By Jason Rantanen
This morning, the Supreme Court granted certiorari on the design patent remedies question in Samsung Electronics Co. v. Apple Inc. It did not grant certiorari on the functionality/ornamentality question raised in Samsung’s petition.
The question presented is:
2. Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?
Prior PatentlyO discussion available here. Tom Cotter also has an extensive discussion of this case on his Comparative Patent Remedies blog.
This case is particularly interesting to me, as this afternoon I’m giving a talk at the Washington & Lee School of Law on a current work in progress on the Takings Clause and changes to substantive patent law. I’ll be touching on the design patent remedies issue as an area of potential tension–regardless of how this decision turns out, it will be an imporant subject to keep an eye on!
The patented designs appear to be 0n the iPhone itself as opposed to any “component.” Without reviewing the briefs, can anybody tell us what Samsung is calling a component?
From my perspective, the design has become very distinctive. I can easily tell an Apple phone from anyone else’s. I don’t know whether that is a non infringement argument or not, but the design does appear to be of the phone. If so, the whole case on appeal hear seems to be an academic exercise.
Perhaps I am missing something?
A phone has many parts, including RF chips, control chips, RAM, touchscreens, sensors, GPS chips/sensors, the operating system, locking and unlocking screens, locations and uses of microphones, cameras, ports, buttons and their locations, the list goes on and on. And Apple’s design patents appear to cover some rounded corners and locations of some ports/speakers. (Except for USD604305; I can’t figure out what this is supposed to cover.)
Thus, Apple’s design covers mainly part of the bezel and case and the location and look of ports. Those parts cost probably 1/100 of the cost of the phone. The entire rest (99/100) of the phone isn’t covered. So, Apple’s design patents cover about $6 of a $600 phone.
PatentBob, are you suggesting that if I apply my bottle design to a bottle that I cannot collect for the total profits of the sale of the bottle of beer, but have to subtract out the value of the beer?
Talking about what goes INTO a phone, as if that value could be subtracted out from a royalty basis, is not talking about components. It is complaining about total profit as a measure of damages assuming that the proper basis for calculation is the same as that as a reasonable royalty: what a reasonable person would pay for a license if damages for non payment were just the marginal value of the contribution of the invention to the whole apparatus.
“Components” has to be about a sub feature of a larger apparatus, or something that is optional and that might even have a separate market. When the design though is on the entire apparatus as opposed to a sub feature, I do not know how we can talk about components.
I think that PatentBob was trying to tell you Ned that the case (alone) is not the entire phone.
anon, I understand the point Bob makes. But the article here is the phone, not the case as the phone and the case are the same thing here.
One cannot distinguish between the bottle and the beer. Until one can give me a good argument that one has to subtract the value of the beer, I think the article here is the phone, not the casing.
No Ned, they are not the same thing – the “design” does not reach the inner guts.
anon, what in the world are you talking about? Truly. You have gone off the deep end here.
Not sure why this was blocked earlier…
Not at all, Ned. Come to the thread and read all of the comments – clearly I am not the one “0ff the wall.”
You may not like what I am saying – and in truth, all that I am doing is relaying the argument on the table (and I am not saying that that argument is correct.
I do “get” what you are saying – and in the bigger picture it is clear that I think Congress has already indicated a total – as opposed to a partial – profits (see 2.1 and 2.1.1.2)
Thanks, anon.
And most certainly one CAN distinguish between the bottle and the beer.
If you don’t think so, then bring me a six pack (of my choice), close your eyes and I will give you back (at least the bottles, now filled with far inferior draft) .
We can play that came every night!
anon, the article sold is the bottle of beer. The design is on the bottle. Total profits on the sale of the bottle of beer would seem to include the convoyed beer.
The whole point of the statute in the first place is to overrule decisions that had apportioned profits between the bottle and the beer.
I hear you – but here, I am just pointing out to you that a different “theory” is being advanced.
Ned, rather than pose a clearly non-analogous fact situation where the container itself is worth more than its removable contents, how would you answer this kind of question from one of the Justices in the upcoming oral argument:
The hood ornaments of expensive cars are typically covered by design patents. So does the statute require payment to an infringer of the entire profit on all sales all of the entire cars, or $250 each?
[P.S. assume the hood ornaments are not removable without damaging the car, which I believe is now often the case.]
Paul,
Is your question what the law should be written to say about that situation or what it currently says about that situation?
The design is applied to the hood ornament. The hood ornament is mounted on the car.
