As is common knowledge in the patent world, this past May, the Federal Circuit upheld a Northern District of California jury verdict in favor of Apple, against Samsung in Apple Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. 2015) with relation to Apple’s design and utility patent claims. This was a massive victory for Apple, and Samsung was ultimately required to pay an award of approximately half a billion dollars. Apple’s design patent claims figured heavily in the award for several reasons. Firstly, Apple’s claims were to the iconic iPhone front face and and to certain ornamental features of the display screen. These features (the jury determined) are in a large volume of Samsung products. Secondly, 35 U.S.C. § 289, the section of the patent code relating to design patent damages specifically notes that no apportionment of profits by features infringed may be made in determining damages. Apple was consequently entitled to the entire profit from every Samsung product sold that included the infringing features.
Much of the news and commentary surrounding the upholding of this verdict has billed the ruling as a sure-fire sign that design patent lawsuits and design patents will now be highly profitable enterprises, despite the fact that they have been largely left by the wayside until now. Indeed, in many regards, design patents seem like a good investment if their payout is more likely. As noted above, a verdict of infringement comes without apportionment, meaning the plaintiff takes all of the profits associated with products containing infringing features. Design patents are much less expensive to file than utility patents, and the recent US implementation of the Hague Agreement concerning industrial designs may mean easier, and less expensive, international filing through the USPTO.

However, more needs to be made out of the likelihood that this ruling is an anomaly, and other payouts are unlikely. The circumstances of the ruling are singular, between two huge tech giants with a defendant that is capable of paying a massive verdict. Very few other companies would even come close to approaching the sales volume that makes the award appear so shockingly large. The dispute related to a very general design that ended up being in some ways an industry standard, and courts may not be as ready to replicate such a verdict in the future with a little time to reflect. Further, other developments like the US implementation of the Hague Agreement might not be as advantageous as they first sound. The Hague Agreement on industrial designs is still not signed by Canada, Mexico, Russia, Brazil, China, India, and Australia, and so is not truly a worldwide filing. Additionally, different substantive examination requirements apply depending on the countries designated at filing, driving up filing costs.

Undoubtedly, filings of both lawsuits and design patents will spike in the wake of this verdict, but potential litigants, patentees, and patent lawyers would do well to take a second look at the likely meaning of the circumstances and the soundness of design patents as an investment.

Dan Ward

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