Supreme Court Appears Likely To Modify Lower Court’s Design Patent Decision

BY Heather Greenfield
October 11, 2016

Washington — The Supreme Court heard arguments today in the first design patent case it has heard in 120 years. The high court is considering lowering the $399 million a district court awarded Apple. Even though the particular design patents only cover a few ornamental features and the accused phones involves many thousands of patented innovations, the damages amount was set based on the entire profits Samsung made on the accused phone models.

The current law on design patent damages was passed by Congress in the late 19th Century to protect rugs and other items where the design can’t effectively be separated from the product. The high court is considering how that law should be applied to more complex products, like smartphones.

The Computer & Communications Industry Association filed an amicus brief asking SCOTUS to hear this design patent case and at the merits stage. In the filing, CCIA argued the lower court ruling raised constitutional issues by expanding a patent for a small ornamental feature to include all of the innovation making up a complex device.

The following can be attributed to CCIA President & CEO Ed Black:

“To award all the profits of a product based on a dispute over a design feature devalues all the other innovation and components that go into producing a high tech device. We are hopeful the Supreme Court can offer a sensible review of this senseless interpretation of the law.”

All parties agreed with the argument CCIA originally made in its amicus briefs about the scope of the term “article of manufacture.”

The following can be attributed to CCIA patent counsel Matt Levy:

“At oral argument, Samsung, Apple, and the U.S. government all agreed that the Federal Circuit was wrong to say that design patent damages must be based on the entire profits for the product sold to consumers. The Justices seemed to be comfortable with this position as well, because they focused on the correct standards to use in applying the statute. Based on what I heard, I think it’s very likely that the Court will modify the lower court’s decision.”

“The damages statute for design patents was written to protect products like rugs, where the design was essentially the entire thing being sold. Congress certainly didn’t intend to treat complex products as if only the outer appearance is what matters. Something like a smartphone involves thousands of inventions and offers an enormous variety of features. A smartphone is much more than just the outer casing. The logic just doesn’t work — and neither does the math. We think the lower court misinterpreted the law. If the lower court’s interpretation stands, it would have a chilling effect on investment and development of products: developing new products would become incredibly risky with your entire profits at stake if you infringe a single design patent.”

“If the lower court’s decision stands, it would provide yet another tool for patent assertion entities to use to extract money from companies that produce complex products; patent assertion entities could threaten them with the loss of their entire profit. “

Levy will speak at American University Tuesday afternoon (today) at a panel discussion on the issues at stake in the Samsung Apple case.

For additional background on the legal arguments in this case, please see his preview blog post for Patent Progress.

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