Now the statute allows the entire profits of the hood ornament. I assume there is a way to figure this out.
Now here – you want to parse the item out. The “article” sold is the car and NOT the car and then a hood ornament.
You are not being consistent Ned – I am not seeing your legal position in all the movement….
The hood ornament is clearly separable from the car, and is separately priced and bought and installed by the car maker. The article of manufacture is the hood ornament for which total profits are easily ascertainable. Not at all analogous to a smartphone.
Sorry Perry, but with that “logic” the phone case is EXACTLY analogous.
No one buys a car and then buys the hood ornament (it is sold with the car).
You want to start taking a step back from the final purchaser of the final article? That’s more than just a slippery slope there…
Watch your step – and your fall.
A good argument can be made that the hood ornament, and the wheels, and the grille, are major factors in a consumer’s decision to buy a car. In fact, other than the overall shape of the car, those are the only “components” for which careful attention is paid by the automakers. This is not a slippery slope at all. All of those “components” are separately manufactured, and removable, from the car. Moreover, if the car is in a crash, those “components” are sold separately, there is a huge market for replacement parts. There is no huge market for an array of colorful icons and they cannot be priced separately. Remember, the inability to apportion profits between a design and its article of manufacture was the major force in Congress’s passage of 289. The hood ornament and smartphone examples are completely non-analogous.
The filter needs serious re-evaluations….
In pieces then…
You mis-identify what is the slippery slope Perry.
Perhaps you cannot see the forest for the trees, but a manufacturer’s decision as to what are “replacement parts” does NOT change what is an article sold – as a unit – in an initial sale.
This is not like an a la carte restaurant – NO ONE that buys a car chooses to but the article sans those features and then separately buys the other items (as other sold articles).
The after market is – and must be – considered a separate market. Once you forget about that and start dissecting what is actually sold upfront, then you have in fact started sliding down that slope (that you are not aware of this does not mean that you are not sliding).
The phone case comment is ALSO an indicator that you are unaware that you are sliding. The plain fact of the matter is that cases are completely analogous here. Your saying otherwise is [blocked].
My example was a hood ornament that was NOT readily separable from the car, and I understand that is a common practice so they won’t get stolen.
But the innards of a smartphone ARE separable from their external case, and can even be separately purchased, as demonstrated by the marketing of the same smartphones in different cases [cheap metal or plastic, gold, diamond-covered, etc.]
C’mon, Paul. There is no such thing as a hood ornament that is not separable from a car. The fact is that, for example, fancy wheels are carefully designed and marketed, and frequently stolen off cars. As are fancy hood ornaments. Think of those old VW plates that were pried off, back in the day. A fancy case for a smartphone? Manufactured and sold separately. No one would argue that someone infringing a design patent for a fancy case such as those sold in Apple stores must disgorge total profits on the smartphone.
You are in error with your “can,” Perry.
Fenders, bumpers, even quarter panels and full panels….
One can put together an entire car with “after market parts” – you’ve slipped and fallen and cannot get up on that slope my friend.
Samsung obviously stacked the question by using “component”. There is no “component” in this case, only the article of manufacture, i.e., the smartphone. Samsung’s framing of the question is an attempt to go back to the late 19th century carpet cases, in which the Supreme Court was magically able to apportion the “value” of the surface ornamentation to the “value” of the carpet, awarding six cents in damages. Which is why Congress then passed the law mandating the “total profits” rule. There is simply no way to “value” the surface decoration on a rug. Most designers would say that were it not for the patented surface decoration, the rug would not sell at all.
Perry, I will read the briefs if I have to, but what does Samsung identify as a component and what the article?
As you suggest, ’til now, Samsung appeared to be arguing the value of the invention to the product — a RR argument unrelated to the statute. Talking about all the inventions that go into a phone is a complete non sequitur as if that were even relevant.
Up until this point, no one has actually said what the component and the article are in Samsung brief.
This is a direct quote from Samsung’s petition for cert.:
“Apple’s D’677 and D’087 patents reflect a rectangular
front face of an electronic device with rounded
corners and accompanying bezel, not an entire
smartphone. Apple’s D’305 patent reflects the layout
of icons on a single screen of a smartphone user
interface, not the entire phone. The relevant “articles
of manufacture” are thus the front face, the front face
with bezel, and the screen with its layout of icons. It
is not the entire phone, which incorporates thousands
of other design- and utility-patent features. Contrary
to the Federal Circuit’s holding, Apple is therefore at
most entitled only to profits attributable to those three
components of Samsung’s phones.”
