Trade Dress Not Protectable If It Serves Any Purpose Other Than Source Identification, No Apportionment Requirement for Design Patent Damages

Apple Inc. v. Samsung Electronics Co., Ltd., 786 F.3d 983 (Fed. Cir. May 18, 2015) (PROST, O'Malley, Chen) (N.D.Cal: Koh, J.) (3 of 5 stars)

Federal Circuit reverses trade dress infringement but affirms liability and damages on design and utility patents.

TRADE DRESS: Apple's claim involved an unregistered trade dress (covering the overall look of the iPhone 3G and 3GS) and a registered trade dress (covering the design of the iPhone home screen icons). Neither was protectable because each served the functional purpose of improving usability. Both failed the Ninth Circuit's Disc Golf factors for functionality: (1) utilitarian advantage of the design; (2) availability of alternative designs; (3) advertising of utilitarian advantages; and (4) whether the design results from a comparatively simple or inexpensive method of manufacture.

For the unregistered trade dress, the design had a utilitarian advantage of being easy to use, durable, and "pocketable"; none of the alternative designs offered exactly the same features; Apple's ads touted the touch screen's utilitarian advantages; and any manufacturing issues resulted from durability concerns and thus were unrelated to the design. Samsung was not required to show the design had "unusual usability"—any functional purpose other than source identification eliminated trade dress protection.

For the registered trade dress, the undisputed functionality of the individual elements overcame the presumption of non-functionality—the combination of icons was simply an assemblage of functional parts. Once the burden shifted back to Apple, its evidence suffered the same deficiencies under Disc Golf as the unregistered trade dress.

DESIGN PATENT INFRINGEMENT: The jury instructions on infringement issues (e.g., functionality, actual deception, and comparison to the prior art) were proper. Precedent did not require excluding entire elements from the infringement analysis (like the phones' rectangular form and rounded corners) merely because they had some functional purpose—the jury could consider ornamental aspects of those features in assessing the products' overall appearance. Moreover, Apple wasn't required to prove that customers were actually confused or deceived by the products' appearance, so long as the ordinary observer would have been. Substantial evidence supported infringement, and the court properly excluded Samsung's untimely evidence meant to rebut copying.

DESIGN PATENT DAMAGES: Section 289 requires the court to award the infringer's entire profits as design patent damages. The statute was specifically amended in 1887 to remove any apportionment requirement, and Samsung's "causation" arguments were apportionment by another name. Moreover, Samsung did not sell individual components to consumers, so it had to pay damages on the products it did sell—phones. Any policy arguments on this issue must be addressed to Congress, not the courts.

UTILITY PATENT VALIDITY: One patent that required a user's double-tapping on a portion of a document to cause it to be "substantially centered" on the display was not indefinite where Apple presented expert testimony that the patent permitted the skilled artisan to understand the term. Another patent was not anticipated where Apple presented substantial evidence a limitation was missing from the prior art.

UTILITY PATENT DAMAGES: Lost profits were appropriate where the jury could reasonably find that one Samsung alternative was not "acceptable" because it had significantly different features (a slide-out physical keyboard and low resolution screen) while another was never sold and thus not "available." The royalty award was appropriate where Apple's expert testimony on lost profits applied equally to the appropriate rate, and the expert adequately discussed the Georgia-Pacific factors.