Amicus Curiae Brief — Samsung Elecs. Co. v. Apple Inc., 136 S. Ct. 1453 (2016) (No. 15-777)

Bees

FILED

JUN 8 ~ Zug

No, 15-777 OPER Gr We sn |

3n the Supreme Court of the Bnited States

SAMSUNG ELECTRONICS Co., LTD., ET AL., PETITIONERS

Vv.

APPLE INC.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE INTERNET ASSOCIATION;

THE SOFTWARE & INFORMATION INDUSTRY

ASSOCIATION; DELL INC.; EBAY INC.; FACEBOOK,

INC; GARMIN INTERNATIONAL, INC.; GOOGLE INC;

HEWLETT PACKARD ENTERPRISE CO.; HP INC.;

LENOVO USA; MOTOROLA MOBILITY LLC;

NEWEGG INC.; PEGASYSTEMS INC.;

RED HAT, INC. SAS INSTITUTE INC.;

VARIAN MEDICAL SYSTEMS; AND VIZIO, INC.

AS AMICI CURIAE SUPPORTING PETITIONERS

KANNON K. SHANMUGAM

Counsel of Record

DAVID M. KRINSKY

ALLISON B. JONES

WILLIAM T. MARKS

WILLIAMS & CONNOLLY LLP

725 Twelfth Street, N.W.

Washington, DC 20005

(202) 434-5000

kshanmugam@we.com

TABLE OF CONTENTS

Page

IIIT... ss nsssnensensimannnntsteasintenesantsianmeenitinmsheiiiin l

ee 3

I ccrenermenmmmnssmnssssmemmnengmneremnett 6

I. The Federal Circuit’s decision is erroneous and out of

step with modern technology . sgialinteindigatinieatianiintiennes 6

A. Modern technological products are highly complex

and consist of numerous components and software

subsystems ............ seenepeenepremmmnmnminnnenemesnceesse 7

B. The text of Section 289 provides for a rule that

avoids the harsh consequences of the Federal

EE 11

C. The context and legislative history of Section 289

confirm that Congress did not intend for the

relevant ‘article of manufacture’ to be a complex,

Multicomponent GeVICE ...............c-ssesecsseeessseeerssnesneseeees 14

D. The case law interpreting Section 289 further

supports petitioners’ reading icihianendibiienerarceneens 19

Il. Petitioners’ interpretation of Section 289 better serves

the statute’s purpose and the public interest..................... 22

A. A narrow interpretation of ‘article of manufacture’

better serves the purpose of Section 2839 ..................... 22

B. A narrow interpretation of ‘article of manufacture’

better serves the public interest .......................ccscceeeee 24

Se cencectisiarincnenicinninianciermnanmnpimimnmasseianini 29

TABLE OF AUTHORITIES

Cases:

Bergstrom v. Sears, Roebuck & Co.,

496 F. Supp. 476 (D. Min. 1980) ..0............cccccccccceeeeeeeees 19

Bush & Lane Piano Co. v. Becker Bros.,

8 ee 19, 20

(1)

II

Page

Cases—continued:

Bush & Lane Piano Co. v. Becker Bros.,

ee EN SITE cnustcevecusensstsenescsasssserenssesvacese 19, 20

Catalina Lighting, Inc. v. Lamps Plus, Inc.,

296 F.3d 1277 (Fed. Cir. 2002) ............0.0.0.ccscsrereerseseeeeee 19

Commil USA, LLC v. Cisco Systems, Inc.,

a I irerirscinicnincesniiemsencesctenssssensennesccsesnest 28

Cuomo v. Clearing House Ass'n, L.L.C.,

4 | ES 12

Dobson v. Dornan, 118 U.S. 10 (1886)..................0..0000 14, 18

Dobson v. Hartford Carpet Co.,

LL ee 14, 18

eBay Inc. v. Mercexchange, L.L.C.,

| aT 28

Gorham Co. v. White,

81 U.S. (14 Wall.) 611 (1872) .00........ccccccceceeeeseeeeeesenees 12, 13

Hadden, In re, 20 F.2d 275 (D.C. Cir. 1927) ...........0000e0e000 12

Henry Hanger & Display Fixture Corp.

v. Sel-O-Rak Corp., 270 F.2d 636 (5th Cir. 1969) ......... 19

Koehring, In re, 37 F.2d 421 (C.C.P.A. 1980)............c0c0000 17

LaserDynamics, Inc. v. Quanta Computer, Inc.,

ee 23

Rite-Hite Corp. v. Kelley Co.,

66 F.3d 1688 (Fed. Cir. 1906) ..............c0cscecccsrersesssssreeseees 24

Scheidler v. National Organization for Women,

We 12

Schnadig Corp. v. Gaines Manufacturing Co.,

Ee 19

Uniloe USA, Inc. v. Microsoft Corp.,

GB2 F.3d 12902 (Fred. Cir. 2011) ...........ccccceccocecerseserseserevees 23

Untermeyer v. Freund, 58 F’. 205 (2d Cir. 1898) ......... 20, 21

Untermeyer v. Jeannot,

20 F. GOB (C.C.S.D.N.Y. 1884) .0.........cceccecesceceseeserensecenees 21

Young v. Grand Rapids Refrigerator Co.,

= EE SS i erircenncirssemenezemencssetscneumensemmsin 21

Ill

Page

Statutes and rule

ES See Ee Nee 15

i passim

Act of Apr. 10, 1790, § 1, 1 Stat. 109 2000... ceceeeneeee 15

Act of Feb. 21, 1798, § 1, 1 Stat. 318-319.......0 15

Act of Aug. 29, 1842, § 3, 5 Stat. 543-6440 18

Act of Feb. 4, 1887, $1, 24 Stat. B87 0.0.0........cccccccceeseeee 11,14

Act of July 19, 1962, ch. 29, § 289, 66 Stat. 813-814............ 12

EST SC ee ee aR 15

Er ET 16

I Ol 16

TE 2

Miscellaneous:

sais eterntnmareanennmeeee et 15

Adams, Ex parte, 84 Official Gazette of the U.S.

Patent Office 311 (1898) seltenietiatasneabapentidmamaipmrenupecenneces 17

James Bessen, The Evidence Is In: Patent Trolls Do

Hurt Innovation, Harvard Business Review

(Nov. 2014) <goo.gi/XJINWVT > ...........c-ccececeseseerereeseres 28

Braden Cox & Steve DelBianco, Consumer Demand

Drives Innovation and Integration in Desktop

Computing, Ass’n for Competitive Technology

(Jume 2007) <goo.gi/40cATn > ..........cceccececeesensereereeeeneees 11

George Ticknor Curtis, A Treatise on the Law of

Patents for Useful Inventions in the United

States of America (Ast ed. 1849) ..............0cecceeeeeeeees 12, 16

The Different Parts of a Laptop Computer, ZKar\o

Laptop Parts Blog (June 15, 2011)

—ti(wité‘(‘(‘(“‘<é‘él 8

James Donald, Chamber's Etymological Dictionary

of the English Language (1871)...........-.-0-ss0-ssseseeseenees 12

Jason J. Du Mont & Mark D. Janis, The Origins of

American Design Patent Protection,

Bis a i ID ccrececcencnseensesccnsesesessenenecccsscsnsese 18

Federal Trade Commission, The Evolving IP

Marketplace (2011) ...cccccccccccsssssessssosssssssssnssssssssensesesenses 22

Page

Miscellaneous—continued:

Harris, Ex parte, 38 Official Gazette of the U.S.

