U.S. Supreme Court Decision Could Take a Bite out of Apple’s Design Patent Damages

Published December 13th, 2016

The Supreme Court of the United States released a decision in Apple and Samsung’s ongoing patent litigation battle, Samsung Electronics Co, Ltd., et al., Petitioners v. Apple Inc., 580 U.S. ___(2016). The Supreme Court was asked to address the appropriate scope of damages that Samsung should pay to Apple for infringing U.S. design patents owned by Apple. As discussed below, the Supreme Court returned the case to the Court of Appeal for further consideration, where the award will likely be lowered.

The case revolves around Samsung’s infringement of Apple’s U.S. Design Patent Nos. D618,677 (covering a black rectangular front face with rounded corners), D593,D087 (covering a rectangular front face with rounded corners and raised rim), and D604,305 (covering a grid of 16 colourful articles on a black screen). At trial, Samsung was found to infringe these design patents and Apple was awarded $399 million USD through an accounting of Samsung’s profits. The Court of Appeal for the Federal Circuit affirmed the amount of the award.

The issue in appeal at the Supreme Court was, when determining damages for design patent infringement, whether the relevant “article of manufacture” for a multicomponent product must always be a product sold to the consumer or whether it can be a component of that product. In other words, for the present case, must the article of manufacture be an entire smartphone or can the specific components of the smartphone be the relevant article? In its decision, the Supreme Court unanimously found that section 289 of the U.S. Patent Act, which makes an infringer liable “to the extent of his total profit” for unlawfully manufacturing or selling an “article of manufacture,” is broad enough to embrace both a product sold to a consumer as well as a component of that product, whether sold separately or not.

Unfortunately, the Supreme Court did not rule on whether the relevant article of manufacture for each of the above design patents is the entire smartphone, or a particular smartphone component. Thus, it will be up to the Court of Appeal to make this decision. If the Court of Appeal finds that the relevant article of manufacture is a particular smartphone component, then the $399 million USD award will likely be lowered.

The Canadian equivalent to a U.S. design patent is called an “industrial design registration”. In an action for infringement of an industrial design registration, Canadian courts have the authority to make such orders “as the circumstances require,” including orders for relief by way of injunction and the recovery of damages or profits, for punitive damages, and for the disposal of any infringing article or kit (see section 15.1 of the Canadian Industrial Design Act).

While these powers may sound broad and wide reaching, in practice they are rarely ever exercised. Canadian courts have only awarded damages for infringement of an industrial design registration in one case since the infringement provisions of the Industrial Design Act were amended in 1993. In that case, Industries Lumio (Canada) Inc. c. Dusablon, 2007 QCCS 1204, the Quebec Superior Court simultaneously addressed the issues of damages for infringement of a patent and damages for infringement of an industrial design registration. Due to the co-mingling of these issues, the amount of damages for infringement of an industrial design was not specifically addressed and is therefore still an open issue under Canadian law. While, the Quebec Superior Court did suggest that similar considerations apply for damages in industrial design registration infringement as apply in patent infringement, the court was careful to point out that each case must be decided on its own merits and judges have a lot of discretion in determining the amount of damages awarded.