Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 1 of 35 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 12 APPLE INC., Plaintiff, 13 14 15 16 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES v. Re: Dkt. Nos. 3521-24 SAMSUNG ELECTRONICS CO. LTD., et al., Defendants. 17 18 After two jury trials and decisions by both the Federal Circuit and the United States 19 Supreme Court, the instant case has been remanded for a determination of whether the jury’s $399 20 million award in favor of Apple for design patent infringement should stand or whether a new 21 damages trial is required. At the center of the U.S. Supreme Court’s decision and the question 22 now before this Court is 35 U.S.C. § 289, which is a damages provision specific to design patents. 23 Section 289 reads, in relevant part: Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties. 24 25 26 27 28 1 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 2 of 35 1 Apple and Samsung1 dispute whether the relevant article of manufacture for the purpose of 2 calculating damages under § 289 for the design patent infringement in the instant case is the entire 3 smartphone or a part thereof. In Samsung Electronics Co. v. Apple Inc., 137 S. Ct. 429 (2016) 4 (“Supreme Court Decision”), the U.S. Supreme Court interpreted § 289 for the first time. It 5 explained that “[a]rriving at a damages award under § 289 . . . involves two steps. First, identify 6 the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the 7 infringer’s total profit made on that article of manufacture.” Id. at 434. The U.S. Supreme Court 8 then held that “[t]he term ‘article of manufacture,’ as used in § 289, encompasses both a product 9 sold to a consumer and a component of that product.” Id. However, the U.S. Supreme Court 10 declined to establish the test for identifying the article of manufacture for the purpose of § 289. Id. 11 After remand to the Federal Circuit, the Federal Circuit held that “the trial court should consider 12 the parties’ arguments in light of the trial record and determine what additional proceedings, if 13 any, are needed. If the court determines that a new damages trial is necessary, it will have the 14 opportunity to set forth a test for identifying the relevant article of manufacture for purpose of 15 § 289, and to apply that test to this case.” Apple Inc. v. Samsung Elecs. Co., 678 F. App’x 1012, 16 1014 (Fed. Cir. 2017) (unpublished) (“Federal Circuit Remand Decision”). Accordingly, the Court must now set forth the method for determining the relevant article 17 18 of manufacture for the purpose of § 289. Taking into consideration that test and the trial 19 proceedings in the instant case, the Court must then decide whether a new damages trial for design 20 patent infringement is warranted. 21 I. BACKGROUND 22 A. History of § 289 “Section 289 of the Patent Act provides a damages remedy specific to design patent 23 24 infringement.” Supreme Court Decision, 137 S. Ct. at 432. The history of § 289 provides 25 important context for understanding the progression of the litigation in the instant case, as well as 26 27 28 1 The Court refers to Samsung Electronics Company, Samsung Electronics America, and Samsung Telecommunications America collectively as “Samsung” in this order. 2 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 3 of 35 1 the competing policy considerations implicated by the formulation of a test for determining the 2 relevant article of manufacture under § 289. As the U.S. Supreme Court has explained, Congress 3 enacted the predecessor to § 289 in 1887 in response to the U.S. Supreme Court’s decisions in 4 what are known as the Dobson cases. Supreme Court Decision, 137 S. Ct. at 432-33 (citing 5 Dobson v. Dornan, 118 U.S. 10 (1886); Dobson v. Hartford Carpet Co., 114 U.S. 439 (1885)). 6 “The cases involved the Dobson brothers, who were found to have infringed patented designs for 7 carpets.” Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1441 (Fed. Cir. 1998). “In Dobson 8 v. Hartford Carpet Co., the lower courts had awarded the holders of design patents on carpets 9 damages in the amount of ‘the entire profit to the [patent holders], per yard, in the manufacture 10 and sale of carpets of the patented designs, and not merely the value which the designs contributed 11 to the carpets.’” Supreme Court Decision, 137 S. Ct. at 432-33 (internal citation omitted) (quoting 12 Dobson v. Hartford Carpet Co., 114 U.S. at 443). The U.S. Supreme Court “construed the statute 13 [in effect at the time] to require proof that the profits were ‘due to’ the design rather than other 14 aspects of the carpets.” Id. at 433 (quoting Dobson v. Hartford Carpet Co., 114 U.S. at 444). 15 “[B]ecause the patentees could not show what portion of the [damages] was due to the patented 16 design and what portion was due to the unpatented carpet,” the U.S. Supreme Court reversed. 17 Nike, 138 F.3d at 1441 (citing Dobson v. Dornan, 118 U.S. 10; Dobson v. Hartford Carpet Co., 18 114 U.S. 439). The U.S. Supreme Court awarded nominal damages of six cents to each plaintiff. 19 Dobson v. Dornan, 118 U.S. at 18; Dobson v. Hartford Carpet Co., 114 U.S. at 447. 20 Concerned that the Dobson cases weakened design patent law to the point of “‘provid[ing] 21 no effectual money recovery for infringement,’” Congress in 1887 enacted the predecessor to 22 § 289, which eliminated the “need to apportion the infringer’s profits between the patented design 23 and the article bearing the design.” Nike, 138 F.3d at 1441-42 (quoting H.R. REP. NO. 1966, 49th 24 Cong. 1st Sess., 1 (1886)); see also Supreme Court Decision, 137 S. Ct. at 433 (citing S. REP. NO. 25 206, 49th Cong., 1st Sess., 1-2 (1886)). Instead of requiring proof that profits were attributable to 26 the patented design, the predecessor to § 289 allowed the patentee to recover “the total profit” 27 made by the infringer from the “manufacture or sale . . . of the article or articles to which the 28 3 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 4 of 35 1 design, or colorable imitation thereof, has been applied.” Supreme Court Decision, 137 S. Ct. at 2 433 (quoting 24 Stat. 387). The Patent Act of 1952 codified that “total profit” remedy for design 3 patent infringement in § 289, see id., and the Federal Circuit in Nike affirmed that § 289 did not 4 require apportionment, see 138 F.3d at 1441-43. With this background established, the Court now 5 recounts the history of the instant case. 6 B. United States District Court Northern District of California 7 The Design Patents and Trial Proceedings in the Instant Case After releasing the iPhone in 2007, Apple obtained design patents on a number of phone 8 design features. As relevant here, Apple obtained the following three design patents: (1) the 9 D618,677 patent (the “D’677 patent”), which covers a black rectangular front face of a phone with 10 rounded corners; (2) the D593,087 patent (the “D’087 patent”), which covers a rectangular front 11 face of a phone with rounded corners and a raised rim; and (3) the D604,305 patent (the “D’305 12 patent”), which covers a grid of 16 colorful icons on a black screen. See Supreme Court Decision, 13 137 S. Ct. at 432-33. 14 On April 15, 2011, Apple sued Samsung for, among other things, design patent 15 infringement, utility patent infringement, and trade dress infringement. ECF No. 1. Throughout 16 the proceedings, Samsung argued for apportionment. Samsung only raised its article of 17 manufacture theory days before trial. Specifically, Samsung does not contest that the issue of the 18 proper article of manufacture was never raised during discovery. In fact, Samsung resisted 19 attempts by Apple to obtain data about the costs of components of Samsung’s infringing phones. 20 See ECF No. 673 at 15 (order by Magistrate Judge Paul Grewal holding that Samsung has 21 previously withheld relevant information on the “selling price per accused product, gross margin, 22 expenses and operating profit”); ECF No. 880 at 10–14 (Magistrate Judge Grewal imposing 23 sanctions for Samsung’s delay in providing documents including the “‘costed bills of materials’ 24 for the accused products”). However, Samsung eventually produced pricing information to Apple 25 about the component parts of Samsung’s phones. See ECF No. 2607-5 at 16 (Apple’s damages 26 expert noting that he relied on “a file that reflects detailed information on [Samsung’s] material 27 costs for the Accused Products”). 28 4 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 5 of 35 United States District Court Northern District of California 1 One of Samsung’s expert reports written by Michael Wagner, which Samsung filed as part 2 of its motion for summary judgment, included a damages theory that would have awarded Apple 3 less profit than the entire profit on Samsung’s infringing phones. See ECF No. 3198 ¶ 340 (using 4 consumer survey information to indicate a split between the profit attributable to the design of 5 Samsung’s phones and its technology). However, in response to Apple’s motion to exclude the 6 damages theory from this expert report, Samsung solely argued that the expert report was 7 admissible based on its apportionment theory of damages, and did not mention the article of 8 manufacture theory. ECF Nos. 1057, 1157 (“Samsung’s opposition cites no legal basis for Mr. 9 Wagner’s apportionment of damages, in clear contravention of 35 U.S.C. § 289, instead appealing 10 only to procedural and policy arguments for allowing apportionment in this case.”). The Court 11 excluded Michael Wagner’s expert report as to those damages because § 289 and Federal Circuit 12 case law clearly exclude an apportionment theory of design patent damages. See ECF No. 1157 13 (citing Nike, 138 F.3d at 1442-43 (noting that Congress removed “the need to apportion the 14 infringer’s profits between the patented design and the article bearing the design” when it passed 15 the Act of 1887, which was subsequently codified under § 289)). 16 The first time Samsung raised its article of manufacture theory was in a trial brief filed on 17 July 24, 2012, 6 days before the 2012 trial, which began on July 30, 2012. In that trial brief, 18 Samsung argued in its trial brief that § 289 “require[s] that profits disgorgement be limited to the 19 ‘article of manufacture’ to which a patented design is applied” and that, as a result, Apple’s 20 attempt to seek “all of Samsung’s profits from sales of the accused phones and tablets” would 21 result in a windfall. ECF No. 1300 at 19-22. Samsung relied on Bush & Lane Piano Co. v. 22 Becker Bros., 222 F. 902 (2d Cir. 1915) (“Piano I”), and Bush & Lane Piano Co. v. Becker Bros., 23 234 F. 79 (2d Cir. 1916) (“Piano II”) (opinion after appeal following remand) (collectively, “the 24 Piano cases”), in which the Second Circuit held that the patentee had been overcompensated for 25 being awarded the profits from an entire piano when the design patent at issue only applied to the 26 piano case, not the internal components of the piano itself. Piano I, 222 F. at 904. 