I ee BR crcctecentcctntentenctssercsnensenssscessncesssese 17

Brian C. Howard, Lex Machina, 2014 Patent

Litigation Year in Review (2015)

Qe O crteriereenecscnteneressemscenssemnessncseneneeecenees 25

H.R. Rep. No. 74, 27th Cong., 2d Sess. (1842) ..............000 18

H.R. Rep. No. 1966, 49th Cong., 2d Sess. (1886) ......... 14, 15

Thomas B. Hudson, A Brief History of the

Development of Design Patent Protection in the

United States, 30 J. Pat. Off. Soc’y 380 (1948).............. 18

Peter Lee & Madhavi Sunder, Design Patents: Law

Without Design, 17 Stan. Tech. L. Rev. 277 (2013) .....26

Giuseppe Macri, Patent Trolls are Already Abusing

the Apple v. Samsung Ruling, InsideSources

(Oct. 1, 2015) <goo.gl/Q5GyGe > ..............cececceeeeseseseseneees 26

David M. Marcus & Shawn K. Leppo, Welcome

Fallout from the Smartphone Wars: Federal

Circuit Embraces Strong Protection of Design

Patents, Metropolitan Corporate Counsel

(July 17, 2015) <goo.g/V4MS1g > ..............c.ceeeseseeeserees 26

Henry Childs Merwin, The Patentability of

Le 16

V. Aslihan Nasir et al., Factors Influencing

Consumers’ Laptop Purchases,

Sixth Global Conference on Business and

Economics (Oct. 15-17, 2006) <goo.gi/nhi90U > ......... 10

National Ass’n of Watch & Clock Manufacturers,

Encyclopedia: Watch Case <goo.g/XN9DbYA > .......... 21

Warren H. Niebling, History of the American

aici isi ssinessiniciniregntabintdnenesnccscccesetens 20

Sal Nuzzo, Florida Entrepreneurs Should Be

Spared Design-Patent Follies: State Viewpoint,

Orlando Sentinel, Oct. 20, 2016, at A13.......................... 25

Office Action in Ex Parte Reexamination (Reexam.

Control No. 90/012,884, U.S.P.T.O. Aug. 5, 2015)........ 27

Page

Miscellaneous—continued:

Abraham Pai, Smart TV: Piece by Piece, Samsung

Tomorrow (Sept. 23, 2011) <goo.gV/5vvYWY >.............. 7

Patent and Trademark Office, U.S. Patent Activity:

Calendar Years 1790 to the Present

ti‘(‘(‘éc é”C*”*C EELS ED 25

R&D Magazine, 2014 Global R&D Funding

Forecast (Dec. 2013) <goo.gV/7LIXBV > .................0000+- 10

Jason Rantanen, Apple v. Samsung: Design Patents

Win, Patently-O (May 18, 2015)

titi‘(“‘(“‘“‘“‘(“‘é‘“‘“‘ CT TE 25

William C. Robinson, The Law of Patents for Useful

I iriiscinnccesninnsesentscenesantadvisemenecssseesess 13, 16

S. Rep. No. 206, 49th Cong., 2d Sess. (1886) ............c000 14

S. Rep. No. 1979, 82d Cong., 2d Sess. (1952)...............0000+ 12

Jonathan Sallet, The Creation of Value: The Value

Circle and Evolving Market Structures,

11 J. on Telecomm. & High Tech. L. 185 (2013)........... ll

Slicing an Apple, The Economist (Aug. 10, 2011)

tid 28

Smith, Ex parte, 81 Official Gazette of the U.S.

Patent Office 969 (1897) ............c.ccccccceseeeerseeseeseeseseneenenes 17

Steck, Ex parte, 98 Official Gazette of the U.S.

Patent, OGiisd TD (IBGE) nnccccccccescesccccssccsccssccssssessesecssescesees 17

Christopher Versace, What Do Consumers Want in

a New Smartphone?, Forbes (Aug. 21, 2013)

ttiCi‘(*tCt*t*«‘r‘r 10

Noah Webster, An American Dictionary of the

English Language (rev. ed. 1841) .............c.0c-0cesee00 12, 14

3n the Supreme Court of the Gnited States

No. 15-777

SAMSUNG ELECTRONICS Co., LTD., ET AL., PETITIONERS

Vv.

APPLE INC.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE INTERNET ASSOCIATION;

THE SOFTWARE & INFORMATION INDUSTRY

ASSOCIATION; DELL INC.; EBAY INC.; FACEBOOK,

INC.; GARMIN INTERNATIONAL, INC.; GOOGLE INC-.;

HEWLETT PACKARD ENTERPRISE CO.; HP INC.;

LENOVO USA; MOTOROLA MOBILITY LLC;

NEWEGG INC.; PEGASYSTEMS INC-.;

RED HAT, INC.; SAS INSTITUTE INC.;

VARIAN MEDICAL SYSTEMS; AND VIZIO, INC.,

AS AMICI CURIAE SUPPORTING PETITIONERS

INTEREST OF AMICI CURIAE

Amici curiae are The Internet Association; The Soft-

ware & Information Industry Association; Dell Inc.;

eBay Inc.; Facebook, Inc.; Garmin International, Inc.;

Google Inc.; Hewlett Packard Enterprise Co.; HP Inc.;

Lenovo USA; Motorola Mobility LLC; Newegg Inc.;

(1)

Pegasystems Inc.; Red Hat, Inc.; SAS Institute Inc.;

Varian Medical Systems; and VIZIO, Inc.”

The Internet Association (LA) is a nonprofit trade or-

ganization that represents the Nation’s leading internet

companies and their global community of users. Its

members include Amazon, Intuit, Netflix, PayPal, Twit-

ter, Yahoo!, and Yelp, as well as some of the amici com-

panies. ILA’s mission is to foster innovation, promote

economic growth, and empower people through the free

and open internet.

The Software & Information Industry Association

(SILA) represents over 700 software companies, data and

analytics firms, information service companies, and digi-

tal publishers in nearly every segment of society, includ-

ing business, education, government, health care, and

consumers—all of whom use design elements in portions

of the products and services that they produce. On be-

half of its members, SIIA has been actively involved in

advocacy efforts targeted at fostering sound innovation

policy by eliminating perverse incentives in the patent

system.

The remaining amici are companies that develop,

manufacture, and sell modern technological products,

including computers, smartphones, operating systems,

* Pursuant to Rule 37.6, amici affirm that no counsel for a party

authored this brief in whole or in part and that no person other than

amici or their counsel have made any monetary contributions in-

tended to fund the preparation or submission of this brief. The par-

ties have consented to the filing of this brief, and copies of their let-

ters of consent are on file with the Clerk’s Office. Counsel for amici

has represented petitioners in other litigation, including litigation

against respondent.

and online platforms, as well as the components, soft-

ware, and services that support them.

