By Jason Rantanen
Apple Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. 2015) Download Opinion
Panel: Prost (author), O’Malley, Chen
Apple prevailed at the district court on trade dress, design patent and utility patent claims, with a total award of almost a billion dollars. On appeal, the Federal Circuit reversed on trade dress but affirmed on the design and utility patents. The big winner in this case, though, are design patents: the Federal Circuit rejected Samsung’s attempt to exclude functional features from the infringement analysis and affirmed the district court’s award of Samsung’s total profits from the sale of the phones with the infringing design.
Trade Dress: Samsung challenged Apple’s unregistered and registered trade dresses on the ground that they were functional. Applying the Ninth Circuit’s law on Lanham Act claims, the Federal Circuit agreed that Apple’s asserted trade dresses possessed utilitarian functionality. In reaching this conclusion, it placed particular weight on the “product configuration” nature of the trade dress. “[C]ourts have noted that it is, and should be, more difficult to claim product configuration trade dress than other forms of trade dress.” Slip Op. at 8, quoting Leatherman Tool Grp., Inc. v. Cooper Indus., Inc., 199 F.3d 1009, 1011-12 (9th Cir. 1999). Here, all factors weighed in favor of the trade dresses being functional and thus unprotectable under trademark law.
Design Patents: A substantial portion of Apple’s billion dollar verdict were based on the infringement of its design patents and Samsung attacked that issue with an array of arguments. The Federal Circuit rejected all of them.
Functionality and infringement: Samsung argued that “the district court erred in failing to exclude the functional aspects of the design patents either in the claim construction or elsewhere in the infringement jury instructions.” Slip Op. at 20. “For example, Samsung contends that rectangular form and rounded corners are among such elements that should be ignored in the infringement analysis.” Id. But, the court held, the precedent cited by Samsung did not support a rule “to eliminate elements from the claim scope of a valid patent in analyzing infringement.” Id. at 21 Nor did the district court err in its construction of the patent: the principle that “it is the non-functional, design aspects that are pertinent to determinations of infringement” was properly reflected in “the district court’s construction
of the design patents as claiming only ‘the ornamental design’ as shown in the patent figures.” Id.
Actual deception not required and the role of prior art: In its instruction on infringement, the district court stated: “You do not need, however, to find that any purchasers actually were deceived or confused by the appearance of the accused Samsung products.” Samsung argued that this instruction misled the jury; the Federal Circuit disagreed. “[T]he jury instruction simply clarified that actual deception was not required, which is an accurate reflection of the analysis in Gorham.” Id. at 23. Nor did the jury instructions reduce the consideration of the prior art to a mere option.
Samsung also argued that infringement was not supported by substantial evidence, but its substantive arguments were essentially the same as its challenges to the jury instructions. The court rejected these and Samsung’s argument that the district court abused its discretion in precluding certain testimony.
Damages: This is the section of the opinion that will probably get the most attention. The damages statute for design patent infringement, 35 U.S.C. § 289 states:
Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.
Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement
In other words, “Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.” Slip Op. at 25 (emphasis added). That is, Samsung’s total profit from its sales of phones with the infringing designs.
Samsung raised two primary arguments. First, it argued in favor of apportionment based on a causality theory; that is, that the only profits attributable to the infringement be allowable as damages. But the statute says “total profit,” and the statutory history contained an express removal of a prior apportionment requirement in the Act of 1887. Second, Samsung argued that the “article of manufacture” should be limited to the infringing “article of manufacture” and not the entire infringing product. Again, the Federal Circuit disagreed, distinguishing Samsung’s citation to a 1957 Second Circuit case involving pianos and piano cases. The Federal Circuit did not substantively engage with the statutory language on this issue.
The bottom line is that high damages claims for design patent infringement are going to be much more credible in the wake of Apple v. Samsung. Under the court’s ruling, it would seem entirely possible, as a hypothetical example, for an automobile manufacturer to be liable for its entire profits from a particular car model if that model contained, say, an infringing tail light. Given the publicity surrounding Apple v. Samsung, my expectation is that there will be explosion of design patent assertions and lawsuits.
Utility Patents: Samsung raised an indefiniteness argument based on the claim term “substantially centered;” unsurprisingly, the Federal Circuit rejected it. There is one interesting little nugget, though: Samsung lost because it “points to no evidence showing that skilled artisans would find the element ‘substantially centered’ as lacking reasonable certainty in its scope.” Slip Op. at 29. This language is notable because it reflects the court’s waffling between indefiniteness as an evidentiary question and indefiniteness as question of law. The former expressly involves testimony about what one of skill in the art would understand; the latter is a question for the court.
Utility Patent Damages: Lost profits for utility patent infringement does require a showing of causality and Samsung argued that there was an acceptable noninfringing substitute. But “the ‘[m]ere existence of a competing device does not make that device an acceptable substitute.’” Id. at 31, quoting precedent. All Samsung pointed to was the “mere existence” of a noninfringing phone. This was not enough, and “there was substantial evidence to support the jury’s refusal to consider the two phones asserted by Samsung as non-infringing substitutes.” Id. at 32. The Federal Circuit also rejected Samsung’s challenges to the reasonable royalty award on the set of phones for which Apple was not entitled to lost profits.
Hat tip to Tom Cotter for being the first to alert me to the opinion, which initially appeared only on PACER. His writeup of the damages discussion: http://comparativepatentremedies.blogspot.com/2015/05/federal-circuit-affirms-damages-awards.html.