27 28 Samsung raised this issue again in a Rule 50(a) motion for judgment as a matter of law 5 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 6 of 35 1 following the close of Apple’s case-in-chief. Samsung argued that “Apple [has not] made any 2 effort to limit the profits it’s seeking to the article to which the design is applied. That’s the plain 3 language of [§ 289]. They are acting—they are assuming that the article to which the design is 4 applied is the entire product, which is erroneous as a matter of law. They have not factored out, 5 for example, the technology and what drives those profits.” ECF No. 1839 at 201-02. 6 In addition, Samsung’s proposed jury instructions included Proposed Jury Instruction 42.1: 7 If you find that [Samsung] infringed any of Apple’s design patents, and if you decide to award Apple profits from [Samsung’s] sales, you should award only those profits which were derived from the article of manufacture to which Apple’s patented design was applied. The article to which Apple’s design was applied may be the same as or different from Samsung’s devices as sold because devices offered for sale may incorporate a single article of manufacture or several articles of manufacture. The article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent. Where the article of manufacture is a case or external housing of the device, then only the profits from the sale of the case or external housing of the device should be awarded. Under these instructions, an award of profits for design patent infringement should not include profits earned from the technology by which the devices operate or from any other functions of the devices. 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 ECF No. 1694 (“Proposed Final Jury Instructions”) at 151. Apple objected to Proposed Jury Instruction 42.1 on the grounds that (1) the Piano cases 17 were out-of-circuit, century-old precedent; (2) the Federal Circuit’s Nike decision “explain[ed] that 18 [article of manufacture] refers to the product that is sold”; and (3) the instant case was 19 distinguishable from the Piano cases because those cases “refer[] to the piano case being sold 20 separately from the piano,” whereas the outer case and internals of the phone are not sold 21 22 23 24 25 26 27 28 separately. Proposed Final Jury Instructions at 151-52. The Court excluded Proposed Jury Instruction 42.1. See ECF No. 1901. Instead of Proposed Jury Instruction 42.1, the Court gave Final Jury Instruction No. 54, which read in relevant part: If you find infringement by any Samsung defendant and do not find Apple’s design patents are invalid, you may award Apple that Samsung defendant’s total profit attributable to the infringing products. The “total profit” of [Samsung] means the entire profit on the sale of the article to 6 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 7 of 35 1 2 which the patented design is applied, and not just the portion of profit attributable to the design or ornamental aspects covered by the patent. “Total profit” does not include profit attributable to other products that may be sold in association with an infringing article embodying the patented design. 3 4 5 ECF No. 1901 at 72. 6 After a thirteen day jury trial from July 30, 2012 to August 24, 2012 (the “2012 trial”) and 7 approximately three full days of deliberation, the jury reached a verdict. See ECF No. 1931. The 8 jury found that Samsung had infringed the D’677, D’087, and D’305 patents, Apple’s utility 9 patents, and Apple’s trade dress. Id. The jury awarded approximately $1.049 billion to Apple on 10 11 United States District Court Northern District of California If you find infringement by any Samsung defendant, Apple is entitled to all profit earned by that defendant on sales of articles that infringe Apple’s design patents. its infringement and trade dress claims. Id. After trial, Samsung moved for judgment as a matter of law. ECF No. 2013. In that 12 motion, Samsung mixed the apportionment and article of manufacture theories. Samsung argued 13 that Apple should have “limit[ed] its calculations of Samsung’s profits to those attributable to use 14 of the patented designs,” which “violate[d] the causation requirement” that exists in “all patent 15 infringement litigation.” Id. at 18-19. Samsung then cited to the Piano cases, which Samsung 16 argued applied the causation principle by “limiting [the] infringer’s profits to those attributable to 17 [the] design of [the] piano case rather than [the] whole piano.” Id. at 19. Moreover, Samsung 18 argued that “[t]he record contains no evidence that the entire sales value of Samsung’s products 19 was attributable to their outer casings or GUI, as opposed to the numerous noninfringing 20 technological components that enable the devices to function and drive consumer choice.” Id. at 21 19. In Samsung’s reply brief in support of its motion for judgment as a matter of law, Samsung 22 argued that Apple “fail[ed] to offer any evidence that [the profits awarded in the instant case] are 23 the profits from the ‘article of manufacture’ at issue, which is the phones’ outer casings or GUI.” 24 ECF No. 2131 at 4. The Court denied Samsung’s motion for judgment as a matter of law under 25 Nike and the Federal Circuit’s precedent forbidding the apportionment of design patent damages. 26 ECF No. 2271 at 12–13 (citing Nike, 138 F.3d at 1441 (“‘It is expedient that the infringer’s entire 27 profit on the article should be recoverable,’ for ‘it is not apportionable’ . . . .”)). 28 7 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 8 of 35 However, the Court granted judgment as a matter of law as to the 2012 jury verdict on the 1 2 theory that Apple’s utility and design patent infringement damages numbers relied on improper 3 notice dates. See 35 U.S.C. § 287(a) (predicating infringement damages in certain circumstances 4 on proof that “the infringer was notified of the infringement and continued to infringe thereafter”). 5 Because Apple had not presented sufficient evidence to recalculate the appropriate damages award 6 for some of the infringing sales at issue in light of the proper notice dates, the Court struck 7 approximately $410 million from the 2012 jury award and ordered a limited new trial on utility 8 and design patent damages relating only to the sales of those products (the “2013 trial”). See ECF 9 No. 2271 at 26; 2316 at 2 (case management order reinstating portion of original jury award). The Court specified at the 2013 trial that “[t]he Court’s prior rulings on the parties’ United States District Court Northern District of California 10 11 Daubert motions, motions in limine, discovery disputes, and evidentiary objections [from the 12 original trial would] remain in effect as law of the case. The parties [could] not relitigate these 13 issues.” ECF No. 2316 at 2. Thus, the Court limited the evidence and witnesses at the 2013 trial 14 to the evidence that was admissible at the 2012 trial. See ECF No. 2369. At the 2013 trial, Samsung argued in a Rule 50(a) motion for judgment as a matter of law 15 16 at the close of Apple’s case that “Apple presents no evidence of apportionment.” ECF No. 2842 at 17 113. However, Samsung’s argument had two parts. First, Samsung explained that “Samsung 18 previously cited a number of cases, including [the Piano cases] . . . , all of those cases stand for the 19 proposition that you cannot get infringer’s profits on the entire device and you can only do it for 20 the actually infringing feature.” Id. Second, Samsung argued that “Apple further did not present 21 any evidence of causation, that these particular accused features of the design patents or the 22 patented designs drive the sales and did not include that in their calculation analysis.” Id. at 113- 23 14. The Court denied Samsung’s motion. Id. at 132. The Court gave Final Jury Instruction 31 on 24 design patent damages, which was substantially the same as the 2012 trial’s Final Jury Instruction 25 54, edited only to reflect the fact that liability had already been determined. See ECF No. 2783 at 26 40. 27 28 On November 21, 2013, after six days of trial and two days of deliberation, a jury awarded 8 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 9 of 35 1 Apple approximately $290 million in damages for design and utility patent infringement. See ECF 2 No. 2822. After the 2013 trial, Samsung repeated verbatim in its Rule 50(b) motion for judgment 3 as a matter of law the arguments Samsung made in its Rule 50(b) motion for judgment as a matter 4 of law after the 2012 trial. See ECF No. 2884-2 at 31–32. The Court denied Samsung’s motion 5 on the same grounds as the motion for judgment as a matter of law following the 2012 trial. ECF 6 No. 2947 at 16 n.8. On March 6, 2014, the Court entered final judgment in favor of Apple in the 7 amount of $929,780,039 on its design patent, utility patent, and trade dress claims. ECF No. 3017. 8 C. Appeal of the Final Judgment 9 With respect to design patent damages, Samsung argued on appeal that “the district court 10 legally erred in allowing the jury to award Samsung’s entire profits on its infringing smartphones 11 as damages.” Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983, 1001-02 (Fed. Cir. 2015) (“Federal 12 Circuit Appeal”). Samsung raised two theories to support its argument that design patent damages 13 should have been less than Samsung’s “entire profits on its infringing smartphones.” Id. The 14 Federal Circuit held that both theories lacked merit. Id. 15 First, Samsung argued that “[t]he damages . . . should have been limited to the profit 16 attributable to the infringement” and that “consumers chose Samsung [products] based on a host 17 of other factors [besides the infringed designs].” Id. The Federal Circuit noted that this theory 18 essentially advocated “apportionment,” which would “require[] [the patentee] to show what 19 portion of the infringer’s profit, or of his own lost profit, was due to the design and what portion 20 was due to the article itself.” Id. However, the Federal Circuit held that, as recognized in Nike, 21 138 F.3d 1437, Congress rejected apportionment for design patent damages under § 289. Federal 22 Circuit Appeal, 786 F.3d at 1001-02. 23 Second, Samsung argued that “the profits awarded [for design patent infringement] should 24 have been limited to the infringing ‘article of manufacture,’ not the entire infringing product.” Id. 25 The Federal Circuit rejected this theory because “[t]he innards of Samsung’s smartphones were 26 not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.” Id. 27 Thus, the Federal Circuit held that the design patent damages did not need to be limited to profits 28 9 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 10 of 35 1 attributable to an article of manufacture less than the entirety of each infringing Samsung phone. 