how much of the profits from the overall product should be attributable to the component in which the infringing design had been embodied.

Not all cases would be difficult, however. Total profits on products such as wallpaper and carpets should be easy insofar as the patented designs drove consumer demand for the product. Also relatively easy would be cases in which the patents were for small components of complex multicomponent products (for example, designs for car cup holders, windshields for boats, or hood ornaments for cars).

The Justices did not discuss Apple’s patents at all or the allocation of profits to the smartphones at issue. But they speculated about what juries might do in allocating profits for infringement of a hypothetical design patent covering the overall shape of a car such as the Volkswagen Beetle. Some Justices seemed to think that consumer demand for cars embodying this design would be near the total profits for the car as a whole, while other Justices thought that much of the value of such a car would lie in the mechanical and other functional design elements not covered by that design patent.

 

Conclusion

Although the Supreme Court oral argument in Samsung largely focused on non-technology design patent examples, the Justices were very aware of the concerns raised by many technology companies and industry associations about the deleterious effects of excessive awards in design patent litigation posed by the CAFC’s total-profits-on-products ruling.

The Court provided very little guidance in its Samsung decision about how fact-finders should assess the relevant article of manufacture to which patented designs have been applied and the profits attributable to that article in its Samsung ruling. We can all breathe a sigh of relief that the worst outcome of the case has been averted by the Court’s willingness to correct yet another erroneous ruling by the CAFC.

 

Pamela Samuelson ( [e-mail]) is the Richard M. Sherman Distinguished Professor of Law and Information at the University of California, Berkeley, and a member of the ACM Council.

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tor door). The SG also participated in the oral argument to represent the government’s interest in sound interpretations of U.S. design patent law.

The SG argued that the proper inquiry in cases involving multicomponent products was, first, to identify the relevant “article of manufacture” to which the patented design(s) had been applied, and second, to assess what portion of the defendant’s profits were attributable to the infringing article. In respect of multicomponent products, the relevant article of manufacture may be one component, rather than the product as a whole, even though there may be no separate market for that component.

The SG’s brief identified several factors that juries should take into account in deciding what the relevant article of manufacture was: the scope of the patented design; the extent to which the patented design was responsible for the appeal of the product; the existence of other conceptually distinct and unrelated components of the product; and how various components of the product were manufactured.

The SG recognized that it would sometimes be difficult for the jury to determine what “total profits” were attributable to the infringing components, but regarded the design patent statute as requiring this determination. The SG also recognized that when components embodying patented designs were not sold separately, the total profits inquiry would be “ functionally similar” to the conventional profits-attributable-to-infringement analysis used in other types of IP cases. However, the SG stated that “a significant conceptual and practical difference [exists] between the profit attributable to the infringing article and the profit attributable to the infringement” (emphasis in the original).

Profits attributable to the infring-
ing article will generally be higher than
profits attributable to infringement,
especially when the relevant article of
manufacture is valuable for more than
the design. (Samsung’s lawyer suggest-
ed, for instance, that the design-pat-
ented rectangular round-edge design
for smartphones might be valuable to
consumers because it makes the face
less likely to fracture in addition to
making the phone look “cool.”) Total
profits on the round-edge component
may overcompensate Apple, but this
must be what Congress intended when
it amended the law in 1887.

The SG recommended sending the Samsung case back to the lower courts to determine the relevant article of manufacture and profits attributable to that article under this standard.

 

The Supreme Court Argument Before the Court, nobody defended the CAFC’s ruling that juries must award total profits on the sale of products embodying patented designs. Samsung pointed to hundreds of thousands of component parts in smartphones and argued that the three patented designs were only small components of the smartphones at issue. In a new trial on damages, Samsung argued that the jury should first study the patent to examine the design and the article to which the design was applied. The jury should then make a judgment about the profits attributable to the components embodying the infringing designs. Consumer surveys and expert witnesses might help the jury to decide these issues.

Although not defending the CAFC ruling, Apple asked the Supreme Court to affirm the total profits award against Samsung. It argued that its patented designs made its smartphones “ peculiar and distinctive in appearance,” as patented designs often do. (Judges sometimes decide that lower courts erred in their interpretation of a legal rule, but find the error to be too insubstantial to justify a new trial.)

Most of the Justices’ questions focused on the difficulties that juries would have in deciding what the relevant article of manufacture was and The Justices did not discuss Apple’s patents at all or the allocation of profits to the smartphones at issue.