Samsung v. Apple: A view from inside the courtroom

 

By Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law

Samsung Elecs. Am., Inc. v. Apple Inc., No. 15-777 (argued Oct. 11, 2016) Transcript

On Tuesday, I attended the oral arguments in Samsung v. Apple.  As mentioned in a previous Patently-O post, the Court granted cert on a single issue, namely:

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?

The relevant statute is 35 U.S.C. § 289, which provides a special additional remedy for certain acts of design patent infringement. Section 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 Apple and a case decided briefly after it, Nordock v. Systems, the Federal Circuit ruled that § 289 requires a court to award the total profit from the entire infringing product to a successful design patentee—even when the design patent claims a small portion of the overall product design.

In its cert petition and merits brief, Samsung argued that the “article of manufacture” in § 289 could be something less than the entire infringing product. In its brief opposing cert, Apple defended the Federal Circuit’s interpretation. Yet, in its merits brief, Apple agreed with Samsung (and the United States) that the relevant “article of manufacture” could be something less than the entire infringing product.

At oral argument, Samsung informed the Court that it was dropping its “causation argument” (i.e., that § 289 must be read in light of background causation principles from general tort law) and wanted to focus on its “article of manufacture” argument (i.e., its argument that a successful design patentee should be entitled to the “total profit” from the “article of manufacture” but that the relevant article should be determined mainly by looking at whether the patent claims a whole design or only part).

Unsurprisingly, the bulk of the oral argument was spent discussing how factfinders should  determine what constitutes the relevant “article of manufacture” for the purposes of § 289. The Justices seemed particularly interested in how a jury could be instructed to perform this determination. The Justices spent a lot of time pressing the parties about the desirability of the four-part test proposed by the United States, asking if they thought that approach was appropriate and if there were any factors they would add.

It was also very clear during the argument that Apple really wanted to focus on its new waiver argument. In its merits brief (though not in its brief opposing cert), Apple argued that Samsung failed to preserve the “article of manufacture” argument for appeal. After a few questions, however, the Justices’ patience for this line of argument waned and the Chief Justice rather pointedly told Apple’s counsel to move on. The clear message conveyed was that the Justices didn’t need to be told what was in the record; they were perfectly capable of reviewing it for themselves.

On the whole, and based solely on the arguments, it seemed like the Justices were leaning toward adopting some form of multi-factor test to determine what constitutes the relevant “article of manufacture.” What that test might look like was far from clear. At some points, the Justices seemed visibly frustrated by the prospect of coming up with a workable test; whether they were convinced that any of the proposed tests would, indeed, be workable remains to be seen.

In this observer’s opinion, the real problem is the attempt to add a qualitative element to this test, instead of focusing on what the patentee actually claims. Also, it’s no wonder that the Justices and parties had difficulty trying to identify the relevant article of manufacture for the D’305 patent, which claims a design for a single screenshot of the iPhone graphical user interface (“GUI”). Like other GUI designs, the D’305 patent claims a design for software, not a design for a screen (no matter what the PTO says).

In any case, there was no indication that any of the Justices were seriously considering upholding the Federal Circuit’s whole-product rule, which a couple of justices derided as clearly absurd. Justice Breyer did express some concern, at the end, about subverting the original congressional intent. However, he seemed more concerned about creating/affirming a rule with “absurd results.”

One thought: The phrase “article of manufacture” doesn’t just appear in § 289. It also appears in § 171, which defines design-patentable subject matter. Although the Federal Circuit wasn’t asked to construe that phrase in § 289 until Apple, it has issued a number of decisions on what constitutes an “article of manufacture” in the context of § 171. The Federal Circuit didn’t mention any of those cases in its decision in Apple and the parties haven’t relied on them to make their points before the Supreme Court. However, under normal principles of statutory construction, this phrase should mean the same thing in both of these key design patent provisions. It seems fairly clear that the Federal Circuit expanded the definition of “article of manufacture” in § 171 without thinking of the potential consequences for § 289 (arguably leading to the worst of the “absurd results” created by the Federal Circuit’s Apple/Nordock rule). And it seems likely that the reverse might happen here—the Justices might redefine the “article of manufacture” in § 289 without considering any potential consequences for § 171. Of course, those issues weren’t briefed. But it’s still an issue worth keeping an eye on.

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

43 thoughts on “Samsung v. Apple: A view from inside the courtroom

  1. Ned: I don’t know how or why one should discount the value of the phone from the value of the casing in this case because there are no separate markets for either.

    You could start with the relative cost of manufacture.

    there are no separate markets

    Sure there are. There are companies who make plastic rectangles. And there are companies who manufacture circuitry. And there are companies who manufacture tiny speakers, and tiny lenses, and touchscreens.

