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IP Alert: Federal Circuit Partially Affirms Apple’s Smartphone Victory Over Samsung, Highlighting Importance of Design Patents

May 29, 2015

In 2012, in Apple Inc, v. Samsung Electronics Co., LTD., et al., Apple scored a significant trial victory against rival Samsung when a jury awarded over $1 billion in damages for infringement of several forms of intellectual property relating to smartphones. Specifically, the jury found that Samsung infringed design and utility patents owned by Apple, as well as the trade dress associated with Apple’s iPhone. The damages amount was later subject to partial retrial, resulting in a final award of $930 million. Not surprisingly, Samsung attacked the verdict on multiple grounds. When these attacks were unsuccessful, Samsung appealed.

The U.S. Court of Appeals for the Federal Circuit issued its opinion on appeal last week. In its opinion, the court upheld Apple’s favorable design and utility patent infringement judgment, but reversed on Apple’s trade dress claims. Because the $930 million award had included damages for both patent and trade dress infringement, the court remanded the case for entry of a final judgment to exclude the portion of the damages attributed to the trade dress claims. This closely watched decision involves ubiquitous consumer products, and is noteworthy for this reason alone. But the decision is also significant for its legal holdings. More specifically, the court highlighted the significance of design patent protection and the difficulty of establishing trade dress infringement, and it also clarified the scope of damages that may be obtained for design patent infringement. 

At trial, Apple asserted infringement of both registered and unregistered trade dress, prevailing on both grounds. On appeal, the Federal Circuit observed that it was bound by precedent of the Court of Appeals for the Ninth Circuit. Under Ninth Circuit law, the Federal Circuit observed that trade dress generally serves to identify the source of a product, and it consists of the totality of elements in which a product or service is packaged or presented. But trade dress does not extend to elements of a product’s configuration that serve a functional purpose. Guided by an earlier Supreme Court case, the court held, “In general terms, a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” Also, the court observed that under Ninth Circuit precedent, “[a] product feature need only have some utilitarian advantage to be considered functional.”

Apple claimed that a combination of elements of its iPhone constituted protectable (albeit unregistered) trade dress. These elements included features such as the rectangular shape with evenly rounded corners, black borders above and below the display screen, and a matrix of colorful square icons with evenly rounded corners, etc. Samsung challenged these elements on the grounds that they were functional, and the Federal Circuit agreed. 

The court first held that that because the asserted trade dress was not registered to Apple on the federal principal trademark register, the burden of proof fell on Apple to establish that the asserted trade dress was not functional. The court observed that one of Apple’s executives had testified that the theme for the design of the iPhone was intended to be “beautiful and simple and easy to use.” As such, the court determined that each element of the alleged trade dress served to promote the usability of the iPhone, even if also contributing to its beauty. The court was also impressed with evidence introduced by Samsung to show that each aspect of the asserted trade dress promoted usability of the device (e.g., the rounded corners promoted “pocketability”).

Apple fared no better with an aspect of its trade dress that it had federally registered as a trademark. The registration claims the details of the 16 icons on the iPhone’s home screen framed by a rounded-rectangular shape with silver edges and a black background. The federal registration of this design provided Apple the advantage of a legal presumption that the registered trade dress is not functional. Under the law, however, the registration “loses its significance” when the accused infringer provides evidence of functionality. The Federal Circuit found that the evidence of record indisputably established that the icons, whether considered individually or as a collection, promote usability and were thus functional. For example, Apple’s user interface expert testified that “the whole point of an icon on a smartphone is to communicate to the consumer using that product, that if they hit that icon, certain functionality will occur on the phone.” Apple failed to explain how the combination of icons negated the usability aspects of each icon individually, and otherwise failed to show substantial evidence in the record to support the jury’s contrary finding. 

Apple fared much better with its claim for design patent infringement. The jury found that Samsung infringed three design patents covering design elements on the front face of a smartphone, its graphical user interface, and the peripheral bezel. Design patents protect an “ornamental design” claimed in the patent through a series of drawings. The scope of a design patent must be construed by the district court to identify nonfunctional aspects of the design.

Specifically, Samsung argued that the district court’s construction failed to exclude the functional aspects of the design patents, and that any similarity in the design of the accused phones was limited to functional elements that should have been excluded. Samsung further argued that the district court’s claim construction “should have excluded elements that are ‘dictated by their functional purpose,’ or cover the ‘structural . . . aspects of the article’” (citation omitted). The Federal Circuit rejected this argument. Under design patent law, the functional components of a design need not be entirely excluded, but rather “it is the non-functional, design aspects that are pertinent to determinations of infringement” even where portions of a design may be functional. The court affirmed district court’s claim construction because it referred only to “the ornamental design” as shown in the patent figures. 

This aspect of the opinion highlights an important difference between trade dress and design patent protection as applied to product configurations. While functional elements are not protectable as trade dress, ornamental aspects of otherwise functional components can contribute to the scope of protection of a design patent. As the outcome here demonstrates, design patent protection may provide more effective protection of product configuration in some circumstances.  

The Federal Circuit’s review of the damages assessed for the design patent infringement is also notable. The damages statute for design patents imposes liability on an infringer “to the extent of his total profit.” 35 U.S.C. § 289. Samsung argued that this provision applies only to the portion of the profit attributable to the infringement, and challenged the jury instruction as allowing an award of total profit absent evidence that the ornamental features caused any sales or profits of Samsung phones. But Samsung failed to reconcile this argument with the legislative history of the damages statute, which demonstrated that any requirement to apportion damages to the profit resulting from the design had been eliminated long ago. Samsung also asserted that the phrase “article of manufacture” in section 289 requires limiting the recovery to damages attributable to the infringing aspects of the product and not the whole product. The Federal Circuit also disagreed with this argument, and concluded that there was no legal error in the jury instruction for design patent damages.

Samsung challenged the jury’s award of lost profit damages for utility patent infringement on the grounds that Samsung offered competing, non-infringing designs as an acceptable substitute. However, the Federal Circuit held that the mere existence of non-infringing phones was not a reason to reject the jury’s implicit finding that the phones were not acceptable substitutes for the infringing models. The Federal Circuit also rejected Samsung’s specific complaints regarding the expert testimony submitted by Apple in support of the reasonable royalty portion of the damages verdict.

Finally, the court rejected Samsung’s various other challenges to Apple’s patent case. Because a portion of the damages award had been attributed to design patent infringement, the court remanded for immediate entry of final judgment on all damages awards not predicated on Apple’s trade dress claims.

The Apple v. Samsung decision is notable for the crucial role of design patents in helping secure a substantial portion of Apple’s nine-figure trial victory. Design patent protection not only succeeded where trade dress claims failed, it allowed Apple to recover Samsung’s total profit on the infringing sales. The Federal Circuit essentially considered this to be statutorily dictated, even without evidence that the protected designs drove the infringing sales and profits. This is in contrast to the comprehensive marketplace analysis required of a utility patent owner to prove entitlement to its own profits lost as a result of utility patent infringement. 

Recent Federal Circuit jurisprudence on utility patent damages also requires reasonable royalty damages theories to be supported by rigorous analysis apportioning the royalty rate and royalty base to reflect the value of the infringing elements of a multi-feature product. According to this decision, a design patent owner need not apportion its damages to the infringing elements of an ornamental product design. Therefore, those interested in protecting aesthetic aspects of a product configuration should give serious consideration to design patents, which may offer significant advantages over other forms of intellectual property protection.  

For more information on this case, please contact Fitch Even partner Timothy P. Maloney, author of this alert.


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