Yesterday, a jury awarded Apple $533 million for the infringement of its design patents. In doing so, the jury appears to afford design patents more value than patents supporting the underlying technology in a smart phone. How could this determination have happened?
We think it useful to provide background to explain how this jury verdict came to be.
First, consider that this case revolves around the definition of the term “article of manufacture.” The Supreme Court explained, “Section 289 of the Patent Act makes it unlawful to manufacture or sell an ‘article of manufacture’ to which a patented design or a colorable imitation thereof has been applied and makes an infringer liable to the patent holder ‘to the extent of his total profit.’ 35 U.S.C. §289.”
Way back in April 2011, Apple sued Samsung for infringement of (among other patents and a trade dress claim) three design patents which roughly cover: 1) a black, rectangular front screen face, 2) a front face with rounded corners and a bezel, and 3) a grid of colorful icons displayed on the screen face. Judge Koh issued opinions on Daubert motions and the case went to a jury trial.
Samsung’s products were found to infringe multiple patents and found to violate trade dress allegations: as a result, a jury verdict awarded Apple close to $1 billion. Judge Koh issued judgment for that jury verdict.
Samsung appealed to the Federal Circuit multiple times, and what remained for this most recent jury was the question of the monetary remedy associated with design patent infringement (N.b., there was an additional patent at issue which we are not discussing here). During the appeals process, the Federal Circuit affirmed that the article of manufacture subject to disgorgement in this design patent matter should be the entire phone, because no portion was sold separately that might constitute a smaller, distinct article of manufacture. Samsung appealed to the Supreme Court, which provided little guidance other than to observe that the Federal Circuit’s definition of the article of manufacture was too narrow. Specifically, the Court found, “Because the term ‘article of manufacture’ is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not, the Federal Circuit’s narrower reading cannot be squared with §289’s text.”
The Federal Circuit then issued an opinion and remanded the case back to Judge Koh for further proceedings; and specifically to articulate a test to define an article of manufacture. In her order for a new trial on damages, Judge Koh provided the following definition of an “article of manufacture”:
After providing the new definition, expert reports were submitted, subject to new rounds of Daubert motions, resulting in new Daubert rulings. Judge Koh excluded Samsung’s damages expert, Mr. Wagner, for relying on surveys that did not properly tie to the facts of the case or to the patents’ footprint in the marketplace. Ms. Davis, Apple’s damages expert, was allowed to testify, but neither expert could offer opinions regarding the actual “article of manufacture,” which was left to other experts.
The jury instructions arguably led jurors to an inevitable verdict. The instructions specifically guided those jurors through the requisite analysis to arrive at disgorgement of total profits:
No doubt, Samsung will appeal.