Design Patents are Distinct from Utility Patents, Says US Supreme Court in Samsung Case

WASHINGTON – A unanimous Supreme Court ruled on Tuesday that Samsung may not have to give up $399 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 Samsung Electronics Co. v. Apple Inc., No. 15-777, turned on the meaning of the quoted phrase.

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 colorful grid of 16 icons. A jury found in 2012 that Samsung had infringed those patents.

“All told,” Justice 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 over a century.

Last year, the United States Court of Appeals for the Federal Circuit, a specialized court that handles patent appeals, ruled that the federal law “explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.”

The appeals 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 appellate court said.

Justice Sotomayor’s opinion did not resolve the question of whether the article of manufacture at issue in the case was the whole 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.”

“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,” Justice 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.”