In a unanimous decision on Tuesday, the U.S. Supreme Court threw out a lower court’s US$399 million judgment against Samsung for violating patents involving Apple’s iPhone. The decision overturns a victory that Apple had won in the Washington, D.C.-based U.S. Federal Circuit Court of Appeals.
The case will now go back to that court for any further proceedings, including determining what, if any, lower penalties Samsung may have to pay Apple. Tech giants such as Google, Facebook and Hewlett Packard Enterprise had urged the Supreme Court to take up Samsung’s appeal of its patent loss to Apple, warning that the outcome against Samsung “will lead to absurd results and have a devastating impact on companies” because of the implications of how patent law is applied to technology products such as smartphones.
It was the first time the Supreme Court made a ruling on a product design since 1885, when it heard a case involving carpet designs. Case Collard, an intellectual property lawyer in Denver with the law firm Dorsey & Whitney, said the 8-0 court opinion, written by Justice Sonia Sotomayor, may end up being historical in its reach.
“The Supreme Court’s decision brings damages law for design patents into accord with the damages law for utility patents,” Collard said. “No longer can a patent holder get all of the profits from the sales of a product infringing a design patent. Instead, they may recover the profits attributable to the infringing feature.”
Sotomayor wrote that the lower court went too far in its ruling when it declared Samsung had to pay fines based on the entire iPhone, instead of just the components that may have been copied when Samsung was designing its smartphones. One of the central arguments in the case was the use of the term “article of manufacture,” and how it applied to the parts used to make a smartphone.
The lower court had ruled that the “article of manufacture” was the entire phone in question, and, thus, based Samsung’s penalties on the profits it made from the sale of its phones. But Sotomayor said such a description was applied too broadly in this case and that the “article” could be just one part of the phone.
“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,” Sotomayor wrote in her 11-page opinion.