US Supreme Court throws out $399m damages ruling in Apple and Samsung dispute

The US Court of Appeals had determined the amount of damages owed by Samsung with reference to the profits the company made from its sale of smartphones featuring Apple's patented designs. It rejected Samsung's claim that damages should be limited because its infringement related to the design of smartphone screens and not the device as a whole.

However, the Supreme Court said that US patent law does not necessarily require damages to be calculated on the basis of the end product sold. Damages can be based on profits stemming from the use of infringing components of a product, it said.

"The only question we resolve today is whether, in the case of a multicomponent product, the relevant 'article of manufacture' must always be the end product sold to the consumer or whether it can also be a component of that product," the Supreme Court judgment said. "Under the former interpretation, a patent holder will always be entitled to the infringer’s total profit from the end product. Under the latter interpretation, a patent holder will sometimes be entitled to the infringer’s total profit from a component of the end product."

"The text [of US law] resolves this case. The term 'article of manufacture,' as used in [Section 289 of the Patent Act], encompasses both a product sold to a consumer and a component of that product," it ruled.

The Supreme Court declined to determine on which basis damages should be calculated in the specific dispute between Apple and Samsung. The case has been referred back to the Court of Appeal where it is likely that a test will be devised, shaped by submissions from Apple and Samsung, for determining what the relevant 'article of manufacture' is for basing damages calculations on in the case.

Apple was initially awarded damages of more than $1 billion in the case in a ruling in 2012. That figure was subsequently reduced on appeal, including in a May 2015 ruling when the US Court of Appeal reversed the part of the earlier decision that related to damages for "trade dress" infringement.