Academic journal article The Review of Litigation

How Should Damages Be Calculated for Design Patent Infringement?

Academic journal article The Review of Litigation

How Should Damages Be Calculated for Design Patent Infringement?

Article excerpt

INTRODUCTION....................242

I. THE DISGORGEMENT OF PROFITS REMEDY AFTER SAMSUNG.................... 245

II. UTILITY PATENT REMEDIES FOR DESIGN PATENT INFRINGEMENT....................253

A. Design Patentee's Lost Profits: The Alternative Designs Problem....................254

B. Reasonable Royalty Awards: A Poor Fit for Design Patents?....................259

III. RECONSIDERING STATUTORY DAMAGES AS A REMEDY FOR DESIGN PATENT INFRINGEMENT....................264

A. Statutory Damages Under Trademark and Copyright Law .265

1. Lanham Act Statutory Damages .265

2. Statutory Damages Under the Copyright Act .268

B. Statutory Damages in Design Patent Law: Some Limiting Principles .269

1. Compensation and Deterrence Objectives .270

2. Rough Nexus with Actual Damages .273

3. Should Statutory Damages be Available only for Design Patent "Counterfeiting"? .276

4. Safeguards for Innocent Infringers .279

5. Fee-Shifting .283

CONCLUSION .284

INTRODUCTION

The Supreme Court's perfunctory opinion in Samsung Electronics Company v. Apple,1 has left to the lower courts the difficult task of fashioning a reliable test for the disgorgement of profits under the design patent remedies provision.2 But Samsung has also exposed the need for a broader conversation that reevaluates whether the special remedies provision ought to be retained in its current form, and what the objectives of the design patent remedies provisions should be. This paper critically evaluates proposals that attempt to implement the Court's Samsung ruling under the existing provision,3 while also seeking to provoke a conversation about alternatives to that provision.4

American patent law provides design patent owners with two routes for recovering damages for design patent infringement. Section 289,5 applicable only to design patents, provides that upon proving infringement, design patent owners may seek an award of either $250 or the infringer's "total profit" on the "article of manufacture" with which the infringing design is associated.6 Section 284, the general utility patent damages provision, allows for an award of "damages sufficient to compensate for the infringement, but in no event less than a reasonable royalty."7 Courts have ruled that Section 284 damages are available to design patent owners as an alternative to a Section 289 award.8

In Samsung, the Court ruled that the "article of manufacture" in the Section 289 profits analysis as applied in any given case could refer to the end product sold to a consumer or to a component of that product, rejecting the Federal Circuit's interpretation that the article always must be the infringer's entire product.9 But the Court declined to adopt a test for identifying the operative article of manufacture. Moreover, because the Court was addressing only a Section 289 profits award, it did not speak to the extension of Section 284 theories to design patents or to the $250 statutory damages element of Section 289.

The Court's terse opinion has left the lower courts with the difficult task of articulating a reliable article-of-manufacture test for Section 289. If future courts applying such a test routinely award minimal damages, then design patent owners will presumably explore other avenues for damages, either by crafting theories under the existing statute or by proposing legislative change. Accordingly, the Samsung decision indirectly exerts pressure on the design patent damages inquiry writ large, prompting questions about which combination of remedies is best suited to provide adequate compensation to design patent owners while still minimizing the risk of windfall recoveries.

In Part I, this Article comments on the Supreme Court's Samsung decision and its immediate aftermath. The Article goes on to evaluate proposed tests for the Section 289 article of manufacture and consider the possibility that the new jurisprudence of the Section 289 disgorgement remedy will drive design patent owners to consider other approaches to design patent damages remedies. …

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