The Supreme Court heard Apple v. Samsung (technically Samsung v. Apple) today. The transcript is here. This post is short and assumes some knowledge of the issues: the tea leaves appear to be that many justices are uncomfortable with the current rule that treats the "article of manufacture" as the entire product. Even Apple seemed to give ground (surprisingly) and admit that what the article of manufacture is a factual determination (but that Apple satisfies those facts in this case). This was an interesting concession, quite frankly, as it is not a given that the Court would accept its view that no new trial is needed. The Court did not seem to even want to hear the "don't remand" argument.
But it also seems clear that the Court has no idea how a rule would operate in practice. After all, it's been 140 years and as far as I can tell, one important case has ever denied profits to a design that was not sold separately (on a refrigerator latch). And Justice Kennedy, in particular, was worried about how one would distinguish a method of determining profits of the patented article of manufacture (OK) as compared to the apportioning profits associated with the patented design (Not OK).
I've made no secret that I favor Samsung's view here. I signed on to an amicus that said as much, and I believe that there is case law mentioned briefly by counsel for Apple (and cited in the amicus) that allows for assessing profits only associated with the infringement, not the entire product. For example, in Westinghouse, the Court held that even if all profits were to be assessed with no apportionment, the defendant could still provide evidence that separated profits unrelated to the infringement.
But that said, I think the argument highlights the central tension here. In Dobson v. Hartford Carpet (1885), the Court considered the very same arguments made today: that people buy carpet for a variety of reasons, that design might drive sales, but there are also other inventions that affect quality in the carding, spinning, dying, and weaving (not to mention the backing). Thus, the Court held, any profits must be allocated based on the patented design. It would be unfair, the Court ruled, to force defendants to pay out their entire profits twice if they infringed another patent.
It was this ruling that Congress promptly intended to reverse by making a rule that all profits on the article of manufacturer would be owed. If the proposals discussed today were in place then, Dobson would not have received all of the defendant's profits; I cannot believe that Congress intended this outcome then, and so I wonder how one can read the statute differently now.
And that's where I'm left. The utilitarian in me says this statute is wrong in many ways (and I've looked for ways to achieve that result through statutory interpretation, like Westinghouse). But the statutory intepreter in me finds it hard to believe that we've somehow misunderstood this statute for the last 140 years, and that the solutions today would leave us with the same outcome that Congress quite clearly intended to reverse. If the Court does decide on narrowing damages, I wish it good luck in finding a happy medium.
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