Samsung Elecs. Co. v. Apple, Inc.

Samsung Elecs. Co. v. Apple, Inc.
137 S. Ct. 429 (2016)
Authored by David Bly

Statement of Facts: During the iPhone design development, Apple obtained several patents and trade dress protections. At issue before the Supreme Court were three design patents: (1) D618,677: a design patent for the black rectangular front face and rounded corners; (2) D593,087: a design patent covering the raised rim along with the rectangular front face and rounded corners; and (3) D604,305: a design patent covering the grid of sixteen icons imposed on a black screen. Samsung developed and manufactured numerous smartphones that Apple alleged infringed Apple’s intellectual property, which served as the basis for this litigation, starting in the United States District Court for the Northern District of California and then working its way up through the Federal Circuit to the Supreme Court. For more detailed information about the case below, see Apple, Inc. v. Samsung Electronics Co., Ltd., 786 F.3d 983 (Fed. Cir. 2015).

Procedural History: In 2012, a jury in the district court ordered Samsung to pay over $1 billion in damages to Apple for repeated patent infringement and trade dress dilution. After the jury trial, the district court upheld the jury’s findings of patent infringement and trade dress dilution, as well as $639,403,248 in damages. The court ordered a partial retrial of the remainder of damages because Samsung lacked notice of some of the patents. The jury in the partial retrial awarded $290,456,703 to Apple and Samsung subsequently appealed to the Federal Circuit. The Federal Circuit decided a wide range of issues, affirming the design patent infringement finding, the validity of two utility patents, and the damages awards for design and utility patent infringement. The Federal Circuit reversed and remanded the claims with respect to trade dress dilution. In awarding damages, the Federal Circuit awarded Apple all of Samsung’s profits resulting from the sale of the infringing devices. The Supreme Court granted certiorari to determine whether an award of an infringer’s profits should only be limited to those profits attributable to the component in question.

Question Presented: Under Section 289 of the Patent Act, must the relevant “article of manufacture” be the end product sold to the consumer, rather than a mere component of that product?

Holding: No. Under Section 289 of the Patent Act, a relevant “article of manufacture” may be a component of a multicomponent product.

Reasoning: The Supreme Court reversed and remanded the Federal Circuit’s patent infringement damages award of all profits for design patent infringement, invalidating the Federal Circuit’s holding that the language of Section 289 requires a damages award to include all profits from an end product because the infringing items were not sold separately. In rejecting the Federal Circuit’s reasoning, the Supreme Court explained that arriving at a Section 289 damages award involves a two-part test: (1) identifying the “article of manufacture,” then (2) calculating the infringer’s profit made from that article of manufacture. See Samsung Elecs. Co. v. Apple, Inc., 137 S. Ct. 429, 434 (2016). The Supreme Court did not consider the second inquiry, but held an “article of manufacture” may include smaller components in a multicomponent product.  

The Supreme Court reached its conclusion individually defining “article” and “manufacture.” The Supreme Court defined an “article” under Section 289 of the Patent Act as “a particular thing.” Likewise, the Supreme Court defined “manufacture” as “the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man.” Id. at 435. An “article of manufacture,” the Supreme Court reasoned, simply means a thing made by hand or machine. While this construction seems exceptionally broad, the Supreme Court explicitly stated that it was adopting a broad meaning of “article of manufacture.” Id. at 434. Among the Supreme Court’s considerations in adopting this broad construction was whether a component should be outside the category of articles of manufacture simply because that component may be integrated into a larger product. To avoid an absurd result based on an overly-technical construction, the Supreme Court used the Stormonth Dictionary of the English Language and the American Heritage Dictionary to define “article” and “manufacture.”

With this understanding of what constitutes an “article of manufacture,” the Supreme Court held that the term is broad enough to encompass both composite end products and their individual component parts. The Supreme Court further reasoned that this definition is consistent with Section 171(a) of the Patent Act, which makes “new, original and ornamental design for an article of manufacture” eligible for design patents, which courts have held to permit a design patent for a component of a multicomponent product. Id. Additionally, the Supreme Court reasoned that this understanding is consistent with Section 101 of the Patent Act, which states that “any new and useful . . . manufacture . . . or any new and useful improvement thereof” is eligible for utility patent protection. Id.

The Supreme Court declined to address whether the relevant “article of manufacture” at issue was the entire smartphone or a component part. The Court did not resolve the issue, nor did it establish a test for the first step of the damages inquiry because neither party briefed the issue and because applying such a test would require an undesirable parsing of the record. Accordingly, the Supreme Court left the issue for the Federal Circuit on remand. The judgment of the Federal Circuit was therefore reversed and remanded for proceedings consistent with this opinion.

Subsequent History: Although the Supreme Court left the issue of setting out a test for identifying the relevant article of manufacture at the first step of the § 289 damages inquiry for the Federal Circuit, the Supreme Court notably referenced the United States’ proposed test submitted as Amicus Curiae. The Federal Circuit has since remanded the case to the district court to determine what additional proceedings, if any, are needed. If a new trial is needed, the district court may create a test for identifying the relevant article of manufacture for purposes of § 289 and calculate the damages accordingly. Apple Inc. v. Samsung Elecs. Co., No. 2014-1335, 2017 WL 490419 (Fed. Cir. Feb. 7, 2017).

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