2 Id. The Federal Circuit upheld the jury verdict as to Apple’s design patent claims and utility 3 4 patent claims but vacated the jury verdict as to Apple’s trade dress claims. Id. at 994-96. The 5 Federal Circuit held that Apple’s claimed trade dress was not protectable under Ninth Circuit law 6 and vacated the jury verdict as to Apple’s trade dress claims. Id. The Federal Circuit “remand[ed] 7 for immediate entry of final judgment on all damages awards not predicated on Apple’s trade 8 dress claims and for any further proceedings necessitated by our decision to vacate the jury’s 9 verdicts on the unregistered and registered trade dress claims.” Id. at 1005. On September 18, 2015, on remand, this Court entered partial final judgment in the amount United States District Court Northern District of California 10 11 of $548,176,477 as to the damages for products that were found to infringe only Apple’s design 12 and utility patents (and not Apple’s trade dress). ECF No. 3290. This Court also ordered a new 13 trial on damages as to the infringing products for which Apple had been awarded damages for 14 trade dress infringement and utility or design patent infringement to determine the damages for the 15 utility or design patent infringement alone. ECF No. 3289. The trial would begin on March 28, 16 2016. 17 D. Proceedings Before the U.S. Supreme Court 18 On March 21, 2016, the U.S. Supreme Court granted certiorari in this case. Samsung 19 Elecs. Co. v. Apple Inc., 136 S. Ct. 1453 (2016) (granting certiorari). The question for which 20 certiorari was granted was: “Where a design patent is applied to only a component of a product, 21 should an award of infringer’s profits be limited to those profits attributable to the component?” 22 Id. As a result, on March 22, 2016, this Court vacated the March 28, 2016 trial and stayed the 23 case. ECF No. 3472. 24 At oral argument on October 11, 2016, Samsung abandoned its apportionment argument, 25 and thus interpretation of the term “article of manufacture” was the only issue before the U.S. 26 Supreme Court. See Supreme Court Decision, 137 S. Ct. at 434 n.2; Tr. of Oral Arg. at 6. On 27 December 6, 2016, the U.S. Supreme Court held that determining profits under § 289 involves two 28 10 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 11 of 35 1 steps: “First, identify the ‘article of manufacture’ to which the infringed design has been applied. 2 Second, calculate the infringer’s total profit made on that article of manufacture.” Supreme Court 3 Decision, 137 S. Ct. at 434. On the first step, the U.S. Supreme Court held that the “article of 4 manufacture” for which total profits are awarded under § 289 was not necessarily limited to the 5 product that is sold to consumers, but may be either “a product sold to a consumer [or] a 6 component of that product.” Id. However, the U.S. Supreme Court “decline[d] to lay out a test for 7 the first step of the § 289 damages inquiry in the absence of adequate briefing by the parties.” Id. 8 at 436. After remand, the Federal Circuit remanded the case to this Court and held that “the trial United States District Court Northern District of California 9 10 court should consider the parties’ arguments in light of the trial record and determine what 11 additional proceedings, if any, are needed. If the court determines that a new damages trial is 12 necessary, it will have the opportunity to set forth a test for identifying the relevant article of 13 manufacture for purpose of § 289, and to apply that test to this case.” Federal Circuit Remand 14 Decision, 678 F. App’x at 1014. 15 E. 16 Proceedings on Remand in this Court On remand, Samsung sought a new trial on design patent damages on the ground that, in 17 light of the U.S. Supreme Court’s interpretation of “article of manufacture” in this case, this Court 18 provided legally erroneous instructions to the jury that prejudiced Samsung. Apple argued that 19 Samsung had waived its right to seek a new trial on the article of manufacture issue, that the jury 20 instructions given were not legally erroneous, and that no evidence in the record supported 21 Samsung’s proposed jury instruction. On July 28, 2017, following briefing by the parties, this 22 Court ruled that Samsung had not waived the article of manufacture issue because Samsung had 23 objected to the exclusion of Proposed Jury Instruction 42.1. ECF No. 3509. 24 However, the Court was unable to determine whether the jury instructions as given 25 constituted prejudicial error until it resolved other issues, including the test for determining the 26 relevant article of manufacture for the purpose of § 289 and which party bore the burden of 27 proving the relevant article of manufacture and the amount of total profits. Accordingly, the Court 28 11 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 12 of 35 1 deferred ruling on whether a new trial was warranted and ordered further briefing on what the test 2 should be for determining the relevant article of manufacture for purpose of § 289, whether the 3 determination of the article of manufacture was a question of fact or law, which party bore the 4 burden of identifying the relevant article of manufacture, and which party bore the burden of 5 establishing the total profits for the purpose of § 289. ECF No. 3509 at 32-33. The Court also 6 ordered the parties to identify the relevant article of manufacture for each of the patents at issue in 7 the instant case, as well as evidence in the record supporting their assertions of the relevant article 8 of manufacture and their assertions of the total profit for each article of manufacture. Id. at 33. 9 On September 8, 2017, the parties submitted cross-opening briefs on those issues. ECF 10 No. 3521 (“Samsung Opening Br.”); ECF No. 3522 (“Apple Opening Br.”). On September 28, 11 2017, the parties submitted cross-responses. ECF No. 3523 (“Apple Response”); ECF No. 3524 12 (“Samsung Response”). The Court held a hearing on October 12, 2017. 13 II. DISCUSSION In order to determine whether a new trial on design patent damages is warranted, the Court 14 15 must first decide the test to identify the relevant article of manufacture for the purpose of § 289 16 and which party bears the burden of proving the relevant article of manufacture. Then, the Court 17 must determine, in light of the test and the 2013 trial proceedings, whether the jury instructions 18 given constituted prejudicial error. The Court addresses these issues in turn. 19 A. Identifying the Relevant Article of Manufacture for the Purpose of § 289 20 As explained above, the U.S. Supreme Court and the Federal Circuit declined to specify 21 how courts or juries2 are to identify the relevant article of manufacture for the purpose of § 289. 22 See Supreme Court Decision, 137 S. Ct. at 436; Federal Circuit Remand Decision, 678 F. App’x 23 at 1014. The Court first describes the approach advocated by the United States before the U.S. 24 Supreme Court and then describes the approaches advocated by the parties. The Court then 25 26 27 28 2 The parties agree that determining the relevant article of manufacture for the purpose of § 289 is a question of fact that a jury decides when there is a material factual dispute. See Apple Opening Br. at 7-9; Samsung Opening Br. at 7-8. 12 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 13 of 35 1 2 3 United States District Court Northern District of California 4 analyzes the various approaches. 1. The Method for Determining the Relevant Article of Manufacture a. The United States’ Proposal Writing as amicus curiae in support of neither party before the U.S. Supreme Court, the 5 United States described the article of manufacture inquiry as “a case-specific analysis of the 6 relationship among the design, the product, and any components.” Brief for United States as 7 Amicus Curiae Supporting Neither Party (“U.S. Br.”) at 9, Samsung Elecs. Co., Ltd. v. Apple Inc., 8 137 S. Ct. 429 (2016) (No. 15-777), 2016 WL 3194218, at *9. “The factfinder should identify the 9 article in which the design prominently features, and that most fairly may be said to embody the 10 defendant’s appropriation of the plaintiff’s innovation.” Id. With respect to multicomponent 11 products, the United States argued that in some instances, “the finished product as sold in 12 commerce is most naturally viewed as the article to which the patented design is ‘applied.’” Id. at 13 *18. However, in other instances, “it is more natural to say that the design has been applied to a 14 single component, or to a set of components that together are only a portion of the product as 15 sold.” Id. at *18-19. 16 The United States proposed that the U.S. Supreme Court adopt a four-factor test to 17 determine the relevant article of manufacture. The factors that the United States identified were:  “[T]he scope of the design claimed in the plaintiff’s patent, including the drawing and written description”;  “[T]he relative prominence of the design within the product as a whole”;  “[W]hether the design is conceptually distinct from the product as a whole”; and  “[T]he physical relationship between the patented design and the rest of the product,” including whether “the design pertains to a component that a user or seller can physically separate from the product as a whole,” and whether “the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.” 18 19 20 21 22 23 Id. at *27-29; see also Elizabeth M. Gil, Note, Samsung v. Apple: Taking a Bite Out of the Design 24 Patent “Article of Manufacture” Controversy, 25 U. MIAMI BUS. L. REV. 67, 84-88 (2017) 25 (endorsing the United States’ test). During oral argument before the U.S. Supreme Court, both 26 parties approved of the United States’ proposed test, with some caveats. See Tr. of Oral Arg. at 27 20:7-9 (Samsung’s counsel: “We – we like the Solicitor General’s test. We propose a briefer test 13 28 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 14 of 35 1 that we think is more administrable.”), 39:3-5 (Apple’s counsel: “We believe that the – the four 2 factors that the Solicitor General articulated would be appropriate factors to consider.”), 39:22- 3 40:1 (Apple’s counsel: “In [determining the article of manufacture], you may consider, and this 4 would depend on the evidence in the case, among other factors I would include the Solicitor 5 General’s, and there may be other things.”), 43:1-7 (Justice Sotomayor: “[The Solicitor General 6 has] a four-part test. Do you agree that that four-part test with respect to identifying just the article 7 of manufacture?” Apple’s counsel: “Yes, with the following caveat only. What – the factors that 8 the jury will be told will depend on the evidence that the parties educe.”) 