Apple, Inc. v. Samsung Electronics, Co., Ltd. et al.


Docket No. 2014-1335, 2015-1529

PROST, O’MALLEY, CHEN
May 18, 2015

Update (Dec. 6, 2016 Adn Feb. 7, 2017): SCOTUS reversed DC/FC § 289 design patent damages award of Samsung’s entire profits on infringing smartphones, holding “[i]n the case of a multicomponent product, the relevant ‘article of manufacture’…need not be the end product sold to the consumer but may be only a component of that product….[b]ecause 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 Federal Circuit’s narrower reading cannot be squared with §289’s text.” Here, however, “[a]bsent adequate briefing by the parties, [the] Court decline[d] to resolve whether the relevant article of manufacture for each design patent at issue here is the smart phone or a particular smartphone component”, leaving that for the FC to resolve on remand. On remand from SCOTUS, the FC panel remanded the case back to the DC without determining damages because the DC “is better positioned to parse the record to evaluate the parties’ competing arguments” (Feb. 7, 2017).

Brief Summary: Apple’s trademark/trade dress claims were found to be functional (DC reversed); design and utility patents affirmed as valid; damages (over $290 million) issue remanded for determination “not predicated on…trade dress claims”.

Summary: Samsung appealed final judgment in favor of Apple after a jury found Samsung infringed Apple’s design patents, utility patents and trade dresses, all related to Apple’s iPhone. The jury ultimately awarded Apple over $290 million in damages. The FC affirmed the design patent verdicts, the validity of two of the utility patent claims and reversed the trade dress findings. The opinion first considered the trade dress issues under the Lanham Act in view of Ninth Circuit law (“[t]rade dress is the totality of elements in which a product is packaged or presented…The essential purpose of a trade dress is the same as a trademarked word: to identify the source of the product…balanced against ‘a fundamental right to compete through imitation of a competitor’s product’….”) The opinion explained that these rights are “temporar[y]” (Ninth Cir.), as compared to trademarks/trade dress that “allow[] for a perpetual monopoly” but are limited to those [features] that are ‘nonfunctional’” (Qualitex, US 1995). “A trade dress, taken as a whole, is functional it is is ‘in its particular shape because it works better in this shape.’” Leatherman, 9th Cir., 1999. And “federal trademark registrations have been found insufficient to save product configuration trade dresses from conclusions of functionality.” Talkig Rain Beverage Co., 9th Cir., 2003. One trade dress was unregistered and the other a registered trademark; the two were analyzed separately since they “are afforded different evidentiary presumptions under the Lanham Act” (unregistered: Apple must prove “as a whole…not functional; registered trademark: “‘prima facie evidence’ of non-functionality” with the evidentiary burden on defendant). The FC reversed on the unregistered trade dress since Apple’s design was found to “serve the functional purpose of improved usability”. The registered “trade dress claims the design details in sixteen icons on the iPhone home screen framed by the iPhone’s rounded-rectangular shape with silver edges and a black background”. The FC wrote “[i]t is clear that individual elements claimed by the ‘983 trade dress are functional”; the burden therefore shifted back to Apple and it could not show otherwise. The DC was therefore reversed on the registered trade dress. Regarding the design patents, the FC found no prejudicial legal error in the infringement jury instructions, the DC did not abuse its discretion in excluding some of Samsung’s evidence of independent development and that there was substantial evidence supporting the jury’s infringement findings; the denials of Samsung’s JMOL and alternative motion for a new trial were affirmed. Samsung’s arguments that the jury should not have awarded Samsung’s entire profits on its infringing smartphones was rejected (Nike, FC 1998 and 35 § 289 (“Whoever during the term of a patent for a design, without license of the owner…sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit”)); the award of damages was therefore affirmed. Samsung unsuccessfully argued that claim 50 of Apple’s ‘163 patent was indefinite because it “provides ‘no objective standard to measure the scope of the term ‘substantially centered’” in part because “absolute precision is unattainable” (Nautilus, US 2014) (“Samsung…points to no evidence showing that skill artisans would find the element ‘substantially centered’ as lacking reasonable certainty in its scope” and the “patent provides skilled artisans with enough information to understand” what is meant by the term.) Samsung also unsuccessfuly argued that claim 8 of Apple’s ‘915 patent was anticipated (a battle of experts). Samsung’s argument that lost profits should not have been awarded because non-infringing substitutes were available were rejected as “the ‘[m]ere existence of a competing device does not make that device an acceptable substitute” (Presidio, FC 2012) and “there was substantial evidence to support the jury’s refusal to consider two phones asserted by Samsung as non-infringing substitutes.” And Samsung’s arguments regarding the awarded royalties based on insufficient expert testimony (“failed to explain the Georgia-Pacific analysis and identified no evidence supporting his royalty rates”) was rejected. The award of damages “not predicated on Apple’s trade dress claims” was therefore remanded.

This entry was posted in Damages, Design Patents, Trade Dress, Trademarks. Bookmark the permalink.

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