Apple and Samsung settle design patent lawsuit; case significantly changes awards in future lawsuits.
The seven-year litigation between Apple and Samsung over the infringement of design patents coving smart phones is now over. Samsung took their appeal to the U.S. Supreme Court on the trial court's holding of infringement of three design patents: D593,087 (rectangular front face with rounded corners), D604,305 (arrangement of icons), and D618,677 (rectangular front face with rounded corners and bezel).
The U.S. Supreme Court held infringement of the design patents did occur but the language used to determine monetary damages, i.e., "total profit made on that article of manufacture," did not necessarily mean the entire phone but, instead, could refer to a component of a phone. Samsung, having already paid Apple $399 million of the $539 million jury award, settled the case.
This case has significantly changed the calculation of damages in design patent litigation. Instead of basing damages on the finished and most expensive article, future courts can limit the award to the "most relevant" piece of the infringed product. For example, the profit associated with the phone's outer case. This change in the interpretation of the language of §289 will reduce the attractiveness of the future use of design patent litigation.
Surprisingly strong number of filings in the Eastern District of Texas.
We mentioned last May that the U.S. Supreme Court's decision on venue severely limits where patent holders can bring their patent lawsuits. Previous interpretation of venue statues allowed patent holders to file in patent-friendly courts, such as the Eastern District of Texas, based on the availability of allegedly infringing product from websites viewable in the jurisdiction. Current law limits the location of patent infringement lawsuits to districts within states where the infringing defendant is incorporated, or in districts where there has been an act of infringement and the defendant has a regular and established place of business.
Surprisingly, an analysis by Professor Paul Janicke shows 14% of recent patent infringement cases are still being filed in the Eastern District. Although this percentage is less than half the number of filings before the Supreme Court decision, it still places the district second only to Delaware in new filings.
Professor Janicke surmises that "plaintiffs are choosing local businesses as their sole defendants, where they can easily satisfy the regular-and-established-place-of-business option, or even the state-of-incorporation option, and hoping to draw in the big-fry companies as protectors of their customers."
U. S. Supreme Court severely limits where patent holders can sue infringers.
Having the ability to choose were to bring an infringement lawsuit can provide a significant advantage to patent holders. It's a fact that plaintiffs are more likely to win their lawsuit and receive a larger award in certain jurisdictions. Unfortunately for plaintiffs, the Supreme Court just decided to more narrowly define where a patent holder can sue a potential infringer.
Patent holders could previously argue in the patent-friendly jurisdiction of East Texas that it was proper to sue any company selling allegedly infringing products through a website viewable in the jurisdiction. Consequently, in 2014 the small town of Marshall Texas (population 24,000) hosted more patent lawsuits than the entire state of Delaware.
The Supreme Court decision now limits the location of patent infringement lawsuits to districts within states where the infringing defendant is incorporated, or in districts where there has been an act of infringement and the defendant has a regular and established place of business. This decision significantly reduces the locations where patent holders can sue potential infringers.
Case returns to trial court after U.S. Supreme Court decision on $399M design patent damage award.
Last March the U.S. Supreme Court agreed to review Apple v. Samsung, a design patent dispute that resulted in a $399M award against Samsung. The lower court awarded the damages for the infringement of three design patents: D593,087 (rectangular front face with rounded corners), D604,305 (arrangement of icons), and D618,677 (rectangular front face with rounded corners and bezel).
The Federal Circuit rejected Samsung’s argument that the award should be reduced because the relevant articles of manufacture were the front face or screen rather than the entire smartphone. The appellate court stated that since the components of Samsung’s smartphones were not sold separately to consumers they were not distinct articles of manufacture.
The US Supreme Court decided last December that the calculation of damages arising from the infringement of a design patent should use a two step analysis:
“identify the ‘article of manufacture’ to which the infringed design has been applied;” and
“calculate the infringer’s total profit made on that article of manufacture.”
(Samsung, 137 S. Ct. at 434.)
The Court limited its decision to the issue of “whether, in the case of a multi-component product, the relevant ‘article of manufacture’ must always be the end product sold to the consumer or whether it can also be a component of that product.” Id.
The Court used a simple analysis that started with defining an article of manufacture. Quoting the dictionary definition that an “article” is “a particular thing” and “manufacture” is “the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man,” the Court reasoned that the term article of manufacture was broad enough to encompass both a product sold to a consumer as well as a component of that product. Thus, the decision below "reading 'article of manufacture' in 35 U.S.C. 289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase." Id.
Upon reversal and remand, the Federal Circuit noted that both parties disputed the jury instructions in light of the decision above. Therefore the trial court was given the task to create a test for identifying the relevant article of manufacture for purposes of §289 and apply it to the facts of the case.
It appears likely that Samsung will win a reduction of damages if the Court for the Northern District of California decides the “article of manufacture” in the §289 damages inquiry is less than the entire phone.
