Apple Samsung: Federal Circuit Remands Design Patent Damages Decision to District Court

iphonedesignpatentimageBy Dennis Crouch

Apple v. Samsung (Fed. Cir. 2017)

In a non-precedential decision, the Federal Circuit has remanded this design patent damages dispute back to the district court reconsideration.  The basic question is whether the patented “article of manufacture” (which serves as the basis for profit disgorgment) should be the entire article sold to consumers or some component of that whole.  A patentee would obviously prefer the whole-article basis because it would result in a greater total-profit award. In Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016), the Supreme Court held that the statute is broad enough to encompass either the entire-article or simply a component.  However, the Court refused to provide any guidance as to how to determine the appropriate basis in any particular case (including this case involving Apple’s iPhone design patents).

On remand here, the Federal Circuit has also refused to particularly decide the case but instead has remanded to the District Court for her analysis.  “[W]e remand this case to the district court for further proceedings, which may or may not include a new damages trial.”

The court did provide some commentary:

The Supreme Court clarified that a damages award under § 289 involves two steps: (1) “identify the ‘article of manufacture’ to which the infringed design has been applied;” and (2) “calculate the infringer’s total profit made on that article of manufacture.”

The parties here dispute whether the jury instructions were appropriate based upon this clarification of the law.   Apparently, Judge Koh read the statute to the jury, and did not particularly indicate whether the “article of manufacture” was the phone as a whole or some component thereof.  So, while the instructions are not wrong, they could be more detailed.

On remand, the District Court will need to review the trial record and determine whether a new damages trial is necessary based upon more detailed jury instructions.

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I like what the court did here.  When the Federal Circuit does decide this issue, its precedential approach is likely to stick for many years to come.  It makes sense then for the court to seek the perspective of at least one other judge before jumping into the foray.  Here, there is no question that the district court more fully understands the case and the particulars of the trial and so it is also right to remand for consideration of how the Supreme Court’s decision impacts what has already been decided. We can also recognize that the parties are fighting over past damages and both have sufficient cash-on-hand so that a delay in judgment does not create irreparable harm.

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In a Footnote, the court looked to foreclose a separate argument on remand. The court writes:

Samsung also argued that § 289 “contains a causation requirement, which limits a § 289 damages award to the total profit the infringer made because of the infringement.” We rejected that argument, and Samsung abandoned this theory during oral argument to the Supreme Court.

Thus, although causation may still be an issue to be debated – it appears out for this case.

About Dennis Crouch

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

5 thoughts on “Apple Samsung: Federal Circuit Remands Design Patent Damages Decision to District Court

  1. Possibly “jumping into the fray” is the idiom intended… A “foray” is not merely a battle, but emphasizes the suddenness and incursiveness of a raid–not really appropriate here.

  2. I wonder if you get convoyed sales too. In other words, but for the sale of the phone – the infringing design patented design – you would not have sold the chargers, cases, etc etc.

    1. You’d have to prove that people would buy your cases and your charges and so on, because of your beveled edges.

      Because of the vast third party charger/case market, I doubt you could show any proof of lost income over the knock on products. Even with ‘proprietary plugs’ for the chargers, since there’s also adapter plugs to turn standard USB chargers into ‘Apple’ chargers, you still can’t even show proof of licensing loss potential.

      1. So you are saying that the law on design patent damages, in the abstract, does allow for recovery of convoyed sales (sale of a related but in itself non-infringing product), but on the facts, here, as you understand the handheld market, do not support a theory of convoyed sales?

        I don’t think your first point is correct. A convoyed sale does not need to be tied to the infringing part of the product. Example, I am first to market with ink jet printer, and I also sell lots of ink (convoyed sale). Second infringing printer enters market – and i seek to recover legal damages for lost profits and lost convoyed sales.

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