by Katherine G. Minarik, Partner, Bartlit Beck Herman Palenchar & Scott, LLP*
With its cert grant in one chapter of the epic Apple v. Samsung patent litigation war, the Supreme Court expanded the spotlight on patent remedies this year. Although Samsung will not be heard until next Term, the grant came not long after the Court heard argument in Halo v. Pulse, a case about the proper standard for awarding enhanced damages, for which a decision is expected soon.
It is not a surprise – or at the very least it was a predictable result (patent law pun intended) – that the Court is paying increasing attention to patent remedies. Scholars have counted up 78 patent cases before the Court from 1952 through the recent grant in Cuozzo v. Lee. The Samsung grant makes 79 patent cases in the last 65 years. And a full 40 percent of those cases have been before the Court since 2006.
While patent law can seem a bit enigmatic to many a non-patent lawyer, the reality is that what the Court is doing in patent law is common practice. The Court sees something not working, believes the Circuit Courts (or here, just the Federal Circuit Court) not fixing it, and steps in. Over the past decade, the Court has seen a lot of things not working in patent law: In 2007, KSR v. Teleflex loosened the standard for assessing the obviousness of a patented invention. In 2014, Nautilus v. Biosig loosened the standard for assessing indefiniteness of a patented invention. Also in 2014, Alice v. CLS Bank loosened the standard for assessing the patentability of the subject matter of a patent.
All of these cases are part of a response – a response that is coming from all three branches of government right now, including the 2011 passage of the America Invents Act – to purportedly “bad” outcomes in patent cases. With this much attention to the standards of who wins or loses, it was inevitable the Court would turn some attention towards what the law allows a patent litigation winner to win.
So what is Samsung about? Samsung is a design patent case. When we talk about “patents,” we are almost always talking about utility patents because the vast majority of patents are utility patents. That is, patents for inventions that do something. Design patents are different. Design patents also grant a monopoly for a set period of time. But for the unique way in which something looks rather than how it works. Therefore, liability turns not on whether an infringer is doing the same thing that the patented invention does, but whether some piece of the infringer’s product looks like the patented design, no matter how small that look-alike piece of the product may be, at least according to the Federal Circuit in Samsung. Which is precisely what brought the Court’s attention to the case.
In 2012, a federal district court jury found that Samsung infringed three Apple design patents that, in Samsung’s cert petition words, cover “a particular black rectangular round-cornered front face, a substantially similar rectangular round-cornered front face plus the surrounding rim or ‘bezel,’ and a particular colorful grid of sixteen icons.” Ultimately, Apple was awarded damages in the amount of Samsung’s entire profits on its phone. A staggering $399 million.
At the Federal Circuit, the court rejected Samsung’s challenge to the amount of damages awarded because “Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.” In a footnote, the court acknowledged the argument of Samsung and many amici that “a defendant’s entire profits for design patent infringement makes no sense in the modern world” (emphasis added), but said that “[t]hose are policy arguments that should be directed to Congress.” In short, the Federal Circuit believes its hands are tied when it comes to design patent damages, no matter how absurd the result.
When the words “makes no sense” appear in a Circuit Court opinion, but the result stands anyway, a cert petition is sure to follow. Here, the question on which the Court ultimately granted cert (Samsung’s Question 2) goes directly to what Samsung believes makes no sense: “Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?” That is, if a company infringes a design element for one just one tiny corner of a sophisticated consumer technology product, should it always be the case that the infringer must pay every penny of profits it has made from that product?
Given the stakes, it was not surprising to see six supporting amicus briefs follow Samsung’s cert petition, including briefs from fellow technology heavyweight Dell, The Computer & Communications Industry Association, and a group of 37 IP law professors. Now that the case is set on the Court’s docket, the technology industry is expected to largely and strongly line up behind Samsung as they did at the Federal Circuit.
The challenge for a Court that has in many cases leaned towards the side of accused infringers over the past decade, is whether it can find wiggle room in the wording of the relevant statute, 35 USC § 289, where the Federal Circuit found none. This is not like, say, KSR where the issue is the rigidity of a legal test created by the courts to assess a statutory requirement for patents. And this is also the point which non-patent lawyers will likely find the most intrigue as well.
Samsung is also a vehicle for one of the most interesting things the Court does: assessing the law in light of how society has evolved over time. The Court has not heard a design patent case in more than 120 years, which Samsung highlighted repeatedly in its cert petition, including its very first sentence. Design patent law, Samsung argues, were directed towards inventions like spoon handles where the design accounted for much if not all of the value of the product in which it was employed. A cell phone is not a spoon handle, Samsung continues. The times have changed dramatically, and the law must account for it, Samsung insists.
This last point is an argument the Court hears regularly across all areas of the law, particularly constitutional concerns. Given the lack of ideological divide expected in Samsung, the way the Court answers Samsung’s plea may prove to have instructive ripples well beyond patent law.
But no matter the reasoning the Court ultimately employs, it would be unusual for the Court to grant cert on this issue only to say that the Federal Circuit got the issue just right and section 289 offers no flexibility at all in the award of design patent damages. Therefore, the case will almost certainly impact the multi-billion dollar vulnerability making tech companies nervous as they wait.
*The views expressed in this post are the author’s alone and do not represent the views of Bartlit Beck Herman Palenchar & Scott LLP or its clients.