This case presents a question of enormous practical

importance to amici: namely, whether 35 U.S.C. 289 im-

poses damages in the amount of the total profit from a

complex, multicomponent product when only some of the

product’s many components in‘vinge a patented design.

In the decision below, the Federal Circuit held that sales

of the entire device form the appropriate basis for the

calculation of total profit. That holding will have signifi-

cant ramifications for amici, which develop, manufacture,

design, and sell complex, multicomponent technological

products, as well as for the technology industry more

generally. Accordingly, amici have a substantial interest

in the question presented here.

SUMMARY OF ARGUMENT

In the decision below, the Federal Circuit upheld a

jury’s award of the entirety of Samsung’s profits on

smartphones that were found to have infringed two Ap-

ple design patents, even though the design patents were

directed only to part of the iPhone’s outer shell and a

single graphical-user-interface screen. Although the de-

sign patents covered only limited portions of those com-

plex electronic devices, the court rejected Samsung’s ar-

gument that damages must be limited to the profits

made from those infringing features. See Pet. App. 27a-

29a. The court instead concluded that the relevant stat-

ute, 35 U.S.C. 289, “explicitly authorizes the award of to-

tal profit from the article of manufacture bearing the pa-

tented design,” and that the entire smartphone was the

relevant “article of manufacture.” Pet. App. 28a-29a.

The court based its conclusions on the fact that the “in-

nards of Samsung’s smartphones were not sold separate-

ly from their shells as distinct articles of manufacture to

ordinary purchasers.” /d. at 29a.

The Federal Circuit’s decision is deeply flawed. If al-

lowed to stand, it will lead to absurd results and have a

devastating impact on companies, including amici, that

spend billions of dollars annually on research and devel-

opment for complex technological products and their

components. As petitioners have explained, the Federal

Circuit’s decision cannot be reconciled with the text, his-

tory, or purpose of Section 289. What is more, the Fed-

eral Circuit’s decision is problematic because it ignores

the reality of modern, multicomponent technological

products. Those complex products, which have become

the norm throughout the consumer electronics industry,

are not purchased primarily for the design of one or

more isolated components.

To the contrary, consumers frequently consider the

purchase of a multicomponent technological product as,

in effect, the purchase of several individual components

based on their functional qualities. For example, cus-

tomers may purchase an iPhone in part because they

prefer the quality of its camera, or because they know

that they can synchronize it with other Apple products,

or because they wish to use certain available software—

not simply because of the design of the iPhone’s rectan-

gular front face with rounded corners. That is why tech-

nology companies apply their research and development

budgets to numerous aspects of a multicomponent prod-

uct, including its hardware, software, and services, and

not just its design.

Section 289 does not compel the adoption of a rule

that ignores these realities. The text of Section 289 itself

contemplates a more sensible approach to calculating

“total profit.” It states that the relevant “article of man-

ufacture” is the one “to which [the infringing] design

* * * has been applied.” 35 U.S.C. 289. Where a sin-

gle component of a complex device infringes a patented

design, the most natural interpretation of that text is

that the component-specific design has been “applied”

only to the specific component, rather than the entire

device.

The history and purpose of Section 289 support that

interpretation. In enacting Section 289 in the nineteenth

century, Congress did not envision application of its rule

to complex modern products that are assembled from a

multitude of individual components, each of which consti-

tutes a distinct “article of manufacture” and many of

which may originate from different manufacturers.

Congress enacted Section 289 in response to decisions of

this Court that awarded nominal damages for the in-

fringement of design patents for carpets, unitary articles

in which the design is inseparable from the article as a

whole. Troubled by that decision, Congress sought to

preserve the right to obtain damages for infringement of

design patents for carpets and similar articles such as

oilcloths and wallpaper. Indeed, at the time Congress

enacted Section 289, a design for a complex, multicom-

ponent device generally would not even have been con-

sidered an “article of manufacture” under the design-

patent statutes.

The foregoing approach is congruent with the exist-

ing case law. Courts interpreting Section 289 focused on

simple products such as ornamental spoons and fireplace

grates—products that are nothing like today’s multi-

component technological products, which distinguish

themselves in the marketplace based on a cornucopia of

different features. To the extent that courts eventually

considered multicomponent “articles of manufacture” in

design-patent cases, those courts recognized the absurd

results that would follow from applying a rigid “total

profit” rule and declined to extend it to that context.

Consistent with the text, history, and purpose of Sec-

tion 289, the better interpretation of “article of manufac-

ture” is one that recognizes that complex, multicompo-

nent technological products typically embody far more

than one “article of manufacture” for purposes of the

“total profit” rule. An award of profits in cases where

only a single component of a complex device infringes a

design patent should be limited to the profit attributable

to the component “to which [the] design * * * has

been applied.” 35 U.S.C. 289.

Finally, such an interpretation would serve the public

interest. As predicted by numerous commentators, the

Federal Circuit’s decision has already prompted so-

called “patent trolls” to threaten design-patent litigation

against high-technology companies like amici. Mean-

while, companies are applying for and obtaining record

numbers of design patents, which are certain to be as-

serted at similarly growing rates. The ensuing litigation

will undermine innovation and the research and devel-

opment efforts of amici and the technology industry

more generally—a particularly troubling development in

light of the spurious quality of many design patents.

Amici therefore respectfully urge the Court to reverse

the decision below.

ARGUMENT

Il. THE FEDERAL CIRCUIT’S DECISION IS ERRONE-

OUS AND OUT OF STEP WITH MODERN TECHNOL-

OGY

Section 289 of Title 35 of the United States Code al-

lows the holder of a design patent to recover “total prof-

it” from any person who, without the patentee’s consent,

“applies the patented design * * * to any article of

manufacture for the purpose of sale,” or “sells or exposes

for sale any article of manufacture to which such design

* * * has been applied.” The question presented here

is what is the relevant “article of manufacture” for de-

termining “total profit”: viz., whether, when one compo-

nent of a complex electronic device infringes a design pa-

tent, the relevant “article of manufacture” is the compo-

nent alone or the entire device.

The better answer is the component bearing the pa-

tented design. The contrary interpretation adopted by

the Federal Circuit cannot be reconciled with the text,

history, or purpose of Section 289. And if it is allowed to

stand, that interpretation will lead to absurd results in

the modern technology industry.

A. Modern Technological Products Are Highly Complex

And Consist Of Numerous Components And Software

Subsystems

Complex, multicomponent products have become the

norm in the modern consumer electronics industry. To

take one example, a “smart television” contains over

2,500 high-technology components. See Abraham Pai,

Smart TV: Piece by Piece, Samsung Tomorrow (Sept. 23,

2011) <goo.g/5vvYWY>. Those components include an

outer casing, speakers, a liquid crystal display, a circuit

board containing 1,200 semiconductors, modules sup-

porting wireless communications, a wall mount, a re-

motely controlled keyboard, a tuner, ports for connecting

to other devices, graphics hardware, an operating sys-

tem, and hundreds of software applications that may run

on tha. system—including applications for games, com-

munications, and news. /bid.