9 United States District Court Northern District of California 10 b. The Parties’ Proposals Notwithstanding the parties’ apparent general agreement with the United States’ proposed 11 test during oral argument before the U.S. Supreme Court, both parties now advocate different 12 tests, which only partially overlap with the United States’ proposed test. Apple now advocates a 13 19 test comprising four factors. Apple’s proposed factors are:  “How the defendant sells its infringing product and accounts for its profits on those sales, including whether the defendant typically sells its asserted article of manufacture as part of a unified product or separately”;  “The visual contribution of the patented design to the product as a whole, including whether the claimed design gives distinctive appearance to the product as a whole or only to the asserted article of manufacture”;  “The degree to which the asserted article of manufacture is physically and conceptually distinct from the product as sold”; and  “The defendant’s reasons for appropriating the patented design, including whether the defendant did so in an effort to replicate a product as a whole.” 20 Apple Opening Br. at 3-6. Apple explains that the relevance of each factor may vary from case to 21 case. Id. at 3 n.2. 14 15 16 17 18 22 Samsung contends that the relevant article of manufacture is “the specific part, portion, or 23 component of a product to which the patented design is applied. The article is identified by 24 comparing the claimed attributes of the design patent to the accused product to identify the 25 specific part, portion, or component of the product that corresponds to the patent’s claim.” 26 Samsung Opening Br. at 3. Samsung further contends that the relevant article of manufacture 27 “does not include any part, portion, or component of a product that is disclaimed by the patent or 28 14 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 15 of 35 1 that does not correspond to the claimed attributes of the patented design, including any part, 2 portion, or component of a product that is not considered when determining infringement.” Id. c. Analysis 3 United States District Court Northern District of California 4 Apple contends that Samsung’s proposed test is too restrictive because overreliance on the 5 scope of the design patent would foreclose the possibility that the relevant article of manufacture 6 in a multicomponent product could ever be the entire product as sold to the consumer. Apple 7 Response at 1, 4-5. The U.S. Supreme Court’s decision, Apple argues, did not go so far. Id. at 4- 8 5. For its part, Samsung accuses Apple of flouting the U.S. Supreme Court’s holding and 9 proposing factors that have nothing to do with the relevant inquiry. Samsung Response at 7-13. 10 The Court addresses these arguments in turn, and then the Court assesses the United States’ 11 proposal. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. The U.S. Supreme Court Did Not Foreclose the Possibility that a Multicomponent Product Could be the Relevant Article of Manufacture in Some Cases The Court turns first to Apple’s argument that Samsung’s proposed test is overly restrictive. As explained above, Samsung advocates that the factfinder should “compar[e] the claimed attributes of the design patent to the accused product to identify the specific part, portion, or component of the product that corresponds to the patent’s claim.” Samsung Opening Br. at 3. Samsung contends that, as a matter of law, the “relevant article of manufacture does not include any part, portion, or component of a product that is disclaimed by the patent.” Id. According to Apple, this test would mean that a complex multicomponent product could never be the relevant article of manufacture, because a design patent may only cover the “ornamental appearance of an article of manufacture,” not “internal or functional features.” Apple Response at 3 (internal quotation marks omitted); see Samsung Opening Br. at 3. The U.S. Supreme Court’s decision did not rule out the possibility that the relevant article of manufacture could be a multicomponent product. The U.S. Supreme Court framed the issue before it as follows: 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 15 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 16 of 35 sold to the consumer or whether it can also be a component of that product. 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. 1 2 3 4 Supreme Court Decision, 137 S. Ct. at 434 (emphasis added). Logically, if the patent holder is 5 only sometimes entitled to the infringer’s total profit from a component of the end product, then 6 the patent holder is also sometimes entitled to the infringer’s total profit on the entire end product. 7 Indeed, the U.S. Supreme Court did not adopt a per se rule that the relevant article of manufacture 8 in a multicomponent product is always only a component.3 Rather, the U.S. Supreme Court held 9 that “the term ‘article of manufacture’ is broad enough to embrace both a product sold to a 10 consumer and a component of that product, whether sold separately or not.” Id. at 436. Samsung’s test is not consistent with the U.S. Supreme Court’s decision, which left open United States District Court Northern District of California 11 12 the possibility that a multicomponent product could be the relevant article of manufacture. Indeed, 13 Samsung’s test does not produce a logical result when applied to the very product that the U.S. 14 Supreme Court identified as an easy case: a dinner plate. See Supreme Court Decision, 137 S. Ct. 15 at 432. Consider a design patent for the decorative rim of a dinner plate. See, e.g., U.S. Patent 16 No. D730,115 (design patent that claims design for rim of a dinner plate). Samsung’s test purports 17 to exclude as a matter of law any part of a product not claimed in the design patent. But in the 18 case of a unitary object such as a dinner plate, the object must be the relevant article of 19 manufacture, even where the design patent disclaims part of the object. See Supreme Court 20 Decision, 137 S. Ct. at 432. Although Samsung conceded during the October 12, 2017 hearing 21 that in the case of a single-article product that article must be the relevant article of manufacture, 22 ECF No. 3528 at 22:9-22:18, 23:2-23:7, 23:19-23:23, 24:8-24:10 (“Hearing Tr.”), the dinner plate 23 example shows that Samsung’s test as written does not produce a logical result, even when applied 24 to a simple unitary product. Thus, it would likely also be over-restrictive when applied to 25 multicomponent products. Because Samsung’s test would result in a stricter application of § 289 26 27 28 3 Although Samsung cites questions posed by U.S. Supreme Court Justices during oral argument to support its test, see Samsung Response at 6, it is the text of the written opinion that controls. 16 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 17 of 35 1 than the U.S. Supreme Court appeared to contemplate, the Court declines to adopt Samsung’s 2 proposed test. 2. Apple’s Test Omits the Scope of the Design Patent and Its Fourth Factor Strays From the Text of the Statute 3 4 Apple’s proposed test also has some flaws. Samsung argues that Apple’s proposed test is 5 defective because it omits fundamental considerations, such as the scope of the design patent, and 6 introduces considerations that have no relationship to the text of § 289, such as the infringer’s 7 intent. Samsung Response at 3, 8. Samsung also contends that some of Apple’s proposed factors 8 contradict the U.S. Supreme Court’s decision in the instant case. United States District Court Northern District of California 9 With regard to the scope of the design patent, the Court agrees with Apple that the relevant 10 article of manufacture may extend beyond the scope of the claimed design. This principle is 11 evident from the text of § 289 and the dinner plate example discussed above. See 35 U.S.C. § 289 12 (“Whoever during the term of a patent for design . . . applies the patented design . . . to any article 13 of manufacture . . .”) (emphasis added). At the same time, the Court agrees with Samsung that 14 “[t]he statute cannot be administered without first ascertaining the scope of the design claimed by 15 the patent.” Samsung Response at 3. As a result, the scope of the design patent must be a central 16 consideration for the factfinder when determining the relevant article of manufacture for the 17 purpose of § 289. 18 Conversely, Apple’s fourth proposed factor, the infringer’s intent in copying the patented 19 design, finds no support in the text of the statute. Apple cites no authority in its briefs to support 20 the inclusion of this factor. In fact, the predecessor to § 289 contained a knowledge requirement, 21 but Congress removed the knowledge requirement when it passed the 1952 Patent Act. See 22 Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277, 1290 (Fed. Cir. 2002); Mark A. 23 Lemley, A Rational System of Design Patent Remedies, 17 STAN. TECH. L. REV. 219, 223 & n.19 24 (2013) (explaining history of knowledge requirement). Moreover, the article of manufacture 25 inquiry is a factual one: to which article of manufacture was the patented design applied? The 26 Court finds unconvincing Apple’s explanation as to why an infringer’s reasons for copying the 27 design is relevant to this factual inquiry. As a result, the Court declines to include the infringer’s 28 17 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 18 of 35 United States District Court Northern District of California 1 intent as a factor in the article of manufacture test. 2 Finally, Samsung contends that Apple’s first proposed factor, how the defendant sells and 3 accounts for its profits on the infringing profit, conflicts with the U.S. Supreme Court’s reasoning 4 in the instant case. Apple argues that “[i]f the defendant typically sells its asserted article of 5 manufacture as part of a unitary product, the factfinder may reasonably infer that the defendant has 6 applied the patented design to the product as a whole.” Apple Opening Br. at 4. Apple goes on, 7 “For example, where a design patent covers only the ‘upper’ portion of a shoe, the entire shoe may 8 fairly be considered the article of manufacture if the defendant only sells the infringing shoes as a 9 whole.” Id. Samsung contends that this is precisely the reasoning that the Federal Circuit adopted 10 in the instant case, and it is also the reasoning that the U.S. Supreme Court rejected. Samsung 11 Response at 4. Accordingly, Samsung urges the Court to “keep how the product is sold totally out 12 of” the test for determining the relevant article of manufacture. Hearing Tr. 17:8-17:9. 13 The Court does not read the U.S. Supreme Court’s decision as narrowly as Samsung 14 suggests. The U.S. Supreme Court interpreted the Federal Circuit’s decision in the instant case as 15 adopting a per se rule that “the relevant ‘article of manufacture’ must always be the end product 16 sold to the consumer.” Supreme Court Decision, 137 S. Ct. at 434. The U.S. Supreme Court 17 framed the question before it as follows: “[T]he Federal Circuit identified the entire smartphone as 18 the only permissible ‘article of manufacture’ for the purpose of calculating § 289 damages because 19 consumers could not separately purchase components of the smartphones. The question before us 20 is whether that reading is consistent with § 289. We hold that it is not.” Supreme Court Decision, 21 137 S. Ct. at 432. The U.S. Supreme Court also said, “[R]eading ‘article of manufacture’ in § 289 22 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.” Id. at 23 436 (emphasis added). Thus, the U.S. Supreme Court rejected a per se rule that the relevant article 24 of manufacture is always the product sold to the consumer. Instead, the U.S. Supreme Court held 25 that “the term ‘article of manufacture’ is broad enough to encompass both a product sold to a 26 consumer as well as a component of that product.” Id. at 435. Moreover, the U.S. Supreme Court 27 did not hold that how a product is sold is irrelevant to the article of manufacture inquiry. 