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For the first time in a century, the US Supreme Court has weighed in how much design patents are worth. The answer: not nearly as much as Apple thinks.
The 8-0 opinion (PDF) is a rebuke to the US Court of Appeals for the Federal Circuit, which held that the relevant “article of manufacture” for calculating damages was—in fact, had to be—the entire smartphone. That meant even though Apple’s patents covered only certain design elements, it was entitled to $399 million in lost profits damages.
In an opinion authored by Justice Sonia Sotomayor, the Supreme Court rejected that approach, finding that the statutory term “article of manufacture” could mean either a whole product or just one component of a product.
“Reading ‘article of manufacture’ in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase,” writes Sotomayor.
The damage numbers in this case, the first of two mammoth Apple v. Samsung trials, have shifted over time. In 2012, the first Apple v. Samsung trial ended with a jury slapping Samsung with a $1.05 billion verdict for infringing Apple patents and trademarks. After appeals, the trademark damages were thrown out, with $548 million in damages remaining, based entirely on patent infringement. With this Supreme Court case, Samsung was looking to get back most of that money—the $399 million that’s based on three design patents.
The patents at issue are D618,677 (a black rectangle with rounded corners, shown above), D593,087 (with bezel on surrounding rim), and D604,305 (a colorful grid of 16 icons.)
The Supreme Court declined to rule on exactly what should be the “article of manufacture” in the case, saying that issue wasn’t sufficiently briefed—an suggestion made by the US Solicitor General during oral arguments.
The case will go back down to the Federal Circuit, which will recalculate the damages using the Supreme Court’s criteria. However, today’s ruling is narrow enough that the appeals court could come still come up with a high number—or even the same number. The Supreme Court said only that they can’t assume the whole product is the damages base, but Sotomayor’s opinion acknowledges that it could be appropriate in some cases.
That seems unlikely to happen, however. Even though it’s a narrow opinion, it’s a sign that the Supreme Court is seeing overreach here, and it is going to expect a smaller number. The Federal Circuit will not want another high court rebuke to add to its growing list.
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