Posted: June 6th, 2016
By: Hunt Harris*| Staff Writer
Back in December of 2015, Samsung agreed to pay Apple $548 million in damages stemming from a 2011 lawsuit filed by Apple. In the lawsuit, Apple argued that Samsung infringed on three design patents that represent the essence of the iPhone. Design patents are meant to protect items whose design is central to the product. As part of the deal, Samsung and Apple agreed to withdraw all patent lawsuits outside of the United States. Samsung also reserved the right to reclaim the funds if the verdict is subsequently overturned. In March of this year, the Supreme Court agreed to hear an appeal from Samsung over the appropriate amount of damages to be paid to Apple.
Several companies supporting Samsung, including Google and Facebook, argued in a brief to the court that the legal framework of design patents is out of step with modern technology. They argued that these patents were originally devised to protect household items like spoons and fireplace grates and not complex mobile devices. Samsung also argued that the total profits rule does not make sense any longer in the digital era and would reward design patents far beyond the value of any inventive contribution. Essentially, Samsung’s brief states that even if the patented features only contributed one percent value to Samsung’s phones, Apple would still get 100 percent of Samsung’s profits. After a 120-year hiatus, Samsung argued that it is time for the court to examine the scope and valuation of design patents.
The court agreed to decide only one of the issues on which Samsung sought review: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component? Essentially, should a design-patent infringer be liable for all profits from a product that includes a patented component, or just the fraction attributable to the patented part?
The court held that the governing statute explicitly authorizes the award of total profit from the article of manufacture bearing the patented design. Meaning, Samsung was required to pay Apple for their total profits made on products with the patented design. In doing so, the court interpreted the statute very literally. On March 21, 2016, the Supreme Court granted certiorari to hear Samsung’s appeal.
Samsung hopes their final appeal to the Supreme Court will not be another example of Apple abusing the judicial system and believes a victory for Apple could harm consumer choice for generations to come. Samsung and other interested parties also fear that the legal precedent from this case has the potential to allow design patent law to swallow utility patent law. This could result in the ornamental design of products becoming more important than the underlying technology. In turn, making it easier for companies to win these design patent cases and stifle competition. Regardless of the outcome in this case, design patents will likely get more legal attention in the future as opportunities continue to arise for technology companies to increase their market share by curbing competition.
*Hunt Harris is a second year law student at Wake Forest University School of Law. Before law school, he studied Political Science and Spanish at North Carolina State University in Raleigh, North Carolina.