28 18 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 19 of 35 1 The parties and the United States agree that evidence of how a product is sold is relevant to 2 the overall damages inquiry. In the October 12, 2017 hearing, Samsung conceded that evidence of 3 how a product is sold would be relevant to determining the amount of total profit on the relevant 4 article of manufacture. Hearing Tr. 17:12-17:20 (“[W]hat the sale might be relevant to is – might 5 be relevant to – is step 2, what’s the quantum of profit? Maybe you look to how the product is 6 sold and whether components are sold separately in a parts market or an aftermarket.”). In 7 addition, the United States’ fourth proposed factor includes whether “the design is embodied in a 8 component that is manufactured separately from the rest of the product, or if the component can be 9 sold separately.” In light of the U.S. Supreme Court’s decision in this case and the parties’ 10 agreement that evidence of how the product is sold is relevant, the Court finds that how the 11 product is sold can be considered by the factfinder in determining the relevant article of 12 manufacture. However, because the Court finds the United States’ articulation of this factor 13 preferable, the Court declines to adopt Apple’s first factor as written and instead adopts the United 14 States’ fourth factor, as explained in more detail below. 15 The Court finds that Apple’s second and third proposed factors—the visual contribution of 16 the design to the product as a whole and the degree to which the asserted article of manufacture is 17 physically and conceptually distinct from the product as sold—to be substantially similar to 18 factors included in the United States’ proposed test. Accordingly, the Court addresses those 19 factors in the next section. 20 21 22 23 24 25 26 27 28 3. The United States’ Proposed Test Most Accurately Embodies the Relevant Inquiry The Court now turns to the four-factor test proposed by the United States. Once again, those factors are:  “[T]he scope of the design claimed in the plaintiff’s patent, including the drawing and written description”;  “[T]he relative prominence of the design within the product as a whole”;  “[W]hether the design is conceptually distinct from the product as a whole”; and  “[T]he physical relationship between the patented design and the rest of the product,” including whether “the design pertains to a component that a user or seller can physically separate from the product as a whole,” and whether “the 19 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 20 of 35 1 United States District Court Northern District of California 2 design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.” Among the various proposals before the U.S. Supreme Court and this Court, this Court 3 finds that the United States’ proposal is the most likely to help the factfinder perform its task of 4 identifying the article of manufacture to which the patented design was applied, “without 5 unnecessarily sweeping in aspects of the product that are unrelated to that design.” U.S. Br., 2016 6 WL 3194218 at *26. Moreover, at the October 12, 2017 hearing, both parties stated that they 7 found the United States’ test acceptable. See Hearing Tr. 4:17-4:18 (Apple’s counsel: “I think 8 adopting that test would be fine with Apple.”), 5:1-5:2 (Apple’s counsel: “And [Apple’s test is] 9 very close to the Solicitor General’s four factors, so we think we could live with that.”), 14:1-14:2 10 (Samsung’s counsel: “We like the Solicitor General’s test . . . .”), 14:14-14:18 (Samsung’s 11 counsel: “But the second best proposal is certainly the Solicitor General’s test. And if Your Honor 12 is inclined to adopt that test, Samsung believes that that test has a lot of merit.”). 13 With regard to the first factor, the Court concludes that the factfinder must consider the 14 scope of the claimed design to determine to which article of manufacture the design was applied, 15 but the scope of the claimed design is not alone dispositive. As the United States explained, “the 16 scope of the design claimed in the plaintiff’s patent . . . provides insight into which portions of the 17 underlying product the design is intended to cover, and how the design relates to the product as a 18 whole.” U.S. Br., 2016 WL 3194218 at *27. The Court acknowledges Apple’s concern that the 19 defendant may apply the patented design in a way that differs from the way that the plaintiff 20 claimed the design in its patent, which would leave the scope of the claimed design with little 21 significance. See Apple Opening Br. at 7. But this is an issue that can be argued to the factfinder 22 in the context of the facts of a given case; it is not a reason to altogether exclude from 23 consideration the scope of the claimed design. 24 The second, third, and fourth factors appear tailored to help a factfinder assess competing 25 contentions where, like here, one party argues that the relevant article of manufacture is the entire 26 product as sold and the other party argues that the relevant article of manufacture is some lesser 27 part of the product. Each factor helps the factfinder think through whether the patented design has 28 20 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 21 of 35 1 been applied to the product as a whole or merely a part of the product. For the purposes of the 2 instant case, the Court finds that the four factors proposed by the United States best embody the 3 relevant inquiry, and so the Court adopts these four factors as the test for determining the relevant 4 article of manufacture for the purpose of § 289.4 5 Adopting the United States’ test is also consistent with actions of the only other court to 6 have instructed a jury on § 289 after the U.S. Supreme Court’s decision in the instant case. On 7 September 29, 2017, a court in the Southern District of California largely adopted the United 8 States’ proposed test and instructed the jury accordingly. See Jury Instructions at 15-16, Columbia 9 Sportswear N. Am., Inc. v. Seirus Innovative Accessories, Inc., No. 3:17-cv-01781-HZ (S.D. Cal. 10 Sept. 9, 2017), ECF No. 378. Particularly where, as here, both parties agree that the United States’ test is acceptable, United States District Court Northern District of California 11 12 there is little reason to adopt a different test in this case. 13 B. The Burden of Proving the Relevant Article of Manufacture and the Total Profit on the Sale of that Article 14 The Court now turns to which party bears the burden to establish the relevant article of 15 manufacture and to prove the total profit on the sale of that article of manufacture. The U.S. 16 17 18 19 20 Supreme Court has observed that “[t]he term ‘burden of proof’ is one of the ‘slipperiest member[s] of the family of legal terms.’” Schaffer v. Weast, 546 U.S. 49, 56 (2005) (quoting J. STRONG, 2 MCCORMICK ON EVIDENCE § 342, p.433 (5th ed. 1999)). This is in part because “historically, the concept encompassed two distinct burdens: the ‘burden of persuasion,’ i.e., which party loses if the evidence is closely balanced, and the ‘burden of production,’ i.e., which party bears the 21 22 23 24 25 26 27 28 4 Samsung and some commentators have expressed concern about the administrability of a multifactor test, which they contend is vague and will yield unpredictable results. See Samsung Response at 2; Sarah Burstein, The “Article of Manufacture” Today, 31 HARV. J. L. & TECH. (forthcoming Spring 2018) (manuscript as of Sept. 16, 2017 at 23-24) (http://ssrn.com/abstract=3033231). However, intellectual property law is already replete with multifactor tests. See, e.g., KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406-07 (2007) (discussing factors for determining obviousness of an invention); Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 11120 (S.D.N.Y. 1970) (listing fifteen factors informing reasonable royalty calculations in utility patent cases). The United States’ proposed four-factor test is no less administrable than these other tests. 21 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 22 of 35 1 obligation to come forward with the evidence at different points in the proceeding.” Id. To avoid 2 ambiguity, the Court will refer to the “burden of persuasion” and the “burden of production,” 3 rather than the “burden of proof.” For the reasons stated below, the Court finds that the plaintiff 4 bears the burden of persuasion on identifying the relevant article of manufacture and proving the 5 total profit on that article. The Court next finds that the plaintiff initially bears the burden of 6 production on identifying the relevant article of manufacture and proving the total profit on that 7 article. If the plaintiff satisfies this burden of production, the burden of production then shifts to 8 the defendant to come forward with evidence of an alternative article of manufacture and evidence 9 of a different profit calculation, including any deductible costs. United States District Court Northern District of California 10 Apple urges the Court to adopt a burden-shifting framework for both identifying the 11 relevant article of manufacture and proving total profit on the sale of that article, whereby the 12 “plaintiff bears the initial burden of proving that the defendant applies the patented design to a 13 product that was sold and further proving revenues from the sale.” Apple Opening Br. at 9. “At 14 that point, the plaintiff has made out a prima facie case under § 289,” and the “burden then shifts 15 to the defendant, if it so chooses, to prove that the damages should be reduced” by proving a lesser 16 article of manufacture or identifying deductible costs. Id. Apple does not specify in its briefs 17 whether it means the burden of production or persuasion, but at the October 12, 2017 hearing, 18 Apple clarified that its position is that both burdens should shift to the defendant. Hearing Tr. 19 43:23-44:3. At the same time, Apple concedes that it bears “the ultimate burden of persuasion on 20 the issue of damages.” Hearing Tr. 41:22-23; Apple Response at 9. Apple does not explain how 21 this “ultimate burden” fits with the burden-shifting framework that it proposes. 