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Available Damages for Design Patent Infringement in the US Have Changed; To What Remains to Be Seen

by Joshua B. Goldberg (Nath, Goldberg & Meyer - USA)

The US Supreme Court recently held, in a unanimous opinion in the Samsung Electronics Co. v. Apple Inc. case, that the US statute for damage awards in design patent disputes, 35 USC 289, allows for damages to be applied at the component level, rather than only being available for a product as a whole. This case was then remanded, first to the US Court of Appeals for the Federal Circuit (CAFC), and now to the District Court, to determine whether the patented “article of manufacture”, in this case Samsung’s phone, should be the entire phone as sold to consumers, or some component of that whole.

On appeal from the CAFC, the Supreme Court changed the possibilities for awarding damages in a design patent dispute, without giving specific guidance as to how such damages should be awarded. Specifically, the decision centered on 35 USC 289, which provides for damages based on a defendant’s use of the patented “article of manufacture”. Based on the statute, the infringer “shall be liable to the owner to the extent of his total profit.” Clearly, since damages are available for “total profit”, any change to how this section of US law is interpreted can have major consequences.

The question in this specific case was whether damages should be awarded based on Samsung’s profits from its phone as a whole, or whether damages could and should be awarded to some lesser extent, for example, to profits associated with individual components of the infringing phone, i.e., the screen or body shape.

In siding with Samsung, the Supreme Court provided a new interpretation of the statutory language “article of manufacture”, stating:

[T]he term “article of manufacture” is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading “article of manufacture” in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.

Accordingly, the Supreme Court left it up to the lower courts to determine which of these levels should apply to determining design patent infringement damages in individual cases, without providing any guidance in this regard.

On remand in this specific case, the CAFC has in turn remanded the damages decision back to the District Court for reconsideration, leaving it to the District Court to make the initial determination of whether the patented “article of manufacture” should be the entire phone as sold to consumers, or some component thereof. In other words, stay tuned!