    Lurking right beneath the surface of all the silliness here, of course, if the fact that the US design patent system is a dysfunctional j0ke from beginning to end. Should Congress try to fix it? Of course they should. Should Congress ask Apple how to fix it? Of course not. Apple doesn’t care about anything except Apple.

  2. Question for Perry Saidman and other “experts”:

    You all agree, right, that if the statute is interpreted to mean “what it says” then it’s ridiculously unfair to everyone except the design patentee.

    Just checking. I don’t have a problem at all with an academic focus on some “correct” way to interpret an ancient statute in a vacuum where the effects of that intepretation are ignored.

    But it’s always nice when the “experts” share their views about what an ideal statute would do, and why they feel that way. After all, in theory you “experts” are thinking about this stuff all the time.

    1. How in the world are those two posts deemed “offensive”…

      Unless on point historical references are now verboten….

    2. Reluctant as I should be to engage with MM, is the following example “ridiculously unfair”? Volkswagen gets a design patent on the body of its iconic Beetle, or on such a portion thereof that anyone looking at that portion knows it’s a Beetle body. There are a lot of “innards” – hundreds of thousands of functional parts – under the body which are not observable, but of course which go with the sale of the car. Mr. Roberts copies exactly that body, or recognizable portion thereof, and puts it on top of a cheap, generic chassis and engine. Mr. Roberts sells his knock-off for half of what the Beetle costs. It sells like hotcakes, because his customers love the Beetle look. The reason Mr. Roberts copied the Beetle body or portion is to make his knock-off more attractive, to sell his cars. Is it ridiculously unfair for Mr. Roberts to pay over his total profit on sales of his cars to Volkswagen?

  3. This debate about what is the “article of manufacture” reminds me of the Werrit “right to repair” litigation in England and Germany on the combination of a plastic container for about 500 gallons of liquid, supported within a wire mesh cage. There are three “articles of manufacture” here: the bottle, the cage and the combination of bottle and cage. Under the “right to repair”, can you put a new bottle in an old cage. The Courts of England and Germany found that question really quite hard to answer. Does it depend, for example, on which of the three articles is claimed?

    I’m assuming that the design patent asserted here concerns the shape of a manufactured article which is a thin-walled housing, which embraces the guts of the phone.

  4. As probably the only design expert attending the oral argument and one who has studied at length the DOJ rubric it is clear that the pathway argued by both partiers related to AoM and apportionment can only lead to total chaos at trial. It was very clear from the questions proffered by the justices they they totally understood the core issue and that was one of “process”. Essentially how is the finder-of-fact supposed to apply any of the various tests proposed. One justice repeatedly suggested that expert testimony would address this issue. However, such expert testimony is bound to be based on outdated research methods that cannot objectively be applied to the more subjective and important aspects of visual design and its role in consumer decision making. This was not a good day for design or design IP.

    1. Sounds exactly like the kind of things that the courts should not be involved with (I can hear the Echoes of Chakrabarty…)

    2. One justice repeatedly suggested that expert testimony would address this issue. However, such expert testimony is bound to be based on outdated research methods that cannot objectively be applied to the more subjective and important aspects of visual design and its role in consumer decision making.

      This is where Daubert comes in, no? You “experts” need to educate the judges and the attorneys and everyone else about the research methods that are reality-based and well-controlled, as opposed to, e.g., polls with one party’s bias built in.

      1. Experts for the experts…

        (it will still be “turtles all the way down” – and the point presented by Cmauro will still be there)

    3. Cmauro, it seems that the Court simply does not like a damages statute that can lead to what it believes are unjust results.

      Damages are suppose to place the injured person whole. Equity and a court’s inherent power punish unlawful conduct should be reserved for wilful misconduct or criminal law.

      What to do with a statute that allows one statutory damages that punish?

      1. Hasn’t Congress already decided that, Ned?

        (after all, one does not have to look far in the IP context to see criminal sanctions – think copyright…)

      2. the Court simply does not like a damages statute that can lead to what it believes are unjust results.

        Does anyone?

        This isn’t a question of “can lead”. If you intepret this statute broadly, it leads to manifestly unjust results in pretty much every other case, at least in the “computer-related” design context.

        1. MM, I think the court is looking for a way limit the damage award to actually compensate the patent owner for the infringement. A RR analysis would be good way of providing yardstick. If the profits awarded are way out of line with a RR, then a court should have the power to lower them.

