The Supreme Court issued a unanimous decision on Tuesday that sides with Samsung Electronics Co. in a bruising five-year patent fight with Apple Inc.
The court ruled Samsung cannot be forced to pay Apple all of its profits made from the sale of Samsung smartphones that infringed on three Apple design patents pertaining to the phone’s outer shell. The opinion was authored by Justice Sonia Sotomayor on Samsung Electronics Co. Ltd. et al. v. Apple Inc.
It was the first decision from the Supreme Court pertaining to design patents in more than 120 years, and it is expected to resonate in the field of copyright law.
In oral arguments held on Oct. 11, several justices expressed skepticism over a lower court’s ruling that Apple was entitled to the total profits of smartphone sales simply because the device infringed on patents pertinent to the outer casing of the phone.
Many tech experts and lawyers had asked the high court to side with Samsung. They worried that a decision upholding the lower court ruling would encourage “patent trolls” to target devices with potentially-infringing design patents in the hopes of capturing the total profits.
A circuit court had earlier ordered Samsung to pay to Apple the total profit on the smartphones in question — nearly $400 million — as damages for its infringement on the three design patents, citing a portion of the U.S. Patent Act originally drafted in the 19th century. It held that since the infringing designs on Samsung’s smartphones were not sold separately, the phones themselves constituted a single “article of manufacture” and Apple was entitled to the total profit of their sales.
Tuesday’s decision makes clear that design patents can represent only a portion of a product’s total value — particularly when that product has as many complex internal and external components as a smartphone.
“The term ‘article of manufacture’ is broad enough to encompass both a product sold to a consumer as well as a component of that product,” wrote Sotomayor.
The court held that damages must be appropriately apportioned so they only impact the infringing portions of the product — in this case, the exterior design of the smartphone — while leaving profits stemming from other components of the device intact.
The court refused to weigh in on exactly how to apportion the damages, remanding that decision back to the lower court.
The Computer & Communications Industry Association, which filed an amicus brief in support of Samsung, praised Tuesday’s ruling. The lower court’s interpretation “would have had a chilling effect on investment and the development of products,” said CCIA president Ed Black.