The components of a smart television may be covered

by individual design patents for features such as the cur-

vature of the wall mount, the specific configuration of the

keyboard, the design of the speakers, or even the ap-

pearance of a single icon within an application. Despite

containing numerous components, however, a smart tel-

evision is sold to an ordinary consumer as a single, com-

plete product. Under the Federal Circuit’s reasoning,

the manufacturer or seller of a smart television contain-

ing any single component that infringed any one design

patent could be required to pay in damages its total prof-

it on the entire television, no matter how insignificant the

design of the infringing component was to that profit or

to consumer demand.

Another example is a laptop computer. See The Dif-

ferent Parts of a Laptop Computer, ZKarlo Laptop

Parts Blog (June 15, 2011) <goo.gl/OR6065>. Much like

a smart television, the components of a laptop include an

outer casing, speakers, a liquid crystal display, a circuit

board containing hundreds of semiconductors (including

chips supporting wireless communication), a keyboard, a

trackpad, ports for connecting to other devices, graphics

hardware, an operating system, and hundreds of applica-

tions that may run on that system. [bid.

As with the smart television, the components of a lap-

top computer may also be covered by numerous design

patents for features such as the sleekness of the laptop’s

outer casing, the specific configuration of its keyboard or

trackpad, the design of its speakers, or the display of

drop-down menus in one of the laptop’s many software

applications. Again, despite containing numerous com-

ponents, a laptop is sold to an ordinary consumer as a

single, complete product. And again, under the Federal

Circuit’s interpretation, the manufacturer or seller of a

laptop containing a component that infringed any single

design patent would be required to pay in damages its

total profit on the entire laptop. That is so even if the

design patent at issue concerned a minor component un-

related to consumer demand for the laptop, such as the

appearance of the laptop’s trackpad.

Similar issues arise with respect to software products

and online platforms. A design patent may cover the ap-

pearance of a single feature of a graphical user interface,

such as the appearance of an icon. That feature—which

may be the result of but a few lines out of millions of

computer code—may appear only during a particular use

of the product, on one screen display among hundreds,

and in circumstances that many customers never even

see. But the Federal Circuit’s decision could allow the

owner of the design patent to receive all of the profits

generated by the entire product or platform, even if the

infringing element was minor to the user and even if

thousands of features, implemented across the software,

actually drove the demand generating those profits.

Software covered by a design patent may be part and

parcel of a much larger product, making the award of

total profit even more excessive. For example, some ve-

hicles now feature a digital instrument panel. That sys-

tem, which appears on display screens on the car’s dash-

board, constitutes only a small fraction of the vehicle’s

components. Assuming, however, that even a single

graphic on a single screen of the digital instrument panel

was covered by a design patent, the Federal Circuit’s in-

terpretation would allow the patentee to extract the en-

tire profit on the infringing car. That absurd result flows

directly from the Federal Circuit’s interpretation, even

though consumers may not have bought the car because

they wanted a digital instrument panel and certainly did

not base the decision to buy on the single infringing de-

sign element. See Pet. App. 29a.

As the above examples demonstrate, the Federal

Circuit’s decision is disconnected from the reality of

modern technological products, and it attaches outsized

10

significance to the design of individual components.

Where complex technological products are involved, de-

sign is only one factor that contributes to consumer de-

mand; function is often far more important. In a study of

the factors that influence consumers’ laptop-purchasing

decisions, for example, design was ranked 21st out of 26

factors—behind functional qualities such as processor

speed, memory capacity, and even the number of ports.

See V. Aslihan Nasir et al., Factors Influencing Con-

sumers’ Laptop Purchases, Sixth Global Conference on

Business and Economics 5 (Oct. 15-17, 2006) <goo.gl/

nhi90U>. So too in the smartphone context, consumers

value numerous other qualities such as battery life, du-

rability, and security. See Christopher Versace, What

Do Consumers Want in a New Smartphone?, Forbes

(Aug. 21, 2013) <goo.g/CMG4j6>. And it is beyond

doubt that functionality is a major factor in consumers’

choice of which software products and online platforms

to use.

To state the obvious, the investment in research and

development for information and communication tech-

nologies—currently estimated at $250 billion annually—

extends well beyond design to include the hardware,

software, and services that are incorporated into the

technological products. See R&D Magazine, 2014 Global

R&D Funding Forecast 24 (Dec. 2013) <goo.gl/7LI-

xBV>. The reason is simple: technology companies

know that consumers want a product that works well, not

simply one that looks good.

Consumer preferences exert influence over every

component that is incorporated into modern technologi-

cal products, even though those components may not be

“sold separately” to the ordinary consumer. Pet. App.

29a. An ordinary consumer’s demand for various com-

ponents, in turn, drives the decisions of manufacturers to

11

purchase those components. See Braden Cox & Steve

DelBianco, Consumer Demand Drives Innovation and

Integration in Desktop Computing, Ass'n for Competi-

tive Technology 1 (June 2007) <goo.gli/4ocA7n>

“(Cjonsumers are demonstrating a desire to shape de-

mand through their own insistence on mixing and match-

ing products and product features,” Jonathan Sallet, The

Creation of Value: The Value Circle and Evolving Mar-

ket Structures, 11 J. on Telecomm. & High Tech. L. 185,

190 (2013), and manufacturers are heeding that call.

The Federal Circuit’s decision ignores all of the fore-

going considerations and reduces the damages analysis

to one question: was the feature that is covered by a de-

sign patent “sold separately from [the remainder of the

product] as [a] distinct article{] of manufacture to ordi-

nary purchasers”? Pet. App. 29a. If not, then the owner

of a design patent is entitled to the full profits from the

entire product, without any further inquiry into the im-

portance of the infringing feature. That absurd result

cannot be squared with the reality of modern, multicom-

ponent technological products.

B. The Text Of Section 289 Provides For A Rule That

Avoids the Harsh Consequences Of The Federal Cir-

cuit’s Approach

Section 289 measures the award of “total profit”

based on sales of the “article of manufacture to which

[the infringed] design * * * has been applied.” 35

U.S.C. 289. Congress first enacted that language in 1887

but did not define any of the key terms—“article of man-

ufacture,” “design,” or “applied.” See Act of Feb. 4,

1887, § 1, 24 Stat. 387. The etarting point for interpret-

ing the text is thus the original meaning of those terms

12

at the time Congress enacted the statute. See, e.g.,

Cuomo v. Clearing House Ass'n, 557 U.S. 519, 525-526

(2009).

While contemporaneous dictionaries do not separate-

ly define the phrase “article of manufacture,” they do de-

fine the term “manufacture.” In common parlance, a

“manufacture” was “[ajny thing made from raw materi-

als by the hand, by machinery, or by art” (with “art” be-

ing “[tJhe disposition or modification of things by human

skill”). Noah Webster, An American Dictionary of the

English Language 53, 516 (rev. ed. 1841) (Webster's); ac-

cord James Donald, Chambers’s Etymological Diction-

ary of the English Language 309 (1871). Contemporary

sources in the area of patent law used “article of manu-

facture” interchangeably with “manufacture” in this

sense, indicating that the terms carried the same mean-

ing. See, e.g., Gorham Co. v. White, 81 U.S. (14 Wall.)

