Samsung v. Apple: A Proposal for “Article of Manufacture”
When Samsung and Apple, both dominators of the smartphone market, went head-to-head in the Supreme Court in Samsung Electronics Co. v. Apple, Inc., the Supreme Court refused to “resolve whether, for each of the design patents at issue [in Samsung], the relevant article of manufacture is the smartphone, or a particular smartphone component,” or to “set out a test for identifying the relevant article of manufacture at the first step of the § 289 damages inquiry.”1 Apple sued Samsung for patent infringement of a number of design patents for its iPhone, including its user interface and the shape of the phone. Several solutions have been considered to identify the relevant “article of manufacture.” One possible solution proposed is a historical interpretation of § 289 of the Patent Act. A historical interpretation could potentially be used in conjunction with another textualist, unitary approach.2
This Comment will argue that on remand, lower courts should use the multi-factor, case-specific test proposed in the U.S. government’s amicus brief to define the appropriate legal standard for “article of manufacture.”3 The Federal Circuit has interpreted § 289 to unambiguously permit a patent holder to recover from the entire profits of the “article of manufacture” to which the design was applied. However, it is not clear whether the “article of manufacture” is the whole, finished product sold on the market or simply any component of such a product.4 From a technological perspective, when § 289 was originally written, the total amount of work that currently goes into a piece of smart technology, such as an iPhone, would have been incomprehensible. The intricacies of an iPhone, including its software, hardware, and design, reach far beyond a typical consumer product of the nineteenth century. With the exponential change in technology, it is necessary to consider each smart device as a combination of several components.
An Overview of Design Patent Claims and Infringement
A design patent may be obtained by a party that “invents any new, original and ornamental design for an article of manufacture.”5 A utility patent, on the other hand, is a “useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”6 Design patents will not issue for features mainly dictated by function,7 a straightforward analysis for simple articles. However, the granting process becomes more complicated when articles have both functional and ornamental features.8
During the life of the design patent, no other party may use the design or a design substantially similar to the patented design without permission.9 Section 289 of the Patent Act states that for the infringement of design patents, the party that infringed “shall be liable to the owner to the extent of his total profit, but not less than $250.”10 A party infringes a design patent if the party is not the patentee, and makes, uses, sells, offers to sell, or imports the invention without the patentee’s permission.11 To determine whether or not infringement has occurred, the test is generally whether an “ordinary observer” would think the patented design looks the same as the design that has been accused of infringement.12
When considering patent design claims in Apple v. Samsung, the Federal Circuit acknowledged that past precedent held that “the scope of the claim must be construed in order to identify the non-functional aspects of the design as shown in the patent.”13 But it sought to distinguish that mandate by holding that functional elements need not be excluded in their entirety. Therefore, the Federal Circuit has yet to determine what specifically is included in an “article of manufacture.”
Procedural Posture of Samsung v. Apple
In January 2007, four days before Apple introduced the iPhone, Apple filed several design patents which covered the shape of the phone.14 In June, Apple filed a color design patent with one hundred and ninety-three screenshots of iPhone user interfaces. In April 2011, Apple sued Samsung, the supplier of the components for its phone, for patent infringement related to the above filings along with utility patents, trade dress rights, and trademark infringement. Apple alleged in the U.S. District Court for the Northern District of California that Samsung’s Android products, including the Galaxy S 4G, Samsung Galaxy Tab, and Nexus S, infringed Apple’s intellectual property.15 Samsung initially counter-sued in Korea, Japan, and Germany, alleging Apple infringed patents for mobile-communications technology. Samsung also filed in the United States District Court for the District of Delaware, the British High Court of Justice, and with the United States International Trade Commission (ITC), in June 2011.16
While Apple accused Samsung in two individual lawsuits, this comment will focus on the first U.S. trial, which specifically addresses the “article of manufacture” issue. At the heart of the issue in the first trial was the 2005 Design Patent 504,889. This patent claimed the ornamental portion of the electronic device and included accompanying figures showing a thin rectangular device with rounded corners.17 A jury trial resulted in a verdict strongly favored Apple, awarding it over $1 billion in damages and giving nothing to Samsung in its counter suit. The jury found that Samsung willfully infringed Apple’s utility and design patents and diluted trade dress related to the iPhone.18