      3. Every case of design patent infringement (and I mean every case – I’ve done the research) involves an infringer who intentionally copied the patentee’s design. Including this one (Samsung). That is “willful misconduct” by anyone’s definition. The injured party is never made whole by Section 289 since the infringer has, in effect, stolen the goodwill of the patentee and in some cases destroyed the market for the design by selling cheap knock-offs. Thus, part of the rationale for Section 289 is not only to penalize the infringer, but to act as a deterrent against future infringement. Why copy another’s product if you will ultimately have to turn over your total profit?

  5. “applies the patented design, or ANY colorable IMITATION thereof, to ANY article of manufacture for the purpose of sale”

    Looks like the drafters of the legislation were focused on the DESIGN, not the nature of the particular gadget or thing to which it has been applied.

    I’m not a design expert, but if the makers of PEZ, or TIC TACs came out with a dispenser that looked exactly like a smartphone and which prima facie infringed a design patent, would there be “apportionment”? Would the “profit” attributable to the candy be excluded and teased apart from the “profit” attributable to the case? But then again no one buys candy FOR a case.. they buy it FOR the candy. That said WHICH candy they buy might be due to the case…

    What if someone manufactured an eraser with rubber cleverly colored to mimic exactly the look of the smartphone… would apportionment be possible? The value of the article’s utility (wink wink) derived from its function of erasing, not its appearance, however the thinness or rounded edged of the design might work well for erasing (wink wink). Then again the reason someone might buy THIS eraser versus another is not because it works better, but because of how it looks… how much profit is made from how an eraser looks versus how it erases?

    I wonder, is this the untenable situation the legislators simply wanted to avoid?
    Maybe this is all nitpicking and congress can rewrite the legislation if and when it does decides to do so.

    1. He judges need to make this decision based on how the law is currently written.

      If there is an uproar, THEN it will be up to Congress to change the law as written.

      Trying to avoid the uproar by “scrivining” a different law, and then being less than honest and calling that different law a mere “interpretation” is offensive to anyone who values the rule of law.

      1. The problem is the Supreme Court doesn’t seem to do this. Instead, in order to avoid the “absurd” result that has occurred, they ignore the language of the law, effectively rewriting it to whatever fits their needs. Case is point is their impenetrable reading (and rewriting) of 101.

        1. Yes, PatentBob, there is that parallel.

          Not nearly as surprising though that past Supreme Court Justices have warned against such – and then turned right around and attempted the very thing that they warned against (specifically, Justice Stevens in the pre-Bilski/Bilski mashing of the nose of wax of 101.

          But those that seek a certain “desired Ends” are only too happy to turn a blind eye the Means used to get there (rest assured, that “blind eye” will disappear if the Court ever did that against their “desired Ends”).

  6. I also attended the oral argument, and have a couple of quick comments about Professor Burstein’s “normal principles of statutory construction”:

    1.       All of the oral argument participants (except perhaps Justice Kennedy) seem to have fallen prey to the major contradiction in the case:  everyone agrees that Section 289 bars apportionment by the language “total profit”.  Yet everyone is also saying that an ‘article of manufacture’ can mean less than that which the infringer is selling – which most assuredly will result in back-door apportioning of the infringer’s total profit.  Under “normal principles of statutory construction” Justice Scalia (for example) would never have allowed this misinterpretation of plain statutory language to be swept under the rug. 

    2.       The Professor’s comments re: “article of manufacture” miss the mark. Some Justices, with the assistance of the parties, were admittedly confused by which ‘article of manufacture’ was relevant, that mentioned in Section 171  (a patent may be granted for a design “for AN article of manufacture”), or that mentioned in Section 289  (damages for the infringer’s sale of “ANY article of manufacture” to which the infringer has applied the infringing/patented design).  It’s clearly the infringer’s article of manufacture (AoM) that matters. Section 171 is about statutory subject matter (validity) for a design patent applicant (i.e., the design must be FOR an AoM, while Section 289 is about infringer’s liability when they apply their infringing design to ANY AoM. As properly stated in one of the amicus briefs (Professors Dumont & Janis):  “Section 289 makes clear that while the infringer’s DESIGN must be at least a colorable imitation of the patented design, the infringer’s PRODUCT may be ANYTHING that bears the design.” This distinction is critical, and has been lost in the headlong rush to define the factors to evaluate the AoM.

    1. Well stated – and perfectly aligned with my previous comments on the apparent ” backdoor” apportionment and (once again) judicial re-writing of the statute to arrive at some pre-determined “desired Ends.”

    2. If the result of the statute’s plain meaning is a loss of due-process (because due process requires reasonable proportionality) than the statue has to be found unconstitutional or ‘interpreted” in a way that avoids the infirmity.

      There are no other choices.

      1. Due process requires “reasonable proportionality”….

        Where did you learn that?