511, 525 (1872); George Ticknor Curtis, A Treatise on the

Law of Patents for Useful Inventions in the United

States of America § 106, at 92-93 (1849) (Curtis). As a

later court noted, “{i}t is difficult to perceive how a thing

may be a manufacture, without producing an article of

manufacture.” Jn re Hadden, 20 F.2d 275, 276 (D.C. Cir.

1927). Accordingly, an “article of manufacture,” like a

“manufacture,” was simply a manmade object—whether

' Congress codified the 1887 Act in 1962 but did not change any of

those three key terms. See Act of July 19, 1962, ch. 29, § 289, 66

Stat. 813-814; S. Rep. No. 1979, 82d Cong., 2d Sess. 30 (1952). Be-

cause the revised statute contains no clear statement to the contra-

ry, those terms are presumed to retain their original meaning. See

Scheidler v. National Organization for Women, Inc., 547 U.S. 9, 20

(2006).

13

or not that object was subsequently incorporated into

something else.

As for the meaning of a “design,” this Court long ago

defined that term as “that which gives a peculiar or dis-

tinctive appearance to the manufacture, or article to

which it may be applied, or to which it gives form.”

Gorham, 81 U.S. at 625. Put differently, a “design” is

simply “a specific physical means for the production of a

specific physical effect” on a manmade object. 1 William

C. Robinson, The Law of Patents for Useful Inventions

§ 203, at (1890) (Robinson). Finally as to the rele-

vant terms, “applied” meant “put on; put to, directed;

[or] employed.” Webster's 46.

When those definitions are joined together, the “arti-

cle of manufacture to which [the infringed) design

* * * has been applied” is the manmade object to

which “the specific [patented] physical means for the

production of a specific physical effect” is “directed” or

“put.” That language thus indicates that, whether or not

an infringing item is incorporated in a larger, complex

device, the “design” for that item applies only to that

item.

Consider, for instance, a patented design for a track-

pad that may become part of a laptop computer. The

trackpad design, one would naturally say, “[is] applied”

to the material constituting the trackpad, thus bestowing

the trackpad with its unique look. And that would re-

main the case even after the trackpad was subsequently

installed in a laptop. The specific means for creating the

trackpad’s appearance (the “design”) is still being di-

rected (“applied”) to the trackpad. It would be most

awkward to say that the trackpad’s design is being ap-

plied to the laptop, because the design is specific to the

item to which it gives a “peculiar or distinctive appear-

ance.” Gorham, 81 U.S. at 525. If anything is being “ap-

14

plied” to—z.e., “put on,” Webster’s 46—the laptop, it is

the trackpad as a component, not the design of the

trackpad itself.

The foregoing interpretation is the most natural

reading of the statutory text, and it avoids the harsh

consequences of the Federal Circuit’s alternative. The

Federal Circuit erred in concluding that the text com-

pelled its draconian interpretation.

C. The Context And Legislative History Of Section 289

Confirm That Congress Did Not Intend For The Rele-

vant ‘Article Of Manufacture’ To Be A Complex, Mul-

ticomponent Device

Congress adopted the “total profit” provision in Sec-

tion 289 in response to this Court’s rulings in two nine-

teenth-century cases that awarded nominal damages of

six cents for the infringement of design patents covering

carpets. See Dobson v. Dornan, 118 U.S. 10 (1886); Dob-

son Vv. Hartford Carpet Co., 114 U.S. 439 (1885). The pa-

tentee could not recover lost profits in those cases, the

Court reasoned, because the record contained no evi-

dence of what portion of the infringer’s profits stemmed

from the patented design (rather than from the underly-

ing material). See Dobson, 118 U.S. at 16-17; Dobson,

114 US. at 444-446.

Concerned that the patent laws provided “no reme-

dy” for design-patent infringement in the wake of those

decisions, S. Rep. No. 206, 49th Cong., 2d Sess. 1 (1886),

Congress passed a bill awarding the “infringer’s entire

profit on the article,” H.R. Rep. No. 1966, 49th Cong., 2d

Sess. 3 (1886); see Act of Feb. 4, 1887, § 1, 24 Stat. 387.

That bill was premised on the assumption that, for items

like carpets, “it is the design that sells the article,” and

the design, as the primary feature of the article, is the

only thing that “makes it possible to realize any profit at

all.” H.R. Rep. No. 1966, supra, at 3.

15

In enacting the “total profit” provision, Congress did

not envision the “article of manufacture” as being a com-

plex, multicomponent product—much less a product in-

corporating modern technologies. As explained in the

House Report on the bill that became Section 289, “[s]o

far as the consumers are concerned, the effect of design

patent laws that are respected is to give them more

beautiful carpets and wall-papers and oil-cloths.” H.R.

Rep. No. 1966, supra, at 3. The sponsor of the bill simi-

larly noted that the statute would protect designs for

“carpeting, oil-cloths, wall-paper, and things of that

sort,” and that the bill was introduced in response to “a

great body of persons who are engaged in the manufac-

ture of goods in which designs are the principal feature.”

18 Cong. Rec. 835 (1887) (statement of Rep. Martin).

Then as now, carpets, oilcloths, and wallpaper were rela-

tively simple, single-component articles for which the de-

sign embodies virtually the whole article and is the pri-

mary factor driving sales.

In contrast, the available evidence suggests that

Congress did not consider complex products with signifi-

cant functional features to be “articles of manufacture”

at all. From the very beginnings of the Republic, the

basic statute on utility patents has distinguished “manu-

facture[s]}” from “machine{s].” Act of Apr. 10, 1790, § 1,

1 Stat. 109. Since 1793, those have been two of the four

statutory categories of subject matter eligible for utility

patents—categories that remain unchanged today, ex-

cept for the substitution of “process” for “art.” Compare

Act of Feb. 21, 1798, § 1, 1 Stat. 318-319, with 35 U.S.C.

101. In enacting the “total profit” provision in Section

289, therefore, Congress employed a term that even then

had a venerable history in American patent law. See

Rev. Stat. § 4886 (1874) (referring to “any new and use-

ful art, machine, manufacture or composition of matter”).

16

Commentators have long noted the distinction be-

tween “manufactures” and “machines.” As explained

above, the term “manufacture” refers broadly to a

manmade object. See pp. 12-13, supra. Because Con-

gress separately listed “manufacture[s]” and “ma-

chine[s],” however, commentators observed that the two

terms must represent distinct classes of patentable sub-

ject matter. See, eg., Curtis § 102, at 89-90; Henry

Childs Merwin, The Patentability of Inventions §§ 52-

53, at 80 (1883) (Merwin). As one commentator ex-

plained, a “machine” was a “mechanism” bestowed with

“a function or mode of operation * * * designed to ac-

complish a particular effect.” Merwin § 52, at 80. A

“manufacture,” on the other hand, was “a thing to be

used by itself,” id §54, at 80, or, more simply, any

manmade object “not being machinery,” Curtis § 102, at

89. As another commentator eruditely put it, “[a manu-

facture] has no inherent law which compels it to perform

its functions in a given method, but receives its rule of

action from the external source which furnishes its mo-

tive power.” 1 Robinson § 182, at 269-270; see Curtis

§ 102, at 89. In other words, a “manufacture” was a sim-

ple object useful in and of itself, and a “machine” was a

complex object whose usefulness derived from its inter-

nal mechanics.