22 The United States advocates a different burden-shifting regime. According to the United 23 States, the plaintiff bears the burden of persuasion on identifying the relevant article of 24 manufacture and the amount of total profit. U.S. Br., 2016 WL 3194218, at *30-31. The United 25 States does not advocate shifting the burden of persuasion to the defendant. Id. The plaintiff also 26 bears a burden of production on both issues. Once the plaintiff has satisfied its burden of 27 production on identifying the relevant article of manufacture, the burden of production shifts to the 28 22 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 23 of 35 1 2 Apple and the United States argue that a burden-shifting framework would be consistent 3 with the principle that the party with superior knowledge of or access to the relevant facts should 4 bear the burden of proving those facts. See id.; Apple Opening Br. at 10-11 (citing, e.g., Concrete 5 Pipe & Prod. Of Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal., 508 U.S. 602, 626 (1993); 6 Campbell v. United States, 365 U.S. 85, 96 (1961)). 7 Samsung objects to this proposed burden-shifting framework. According to Samsung, 8 “[t]he ‘ordinary default rule’ is that ‘plaintiffs bear the burden of persuasion regarding the 9 essential aspects of their claims,’” and there is no reason to stray from that rule in the instant case. 10 11 United States District Court Northern District of California defendant. Id. Samsung Opening Br. at 8 (quoting Schaffer, 546 U.S. at 57). The Court first assesses which party bears the burden of persuasion on identifying the 12 relevant article of manufacture and proving the total profit on that article. The Court then 13 examines the burden of production on these same issues. 14 1. The Burden of Persuasion 15 Where a statute is silent on the allocation of the burden of persuasion, the Court “begin[s] 16 with the ordinary default rule that plaintiffs bear the risk of failing to prove their claims.” Id. 17 “Absent some reason to believe that Congress intended otherwise . . . the burden of persuasion lies 18 where it usually falls, upon the party seeking relief.” Id. at 57-58. This default rule applies to 19 proving infringement and damages in patent cases. See Medtronic, Inc. v. Mirowski Family 20 Ventures, LLC, 134 S. Ct. 843, 849 (2014) (“It is well established that the burden of proving 21 infringement generally rests upon the patentee.”); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 22 1301, 1324 (Fed. Cir. 2009) (“The burden of proving damages falls on the patentee.”); Egyptian 23 Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 678 (Fed. Cir. 2008) (stating in a design patent case 24 that, “as is always the case, the burden of proof as to infringement remains on the patentee”), cert. 25 denied, 129 S. Ct. 1917 (2009); Avid Identification Sys., Inc. v. Global ID Sys., 29 F. App’x 598, 26 602 (Fed. Cir. 2002) (unpublished) (“The district court also erred in shifting the burden of proving 27 damages to [defendant] . . . .”); ROBERT A. MATTHEWS, JR., 4 ANNOTATED PATENT DIGEST § 30:9. 28 23 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 24 of 35 United States District Court Northern District of California 1 The Court concludes that the plaintiff bears the burden of persuasion on identifying the 2 relevant article of manufacture and proving the defendant’s total profit on that article. First, there 3 is no indication that Congress intended the defendant to bear the burden of persuasion on 4 identifying the relevant article of manufacture or proving the amount of total profit, see Burstein, 5 supra n.4, at 59-61, and so the default rule is presumed to apply, Schaffer, 546 U.S. at 56. In fact, 6 the legislative history of the predecessor to § 289 shows that Congress intended that the plaintiff 7 bear the burden of persuasion. See Burstein, supra n.4, at 59-61; Sarah Burstein, The “Article of 8 Manufacture” in 1887, 32 BERKELEY TECH. L. J. (forthcoming) (manuscript as of Sept. 4, 2017 at 9 68 & nn.419-20) (https://ssrn.com/abstract=2850604); H.R. REPORT NO. 1966, at 3 (1886); S. REP. 10 NO. 206, at 2 (1886). Moreover, as Samsung points out, “[p]lacing the burden of identifying the 11 correct article of manufacture on the patent plaintiff also corresponds with the analogous law of 12 utility-patent damages for multicomponent products, where the patent plaintiff similarly must 13 prove the correct component to be used as a royalty base . . . .” Samsung Opening Br. at 10; see 14 Virnetx, Inc. v. Cisco Systems, Inc., 767 F.3d 1308, 1327 (Fed. Cir. 2014) (“Where the smallest 15 salable unit is, in fact, a multi-component product containing several non-infringing features with 16 no relation to the patented feature . . . , the patentee must do more to estimate what portion of the 17 value of that product is attributable to the patented technology.”). Finally, Apple concedes that it 18 bears the ultimate burden of persuasion on the issue of damages. Hearing Tr. 41:22-23; Apple 19 Response at 9. Accordingly, the plaintiff must bear the burden of persuasion in identifying the 20 relevant article of manufacture for the purpose of § 289 and proving the defendant’s total profit on 21 that article. 22 Apple’s argument in favor of shifting the burden of persuasion is unconvincing. Apple 23 argues that it would be appropriate to shift the burden of persuasion to identify the relevant article 24 of manufacture on the defendant because the defendant has superior knowledge of the infringing 25 product’s components. See Apple Opening Br. at 10-11. However, the U.S. Supreme Court has 26 confirmed that the “superior knowledge” burden-shifting principle is “far from being universal, 27 and has many qualifications upon its application.” Schaffer, 546 U.S. at 60 (quoting Greenleaf’s 28 24 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 25 of 35 1 Lessee v. Birth, 6 Pet. 302, 312 (1832)). None of the cases that Apple cites in support of this 2 argument apply the “superior knowledge” burden-shifting principle to an analogous situation in 3 the intellectual property context, let alone a patent case. Indeed, in the closest analogous 4 context—identification of the smallest salable patent-practicing unit for utility patent damages— 5 the burden of persuasion rests on the plaintiff, as explained above. Moreover, Apple offers no 6 reason why ordinary discovery would not be sufficient to allow a design patent plaintiff to carry 7 its burden of persuasion on identifying the relevant article of manufacture. As a result, the Court 8 concludes that the plaintiff bears the burden of persuasion. 9 United States District Court Northern District of California 10 2. Burden of Production As the party that bears the burden of persuasion, the plaintiff also bears an initial burden to 11 produce evidence identifying the article of manufacture to which the patented design was applied 12 and proving the amount of total profit on that article. See generally GEORGE E. DIX ET AL., 2 13 MCCORMICK ON EVIDENCE § 337 (7th ed.). Apple concedes that it bears this burden of 14 production. See Apple Opening Br. at 9. 15 Apple contends that if the plaintiff has made an initial showing as to the relevant article of 16 manufacture, and if the defendant disputes the relevant article of manufacture, the burden of 17 production then shifts to the defendant to come forward with evidence to support its alternative 18 article of manufacture. Apple Opening Br. at 9. Apple asserts that the same burden-shifting 19 scheme applies to the calculation of total profit. Apple argues that such a shift in burden is 20 consistent with § 289’s disgorgement-like remedy, because in other disgorgement contexts the 21 defendant bears the burden to prove any deductions. Id. at 11-12 (analogizing to the SEC 22 enforcement and contract contexts). Samsung disagrees. In Samsung’s view, the text of the 23 statute is determinative. Nothing in the text of § 289 suggests that Congress contemplated the 24 defendant bearing any burden. By contrast, the text of both the Copyright Act and the Lanham 25 Act explicitly impose a burden on the defendant to prove deductible costs. Samsung Opening Br. 26 at 9 (quoting 17 U.S.C. § 504 and 15 U.S.C. § 1117(a)). The logical inference, according to 27 Samsung, is that Congress did not intend the defendant to bear any burden on either identifying 28 25 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 26 of 35 1 United States District Court Northern District of California 2 the article of manufacture or the amount of damages. The Court holds that if the plaintiff has met its initial burden of production on identifying 3 the relevant article of manufacture for the purpose of § 289 and the defendant disputes the 4 plaintiff’s identification of the relevant article of manufacture, then the burden of production shifts 5 to the defendant to come forward with evidence supporting its asserted article of manufacture. 6 First, a defendant will seek to prove an alternative article of manufacture to lower the amount of 7 total profit. Assigning the defendant a burden of producing evidence to support its position is thus 8 consistent with other disgorgement remedies, where the defendant bears the burden of proving any 9 allowable deductions that decrease the amount of total profit. See, e.g., S.E.C. v. First City Fin. 10 Corp., 890 F.2d 1215, 1232 (D.C. Cir. 1989) (describing how “the burden of going forward” 11 shifted to defendants to demonstrate that the disgorgement figure was not a reasonable 12 approximation of its unjust enrichment even though the SEC bore the ultimate burden of 13 persuasion). 14 Such a shift in the burden of production is also consistent with the lost profits remedy 15 under 35 U.S.C. § 284. In the § 284 lost profits context, the patentee “must show that ‘but for’ 16 infringement it reasonably would have made the additional profits enjoyed by the infringer.” 17 Micro Chem., Inc. v. Lextron, Inc., 318 F.3d 1119, 1122 (Fed. Cir. 2003). “Once the [patent 18 holder] establishes the reasonableness of this inference, the burden shifts to the infringer to show 19 that the inference is unreasonable for some or all of the lost profits.” Id. Finally, shifting the 20 burden of production is consistent with the Federal Court’s en banc decision in the design patent 21 case Egyptian Goddess. In Egyptian Goddess, the Federal Circuit clarified that the test for design 22 patent infringement is whether an ordinary observer familiar with the prior art would be deceived 23 by the similarity between the claimed and accused designs. 543 F.3d at 678, 681, 683. Although 24 the burden of proof as to infringement remained on the patentee, an accused infringer who elects 25 to rely on comparison to prior art as a defense to infringement bears the burden of production of 26 that prior art. Id. at 678-79. The Federal Circuit reasoned that “[t]he accused infringer is the party 27 with the motivation to point out close prior art, and in particular to call to the court’s attention the 28 26 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 27 of 35 1 prior art that an ordinary observer is most likely to regard as highlighting the differences between 2 the claimed and accused design.” Id. at 679. Likewise, in the context of § 289, it is the defendant 3 who has “the motivation to point out” evidence of an alternative article of manufacture. 