        Why do you think that the government (the legislature) lacks “reasonableness” when the afforded proportionality IS met with the item(s) under question meeting the “substantial” portion of what Congress wrote?

        I suspect that you are once again reacting emotionally rather than with a legal understanding here, Mr. Snyder.

        1. I just knew you were going to try to dispute that due process requires reasonable proportionality.

           “Proportionalityis today accepted as a general principle of law by constitutional courts and international tribunals around the world”

          Really son, ya just mailing it in and getting beaten like an old rug…

            1. One might then recognize (you personally not so likely) that the same gen eral notion of “substantially” works AGAINST the patent holder in the area of exhaustion.

              But hey, why would you care about such things, right? I mean that does not align with your personalized “tragedy” does it?

          1. Mr. Snyder,

            Your sound-byte “I slept at a Holiday Inn last night” type of legal work needs some work.

            From the abstract of the item you linked to:

            Many areas of U.S. constitutional law include some elements of what is elsewhere called proportionality analysis. I argue here for greater use of proportionality principles and doctrine; I also argue that proportionality review is not the answer to all constitutional rights questions.

            You like the buzz word, but it does not mean what you think it means.

    3. I can’t believe* I’m going to say this, but I agree with Mr. Saidman. I don’t see a straight-faced way to get where Samsung wants to go in this case.

      (* In large part I think the design patent process is a horrid mess of poorly examined applications, too easily granted, and the unjust nature of the damages here (IMHO) just makes it more irritating. But the fix here is for the Congress to “fix” the law on damages.)

    4. I keep coming back to this: the plain meaning of the statute says total profits and everyone agrees there is no apportionment. If you believe that leads to absurd or unfair results, that is an argument not for the Court, but for Congress. The reasons that underlied the change after Dobson may not apply anymore now that we have advanced damages theories and expert witnesses who are able to opine on these issues; but that’s a policy determination that goes beyond the statutory construction question.

  7. Does patent law in the USA have any “reach through” jurisprudence? This is something one sees in pharma patents, but one English judge uses a claim to a “steam whistle on an aircraft carrier” to illustrate the point. The invention is, say, in the whistle but your “reach through” claim is to the entire aircraft carrier on which the whistle is fitted, and with that claim you seek to enjoin the ship-owner. Do you get your relief, or not? How does one decide?

    If so, I wonder how relevant this dilemma is to the court’s thinking in the present case.

  8. Focusing your strategy on waiver seems dubious given that was also discussed in the Cert petition.

    1. Getting cut short “because the Court does not like to be told” anything sounds an awful lot like people hushing up the child who remarks that the emperor has no clothes on.

      (I would hazard a guess that this is part of why Ned’s case failed to reach cert)

  9. Great write-up.

    This particular passage

    In this observer’s opinion, the real problem is the attempt to add a qualitative element to this test, instead of focusing on what the patentee actually claims.

    was difficult for me to understand. I just wasn’t sure what you were driving it. Are you saying simply that figuring out “what is actually claimed” in the design patent is easier than figuring out how to apportion the damages? If so, is that always going to be true or is it just easier in this particular case?

    I thought the judge’s hypotheticals were interesting. Can items like wallpaper or a T-shirt or a vase upon which a design is printed be easily distinguished from utilitarian items “masked by a design” (like cars and phones), and also easily distinguished from objects in which the design and utility are unseverable (e.g., a design for the shape of a container)? And of course there’s the “de minimis” category (the on button for the stereo in the Jaguar). Are there more obviously discrete categories than this (recognizing that there are always going to be gray areas)? If the categories can be defined, then an apportionment approach can be assigned to each category (at least as a presumption). For the “masking” categories it seems likely there will need to be some factual investigation and expert testimony relating to the consumers motivations (are the paying for the design or the utility or a bit of both).

    I suppose there’s a chance the Supremes will ask for additional briefing on this issue … and Congress, as always, is free to step in at any time if they are concerned.

    1. than figuring out how to apportion

      That’s the rub: it is more than just a little difficult to apply ANY apportioning given the plain word of “Total.”

    2. MM, the Samsung phone casing is never sold apart from the phone. I don’t know how or why one should discount the value of the phone from the value of the casing in this case because there are no separate markets for either.

      The matter might be different if the patent were on a generic box design for holding generic items, and the question is whether one should include the entire profits of the box plus contents, where the contents were known to be variable and the box itself had a separate market.

      1. Ned – your post reflects just one (easy) way to apportionment (which also just happens NOT to apply in the given circumstances) – something that Congress simply did not want with its choice of words.

        I am not sure that even IF the circumstances were different, that one could change the law to reach a certain “desired Ends” that is not “interpretation” but actual re-writing.

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