By David NguyenSamsung filed a brief in the U.S. Supreme Court on June 1, 2016 in response to the Court's grant of a petition for a writ of certiorari filed in December 2015. The petition sought a ruling on “where a patented design is applied only to a component of a product, should an award of infringer’s profits be limited to profits attributable to that component?”
| June 29, 2016
This case is follow-on to Apple v. Samsung in 2012, which, generally speaking, included the U.S. District Court for the Northern District of California's denial of Samsung’s post-trial motion for judgment as a matter of law, new trial or remittitur (Pet. App. 114a-153a), followed by the U.S. Court of Appeals for the Federal Circuit (Pet. App. 1a-36a) denial of a rehearing en banc.
Samsung argues that the District Court’s interpretation of Section 289 of the Patent Act of 1887 resulted in a judgment obligating the company to “pay its entire profits on eleven [models of] smartphones” for infringing various Apple design patents. The design patents involved include U.S. Patent Nos. D618,677, D593,087, and D604,305.
In the brief, Samsung argues that “at a minimum, a new trial is necessary” due to a number of issues in the previous cases. For example, Samsung states:
(1) Federal Circuit Court erred:
the Federal Circuit court erred in approving the district court’s instruction that, under Section 289, the jury should award the “total profit attributable to the infringing products.” ... and that Section 289 limits recoverable total profit to the profit “made from the infringement.”
(2) The District Court erred:
in declining to give Samsung’s proposed instruction that the jury “should award only those profits which were derived from the article of manufacture to which Apple’s patented design was applied” and that “[t]he article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent.”(3) The District Court’s rejection of Samsung’s proposed instruction ignored “traditional common-law and equitable principles of causation incorporated into Section 289 that tie monetary recovery to actual loss or gain from wrongful conduct.”
Samsung's brief further states that Congress did not intend for Section 289 of the Patent Act to be applied as it were in this instance: While Congress determined that such articles [e.g. carpets, wallpapers and oil-cloths] derive their value from their design, it made no similar assumption for complex products like smartphones, whose value is overwhelmingly driven by functionality.
Finally, Samsung cites surveys that indicate the main reasons why customers buy smartphones relate to functionality rather than design features, and that misinterpretation of Section 289 has significant implications:
The Federal Circuit’s automatic entire-profits rule would have disastrous practical consequences that Congress surely did not intend. The rule would create extreme asymmetry between design patents and utility patents, which are governed by ordinary rules of causation and proportionality. By making the most trivial design patent worth exponentially more than the most innovative utility patent, the rule would distort the patent system and harm innovation and competition. The rule would encourage companies to divert research and development from useful technologies to ornamental designs. It would encourage design-patent holders to litigate even weak infringement claims in a quest for outsized awards. And it would encourage non-practicing entities to use design patents as the next big thing for extracting holdup value from targeted businesses, with such extortionate demands posting especially grave threats to small businesses for whom a single design misstep could be an existential threat. Congress could not have intended any of these results.