In October 2012, after the U.S. Patent and Trademark Office tentatively invalidated U.S. Patent No. 7,469,381 (the “Bounce-Back Effect” patent), Apple filed a request to stop sales of Samsung products that violated U.S. patents. The court denied the request in December 2012, and also found that the jury miscalculated damages for Apple by four hundred million dollars and, ordered a retrial. In the damages-only retrial in November 2013, Samsung disputed the amount that Apple claimed it was owed, and counterclaimed that it should only owe $52 million.19 On November 21, 2013, the jury awarded a new figure of two hundred and ninety million dollars.20
On December 6, 2016, the Supreme Court unanimously reversed the decision from the first trial and remanded the case in order to determine the appropriate legal standard for “article of manufacture.”21
Previously Proposed Interpretations of § 289
Textualists look for meaning in the governing text itself.22 They argue that judges should look to the meaning of the words at the time the statute was drafted.23 With this as a goal, it is important to look to cases during that time for evidence as to what “article of manufacture” meant. In Gorham Co. v. White, the Court explained that an “article” refers to “the thing invented or produced, for which a patent is given, is that which gives a peculiar or distinctive appearance to the manufacture, or article to which it may be applied.”24 Because the patented design “may enhance its salable value” of the product, the patent “therefore proposes to secure for a limited time to the ingenious producer of those appearances the advantages flowing from them.”25 This can be used as evidence to show that the meaning of “article of manufacture” when § 289 was drafted in 1887 referred to an entire man-made tangible item with a unitary structure complete for use or sale.26 The unitary approach was also the approach used by Congress in 1887 toward its predecessor to § 289. There, Congress articulated that the “article of manufacture” would be a man-made tangible item “with a unitary structure complete in itself for use or sale.”27
This is a potentially simple and straightforward solution and has been advocated by the Federal Circuit.28 However, this interpretation is not appropriate in this case. At the time the statute was written, the reasonable person could not comprehend the exponential development of technology today. In that day, decisions involving design patents involved items such as the handles of tablespoons and forks.29 The idea of not only having the hardware of a phone, but also the programming involved to create a user interface, apps, and user experience was incomprehensible at the time. Since it is not only a difference of the scale of the manufacturing involved, but also the type,, a solution needs to be found other than using a textualist, unitary approach.
A second interpretation of § 289 is historical. As argued by Sarah Burstein, this interpretation provides the best solution.30 While in both the historical interpretation and the textualist interpretation it is necessary to look at case law around the time the statute was drafted, the outcomes are different. Using this approach, the “article of manufacture” would be a man-made tangible item with a unitary structure complete in itself for use or sale, and does not also qualify as a “machine” or “composition of matter.”31 While Apple does not separate its shell from the inside of the phone, Burstein argues that this definition of “article of manufacture” is nonetheless sufficient. The question is not whether the parties manufacture the item to which the design is applied separately from the internal workings of the phone, but rather if anyone does, be it directly to consumers or further up the production chain.32 By considering the shell of the iPhone a separate component, the answer to this question “would result in more defensible damages awards that would more accurately reflect the designer’s actual contribution without providing a windfall to most design patentees” by excluding from the consideration of damages the inner machine that is not covered by the design patent.33
Since 1980, applicants for design patents have been allowed to claim that their design is “something less than an entire configuration or surface ornamentation design” often by the use of broken lines in the patent drawing to disclaim certain portions of a product’s design.34 This is typically done to obtain a broader scope of protection, by being able to claim infringement if the design is included on a larger item.35 While the patent bar has been moving toward design patents disclaiming certain portions of a product’s design, Burstein argues that her historical interpretation would move away from potentially overbroad claims. Instead, her interpretation would eliminate having to determine a test for what constitutes each component of an item on a case-by-case basis, and allow an “objective predictable benchmark” to determine whether or not an item qualifies using a minimum amount of evidence in court.36
The judicial understanding of “article of manufacture” has long included the separation of components as described by Burstein. As early as 1915, the Second Circuit, in a pair of cases known as the Piano Cases, determined that the outer ornamental design for the body of a piano was the relevant “article of manufacture” to be used to calculate profits.37 While the Second Circuit acknowledged there was not a “separate market” for the case apart from the actual mechanism of the piano, it found the piano case was a distinct “article of manufacture” because the patentee’s innovation did not extend to the actual mechanism of the piano, as it had a different function.38 The Second Circuit’s determination of an article of manufacture shows that even as early as 1915, courts were already considering separate components of more complicated items. This outcome is analogous to separating the outer case of the iPhone from the inner machine.
