Jonathan Moskin
Foley & Lardner

The US Supreme Court has agreed to hear Samsung’s design patent appeal. Jonathan Moskin of Foley & Lardner explains how the case threatens to shake up an otherwise settled area of patent law.

Why did the Supreme Court agree to address only one of Samsung’s questions?

I find it a little paradoxical because on the one hand, the US Supreme Court declined to consider whether the jury should have been instructed to filter out the functional elements of the design, which makes it more difficult for the Supreme Court to review the damage award, at least if it wants to consider reducing it to the smallest patentable feature. Instead, the court appears to be saying it is going to take the design patents as they are, and not purport to limit them at all. My own view is that the design patents at issue are—within the context of smartphones—fairly broad, not that design patents are ever very broad.

The Supreme Court justices limited the scope of the questions they want to review in a way that seemed unhelpful to Samsung’s broader position. But the fact that they took the case at all makes me wonder why they are bothering, unless some change in the law is being considered. It it is an area of law that is very well settled—the question of apportionment has scarcely come up in 100 years.

As part of its argument, Samsung cited the 1916 case of Bush & Lane Piano Co v Becker Bros, where the court limited the scope of recovery on a product, in this case pianos. The inner workings were the same, but the outer case could be changed, by size or shape, or perhaps with a more ornate design. Upon hearing the case, the Court of Appeals for the Second Circuit limited damages to the patented article of manufacture, so not the entire piano, but the outer case.

This is an issue that has not been seriously challenged ever since. The Federal Circuit now, and for the past 30 years, has had exclusive jurisdiction in patent cases. It decided a case, Nike v Wal-Mart Stores in 1998, that removed any doubt that there is no apportionment of profit. It applies to the whole article of manufacture.

So it begs the question: why is the Supreme Court taking the case on now? The law has not been disputed or in controversy for 100 years, so it does make one suspicious that some of the justices on the Supreme Court are contemplating coming out with a different conclusion from the Federal Circuit’s.

Yet again, they seem to have tied their hands a little bit by declining to consider whether the scope of the patent could be limited by filtering out the functional elements of the design patent.

Does the Supreme Court’s acceptance pose an opportunity for design patent disputes to come to the fore?

That depends on two things: the first is the outcome of the case. If the court upholds the Federal Circuit decision (to award Apple $399 million), that is, I’d say, a small inducement for some additional design patent litigation. I don’t think that it is a great inducement. The second is whether Congress acts to amend the statute in the wake of the Supreme Court’s decision.

In its brief, there was an argument made by Samsung that the Federal Circuit’s decision will lead to design ‘patent troll’ litigation in the US. I don’t agree with that assertion because design patents are still quite limited in scope.

There has been an upswing in design patent litigation in the last several years, but not so noticeable that it is skewing the overall nature or volume of disputes in the patent arena. Unlike the enormous growth of troll, or non-practising entity litigation, which may now be easing, there has only been a relatively modest increase in design patent litigation.

Upholding a big award will certainly get more attention, and therefore might encourage some litigation, but with regard to the second factor, and this is somewhat implicit in the Federal Circuit’s decision, it may be in the wake of whatever the Supreme Court decides, that Congress steps in and amends the statute.

In one of the footnotes in the Federal Circuit decision, it said that considering the policy arguments, that is, whether it is fair to award profits on an entire product when only a small feature is patented, that such policy questions should be directed to Congress. The Federal Circuit can’t affect the actual current wording of the statute.

I don’t think this will significantly affect future litigation. It will only have an effect on litigation in that a high award demonstrates that design patents can be valuable. But on the other hand, it might be short lived if Congress limits the wording of the statute. This dispute might also be an outlier case because it is very rare to get such a large award in any case, much less a design patent case. The figure of $400 million is a lot of money.

There are, then, interesting ways to use design patents: you get them relatively quickly and inexpensively and they can be effective tools in some circumstances. Some companies are also careless and do not check whether or not they are infringing another design patent, even if they do check for utility patents.

There is also an inherent conflict within design patents. I do not know how much litigators have really thought about it, but the case for infringement is whether the accused design is substantially the same as the patented design. That is not unlike the test for copyright infringement of “substantial similarity”. But yet, the Federal Circuit has held that design patents, unlike copyright, have very little scope.

Does that not hinge on the word ‘substantially’?

Yes, in adopting a standard much the same standard as copyright infringement, the key case here was decided a long time ago—with Gorham Co v White, which was decided by the Supreme Court back in 1871 and concerned a baroque pattern for silverware.

That’s one of the inherent conflicts in design patent law: you have, theoretically, a broad test, but the Federal Circuit has imposed a strict overlay in saying that design patents have virtually no scope. Many fairly modest differences will preclude a finding of infringement.

In an article I wrote several years ago, I argued that more effective use of surveys and other types of proof could help prove substantial similarity, but again there has been no great surge in design patent litigation and certainly no movement to follow my suggestions to do surveys to question what the consumer recognises as substantially the same.

Minimally, there is a greater chance of winning in district courts with such evidence, but there’s a risk of it being overturned either by, in spite of a jury decision, the court itself, or the Federal Circuit, as a matter of law, which might pare back the victory on appeal.

Design patents are a kind of hybrid system, or right, that incorporates design law and strong elements of the patent statute and the need to find literal infringement. There is no doctrine of equivalents in design patent law. I think there are inherent tensions. The underlying theory of design patent law thus makes it unclear how much the floodgates could ever open for more design patent litigation. It’s not so clear to me that will happen.

And I don’t think that many owners of design patents do all they can in protecting their designs. There is only a grace period of one year under US law to seek protection in the first instance, and companies are not keen to pay a few thousand dollars to protect their design before they know if the product in issue will be successful. They fear it would be too costly to get design patents on their designs before they have any sense of how the market will react.

Does this litigation serve as a warning for those concerned that their products might infringe?

Not really, this may just be an outlier case. There are much more subtle strategies on how to get design patents. To some extent, you can file continuations on applications and you can modify what you claim, effectively broadening the scope of the patent to read more clearly on what a competitor is doing. Not every company is attuned to the benefits of the design patent system.

I think it’s safe to say that this should cause companies to take a much closer look. Just because of the size of the award. Whether it actually will, I can’t say.

On its face the statute seems clear that there is no apportionment of profits on the entire article of manufacture. It will be very interesting to see how the Supreme Court decides. I have read Samsung’s arguments and I don’t quite grasp them on statutory construction.

I understand the policy argument that this one design feature should not force them to disgorge all of their profits on the whole phone. But there is nothing exceptional in how the Federal Circuit interpreted the statute, following its own decision in the 1998 Nike case.

Samsung cites an old Black’s Law Dictionary, published four years after the statute was amended (1887), to support an apportionment requirement. The Black’s Law Dictionary states that the word ‘article’ can be defined as “one of several things presented as connected or forming a whole”. That may be fine, but the phrase in the statute is not “article”, but “article of manufacture”. so I don’t know if that gets Samsung to where it wants to be. Samsung also failed to take the time to apply the theory to the actual patents that are at issue, including a flat rectangular face with rounded corners, a face with a bezeled edge, general features and graphical user interface. It’s not just a screen, however, it’s a combination of things, and I’m just puzzled as to why or how Samsung can put its theory into action in this case.

It’s one thing to say that a cup holder is separate and manufactured apart from a truck or a car, but it’s another thing to say that the specific features that are integrated in a phone are separate parts. Even conceptually, it’s very hard to separate them out from the phone itself. That’s certainly Samsung’s challenge.

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