A unanimous US Supreme Court has ruled that Samsung may not have to give up $US399 million ($535 million) in profits for copying parts of the distinctive look of Apple's iPhone.
A federal law says that companies found liable for infringing design patents on an "article of manufacture" are liable for their total profits. The decision in this particular case turned on the meaning of the quoted phrase.
![Samsung may not have to hand over its entire profit for phones judged to have infringed Apple's patents.](/web/20161207190350im_/http://www.smh.com.au/content/dam/images/g/s/p/a/k/e/image.related.articleLeadwide.620x349.gt5hdz.png/1481079415714.jpg)
Writing for the court, Justice Sonia Sotomayor said an article of manufacture may sometimes be the entire product sold to consumers — here, Samsung's phones — and sometimes be the components found to have infringed a design patent.
Apple's patents covered specific design elements of the iPhone, including its black rectangular front face with rounded corners and its colourful grid of 16 icons. A jury found that Samsung had infringed those patents.
![The Galaxy S II, one of Samsung's infringing phones.](/web/20161207190350im_/http://www.smh.com.au/content/dam/images/g/t/5/h/y/d/image.related.articleLeadNarrow.300x0.gt5hdz.png/1481079415714.jpg)
"All told," Sotomayor wrote, "Apple was awarded $399 million in damages for Samsung's design patent infringement, the entire profit Samsung made from its sales of the infringing smartphones."
Design patents, which address what products look like, are far less common than utility patents, which cover how products work. The Supreme Court had not heard a design patent case in more than a century.
Last year the US Court of Appeals for the Federal Circuit, a specialised court that handles patent appeals, ruled that the federal law "explicitly authorises the award of total profit from the article of manufacture bearing the patented design."
The court appeared to acknowledge the possibility that "an award of a defendant's entire profits for design patent infringement makes no sense in the modern world." But it added that "those are policy arguments that should be directed to Congress."
"We are bound by what the statute says, irrespective of policy arguments that may be made against it," the court said.
Sotomayor's opinion did not resolve the question of whether the article of manufacture at issue in the case was the entire phone or just parts of it. She said only that the Federal Circuit had been wrong to rule that "the relevant 'article of manufacture' must always be the end product sold to the consumer or whether it can also be a component of that product."
"In the case of a design for a single-component product, such as a dinner plate, the product is the 'article of manufacture' to which the design has been applied," Sotomayor wrote. "In the case of a design for a multicomponent product, such as a kitchen oven, identifying the 'article of manufacture' to which the design has been applied is a more difficult task."
The Supreme Court returned the case to the Federal Circuit for further consideration.
Sotomayor's analysis leaned heavily on dictionaries.
"An 'article' is just 'a particular thing,'" she wrote, citing two dictionaries. "And 'manufacture' means 'the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man' and 'the articles so made.'
"An article of manufacture, then, is simply a thing made by hand or machine," she concluded. "So understood, the term 'article of manufacture' is broad enough to encompass both a product sold to a consumer as well as a component of that product."
Patent lawyers had hoped for a broader ruling about the scope of design patents in the digital age.
"The court basically punted," said Mark A. Lemley, a law professor and director of the Stanford Program in Law, Science and Technology, who had previously filed a brief on behalf of Samsung in the case. "It seems to have clearly in its mind that the patent could cover only a portion of the device. But it said, 'We're not going to tell you what the right rule is.'"
Lemley said the ruling was one of several recent patent decisions by the court that struck down patent guidelines used by the Federal Circuit without replacing them with clear alternatives. In particular, he cited cases involving the awarding of attorney's fees in patent cases and guidelines for deciding whether a patent has been willfully violated.
Companies that sold products with distinctive designs filed a brief supporting Apple and urging the justices to protect their investments. Technology companies filed briefs supporting Samsung, arguing that design patents are poorly suited to complex devices with many features, adding that they can give rise to disproportionate penalties.
The New York Times
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