purpose of sale” or sells “any article of manufacture to which such design . . . has been applied” shall be liable to the patent owner “to the extent of his total profit.” The jury awarded $399 million, which represented Samsung’s entire profit from selling smartphones that incorporated the patented designs on the front face.

Samsung appealed to the Federal Circuit, arguing that Apple’s damages should have been limited to a component of the smartphones, such as the screen or case, as the relevant “article of manufacture” to which Section 289 applied. The Federal Circuit disagreed, holding that because the “innards” of the smartphones were not sold separately from the front faces or cases as distinct articles of manufacture to ordinary purchasers, the relevant “article of manufacture” had to be the entire smartphone.

The Supreme Court unanimously reversed the Federal Circuit. The Court held that in the case of a multicomponent product such as a smartphone, the relevant “article of manufacture” is not necessarily the entire end product sold to the consumer, but may be a component of the end product. The Court concluded that the plain language of the phrase “article of manufacture” could encompass both the product sold to a consumer and a component of that product, and that the Federal Circuit was wrong to conclude that it encompassed only the entire end product. The Court also pointed out that this reading of Section 289 of the Patent Act was consistent with Section 171, which provides for design patents and has always been understood to permit a design patent that extends only to a component of a multicomponent product, and consistent with Section 101, which covers utility patents and similarly allows for patents on a portion of a multicomponent product.

Although the Court held that an “article of manufacture” may be only a component of the end product, the Court did not establish a test for identifying the relevant “article of manufacture” for purposes of a damages award under Section 289, as the parties had not briefed that issue.

Justice Sotomayor delivered the decision for a unanimous Court.

Download Opinion of the Court

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