The University of California has failed in their attempt to block the Broad Institute of MIT from patenting the use of CRISPR technology in eukaryotic cells. Although UC pioneered the use of the CRISPR-Cas9 system to edit gene sequences in prokaryotic cells and in vitro, the Patent Trial and Appeal Board (PTAB) found no expectation of success in eukaryotic cells. Therefore both parties are now able to receive patents in different aspects of the technology. The decision of the PTAB is available online.
The USPTO published a notice in the Federal Register today proposing increases to patent fees. The last adjustment of the patent fee structure was in January of 2013. An article published today in the USPTO blog explains that it is targeting a 5% increase in revenue.
The notice states the increase is necessary to "continue funding patent operations, enhance patent quality, and continue to work toward patent pendency goals, strengthen the Office’s information technology (IT) capability and infrastructure, and achieve operating reserve targets." The Office states that the cost to applicants will be moderate but the benefits will be significant. More information of the costs and benefits is posted on the USPTO fee setting page.
If you would like to make a comment on the fee increase, you may send an email to firstname.lastname@example.org. Comments must be received on or before December 2, 2016.
Today the Supreme Court held that the Federal Circuit had erred in raising the bar in the award of enhanced damages. Patent holders can once again receive up to an additional three times the amount found or assessed for infringement based on evidence entered using the preponderance of the evidence standard. Giving discretion back to the trial court ensures that those infringers who knew they were infringing a patent will be financially punished and not just forced to pay a reasonable royalty after being caught.
Legal researchers have documented a spike in 35 U.S.C. §101 subject matter eligibility rejections of personalized medicine patent applications. Subject matter eligibility rejections are made by patent examiners when an application attempts to claim laws of nature, natural phenomena, and abstract ideas. Rejections of this type have become more frequent after the Supreme Court’s decisions in Mayo v. Prometheus, and Association for Molecular Pathology v. Myriad Genetics, leading some to say diagnostic tests are no longer patent eligible.
This opinion is supported by a recent analysis of office actions involving patent applications directed to the diagnosis or treatment of a specific disease. The figure below, adapted from the survey, shows a significant increase in subject matter eligibility rejections between August 2007 and March 2016.
Medical breakthroughs in personalized medicine, e.g., diagnostic tests, hinge on the discovery of a relationship between specific markers and disease. Post-Mayo, examiners are much more likely to treat the discovery of a relationship between specific markers and disease as a natural law and therefore ineligible for patent protection.
U.S. Supreme Court agrees to review $399 million design patent damage award on ornamental features of phones.
Design patents protect the ornamental design of an item, for example a rug or wallpaper. More recently, design patents have been used to protect the look and feel of computer-related products. For example, Apple Inc. received a design patent for the "slide to unlock" gesture.
Because design patents historically protected ornamental designs on simple items, the award of damages defined in 35 U.S.C. 289 does not translate well to complex items. The statute makes the infringer of a design patent "liable to the owner to the extent of his total profit." Use of the "total profit" rule makes the assertion of design patents attractive but has recently resulted in awards that seem excessive.
Apple Inc. sued Samsung Electronics Co. Ltd., for infringement of three mobile phone design patents: D593,087 (rectangular front face with rounded corners), D604,305 (arrangement of icons), and D618,677 (rectangular front face with rounded corners and bezel). The U.S. Federal Circuit jury awarded Samsung’s entire profits, $399 million, from the sale of phones that infringed the ornamental designs in the patents.
Samsung Electronics Co. Ltd. petitioned the U.S. Supreme Court to review the design patent damage award, claiming the award does not reflect the value that the ornamental design contributes to the device. The U.S. Supreme Court has agreed to review the issue in the 2016 term.
Design patents play an important role in protecting the look and feel of computer-related products. However, the "total profit" rule could be used abusively. With very little investment, design patents could be acquired and asserted against popular consumer products. Multiple parties could assert their design patents, forcing manufacturers to pay their "total profit" from a product potentially many times in multiple courtrooms.
Background materials on the case are available online.
Akamai alleged infringement of a patent that claims a method of delivering electronic data using a content delivery network (CDN). Limelight, a rival CDN, avoided performing certain steps in the Akamai patent by requiring their customers to perform those steps.
The Court found Limelight liable for patent infringement because, in part, it specified the manner and timing of the data exchange and customers could only avail themselves of the CDN service upon their performance of the remaining method steps. For liability under direct infringement, an entity can be held responsible for the performance of method steps: (1) where that entity directs or controls others’ performance or (2) where the actors form a joint enterprise. The new interpretation of "control" has now expanded in scope:
liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance
APIs typically specify the manner and timing of exchanged data and generally users can only avail themselves of a service if they properly prepare their data consistent with API documentation. Would requiring the use of an API trigger infringement when the combination of acts performed by both parties constitute all steps of a patent claim?
In Limelight, $45 million dollars was awarded to the patent holder when the lower court combined the acts of Limelight customers with those of Limelight to find infringement of U.S. Patent 6,108,703.
When deciding if there is risk of infringement, remember to consider the actions you require of your customers as well as those your company performs.