California Jury Finds Big For Apple But Jury Instructions On Article of Manufacture Lacking

//California Jury Finds Big For Apple But Jury Instructions On Article of Manufacture Lacking

California Jury Finds Big For Apple But Jury Instructions On Article of Manufacture Lacking

Larger takeaway from Samsung v. Apple may be reinforcement of design patent importance in protecting business interests

  1. Jury finds that Apple is entitled to $538.6 million from Samsung infringement of design and utility patents
  2. Federal court’s jury instructions on four-part test for determining an “article of manufacture” not likely to become the signpost for calculating design infringement damages
  3. Importance of design patents assets for protecting business interests is reinforced; design patents provide legal protection enforceable in courts and in the marketplace, too

On May 24, 2018 in Samsung Electronics Co., Ltd. v. Apple Inc., a California federal jury found that Apple is entitled to $538.6 million in damages for Samsung infringement of design and utility patents covering smartphone technology. $533.3 million of this jury finding was for Samsung infringement of three design patents; the D’677, D’087, and D’305 patents. The remaining $5.3 million was for infringement of the ‘381 and ‘163 utility patents.

While post-verdict motions remain to be filed, it is likely that the Northern District of California court will enter a judgment on this which will start yet another round of appeals by the parties in this case.

The issue in the case appeared to be a simple one. In its decision on December 6, 2016, the Supreme Court, hearing an earlier appeal on damages in the instant case, outlined two steps to the inquiry under § 289 for determining damages in a design infringement case:

  1. Identify the “article of manufacture” to which the infringed design has been applied and
  2. Calculate the infringer’s total profit made on that article of manufacture

In a February 7, 2017 remand of the Supreme Court decision, the federal circuit opted out of deciding the issue itself and left it to the district court to consider the legal issues related to the test for identifying the “article of manufacture.”

For background, see Apple v. Samsung: How Things Can And Do Go Awry in Patent Litigation

After considering the legal issues, the California court came up with a four-part test for determining an “article of manufacture.” The jury was instructed:

To identify the articles of manufacture to which Samsung applied Apple’s patented designs, you should consider the following four factors:

  1. The scope of the design claimed in Apple’s patent, including the drawing and written description;
  2. The relative prominence of the design within the product as a whole;
  3. Whether the design is conceptually distinct from the product as a whole; and
  4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.

Final Jury Instructions filed May 18, 2018.

A closer inspection shows this four-step analysis to be lacking. Step one appears to be useful since the scope of every design patent claim should define the scope of the article covered by the claim.

The remaining steps, however, appear to be

  • Vague (step 3 “whether the design is conceptually distinct from the product as a whole”)
  • Ambiguous (step 4 “design is embodied in a component that is manufactured separately from the rest of the product”), and
  • Biased in favor of Apple (step 2, can anyone dispute “relative prominence of the Apple design within the product as a whole”?)

It is settled law that design patents cover an ornamental feature of an article. The lost profits attributable to that ornamental feature should be the basis of the lost profits and the signpost for the analysis.

In some cases, the ornamental feature may be the entire product, such as the Mickey Mouse design patent obtained by Walt Disney in 1930, U.S. Patent No. Des. 82,802.

The Supreme Court acknowledged this when holding that the relevant “article of manufacture” may be the end-product as sold. But in the instant case there are many functionalities within the infringing Samsung smart phones of significant value that go far beyond the ornamental feature (e.g., Samsung touch screen functionality). This important point, for whatever reason, appears to be obfuscated in the jury instructions and so no doubt lost on the jury in this case.

The advocacy process should do a better job on distilling this important point for the jury. Until that happens, however, no one will truly know the exact measure of damages from Samsung’s infringement of the Apple design patents, let alone what is a meaningful signpost for use in the calculation of design infringement damages.

Whether Samsung is able to bring clarity to this murkiness on appeal remains to be seen. If, because of the Samsung failure to advocate for this kind of clarity at trial, it is bound by these jury instructions, then the appellate arguments may be cabined into whether the damages evidence supports the jury findings.

This would be a great disservice to the design patent community at large since the much anticipated test for determining an “article of manufacture” as has been framed by the jury instructions in this case is wanting. But then again, since the test for determining an “article of manufacture” is a question of law reviewable on appeal de novo, the federal circuit could do what it opted out of doing in the February 7, 2017 remand, to wit, consider the legal issues related to an “article of manufacture” and to itself define the test for identifying the “article of manufacture.”

Still, one thing clear from the jury verdict is this: that design patents are extremely powerful patent assets for protecting the business of a company. Indeed, most of Apple’s damages success in the instant case are due to their design patents; and not the other way around on their utility patents.

So the larger take-away from the jury verdict in Samsung v. Apple may be the reinforcement of design patent importance in protecting business interests. For companies engaged in a business involving articles of manufacture, there can be no question that important ornamental product designs must be protected.

Design patents provide legal protection enforceable not only in courts but in the marketplace, too. For example, ecommerce platform take-down procedures enable quick removal of products from on-line stores for design patent infringement. Design patents are also quicker, easier, and less expensive to obtain than utility patents and require no maintenance payments. They also allow for use of the terms “patent pending” and “patent issued” on products. For these and other reasons, design patents can provide valuable protection to facilitate a larger IP strategy for protecting a company business.

About The Juhasz Law Firm

About Paul R. Juhasz

By |2018-06-04T10:45:45+00:00May 30, 2018|