4 Similarly, the defendant bears the burden of production on proving any deductible 5 expenses from the amount of total profit proved by the plaintiff. This result is, first of all, the law 6 of the case, and Samsung did not appeal it. See ECF No. 1903 at 72 (jury instruction from 2012 7 trial assigning Samsung the burden of proving deductible expenses); ECF No. 2784 at 39 (same 8 for 2013 trial); Opening Brief for Defendants-Appellants, Apple Inc. v. Samsung Elecs. Co., Nos. 9 2014-1335, 2014-1368, 2014 WL 2586819 (Fed. Cir. May 23, 2014). Second, other courts in 10 design patent cases have assigned the burden on deductible expenses to the defendant. See Henry 11 Hanger & Display Fixture Corp. of Am. v. Sel-O-Rak Corp., 270 F.2d 635, 643 (5th Cir. 1959) 12 (stating that the “burden of establishing” deductible overhead costs “rested upon the defendants”); 13 Rocket Jewelry Box, Inc. v. Quality Int’l Packaging, Ltd., 250 F. Supp. 2d 333, 341 (S.D.N.Y. 14 2003) (“[The defendant] has not provided any evidence that the objected-to [operating] expenses 15 were sufficiently related to the production of the [infringing products]. Therefore, the Court 16 hereby adopts [the plaintiff’s] calculations . . . .”), vacated in part on other grounds, 90 F. App’x 17 543 (Fed. Cir. 2004) (unpublished); Bergstrom v. Sears, Roebuck & Co., 496 F. Supp. 476, 497 18 (D. Minn. 1980) (“The burden of establishing the nature and amount of these [overhead] costs, as 19 well as their relationship to the infringing product, is on the defendants.”). 20 Samsung’s argument that the face of the statute lacks an explicit burden-shifting scheme 21 does not mandate a different result. The Federal Circuit has endorsed shifting the burden of 22 production in contexts where the statute does not explicitly require it. For example, § 284 does 23 not mention burden shifting, but the Federal Circuit endorses burden-shifting in the lost profits 24 context under § 284, as discussed above. See Micro Chem., 318 F.3d at 1122. In the design patent 25 context, the Federal Circuit approved shifting the burden of production to the defendant in 26 asserting a noninfringement defense even though § 282, which identifies that defense, does not 27 assign the defendant a burden. See 35 U.S.C. § 282(b); Egyptian Goddess, 543 F.3d at 678-79. 28 27 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 28 of 35 1 Accordingly, the defendant must bear the burden of production on any deductible costs that it 2 argues should be subtracted from the profits proved by plaintiff. Overall, the Court’s allocation of the burdens of persuasion and production is consistent 3 4 with how the court in Columbia Sportswear instructed the jury in that case. The court in 5 Columbia Sportswear assigned the plaintiff “the initial burden of producing evidence identifying 6 the article of manufacture for which it seeks profits.” Jury Instructions at 15, No. 3:17-cv-01781- 7 HZ. The plaintiff was also required to prove the defendant’s total profit from the sale of the 8 infringing article. The defendant then bore “the burden of proving that the article of manufacture 9 [wa]s something less than the entire product.” Id. The defendant also bore the burden of proving United States District Court Northern District of California 10 deductible expenses. Id. at 17. 11 To summarize, the Court adopts the four-factor test for determining the relevant article of 12 manufacture for the purpose of § 289 proposed by the United States in its amicus brief before the 13 U.S. Supreme Court. The plaintiff bears the burden of persuasion in proving the relevant article of 14 manufacture and in proving the amount of defendant’s total profit under § 289. The plaintiff also 15 bears an initial burden of production on both of these issues. However, once the plaintiff satisfies 16 its initial burden of production, the burden of production shifts to the defendant to come forward 17 with evidence to support any alternative article of manufacture and to prove any deductible 18 expenses. Having established these threshold issues, the Court now turns to whether the jury 19 instructions given at trial constituted prejudicial error. 20 C. 21 The Jury Instructions Were Prejudicial Error As explained above, Samsung contends that a new trial is warranted because the jury 22 instructions given inaccurately stated the law on the article of manufacture issue. Specifically, 23 Samsung contends that excluding Proposed Jury Instruction 42.1 and giving Final Jury Instruction 24 54 led the jury to believe that the entire phone was the only possible article of manufacture under 25 § 289. Once again, Proposed Jury Instruction 42.1 read: 26 27 28 If you find that [Samsung] infringed any of Apple’s design patents, and if you decide to award Apple profits from [Samsung’s] sales, you should award only those profits which were derived from the article of manufacture to which Apple’s 28 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 29 of 35 1 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 patented design was applied. The article to which Apple’s design was applied may be the same as or different from Samsung’s devices as sold because devices offered for sale may incorporate a single article of manufacture or several articles of manufacture. The article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent. Where the article of manufacture is a case or external housing of the device, then only the profits from the sale of the case or external housing of the device should be awarded. Under these instructions, an award of profits for design patent infringement should not include profits earned from the technology by which the devices operate or from any other functions of the devices. ECF No. 1694 at 151. Final Jury Instruction 54 read in relevant part: If you find infringement by any Samsung defendant and do not find Apple’s design patents are invalid, you may award Apple that Samsung defendant’s total profit attributable to the infringing products. The “total profit” of [Samsung] means the entire profit on the sale of the article to which the patented design is applied, and not just the portion of profit attributable to the design or ornamental aspects covered by the patent. “Total profit” does not include profit attributable to other products that may be sold in association with an infringing article embodying the patented design. If you find infringement by any Samsung defendant, Apple is entitled to all profit earned by that defendant on sales of articles that infringe Apple’s design patents. ECF No. 1901 at 72. “A jury verdict will be set aside, based on erroneous jury instructions, if . . . ‘those 17 instructions were legally erroneous,’ and that ‘the errors had prejudicial effect.’” NTP, Inc. v. 18 Research In Motion, Ltd., 418 F.3d 1282, 1311-12 (Fed. Cir. 2005) (quoting Advanced Display 19 Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1281 (Fed. Cir. 2000)), abrogated on other grounds 20 as recognized in Avid Tech., Inc. v. Harmonic, Inc., 812 F.3d 1040, 1047 (Fed. Cir. 2016). More 21 specifically, a judgment may be altered based on an erroneous jury instruction by a party if “(1) 22 [the party] made a proper and timely objection to the jury instructions, (2) those instructions were 23 legally erroneous, (3) the errors had prejudicial effect, and (4) [the party] requested alternative 24 instructions that would have remedied the error.” Advanced Display, 212 F.3d at 1281 (internal 25 citations omitted). The Court addresses these factors in turn. 26 1. The Objection Was Proper and Timely 27 The Court has already determined that “Samsung objected to the exclusion of Proposed 29 28 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 30 of 35 1 Jury Instruction 42.1 in a proper and timely manner that was in compliance with Rule 51.” ECF 2 No. 3509 at 15-16. 3 2. The Instructions Were Legally Erroneous 4 The jury instructions given were legally erroneous because they did not state the law as 5 provided by the U.S. Supreme Court in this case. Nevertheless, Apple contends that it was not 6 error for the Court to have declined to give Proposed Jury Instruction 42.1 because that instruction 7 did not have an adequate foundation in the evidence. Apple also contends that legal errors in the 8 proposed instruction mean that it was not error for the Court to have excluded it. For the reasons 9 below, the Court disagrees. 10 United States District Court Northern District of California 11 a. The Instructions Did Not Properly State the Law In its order on July 28, 2017, the Court held that “the jury was not provided an instruction 12 that stated the law as provided by the United States Supreme Court decision in this case that an 13 article of manufacture can be ‘a product sold to a consumer [or] a component of that product.’ 14 Without such an instruction, Final Jury Instructions 53 and 54 would direct a jury to find that the 15 article of manufacture and product are the same.” Id. at 22 (citation omitted). 16 17 b. There Was an Adequate Foundation in Evidence Apple argues that the Court did not err by declining to give Proposed Jury Instruction 42.1 18 because there was not an adequate foundation in the evidence for it. ECF No. 3490-2 at 17. 19 “While it is unnecessary to give instructions unsupported by the evidence, a litigant is entitled to 20 have the jury charged concerning his theory of the case if there is any direct or circumstantial 21 evidence to support it.” Don Burton, Inc. v. Aetna Life & Cas. Co., 575 F.2d 702, 706 (9th Cir. 22 1978); see Galdamez v. Potter, 415 F.3d 1015, 1023 (9th Cir. 2005) (determining whether there 23 was prejudicial error by determining whether “a reasonable jury could have found” for the party 24 proposing the instruction); see also Kinetic Concepts, Inc. v. Blue Sky Med. Grp., Inc., 554 F.3d 25 1010, 1021 (Fed. Cir. 2009) (“Challenges to jury instructions are reviewed under the law of the 26 regional circuit where the district court sits.” (internal quotation marks omitted)). 27 28 Samsung argues that there was a sufficient foundation in evidence to instruct the jury on 30 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES United States District Court Northern District of California Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 31 of 35 1 the possibility of a lesser article of manufacture based on evidence that was presented to the jury 2 as part of the parties’ infringement and invalidity cases. ECF No. 3491 at 8. Samsung cites three 3 categories of evidence to show that the jury could have found an article of manufacture that was 4 less than the entirety of each infringing Samsung phone. First, Samsung cites to the design patents 5 themselves, which cover only certain aspects of Samsung’s phones. The D’677 patent claims a 6 design for a “black, rectangular front glass face with rounded corners” and does not claim the 7 surrounding rim (bezel), the circular home button on the front, or the sides, top, bottom, or back of 8 the device. ECF No. 1611 at 1014-15 (Apple’s expert Peter Bressler stating that “all [the D’677 9 patent is] claiming is that front face”). The D’087 patent claims a rectangular front face with 10 rounded corners, with a bezel, but without black shading, and does not claim the sides, back, top, 11 and bottom of the device or the home button. Id. at 1018-19 (Bresseler stating that the D’087 12 patent is “not claiming the body. It’s claiming the bezel and the front face.”). The D’305 patent 13 claims a design for a grid of sixteen colorful icons on a screen on a mobile device as part of a 14 graphical user interface, and does not claim any other aspect of the device. ECF No. 1612 at 1367 15 (Apple expert Susan Kare stating that the D’305 patent is limited to “the rectangular area” 16 represented by the phone’s screen). 