Samsung Wants New Trial in the Wake of the Recent Supreme Court Decision on Design Patents

By Nicole Daniel

In April 2017 Samsung filed an opening brief asking to vacate a design-patent judgment for $399 million and order a new trial on damages regarding their eleven smartphone models which have been found to infringe an Apple design patent.

According to Samsung the recent Supreme Court’s decision on design patents invalidates the legal premise on which the damages were tried in the earlier trials and further eliminates the legal basis for the $399 million award amounting to the total profit Samsung made on its phones.

This development comes after an unanimous Supreme Court decision made in December 2016. The Supreme Court ruled that the term “article of manufacture” in Section 289 of the Patent Act could apply to a component of a finished and not just the whole product.

Section 289 entitles a design patent holder to all profits derived from the “article of manufacture” that infringed the patent. The Supreme Court remanded a $399 million judgment against Samsung on three iPhone design patents back to the U.S. Court of Appeals for the Federal Circuit. According to the Supreme Court ruling interpreting Section 289 to only cover the end product sold to a consumer is a too narrow meaning of the phrase. “Article of manufacture” is broad enough to cover the final product as well as a component of that product. This decision follows the oral arguments held in October 2016 where Apple, Samsung and the U.S. Department of Justice (participated as amicus in the case) agreed that it was incorrect by the Federal Circuit to hold that the term “article of manufacture” always has to be synonymous with the final product sold to the consumers.

From the ruling it follows that a single component of a device featuring multiple components, such as a smartphone, could be the basis for determining damages for infringing a design patent.

Samsung therefore argued that this Supreme Court ruling requires vacating the $399 million award and scheduling another trial for damages. In February 2017, the U.S. Court of Appeals remanded the case back to U.S. District Judge Lucy Koh, saying that the district court was in the best position to decide on the arguments of Apple and Samsung over the need for further trials.

In contrast to Samsung, Apple is of the opinion that no additional proceedings are necessary after the Supreme Court ruling. Apple argues that the Supreme Court’s decision did not identify any problems with the jury verdicts in 2012 and 2013 in the patent trials. Also Samsung never presented evidence or even argued that “article of manufacture” applied to anything other than the entire phone. Accordingly, no further proceedings are necessary as the ruling did not serve to question any aspect of the Court’s prior decisions. Further, the Supreme Court merely resolved a narrow question on the interpretation of the term “article of manufacture” which arose out of the Federal Circuit’s reading of this term in its original opinion. The Federal Circuit had interpreted the term in question as relating only to a finished product.

It also has to be noted that in March 2016 Judge Koh decided to delay a scheduled third trial in the case dealing with damages for Samsung’s smartphones found to infringe Apple’s trade dress. This decision by Judge Koh was made after the Supreme Court agreed to hear Samsung’s appeal on design patents. Therefore, a third trial in this case will take place anyway. For now the stay remains in place.

Judge Koh now scheduled a hearing for June 15 on the need for a further trial in the wake of the Supreme Court ruling and ordered a case management conference for July 5.

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