Apple v Samsung Saga – The New Article of Manufacture Damages Standard

Apple v Samsung Saga – The New Article of Manufacture Damages Standard

Under 35 U.S.C. §289, a design patent infringer is liable to the owner “to the extent of his total profit.” However, to be liable under this statute, one must apply the patented design (or imitation thereof) to an article of manufacture for the purpose of sale.

Going back to 2012, Apple was awarded damages exceeding one billion – a calculation based on sales of entire Samsung cell phones. However, an appeal is pending to determine what constitutes an article of manufacture for purposes of calculating damages. Apple contends that each cellphone in its entirety qualifies as an article of manufacture, while Samsung argues that the infringement covers only minor parts of the cell phones, and, therefore, damages should not be calculated based on the sales price of the entire phone product.

Though Apple originally won a verdict with damages calculated accordingly to the total profits Samsung made from selling its devices, in 2016, the Supreme Court weighed in on the issue and decided that an article of manufacture can be based on just a part of a product that infringes rather than the whole product. Yet, that was as far as the Court went, kicking the case back down to California federal courts to decide the degree of infringement and recalculate the damages accordingly.

Now back in lower court, a multi-factor test has been adopted which will balance:
(1) The scope of the design claimed in the patent
(2) The relative prominence of the design within 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.

How strong each factor is and what kinds of evidence can be used for each are going to be new issues, and the burden of persuasion will be on Apple to argue how much of the products should qualify as articles of manufacture for damages purposes. It is not yet known whether the Federal Circuit will adopt the same test.

©2018 Buche & Associates, P.C.
Article written by Nicole Sumida, J.D. Candidate.