The Multi-Factor, Case Specific Approach
The Many Components of Smart Devices
Due to the ever-changing nature of hardware and software technology, a multi-factor, case specific approach is the most appropriate way to determine the “article of manufacture.” This approach was proposed by the United States as amicus curiae.39 In its brief, the government recommended the Supreme Court remand the case because Samsung relied primarily on testimony that Apple’s design patents extended “only to aspects of the phones’ physical appearance” as opposed to the entire design.40 While also observing that phones contain components unrelated to the designs, such as the internal technology, Samsung failed to consider other factors “such as the extent to which users or sellers can physically separate the relevant components from the other parts of the phones, the manner in which the components were manufactured, and the extent to which the designs effectively determined the entire appearance of the phones.”41 These are all important factors to be considered. The inner functional technology, especially, is drastically different from the outer design. According to Apple’s website, to create Apple products including the iPhone, iPad, Mac and Apple Watch, the company works with more than nine thousand suppliers in all 50 states.42 The massive scale of manufacturing in today’s globalized economy is beyond what could have been envisioned in the 19th century. Therefore, neither the historical interpretation nor the textualist approach is wholly appropriate now.
While a more unitary approach may be the better approach, as a multi-factor test could “significantly increase the cost and complexity of design patent litigation.”43 Lower courts have considered the growing number of issues that would need to be addressed, including who has the burden of proof to determine the article of manufacture, and what specific factors should be used on a case-by-case basis.44 Nonetheless, just as the complexity of litigation would increase under this approach, so too will the complexity of technology. It is fitting that a field that involves thousands of people working on the hardware, software, design, and marketing that there will be an increase in a number of issues, such as trade dress, trademarks, patents and more. While more resources will need to be used to determine such legal issues, it is a necessary consequence of the progress of technology.
Preventing Unjust Enrichment and Encouraging Innovation in the Tech Industry
The multi-factor, case-specific approach is the most fitting approach for policy reasons. It will help prevent unjust enrichment and thereby encourage innovation in the tech industry. Currently, it is established that the jury determines whether a design patent has been infringed.45 Gorham’s ordinary observer test is too broad to determine infringement. It is not fair for a party to pay damages for the full product for partial infringement.46 Just as it would be ludicrous for an iPhone to be compared to a similar looking but empty plastic shell, it is unfair for a party to have to calculate damages by considering the entire device, especially if one product’s software is either completely different or inferior to another’s.47
An argument could be made that if the “article of manufacture” refers to an entire product sold, it could deter infringement in the future. Especially with smart technology, the stakes are high if infringement is found. If the entire profit of the product sold is awarded, this “would result in grossly excessive and essentially arbitrary awards.”48 However, if a device such as an iPhone is not sold in different components, the damages may nonetheless be best reflected by treating the entire product as the relevant article. However, while this definition could deter infringement, it could also deter innovation. If cases show that such unjust enrichment is possible in courts, product manufacturers will see reduced incentives to improve the internals of a marketable device which may be exposed to design patent litigation. Future improved iterations of the same design could result in even larger damage awards.
Courts should adopt the multi-factor, case-specific approach proposed by the U.S. government in its amicus curiae brief in Samsung v. Apple. While both the textualist approach and the historical interpretation may be more cost-effective by adding certainty in determining what constitutes an “article of manufacture,” neither interpretation is appropriate considering the exponential growth of technology. Calculating damages stemming from a design patent by considering the entire product would be unjust enrichment, as there are many different components and countless manufacturers that go into one device when considering hardware, software and design. In order to encourage innovation and prevent unjust enrichment, a multi-factor approach should be used on a case-by-case basis to ensure the fairest outcome in a rapidly changing industry.
GLTR Staff Member; Georgetown University Law Center, J.D. expected 2019; University of British Columbia, B.A., 2014. ©2018, Rachel Johns.