In fact, complex devices do not even appear to have

been eligible for design patents at the time Congress

adopted the relevant provision of Section 289. Like the

utility patent statute, the statute authorizing the issu-

ance of design patents set forth a specific list of patenta-

ble subject matters. See Rev. Stat. § 4929 (1874); Supp.

to Rev. Stat., at xvi, 16 (1891). The broadest categories

covered “any new and original design for a manufacture”

and “any new, useful, and original shape or configuration

of any article of manufacture.” Rev. Stat. § 4929.

17

That statute, however, made no provision for design

patents on “machines,” and the contemporary practice of

the Patent Office was not to issue such patents. As the

Commissioner of Patents explained at the turn of the

century, “(design] patents are limited to ‘an article of

manufacture,’” and “there is a clear and well-defined dis-

tinction in patent law between a machine and an article

of manufacture.” Ea parte Steck, 98 Official Gazette of

the U.S. Patent Office (0O.G.) 228, 230 (1902). The Patent

Office would thus reject patent applications for designs

applied to things such as trains or atomizers. See ibid.;

Ex parte Harris, 38 O.G. 104, 104 (1887); Ex parte

Smith, 81 0.G. 969, 969 (1897). The Patent Office ex-

plained that “several articles of manufacture of peculiar

shape which when combined produce a machine or struc-

ture having movable parts may each separately be pa-

tented as a design; but the machine itself cannot be so

patented.” Ex parte Adams, 84 0.G. 311, 311 (1898); see

Steck, 98 O.G. at 230 (discussing Adams).

Naturally, then, in enacting the “total profit” provi-

sion for design-patent infringement, the 1887 Congress

focused on relatively simple, single-component articles

such as carpets, oilcloths, and wallpaper. Complex mul-

ticomponent devices with inner workings did not consti-

tute patentable subject matter for design patents at the

time.

From today’s perspective, the machine-manufacture

distinction seems outdated. The Patent Office and the

courts began to move away from that distinction in the

1920s. See In re Koehring, 37 F.2d 421, 423-424

(C.C.P.A. 1930). And today, design patents are readily

issued for all sorts of consumer goods. See pp. 7-9, su-

pra. From the perspective of the 1887 Congress, howev-

er, the distinction made good sense. The market for eve-

ryday consumer goods contained significantly fewer

18

complex machines than today. And abundant evidence

shows that the design-patent laws arose to protect key

consumer industries at the time, particularly the textile

and cast-iron-goods industries. See Act of Aug. 29, 1842,

§ 3, 5 Stat. 543-544; H.R. Rep. No. 74, 27th Cong., 2d

Sess. 2 (1842); Jason J. Du Mont & Mark D. Janis, The

Origins of American Design Patent Protection, 88 Ind.

L.J. 837, 848-854, 856-874 (2013); Thomas B. Hudson, A

Brief History of the Development of Design Patent Pro-

tection in the United States, 30 J. Pat. Off. Soc’y 380,

380-383 (1948).

The point, however, is not that this Court should re-

turn to the nineteenth-century standard for the issuance

of design patents. Rather, the import of the history of

the design-patent laws is twofold. First, it hews more

closely to Congress’s original vision for the “total profit”

provision to choose the specific infringing component of a

multicomponent device as the relevant “article of manu-

facture” for purposes of determining “total profit.” If

Congress would not have thought that a complex device

was an “article of manufacture” for purposes of patent-

ability, it surely did not intend for such a device to be the

relevant “article of manufacture” in the “total profit”

provision.

Second, it does not conflict with Congress’s original

intent to adopt an interpretation of Section 289 that re-

quires apportionment among the various components of

a complex, multicomponent product. To be sure, in en-

acting Section 289, Congress intended to dispense with

the apportionment requirement set out in the Dobson

carpet cases, which resulted in the award of nominal

damages for design-driven articles. See Dobson, 118

U.S. at 10; Dobson, 114 U.S. at 489. But there is no evi-

dence that Congress intended to award, or even consid-

ered the possibility of awarding, the total profit from a

19

complex, multicomponent machine of which the infring-

ing design applies to but one component. While Con-

gress intended to prevent apportionment in cases involv-

ing simple products, it did not intend to require dispro-

portionate damages in other cases. The context and leg-

islative history of Section 289 strongly support a less ex-

pansive interpretation of the “total profit” provision.

D. The Case Law Interpreting Section 289 Further Sup-

ports Petitioners’ Reading

Despite the subsequent growth of the design-patent

regime, most cases applying Section 289 have continued

to involve simple products that are defined by, and pur-

chased for, their designs. Examples include such prod-

ucts as garment racks, fireplace grates, sofas, and

lamps—products much like the carpets and oilcloths that

motivated Congress when it originally enacted the “total

profit” rule. See Catalina Lighting, Inc. v. Lamps Plus,

Inc., 295 F.3d 1277, 1281 (Fed. Cir. 2002); Schnadig

Corp. v. Gaines Manufacturing Co., 620 F.2d 1166, 1167

(6th Cir. 1980); Henry Hanger & Display Fixture Corp.

v. Sel-O-Rak Corp., 270 F.2d 635, 638 (5th Cir. 1959);

Bergstrom v. Sears, Roebuck & Co., 496 F.Supp. 476,

480 (D. Minn. 1980).

Where courts have been faced with more complex,

multicomponent products containing a component with

an infringing design, they have exercised common sense

and awarded total profit based on the component alone,

not the larger product. For example, in Bush & Lane

Piano Co. v. Becker Bros., 222 F. 902 (1915) and 234 F.

79 (1916), the Second Circuit declined to award the total

profit from a piano that included an infringing piano

case. As the court put it, the patentee “did not invent a

piano, but a piano case,” 222 F. at 906, and the piano’s

instrument and case were distinct articles of manufac-

20

ture. The court reasoned that the “article” from which

total profit was awarded should depend on the “tech-

nical, mechanical, popular, and commercial” circum-

stances in a particular case. 234 F. at 81. Applying that

approach, the court distinguished between profit from

consumers’ demand for “the piano mechanism, which

pleased the ear,” and for “the ornamented and infringing

casing, which attracted the customer’s eye.” /d. at 82.

The court recognized that this distinction ultimately

mattered in awarding total profit based on the only com-

ponent bearing the patented design—the piano case.

In the decision below, the Federal Circuit attempted

to distinguish Bush & Lane Piano on the ground that

“the commercial practice in 1915” was such that “ordi-

nary purchasers regarded a piano and a piano case as

distinct articles of manufacture.” Pet. App. 29a. But or-

dinary purchasers also view modern technological prod-

ucts as containing multiple “articles of manufacture” that

are integrated into products based on their preferences.

