Design Patent Damages: A Critique of the Government’s Proposed 4-Factor Test for Determining the “Article of Manufacture”

by Perry J. Saidman, Saidman DesignLaw Group, LLC

from Volume 8 (2018-2019)

Download this Article in PDF format from The Jerome Hall Law Library’s Digital Repository.

The Supreme Court in Samsung Electronics Co. v. Apple, Inc. wrestled with the question of determining the meaning of “article of manufacture” in 35 U.S.C. § 289 when it comes to calculating the total profit of the infringer that is awarded to the patentee.

In its Petition for Certiorari, Samsung raised the novel theory that the article of manufacture could be less than the entire product sold by the infringer. The Supreme Court agreed to hear the following issue, as framed in Samsung’s Petition:

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?

Samsung argued that for a multi-component product, such as a smartphone, the article of manufacture needs to be defined in terms of only portions or components of the smartphone. Since Apple’s design patents were drawn to portions of the iPhone, rather than the entire iPhone, Samsung sought to limit its liability to its total profit on those portions. This would have greatly reduced the jury award of $399 million, which had been based on the total profit derived from Samsung’s sales of their entire smartphones to which the patented designs had been applied.

The Supreme Court said that the only question before it was narrow: “[W]hether, in the case of a multicomponent product, the relevant ‘article of manufacture’ must always be the end product sold to the consumer or whether it can also be a component of that product.”

Looking to the statutory text, the Supreme Court concluded that the term “article of manufacture,” as it is used in § 289, “encompasses both a product sold to a consumer and a component of that product.” The Court further indicated that the term “article of manufacture” is “broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not.” The Court declined, however, to “set out a test for identifying the relevant article of manufacture at the first step of the § 289 damages inquiry.”

Thus, the narrow question left unanswered from Samsung is how to determine the relevant article of manufacture for a multi-component product, such as a kitchen oven (the example given by Justice Sotomayor). If the product is a single component product, such as a dinner plate (again, Justice Sotomayor’s example), there is no issue, because, as she put it, “the product [sold to a consumer] is the ‘article of manufacture’ to which the design has been applied.”

The meaning of “total profit” was not at issue; as the Court stated: “‘[t]otal,’ of course, means all.” Thus, the Court left undisturbed the long-standing design patent rule against apportionment of the infringer’s total profit, as well as its sister rule prohibiting an inquiry into causation.

As noted above, the Court left formulation of a test for determining the article of manufacture to the lower courts in future litigation.