Design Patent Damages

Design patent damages are governed by a separate statutory provision, 35 U.S.C. § 289, which provides: 'Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250...' TOTAL PROFIT RULE: unlike utility patents (where damages = reasonable royalty or lost profits), design patents allow recovery of the INFRINGER'S TOTAL PROFIT from the article of manufacture — not just the patent owner's lost royalties or lost sales; DISGORGEMENT vs. COMPENSATION: § 289 is a disgorgement remedy — the infringer must give up profits it made, regardless of whether the patent owner suffered equal harm; Apple recovered ~$1 billion in design patent damages from Samsung at trial on this theory; § 284 ALTERNATIVE: design patent holders may alternatively seek damages under § 284 (reasonable royalty or lost profits) if they are larger than § 289 total profits — whichever is greater; ARTICLE OF MANUFACTURE: the central issue after Samsung v. Apple (S.Ct. 2016) is identifying the correct 'article of manufacture' — the profits from which are disgorged; if the article is the whole smartphone, profits are enormous; if the article is a smaller component (the front face), profits are much smaller.

Samsung Electronics Co. v. Apple Inc., 580 U.S. 53 (2016) is the Supreme Court's most recent design patent damages decision: THE ISSUE: Apple's design patents covered the iPhone's front face, bezel, and graphical user interface; a jury awarded Apple $399 million in design patent damages (Samsung's total profits on the entire iPhone); Samsung argued the 'article of manufacture' should be the specific component (the front screen), not the whole phone; SUPREME COURT HOLDING: (1) the 'article of manufacture' in § 289 need not be the end product sold to consumers — it can be a COMPONENT of the end product; (2) the Court rejected Apple's argument that the article is always the whole product; (3) the Court rejected Samsung's argument that the article is always the smallest component to which the design is applied; (4) The Court remanded for the lower courts to develop a test for identifying the article of manufacture; ON REMAND AND SUBSEQUENT PROCEEDINGS: the case went back to district court for retrial on damages with an article-of-manufacture jury instruction; Samsung ultimately paid Apple ~$539 million to settle the damages question; IMPACT: § 289 total profit damages are no longer automatically calculated on the whole product price; courts must identify the relevant article (component or whole product) before calculating profits; this reduced the maximum design patent damages exposure for multi-component products.

After Samsung v. Apple, courts and the USPTO developed a four-factor test for identifying the article of manufacture to which a design patent applies: FOUR FACTORS (from the USPTO Solicitor General's amicus brief in Samsung v. Apple, adopted by many courts): (1) THE SCOPE OF THE DESIGN CLAIM: what article does the design claim specifically identify? A design patent 'for a front face of a phone' points to a component, not the whole phone; a design patent 'for a tablet computer' may encompass the whole device; (2) THE RELATIVE PROMINENCE OF THE DESIGN WITHIN THE WHOLE PRODUCT: is the patented design a major, visually dominant feature of the whole product, or is it a subtle detail on one part? A highly prominent design on the face of a product suggests the whole product is the article; a small design element on one corner suggests a component; (3) WHETHER THE DESIGN IS CONCEPTUALLY DISTINCT FROM THE PRODUCT AS A WHOLE: can the design be considered separately from the overall product? A GUI or screen design is conceptually separable from the device hardware; an integrated outer casing design is not separable; (4) THE PHYSICAL RELATIONSHIP BETWEEN THE PATENTED DESIGN AND THE ARTICLE: is the design embodied in a physically separable component (a screen that can be removed), or is it integrated into the whole product's structure? Physically separable components are more likely to be the 'article' rather than the whole product; JURY INSTRUCTION COMPLEXITY: the four-factor test requires detailed jury instructions; courts have struggled with how to explain this test to juries and how to establish it through expert testimony; both sides typically present design and damages experts on the article-of-manufacture question.

Design and utility patent damages differ significantly in legal theory and practical impact: UTILITY PATENT DAMAGES (§ 284): compensatory damages = lost profits (Panduit four-factor test) OR reasonable royalty (Georgia-Pacific fifteen factors); both are measured by the PATENT OWNER'S harm or entitlement to fair compensation; reasonable royalty is the floor — actual damages can be higher if lost profits are proven; design and utility patent § 284 damages are parallel — same statutory basis, same theories; DESIGN PATENT § 289 DAMAGES: disgorgement of infringer's TOTAL profits from the article of manufacture; NOT limited to the patent owner's harm; no apportionment required (unlike utility patent reasonable royalty after LaserDynamics/VirnetX); 'total profit' means all revenue from the article minus the cost of goods sold (not including general and administrative expenses in the original Apple v. Samsung trial controversy — courts debated whether overhead should be deducted); WHICH IS LARGER?: for successful products, § 289 total profits often EXCEED reasonable royalty damages; for low-margin products, reasonable royalty may exceed total profits; patent holders elect whichever remedy is larger; TREBLE DAMAGES (§ 284): available for willful infringement on both design and utility patents; FRAND/SEP context: design patents are rarely FRAND-committed; utility patents are more likely to be SEP-encumbered; ATTORNEY FEES (§ 285): available for both design and utility cases in exceptional cases; MARKING (§ 287): design patent marking applies; failure to mark limits pre-suit damages.

§ 289 MINIMUM DAMAGES: the statute provides 'but not less than $250' per article of manufacture sold with the infringing design applied; this $250 floor is per infringement — it can accumulate across millions of units to substantial damages even without proving total profits; PROVING TOTAL PROFITS: the plaintiff bears the burden of proving the infringer's revenues from the article of manufacture; the defendant then has the burden of proving deductions (cost of goods sold, overhead — debated post-Samsung v. Apple); REVENUE vs. PROFIT: (1) gross revenue from the article of manufacture; (2) less: cost of goods sold (materials, direct manufacturing costs — clearly deductible); (3) less: overhead/G&A expenses — courts debated whether overhead allocated to the infringing product can be deducted; Apple v. Samsung original trial: Samsung wanted to deduct $401 million in overhead; district court excluded this deduction initially; (4) 'total profit' = net profit attributable to the article, not total company profits; CONCURRENT UTILITY PATENT DAMAGES: if both design and utility patents are infringed for the same product, the patent owner CAN recover under both — but courts apply 35 U.S.C. § 289's bar on 'double recovery' for the same infringement under both § 284 and § 289 separately; the patent owner recovers the greater of the two remedies, not both separately stacked; ELECTION OF REMEDIES: must make an election before final judgment — cannot wait to see which measure is larger and then claim both.