Samsung Electronics Co. v. Apple Inc.

PETITIONER: Samsung Electronics Co., Ltd., et al.
RESPONDENT: Apple Inc.
LOCATION: U.S. District Court for the Northern District of California, San Jose Courthouse

DOCKET NO.: 15-777
DECIDED BY: Roberts Court (2016- )
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: US ()
GRANTED: Mar 21, 2016
ARGUED: Oct 11, 2016
DECIDED: Dec 06, 2016

ADVOCATES:
Kathleen M. Sullivan - for petitioners
Seth P. Waxman - for respondent
Brian H. Fletcher - for United States, as amicus curiae

Facts of the case

In April 2011, Apple Inc. (Apple) sued Samsung Electronics, Co., Ltd. (Samsung) and argued that certain design elements of Samsung’s smartphones infringed on specific patents for design elements in the iPhone that Apple holds. The jury held that Samsung had infringed on Apple’s patents and awarded over $1 billion in damages. The district court ordered a partial retrial on the issue of damages because some damages had been awarded for a period in which Samsung did not have notice of some of the asserted patents. On retrial, the jury awarded nearly $300 million in damages. On appeal, Samsung argued that the district court erred in allowing the jury to award damages based on Samsung’s entire profits, rather than the fraction of profits directly attributable to the infringed patents themselves. The U.S. Court of Appeals for the Federal Circuit affirmed the district court’s award of damages because Samsung did not argue that there was a lack of substantial evidence to support the award.

Question

If an infringed design patent only applies to a component of a product, should damages for the infringement be limited to the portion of the infringer’s profits attributable to that component?

Media for Samsung Electronics Co. v. Apple Inc.

Audio Transcription for Oral Argument - October 11, 2016 in Samsung Electronics Co. v. Apple Inc.

John G. Roberts, Jr.:

We'll hear argument first this morning in Case No. 15-777, Samsung Electronics v. Apple, Incorporated. Ms. Sullivan.

Kathleen M. Sullivan:

Mr. Chief Justice, and may it please the Court: A smartphone is smart because it contains hundreds of thousands of the technologies that make it work.

But the Federal Circuit held that Section 289 of the Patent Act entitles the holder of a single design patent on a portion of the appearance of the phone to total profit on the entire phone. That result makes no sense.

A single design patent on the portion of the appearance of a phone should not entitle the design-patent holder to all the profit on the entire phone. Section 289 does not require that result, and as this case comes to the Court on the briefing, Apple and the government now agree that Section 289 does not require that result.

We respectfully ask that the Court hold that when a design patent claims a design that is applied to a component of a phone or a component of a product, or, to use the language of Section 289, when a design patent is applied to an article of manufacture within a multi-article product, we request that you hold that Section 289 entitles the patent-holder to total profit on the article of manufacture to which the design patent is applied, and not the profits on the total product.

Anthony M. Kennedy:

The problem is, is how to instruct the jury on that point.

Both parties, not the government, both parties kind of leave it up and say, oh, give it to the juror.

If I were the juror, I simply wouldn't know what to do under your -- under your test. My preference, if -- if I were just making another sensible rule, is we'd have market studies to see how the -- the extent to which the design affected the consumer, and then the jury would have something to do that.

But that's apportionment, which runs headlong into the statute. You can't really have apportionment, so it seems to me you leave us with no -- one choice is to have a de minimis exception, like the cup-holder example that's in the car -- maybe the boat windshield, which is a little more difficult -- and just follow the -- and just follow the words of the statute.

But it seems to me neither side gives us an instruction to work with.

Kathleen M. Sullivan:

Your Honor --

Anthony M. Kennedy:

One -- I mean, it's one thing to leave it to the jury.

It's the other thing -- if I were the juror, I wouldn't know what to do under your brief.

Kathleen M. Sullivan:

Your Honor, we do not propose a test that simply leaves it to the jury without guidance.

The instruction we proposed and that was rejected by the district court appears in the blue brief at page 21, and what we would have told the jury is that the article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent. So, Justice Kennedy, our test is very simple.

Anthony M. Kennedy:

If I'm the juror, I just don't know what to do.

I'd have the iPhone in the jury room; I'd -- I'd look at it.

I just wouldn't know.

Kathleen M. Sullivan:

Your Honor, what we respectfully suggest is that there are two parts to the test for what constitutes an article of manufacture. And to be clear, I'm now stressing our article-of-manufacture argument, not the causation argument we gave as an alternative. As the case comes to the Court, all we ask is that you rule in favor of us on article of manufacture. And, Justice Kennedy, the statute tells us what to look at --

Elena Kagan:

Could I really quickly make sure I understand that, that in other words, you're -- you're saying we should only look to what an article of manufacture is and not your other argument that there should be apportionment as to any particular article of manufacture.

Kathleen M. Sullivan:

That is correct, Your Honor. We're pressing here, as you all you need to resolve the case, that a jury should be instructed that total profit must be profit derived from the article of manufacture to which the design has been applied. And, Your Honor, the statute does support our test because the statute asks us to look at the article of manufacture to which the design has been applied.

Ruth Bader Ginsburg:

And what is that in this -- in this case?

Kathleen M. Sullivan:

Your Honor, in this case it is -- there are three patents.

The D'677 is on the front face of a phone.

The rectangular, round-cornered front face of a phone. In the D'087, it's also the rectangular, round-cornered front face of the phone with certain aspect ratio and corner radii. In the D'305, it is the display screen on which the graphical user interface appears. So, to answer Justice Kennedy's question, the jury should have been instructed either with our instruction: Instruction 42.1 would have said to the jury, I'm giving you guidance.

There's an article of manufacture here, but it may be less than the entire phone.

The article of manufacture may be a part or portion of the phone, and you should look at two things, Your Honor. You should look at the patent, and, Justice Kennedy, with respect -- you shouldn't just look at the -- at the phones in the jury room.

You ought to look at the patent because, Justice Ginsburg, the patent is going to be the best guide to what the design is applied to in many, many cases, as in this case.

Sonia Sotomayor:

Ms. Sullivan, you seem to be arguing, as when you opened, that as a matter of law, you were right.

And I don't see that as a matter of law. I believe that your basic argument, everyone is in agreement, that the test is an article of manufacture for purposes of sale. But I am like Justice Kennedy, which is, how do we announce the right test for that? Because the phone could be seen by a public -- a purchasing consumer as being just that rounded edge, slim outer shell.