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Supreme Court Curbs Excessive Design Patent Damages

The Supreme Court issued an important ruling today in the long-running patent battle between Apple and Samsung. The appeal involved some of Apple’s infamous design patents on rounded corners. The Federal Circuit had ruled that Apple was entitled to all of Samsung’s profits from the infringing phones. Samsung appealed, arguing that the law did not require such a steep penalty. As Samsung explained, if the Federal Circuit’s rule were allowed to stand, then a car company sued for infringing a design patent on a cup holder could be liable for the total profits from sales of the car.

Unlike utility patents, design patents are intended to cover new, non-functional, ornamental aspects of articles. They usually contain one claim and a set of drawings detailing what is being claimed. Allowance rates are so high for design patent applications that the system effectively operates as a registration process. This leads to numerous silly and non-novel design patents. We’ve featured a few in our Stupid Patent of the Month series, including a patent on rectangles on a screen and a basic slider graphical interface.

Together with Public Knowledge, R Street, the American Antitrust Institute, and IP Justice, EFF filed an amicus brief with the Supreme Court. We argued that a design patent relating to a component should not allow a patent owner to capture every penny of profit from the entire device. Such a rule would be an invitation to trolling and litigation abuse, especially when it is so easy to get design patents approved.

The Supreme Court agreed. Although this may seem obvious as a policy matter, the statute did provide some support for the Federal Circuit’s decision. The statute states that someone who sells “any article of manufacture” incorporating a patented design “shall be liable to the owner to the extent of his total profit.” So perhaps the blame for an absurd damages rule belongs to Congress. But, as the Supreme Court explained, the statute does allow for a more sensible result. This is because an “article of manufacture” might not be the item actually sold to consumers (such as a phone or car) and instead could be a component.

The Supreme Court did not create a rigid rule for when the relevant “article” is a component or the entire product. Nor did it say how any rule should apply in this case. Its decision merely says that, for damages purposes, the article of manufacture can be a component. There will likely be further proceedings in this case and others to determine the contours of design patent damages. We hope that courts—and Congress, if necessary—move towards sensible damages rules, whether in design patents, utility patents, or copyright.

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