Thanks Perry.
Simply ludicrous.
“like”
Re: “Most designers would say that were it not for the patented surface decoration, the rug would not sell at all.”
That of course is not at all the case for the subject design patents on the cases containing smartphones.
O.T. Perry, but since it is a pet peeve of yours, did you see the recent D.C. decision finding a design patent on some kind of drilling apparatus “functional” rather than “ornamental”? Any chance that case will head to the Fed. Cir.?
I disagree regarding smartphones. The external appearance of the case is the first thing consumers see. The case is meticulously designed to appear “cool” – witness the long lines outside an Apple store when a new one is released. There are no long lines outside a Samsung store. There have been many studies that show the appearance of a product is the prime motivating factor in its purchase, even with a product such as a smartphone. Looks matter!
I haven’t seen the D.Ct. decision of which you speak. Give me a cite. But I predict the decision is predicated on the court finding something “functional” because it performs a function. Reversed.
regardless of how this decision turns out
I think it’s extremely safe to say that it’s going to turn out poorly for Apple. Most likely very, very poorly. And that’s a good thing.
It did not grant certiorari on the functionality/ornamentality question raised in Samsung’s petition.
That’s unfortunate but perhaps the Supremes saw the resolution to the first question as basically a slam dunk (which it is).
No slam dunk, MM. It’ll be an interesting 4-4 split is in the making – would the conservative Justices or the liberal Justices take the view that the statute is the statute? If you want to change the statute, go to Congress. Garland will make it 5-4, head to Congress. Which is what the Federal Circuit said. This “total profits” rule has been interpreted one way for well over 100 years, and enforced against previous products where the claimed design has been only a portion of the entire article of manufacture.
Good
The case is essentially one of statutory interpretation of 35 U.S.C. 289.
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.
Does “applied to” mean only strictly that portion of the item to which the protected design is applied – as opposed to the item itself (as a whole)…?
Because being hyper-technical, the “portion” that a design is applied to may only be the mere surface layer(s) of which can be (mentally) removed in toto, which would yield NO damages and that is something that is clearly not the intent of the legislation.
the “portion” that a design is applied to may only be the mere surface layer(s) of which can be (mentally) removed in toto, which would yield NO damages
That’s incorrect. The statute expressly states that $250 is the minimum amount of damages.
You are correct – although that does not change the “gist” of the question, said gist being associated with the portion (which still might be said to vanish for all intents and purposes).
“shall be liable to the owner to the extent of his total profit, but not less than $250”
Not sure how this can NOT be viewed as an ability to somehow arrive at a portion of profit…
The $250 is like a minimum fine – if you violate the law here, even if you make no profit, you have to pay. This is different than saying “250 of the profit” is taken.
Trying to make it as if the 250 supports “a portion” rather than the direct words of “total” seems most odd.
“portion” is not in the statute. “article of manufacture” is. and in this case, the article of manufacture is the smartphone.
“Like”
;-)
“current work in progress on the Takings Clause and changes to substantive patent law.”
Would love to know more details on this…
:-)
It’s a work in progress (and a 3/4 baked idea), so I won’t have a draft to post until classes end and I can spend more time writing out the analysis. I’ll share it here once it’s at that stage.
It is a great question: how to calculate the wealth siphoned out of the public’s hands and into the hands of patent tr0lls as a result of Judge Rich’s activist opinion in State Street Bank and the PTO’s reckless interpretation of that law for well over a decade? And how best to quickly and efficiently end that siphoning and claw the improperly obtained money back from the grifters who took it?
Except that your attempted spin and “scape-goating” of Judge Rich mischaracterizes what Congress did in the Act of 1952.
Aim better.
your attempted spin and “scape-goating” of Judge Rich
LOL I”m not attempting anything.
Judge Rich s x cked at writing patent law, and he was even worse at interpreting it. Even the Supreme Court understands that much.
But go ahead on bash on the Supremes for failing to idolize your hero and is magnificent blunders. That’s been such a fruitful strategy for you.
LOLOLOL
You quite miss the point of who actually passed the law that you want to disparage.
“Go figure.”
I do hope that you are at least considering within the ambit of your “evolving” work in progress the takings incurred at the point of initiation (takings of certain sticks in the bundle of property rights of a granted patent) when said patent is subjected to post grant review under the AIA.
Perhaps by that time (as well), fellow blogger Ned Heller’s suit regarding the nature of property for granted patents will have been resolved.
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