See pp. 10-11, supra. Just as Samsung or Apple pur-

chases many of the components and features of its

smartphones from third parties based on consumers’

preferences, and mixes and matches those components

and features into its smartohone models based on those

preferences, the defendant manufacturer in Bush &

Lane Piano purchased the infringing piano cases from

others before assembling them and selling them with pi-

anos as whole units, again based on consumer prefer-

ences. See 222 F. at 904.

The Second Circuit’s earlier decision in U/ntermeyer

v. Freund, 58 F. 2065 (1893), accords with the foregoing

approach. The infringed design at issue there was for a

watch case, the metal outer shell of a pocket watch sold

separately from the time-keeping mechanism. /d. at 206-

207; see Warren H. Niebling, History of the American

21

Watch Case 28-50 (1971) (Niebling); National Ass’n of

Watch & Clock Collectors, Encyclopedia: Watch Case

<goo.gVXN9bYA>. The court concluded that the in-

fringer had to pay the patentee the profits made from

“watch cases bearing the patented design.” Untermeyer,

58 F. at 209. Relying on the plain language of the “total

profit” provision, the court rejected the defendant’s ar-

gument that his liability was limited to the profits made

from the design alone, not the entire watch case. See id.

at 211-212. In Untermeyer, however, the ornamental de-

sign was applied to a single-component article of manu-

facture—the watch case—with the result that the pa-

tentee could recover profits made from the case alone.

See id. at 206-209; see also Untermeyer v. Jeannot, 20 F.

503, 503-504 (C.C.S.D.N.Y. 1884); Niebling 48. Unter-

meyer is thus entirely consistent with petitioners’ inter-

pretation of Section 289.

Finally on this score, the Sixth Circuit applied similar

principles in another design-patent case that the Federal

Circuit did not address in the decision below. In Young

v. Grand Rapids Refrigerator Co., 268 F. 966 (1920), the

court refused to award total profit on a refrigerator that

incorporated an infringing door latch. Because it is read-

ily apparent that the design of a latch does not permeate

a refrigerator, “it [wa]s not seriously contended that all

the profits from the refrigerator belonged to [the pa-

tentee],” and damages (in the amount of the statutory

minimum) were awarded based on the profit derived

from the latch alone. Jd. at 967, 974.

2 * o * *

In sum, the text, context, and legislative history of

Section 289, and case law interpreting it, reveal the error

in the Federal Circuit’s approach. All of those sources

point to the same conclusion: where a component of a

22

complex, multicomponent device infringes a design pa-

tent, total profit should be measured based on the in-

fringing component, not the entire device.

Il. PETITIONERS’ INTERPRETATION OF SECTION 239

BETTER SERVES THE STATUTE’S PURPOSE AND

THE PUBLIC INTEREST

Applying the Federal Circuit's interpretation of the

“total profit” rule to complex multicomponent products

incorporating modern technologies would produce ab-

surd consequences that Congress would not have intend-

ed. See pp. 7-9, supra. Awarding a design patentee the

total profit from an infringer’s product when the design

covers only a relatively minor portion of the product is

out of proportion with the significance of the design and

out of touch with economic realities. See pp. 9-11, supra.

Such disproportionate damages awards hinder innova-

tion and “disrupt{] the ability of the market to allocate

[research and development] resources to those areas

most likely to generate the products most valued by con-

sumers.” Federal Trade Commission, The Evolving IP

Marketplace 146 (2011). They also create an incentive

for the prosecution of opportunistic lawsuits, as has al-

ready begun to occur.

A. A Narrow Interpretation Of ‘Article Of Manufacture’

Better Serves The Purpose Of Section 289

The correct way to interpret Section 289 is to read

the phrase “article of manufacture,” consistent with the

statutory text, context, legislative history, and case law,

to mean the component “to which [the] design * * *

has been applied.” 35 U.S.C. 289. Section 289 awards

the “extent of [the infringer’s) total profit” for “any arti-

cle of manufacture to which such design * * * has

been applied”: that is, “the profit made from the in-

fringement.” Jbid. Thus, where the application of the

23

design permeates the entire product and drives nearly

all of its demand—as with carpets, oilcloths, or ornamen-

tal spoons—the “article of manufacture” is the whole

product, and profit from the whole product may be

awarded. But where a design “has been applied” to only

part of a multicomponent product and does not drive

demand for the entire product, the “article of manufac-

ture” is rightly considered to be only the component to

which the design applies, and only profit attributable to

that component may be awarded.

Such an approach would have the added benefit of be-

ing congruent with the “entire market value” rule that

the Federal Circuit has applied in determining whether

the royalty base for reasonable royalty damages should

extend to an entire multicomponent technology. Under

that rule, a patentee may “assess damages based on the

entire market value of the accused product only where

the patented feature creates the basis for customer de-

mand or substantially create[s) the value of the compo-

nent parts.” Uniloc USA, Inc. v. Microsoft Corp., 632

F.3d 1292, 1318 (Fed. Cir. 2011) (alteration in original)

(internal quotation marks omitted). Otherwise, royalties

are not based on the entire technology, but instead on

the “smallest salable patent-practicing unit,” which could

be any number of components that constitute the tech-

nology. LaserDynamics, Inc. v. Quanta Computer, Inc.,

694 F.3d 51, 67 (Fed. Cir. 2012) (internal quotation

marks omitted). Just as a “reasonable royalty” can be

keyed to the component of a complex technology, so too

can an award of “total profit” be tied to such a compo-

nent.

Similar principles apply to the Federal Circuit’s ap-

proach in awarding “lost profits” damages in the context

of utility patents. To receive such damages, a patentee

must show that the defendant’s infringement of its pa-

24

tented feature caused the losses. Causation requires,

among other things, a showing of “demand for the pa-

tented product” and “manufacturing and marketing ca-

pability to exploit” that demand. Rite-Hite Corp. v. Kel-

ley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).

Without such proof, the patentee cannot “prove entitle-

ment to lost profits damages” and is limited to other

forms of damages, such as a reasonable royalty. /d. at

1544-1545. If that principle were applied in the context

of design patents, Apple could receive lost profits here

only to the extent that it could show that it has sold few-

er iPhones because Samsung sold smartphones that had

a similar curvature or used a similar icon. Again, to the

extent damages based on profits are available at all, they

must be tied to the relevant components that influence

consumer demand.

There is no dispute here that the designs at issue

solely involved a portion of the smartphone’s outer shell

and a single graphical-user-interface screen, and it is not

clear from the record in this case that those infringing

designs are the reason consumers purchased the infring-

ing Samsung devices at issue. A proper interpretation of

Section 289 should focus on those components, not on the

products as a whole, and the Federal Circuit erred in

holding otherwise.

B. A Narrow Interpretation Of ‘Article Of Manufacture’

Better Serves The Public Interest

A narrow interpretation of “article of manufacture” is

also necessary to reduce the risk of frivolous litigation in

the design-patent context. If allowed to stand, the Fed-

eral Circuit’s interpretation will create incentives for

more such litigation, because any technology that some-

how encompasses an infringing design—no matter how

complex—could trigger the “total profit” rule and allow

25

the patentee to obtain disgorgement of all profits from

the purported infringer. That possibility will prompt lit-

igation both from technology manufacturers and from

so-called “patent trolls,” with significant detrimental

consequences for the continued development of useful

modern technological products.

