Apple vs. Samsung – US Supreme Court Decision 6th December 2016- Why this matters if you file US Designs

This week, the Supreme Court issued a decision in the Apple vs. Samsung matter which may change the way we effectively register designs in the USA; and specifically, may change the thought process for EU/UK design applicants filing in the USA and vice versa.

Briefly, Apple sued Samsung for infringement of their design and utility patents and, having decided in Apple’s favour, the lower court went on to calculate damages on a “total profits” basis. This means that the damages were calculated to represent Samsung’s total profit from the sales of smartphones that were found to be infringing, even though the infringed design was only a (smaller) component of the end product. The initial award totalled approximately $399million.

Samsung appealed to the Supreme Court which reversed the decision, unanimously deciding that the relevant ‘article of manufacture’ for arriving at a damages award need not be the end product sold to consumers, but may only be a component of that product. The Supreme Court has left the determination as to whether the ‘article of manufacture’ in this case is the smartphone or a specific smartphone component to which it is applied, so the full effect of this decision may not be known for some time. The designs in question are protected in respect of a small part of the end product, and if that part can be considered to be an article of manufacture in its own right, then it is thought that Apple’s award of damages may be significantly reduced.

More generally, however, the immediate effect is that a US design patent owner can no longer automatically expect an award of “total profits” for the end product sold to consumers as a result of successful litigation, but will instead have to prove that they are entitled to such an award. Conversely, of course, the decision also gives defendants in such litigation the ammunition to reduce the size of a design patent award.

So, what does this mean in real terms? For the design registration process in the European Community and the UK, one or more representations of the design, applied to an article, must be provided. Where the “design” (i.e. the part that the applicant really wants to protect) is included in, or applied to, a smaller part of that article, it has long been common practice to “disclaim” the other parts of the article in the application (e.g. by using dotted lines), with the net result that the design registration only covers the design itself. This is commonly understood, in many cases, to provide the broadest protection available for the design. This has also been common practice for US design patent applications, and it is not unusual for the owner of a Community or UK registered design to use the same (or very similar) representations, including these “disclaimers” in a corresponding US design patent application, and vice versa, to achieve a similar scope of protection.

In view of the Supreme Court’s decision, the advice in this regard may change quite significantly. Indeed, early indications are that the advice will now be to file US design patent application covering an end product (without disclaiming any part of it), even if only one part of it is, or includes, the truly “ornamental feature”. This is because, if infringement of the US design patent is subsequently proved, the damages would be calculated on the basis of the article of manufacture covered by the right (i.e. the end product as sold to the consumer) and would, therefore, be much higher than if only a small component of the end product is claimed and that component is determined to be an ‘article of manufacture’ in its own right. There is a further thought that if the US design patent is limited to a small part or component of the end product, competitors might be more apt to copy that small part or component, knowing that any consequential award of damages would potentially be so small as to render it worthless for the patentee to pursue it through the courts.

The relatively simple, largely administrative nature of the design application processes in both the EU and the US masks the complex underlying legal framework that needs to be borne in mind to ensure that right owners are protecting their designs adequately. This decision certainly highlights that and introduces another legal element that needs to be considered from the outset.

So, in summary, rather than simply filing design applications of similar scope in the US and in the European Community or UK, further consideration will now need to be given to:

a) whether or not the scope of a US design patent application directed to the whole article needs to be broadened by disclaimer for filing a corresponding EU/UK application, to secure the broadest protection available; and
b) whether or not the scope of an EU/UK design registration including any disclaimers needs to be “narrowed” to include the whole article (or end product) for filing a corresponding US application, to preserve the owner’s right to claim damages on the basis of “total profits” in the event of successful litigation. Of course, in this case, additional US design patent applications can be filed to protect individual component parts of the end product as well, if this is deemed appropriate.

As ever, it is very important to get expert legal advice in order to maximise the value of your design filings and to minimise the chances that you end up disappointed. Please contact Wynne-Jones IP for expert advice on designs, design patents or any other area of IP.