Supreme Court Unanimously Reverses Federal Circuit’s $399 Million Decision in Samsung v. Apple

On December 6, 2016, the Supreme Court issued its (unanimous) opinion in Samsung v. Apple (decision available here). The opinion involved the proper amount of damages for infringement of a design patent. Under 35 U.S.C. § 289, a person who manufactures or sells “any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit[.]” (emphasis added). Certain Samsung smartphones were found to infringe three Apple design patents, and the Federal Circuit upheld a damages award of $399 million (which represented the entire profit Samsung made from its sales of the smartphones-at-issue). According to the Federal Circuit, the “entire smartphone” was the only permissible “article of manufacture” for the purpose of calculating damages because “consumers could not separately purchase components of the smartphones.” The Federal Circuit rejected Samsung’s argument that “the profits awarded should have been limited to the infringing ‘article of manufacture’—for example, the screen or case of the smartphone—not the entire infringing product—the smartphone.” (certain quotations omitted).

The Supreme Court reversed the Federal Circuit, holding: “The term ‘article of manufacture,’ as used in §289, encompasses both a product sold to a consumer and a component of that product.” It is “simply a thing made by hand or machine.” The Supreme Court thus reversed the Federal Circuit’s decision, and remanded for the Federal Circuit to address any remaining issues on remand.

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