The U.S. Supreme Court unanimously ruled in favor of Samsung Electronics on Tuesday in its titanic patent dispute with Apple Inc. over design features copied from Apple iPhones.
Justice Sonia Sotomayor, writing for a unanimous court, said the damages Samsung should pay Apple for infringement need not be based on the profits from the entire phone but rather can be keyed to the value of the copied components.
The terse nine-page decision appears to put an end to the $399 million awarded to Apple for Samsung’s infringement of Apple’s distinctive rounded corners and user interface, which was based on Samsung’s total profits made from the sales of infringing phones. The justices sent the case back to the U.S. Court of Appeals for the Federal Circuit to decide the proper remedy.
Section 289 of the Patent Act says it is illegal to manufacture or sell an “article of manufacture” that infringes on a patented design, and says patent infringers “shall be liable to the owner to the extent of his total profit.”
Sotomayor wrote that the phrase “article of manufacture” encompasses both the entire product and a component of a product. As a result, she said the Federal Circuit’s opinion pegging damages to the entire product “cannot be squared” with the words of the patent statute.
The decision is a win for Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan, who represented Samsung and went up against former U.S. Solicitor General Seth Waxman of Wilmer Cutler Pickering Hale and Dorr.
In her brief before the court, Sullivan said the Federal Circuit’s analysis no longer makes sense and would have “disastrous practical consequences.” She used an example: “Under the Federal Circuit’s rule, an infringer of a patented cup-holder design must pay its entire profits on a car.”
During oral argument in October, justices seemed divided over the proper test, though most seemed to agree with Sullivan. Justice Stephen Breyer said at one point, “A Rolls-Royce thing on the hood? No, no, no. You don’t get all the profit from the car.”