Litigation Alert: A Unanimous Supreme Court Reverses Federal Circuit Ruling on Damages in Samsung Electronics Co. v. Apple Inc.

On December 6, 2016, in a unanimous opinion written by Justice Sotomayor, the Supreme Court reversed the Federal Circuit’s affirmance of the damages award in Samsung Electronics Co. v. Apple Inc. The question before the Supreme Court was whether the ruling of the United States Court of Appeals for the Federal Circuit, that the entire smartphone (found to infringe three design patents asserted in the case) is the only permissible “article of manufacture” for the purpose of calculating damages under Section 289 of the Patent Act, is consistent with the language of the statute. The Supreme Court held that it was not.

Section 289 provides that a person who manufactures or sells “any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.” The Supreme Court explained that arriving at the damages award under Section 289 involves two steps. First, the “article of manufacture” to which the infringed design has been applied must be identified. Second, the infringer’s total profit made on that article of manufacture must be calculated. The Supreme Court’s opinion addresses the first step and in particular whether in the case of a multicomponent product, the relevant “article of manufacture” must always be the end product that is sold to consumers or whether it can also be a component of that product. The Supreme Court held that the term “article of manufacture” in Section 289 “encompasses both a product sold to a consumer and a component of that product.” Citing to dictionaries, the Supreme Court found that an article of manufacture is simply a thing made by hand and thus includes both the end product and its individual components.

The Supreme Court explained that its broad reading of the term “article of manufacture” in Section 289 is consistent with 35 U.S.C. §171 and 35 U.S.C. §101. Section 171(a) of the Patent Act makes “new, original and ornamental design[s] for an article of manufacture” eligible for design patent protection, which has been interpreted by the Patent Office and the courts to permit the patenting of designs for individual components of a multicomponent product.1The Supreme Court noted that the term “manufacture” in Section 101 has similarly been interpreted to include the production of “the parts of a machine considered separately from the machine itself.”2Thus, the Supreme Court held that the Federal Circuit’s reading of “article of manufacture” in Section 289 to cover only an end product sold to a consumer is inconsistent with the language of Section 289.

Although the parties asked the Supreme Court to resolve whether, for each of the design patents at issue in the case, the relevant article of manufacture is the smartphone or a smartphone component, the Supreme Court declined to address this issue. The Supreme Court stated that to do what the parties are asking would require the Court to set out a test for identifying the relevant article of manufacture at the first step of Section 289 damages analysis and then to parse the record to apply that test in the case at hand. Neither party, however, proposed such a test or provided the Supreme Court with adequate briefing to address the issue. The Supreme Court deferred to the Federal Circuit to address any remaining issues on remand.

1See, e.g., Ex parte Adams, 84 Off. Gaz. Pat. Office 311; Application of Zahn, 617 F. 2d 261, 268 (CCPA).

21 W. Robinson, The Law of Patents for Useful Inventions §183, p. 270 (1890).


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