The fight between Apple Inc. and Samsung Electronics Co., the world’s two leading smartphone manufacturers, is not limited to the marketplace – in the past five years, Apple has filed over fifty patent infringement lawsuits internationally against Samsung. The most recent United States ruling was decided in favor of Apple by the Federal Court of Appeals in 2015. However, the Supreme Court has recently decided to review the case. In this post, we’ll explain what exactly is being contested, and why it may matter for future of design patent cases across the country.
Design Patents vs. Utility Patents:
An important distinction in patent law is the distinction between design patents and utility patents. According to the U.S. Patent and Trademark Office’s official Manual of Patent Examining Procedure: “In general terms, a ‘utility patent’ protects the way an article is used and works, while a ‘design patent’ protects the way an article looks.”
In the 2015 ruling, Apple was awarded damages for three design patent infringements. Intellectual property news website IPWatchdog summarizes the three design elements as follows: “(1) the design of the ‘graphical user interface,’ or icons on the display screen; (2) the flat-contoured front face of the phone and ‘bezel’ around the face; and (3) the ‘flat, continuous and edge-to-edge transparent black front surface.”
Apportionment and “Total Profit”
The question, in this matter, is not whether or not Samsung infringed on Apple’s design patents. The question to be reviewed by the Supreme Court has to do with how damages for design patent infringements are awarded.
Damages for infringing on utility patents, as opposed to design patents, may be limited by apportionment requirements. This means that damages may have to be apportioned based on what role the patented technology plays in the overall profits. According to the National Law Review, the parts of a smartphone which are protected by utility patents include the camera, the technology which allows for messaging, and so forth.
However, this is a case having to do with design patents. In contradiction to utility patents, the damages for infringing on design patents, according to 35 U.S.C. § 289, are to be calculated on the “total profit.”
This case rests on the meaning of “total profit.” Samsung alleges that it is unclear whether the design patent applies to the whole phone, or to the particular components of the phone which use the patented design. As patent law website Patently-O reports, “For this case, the particular components would be the front face of the phone and the icon-grid displayed on a user interface screen.” If the “total profit” only applies to the profits made as a result of the phone’s front face and user interface screen, Samsung could owe Apple far less money in damages.
What will happen?
Precedent seems to be against Samsung. In 2013, Nike sued Wal-Mart for infringing on the design of an athletic shoe. IPWatchdog writes that, during this suit, “the court reviewed the history of design patent remedies and the early cases that prompted design patent-specific legislation in the 1800s. The court determined that the design patent-specific legislation was enacted to remove ‘the need to apportion the infringer’s profits between the patented design and the article bearing the design.’ ” All of Wal-Mart’s profits on the shoe were awarded to Nike, for the explicit reason that design patent damages were not to be apportioned.
However, Samsung is not backing down – and the case could have nationwide repercussions. As they argued to Patently-O, “If the current ruling is left to stand, it would value a single design patent over the hundreds of thousands of groundbreaking technology patents, leading to vastly overvalued design patents.” Additionally, some legal scholars believe that a ruling in favor of Apple will lead to an “explosion of design patent assertions and lawsuits.” Whether this is true or not has yet to be determined. Either way, this latest stage of Apple vs. Samsung may prove hugely important for the future of American patent law.
This case is a prime example of the complexities and risks of intellectual property matters. Graham Rogers and his staff have decades of experience and have been qualified as expert witnesses in various state, federal, and tax courts. They have worked in a wide variety of industries including, but not limited to: the pharmaceutical industry, medicine, high technology, digital services, finances, retail, healthcare services, and the insurance industry. If you are interested in a free intellectual property damages consultation, Contact Rogers DVS today, and Graham Rogers will personally respond to your inquiry ASAP.