17 Second, Samsung cites to testimony and exhibits that purport to show that Samsung’s 18 phones can be separated into various component parts. For example, Samsung cites to slides that 19 show a breakdown of one of Samsung’s infringing phones, the Vibrant, and its various 20 components. See DX2519 at 5-11. Similarly, multiple witnesses testified about how smartphones 21 are assembled and how the screen was separate from internal components. See, e.g., ECF No. 22 1610 at 313-17 (“[T]here’s a piece of glass [for the screen] and then underneath that is a display 23 and have to glue that on top.”). At one point in the trial, an Apple witness showed and passed 24 around to the jury the “major logic board” of a disassembled iPhone 4. ECF No. 1842 at 3165-68. 25 Third, Samsung points to consumer survey evidence discussing the outer shape of 26 Samsung’s phones. See PX6.1 (commentary about Samsung’s Galaxy S phone and its “all black, 27 shiny plastic body” and the “minimal buttons on the phone’s face”). 28 31 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 32 of 35 United States District Court Northern District of California 1 As to whether there was sufficient evidence for the jury to calculate Samsung’s total profit 2 on an article of manufacture other than the entire phone, Samsung argues that Apple’s own 3 damages experts provided this information at trial. Samsung Opening Br. at 23. Specifically, 4 Samsung contends that “Apple’s experts offered reasonable-royalty calculations for the D’677, 5 D’087, and D’305 patents, with one methodology (the ‘income method’) suggesting a value of $9 6 per phone for those three patents combined.” Id. (citing ECF No. 1839 at 2088-92 (testimony of 7 Apple’s damages expert at 2012 trial); ECF No. 2840 at 704-08 (testimony of Apple’s damages 8 expert at 2013 trial); PX25A1.16 (Apple’s 2012 trial exhibit summarizing its damages 9 contentions); PX25F.16 (same for 2013 trial)). According to Samsung, “[t]hese ‘income method’ 10 opinions used Samsung’s ‘actual profits’ as the measure of what Samsung would earn from the 11 components ‘embodying the patented [designs].’” Id. (quoting PX25A1.16; PX25F.16) (emphasis 12 removed). 13 In response, Apple accuses Samsung of misstating the evidence. Apple Response at 19. 14 For example, the quoted sentence from PX25A1.16 and PX25F.16, Apple points out, actually 15 reads: “The income approach to the value of the patent at issue is based on the future profitability 16 of the products embodying the patented technology.” Apple also contends that the jury would not 17 have been able to calculate Samsung’s total profit on a lesser article of manufacture because 18 Samsung never identified any lesser article of manufacture for the jury and never identified any 19 amount of profits that the jury could have attributed to these lesser articles. Id. at 18. However, 20 had the Court not excluded Proposed Jury Instruction 42.1, Samsung could have made such 21 arguments in its closing. 22 Even taking Apple’s objections into account, the Court finds that there was a sufficient 23 foundation in the evidence to have given Proposed Jury Instruction 42.1. The level of evidence 24 required to support a jury instruction is not high: “a litigant is entitled to have the jury charged 25 concerning his theory of the case if there is any direct or circumstantial evidence to support it.” 26 Don Burton, 575 F.2d at 706 (emphasis added). The testimony about the various components of 27 the phones at issue, together with the design patents themselves, is enough to support Proposed 28 32 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 33 of 35 1 2 United States District Court Northern District of California 3 Jury Instruction 42.1. c. Legal Error in the Proposed Instruction Would Not Have Excused the Court From Properly Instructing the Jury Finally, Apple argues that the Court did not err by declining to give Proposed Jury 4 Instruction 42.1 because that proposed instruction “contained multiple misstatements of law.” 5 ECF No. 3490-2 at 18. Specifically, Proposed Jury Instruction 42.1 included Samsung’s now- 6 abandoned apportionment theory and also defined the article of manufacture as invariably less 7 than the entire product as sold. Id. As the Court stated in its July 28, 2017 order, however, once 8 an issue is raised to the district court, “[t]he fact that the proposed instruction was misleading does 9 not alone permit the district judge to summarily refuse to give any instruction on the topic.” 10 Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, 1017 (9th Cir. 2007). Instead, “[i]f a party’s 11 proposed instruction has brought an ‘issue . . . to the district court’s attention,’ the court commits 12 error if it ‘omit[s] the instruction altogether, rather than modifying it to correct the perceived 13 deficiency.’” Hunter v. Cty. of Sacramento, 652 F.3d 1225, 1235 n.11 (9th Cir. 2011) (citation 14 omitted); see also Norwood v. Vance, 591 F.3d 1062, 1067 (9th Cir. 2010) (“Perfect or not, the 15 defendants’ proposed instruction brought the issue of deference to the district court’s attention.”). 16 In this case, Proposed Jury Instruction 42.1 raised the issue of whether the proper article of 17 manufacture for Samsung’s phones was the “product sold to a consumer [or] a component of that 18 product.” Supreme Court Decision at 434. Because, as explained above, the Court finds that 19 Proposed Jury Instruction 42.1 had an adequate foundation in the evidence, the Court’s duty under 20 Hunter would have been to ensure that the jury instructions reflected the U.S. Supreme Court’s 21 decision, had it been in effect at the time. Hunter, 652 F.3d at 1235 n.11. Accordingly, the fact 22 that the proposed instruction contained legal errors would not have excused the Court from 23 accurately instructing the jury how to determine the relevant article of manufacture for the purpose 24 of § 289. The cases cited by Apple do not require a different result, as the Court explained in its 25 July 28, 2017 order. See ECF No. 3509 at 27 n.5. 26 3. The Error Was Prejudicial 27 “An error in instructing the jury in a civil case requires reversal unless the error is more 28 33 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 34 of 35 1 probably than not harmless.” Clem v. Lomeli, 566 F.3d 1177, 1182 (9th Cir. 2009) (quoting Dang 2 v. Cross, 422 F.3d 800, 811 (9th Cir. 2005)). The Court must “presume prejudice where civil trial 3 error is concerned.” Dang, 422 F.3d at 811 (quoting Galdamez, 415 F.3d at 1025). The burden 4 then shifts to the party opposing the new trial “to demonstrate ‘that it is more probable than not 5 that the jury would have reached the same verdict’ had it been properly instructed.” Galdamez, 6 415 F.3d at 1025 (quoting Obrey v. Johnson, 400 F.3d 691, 701 (9th Cir. 2005)). Thus, Apple 7 bears the burden of proving that it is more probable than not that the jury would have awarded 8 profits on the entire phones had it been properly instructed. Apple has not carried its burden. Based on the evidence discussed in the foundation-in- United States District Court Northern District of California 9 10 the-evidence section above, the Court finds that a properly instructed jury may have found that the 11 relevant article of manufacture for each of the design patents was something less than the entire 12 phone. Apple’s argument that Samsung’s failure to actually identify a smaller article of 13 manufacture at trial would have precluded the jury from finding any article of manufacture other 14 than the entire phone is not persuasive. See Apple Opening Br. at 15, 20-21. Had the Court 15 agreed to give some version of Proposed Jury Instruction 42.1, Samsung could have identified a 16 smaller article of manufacture in its closing argument. The Court’s erroneous jury instructions 17 were thus prejudicial error. 18 4. Samsung Requested an Instruction That Would Have Remedied the Error 19 As discussed in the beginning of this section, the last element to be considered when a 20 party asserts instructional error is whether “[the party] requested alternative instructions that 21 would have remedied the error.” Advanced Display, 212 F.3d at 1281. The Court finds that 22 Proposed Jury Instruction 42.1 would have remedied the error because it would have clarified for 23 the jury that the relevant article of manufacture could be something other than the entire product as 24 sold. 25 In sum, the Court finds that the jury instructions given at trial did not accurately reflect the 26 law and that the instructions prejudiced Samsung by precluding the jury from considering whether 27 the relevant article of manufacture for the purpose of § 289 was something other than the entire 28 34 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES Case 5:11-cv-01846-LHK Document 3530 Filed 10/22/17 Page 35 of 35 1 phone. 2 III. 3 For the foregoing reasons, the Court orders a new trial on damages for the D’677, D’087, 4 and D’305 patents. The test for determining the article of manufacture for the purpose of § 289 5 shall be the following four factors:  The scope of the design claimed in the plaintiff’s patent, including the drawing and written description;  The relative prominence of the design within the product as a whole;  Whether the design is conceptually distinct from the product as a whole; and  The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately. 6 7 8 9 10 11 United States District Court Northern District of California CONCLUSION 12 13 14 15 16 17 18 The plaintiff shall bear the burden of persuasion on identifying the relevant article of manufacture and proving the amount of total profit on the sale of that article. The plaintiff also shall bear an initial burden of production on identifying the relevant article of manufacture and proving the amount of total profit on the sale of that article. If the plaintiff satisfies its burden of production on these issues, the burden of production shifts to the defendant to come forward with evidence of an alternative article of manufacture and any deductible expenses. IT IS SO ORDERED. 19 20 21 22 Dated: October 22, 2017 ______________________________________ LUCY H. KOH United States District Judge 23 24 25 26 27 28 35 Case No. 11-CV-01846-LHK ORDER REQUIRING NEW TRIAL ON DESIGN PATENT DAMAGES