As an initial matter, even aside from the effects of the

Federal Circuit’s decision, design-patent litigation is

bound to increase in frequency in light of the growing

numbers of design patents granted in recent years. As

reflected in the Patent and Trademark Office’s annual

report on design patents, those patents are being grant-

ed at a record clip. Of the approximately 750,000 design

patents that have been granted in American history,

more than half have been granted in the last two dec-

ades. See Patent and Trademark Office, U.S. Patent Ac-

tivity: Calendar Years 1790 to the Present <goo.gl/pCw-

9SJ>.

Given those numbers, it seems virtually certain that

the rate of design-patent litigation will also increase.

While fewer design patents are litigated than utility pa-

tents, the filing of design-patent cases has shown no sign

of slowing down. See Brian C. Howard, Lex Machina,

2014 Patent Litigation Year in Review 12 (2015) <goo.

gl/CqzkCP>. In the wake of the Federal Circuit’s deci-

sion, commentators have suggested that “there will be an

explosion of design patent assertions and lawsuits.” Ja-

son Rantanen, Apple v. Samsung: Design Patents Win,

Patently-O (May 18, 2015) <goo.gl/x23XTm>. That is

particularly true because “an award of infringers’ profits

by its nature does not require the patentee to be a pro-

ducing entity, and the lure of profits may drive trial law-

yers to work on contingency fees in hopes of a large set-

tlement.” Sal Nuzzo, Florida Entrepreneurs Should Be

Spared Design-Patent Follies: State Viewpoint, Orlando

26

Sentinel, Oct. 20, 2015, at Al3. “[TJhe relative ease,

speed and lower costs with which a design patent may be

secured in comparison to a utility patent” only adds fuel

to the fire. David M. Marcus & Shawn K. Leppo, Wel-

come Fallout from the Smartphone Wars: Federal Cir-

cuit Embraces Strong Protection of Design Patents,

Metropolitan Corporate Counsel 16, 34 (July 17, 2015)

<goo.g/V4MSlg>.

Indeed, as petitioners point out, “patent trolls” have

already begun relying on the Federal Circuit’s decision

to demand large payments for alleged design-patent in-

fringement. See Pet. Br. 51 & nn. 31-32. One such

“troll” even filed a patent-infringement action based on a

“pending design patent portfolio (a.k.a. patents not yet

issued).” Giuseppe Macri, Patent Trolls are Already

Abusing the Apple v. Samsung Ruling, InsideSources

(Oct. 1, 2015) <goo.g/Q59y6e>. If “trolls” are already

threatening to assert pending design patents in the wake

of the Federal Circuit’s decision, one can only imagine

how much that activity will increase over time as more

such patents are granted. And there can be no real

doubt that grants will be forthcoming: as noted, “design

patents” are “much faster and cheaper to obtain than

utility patents,” and the typical grant takes only 14

months. Peter Lee & Madhavi Sunder, Design Patents:

Law Without Design, 17 Stan. Tech. L. Rev. 277, 283

(2013).

In addition to increasing the rate of design-patent lit-

igation, the Federal Circuit’s decision is also likely to re-

sult in a concomitant increase in the issuance of low-

quality design patents that do not represent significant

innovations in design. Indeed, one of the very patents at

issue here—Apple’s patent for the design of the

smartphone’s front face—was recently reexamined by

the Patent and Trademark Office, which preliminarily

27

determined that the design was anticipated, obvious, or

both, as illustrated by the prior-art design depicted to

the left of the patented design below:

See Office Action in Ex Parte Reexamination (Reexam.

Control No. 90/012,884, U.S.P.T.O. Aug. 5, 2015), at 5.

Whatever the degree of invention in Apple’s design, this

example amply illustrates that even design patents be-

longing to major technology companies may involve only

minimal, if any, advances over the prior art. Design pa-

tents in the modern era are seldom directed to fashion-

able carpet designs or classic Coca-Cola bottles; they are

often sought, and issued, for relatively mundane design

features. If allowed to stand, the Federal Circuit’s deci-

sion would encourage the procurement and assertion of

more low-quality, marginally innovative design patents,

in the hopes that those patents will be infringed by the

latest smartphone, laptop, or other device.

28

What is more, the availability of disproportionate

profits from accused infringers of design patents would

reduce innovation. This Court has recognized that the

activities of “patent trolls” “can impose a harmful tax on

innovation.” Commil USA, LLC v. Cisco Systems, Inc.,

135 S. Ct. 1920, 1930 (2015) (internal quotation marks

and citation omitted). If adopted by this Court, the Fed-

eral Circuit’s interpretation would provide design pa-

tentees with a cudgel that they can use as “a bargaining

tool to charge exorbitant fees to companies that seek to

buy licenses to practice the patent.” eBay Inc. v. Mer-

cExchange, L.L.C., 547 U.S. 388, 396 (2006) (Kennedy, J.,

concurring). Those exorbitant fees, and the inevitable

concomitant litigation costs, necessarily come out of the

research and development budgets of technology com-

panies, further hampering innovation. A recent study

concluded that such fees and costs may reduce research

and development spending in such companies by as

much as 48%. See James Bessen, The Evidence Is In:

Patent Trolla Do Hurt Innovation, Harvard Business

Review (Nov. 2014) <goo.g/XJnWVT>. Such a pro-

spect is particularly troubling where, as here, “the pa-

tented invention is but a small component of the product

the companies seek to produce.” eBay, 547 U.S. at 396

(Kennedy, J., concurring).

Finally, the Federal Circuit’s interpretation could

lead to arbitrary results. That is because it could make

the measure of damages in design-patent cases depend

on the identity of the infringer. Consider, for example,

the market for smartphone components. See, e.g., Slic-

ing an Apple, The Economist (Aug. 10, 2011) <goo.gl/

ZYGXQ>. If Samsung or Apple were to infringe a com-

ponent manufacturer’s design patent and to incorporate

it in a smartphone, the component manufacturer could

recover profit from sales of the entire smartphone. But

29

if the component manufacturer were to infringe an iden-

tical patent held by Samsung or Apple, Samsung or Ap-

ple could recover damages based only the manufactur-

er’s sales of the component. In other words, an identical

act of infringement would yield two different damages

awards simply because the infringers packaged their

products in different units.

All of the foregoing problems can be avoided by in-

terpreting the phrase “article of manufacture” to mean

the component of a complex product that is covered by

the relevant design patent, rather than the entire prod-

uct. Such an interpretation would rightly limit a patent-

ee’s award under Section 289 to the amount of profit

generated by the infringing component. And it would

better accord with the statute’s text, history, and pur-

pose, while serving the public interest in our twenty-

first-century economy.

CONCLUSION

The judgment of the court of appeals should be re-

versed.

Respectfully submitted.

KANNON K. SHANMUGAM

DAVID M. KRINSKY

ALLISON B. JONES

WILLIAM T. MARKS

WILLIAMS & CONNOLLY LLP

725 Twelfth Street, N.W.

Washington, DC 20005

(202) 484-5000

kshanmugam@we.com

JUNE 2016