Samsung Electronics Co. v. Apple Inc.
Headline: Court rejects rule that design-patent damages must be the whole smartphone; holds components can be the relevant 'article of manufacture,' potentially changing how profits are calculated and returns case for more review.
Holding: The Court held that the term "article of manufacture" in Section 289 can refer to a component as well as the whole product, and the Federal Circuit’s rule limiting damages to the entire smartphone was incorrect.
- Allows damages to be based on a component's profit, not just whole-product profit.
- Could lower awards in cases involving multicomponent products like smartphones.
- Requires lower courts to decide which component qualifies on remand.
Summary
Background
Apple, the company that released the iPhone, obtained design patents covering the phone’s look. Samsung, another technology company, later sold smartphones that a jury found copied some of those designs. The jury awarded Apple $399 million, the entire profit Samsung made from the infringing phones. The Federal Circuit affirmed, saying the relevant "article of manufacture" for damages must be the entire smartphone because consumers did not buy the innards separately.
Reasoning
The core question was whether the phrase "article of manufacture" in the damages law means only the whole product sold to consumers or can also mean a component of a multi-piece product. The Court looked to the statute’s words and history and concluded the term is broad enough to include both whole products and parts made by hand or machine. The Court found the Federal Circuit’s narrow rule inconsistent with the text and reversed that part of the decision. The Court did not pick which component (if any) should be treated as the relevant article in this case and declined to announce a general test, because the parties had not fully briefed that issue.
Real world impact
The ruling means design-patent damages can sometimes be based on a component’s profit rather than the entire product’s profit. That could change damage awards in cases about multicomponent products like smartphones. Because the Court sent the case back for further proceedings, lower courts will decide which component, if any, qualifies and how profits should be calculated on remand.
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