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Case 3:15-cv-00064-HZ Document 150 Filed 03/09/17 Page 1 of 12

David W. Axelrod, OSB #750231


Email: daxelrod@schwabe.com
Scott D. Eads, OSB #910400
Email: seads@schwabe.com
Nicholas F. Aldrich, Jr., OSB #160306
Email: naldrich@schwabe.com
SCHWABE, WILLIAMSON & WYATT, P.C.
Pacwest Center
1211 SW 5th Ave., Suite 1900
Portland, OR 97204
Telephone: 503.222.9981
Facsimile: 503.796.2900

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

COLUMBIA SPORTSWEAR NORTH No. 3:15-cv-00064-HZ


AMERICA, INC., an Oregon corporation,
PLAINTIFF COLUMBIA SPORTSWEAR
Plaintiff, NORTH AMERICA, INC.S BRIEF
REGARDING THE LEGAL STANDARD
vs. FOR DESIGN PATENT DAMAGES

SEIRUS INNOVATIVE ACCESSORIES,


INC., a Utah corporation,

Defendant.

INTRODUCTION
Columbia respectfully moves, pursuant to the Courts Order at the hearing on the parties

Motions for Summary Judgment [Dkt. No. 144, as revised Dkt. No. 146], for the Court to adopt

the following legal standard and jury instruction for the determination of design patent damages

pursuant to 35 U.S.C. 289:

SCHWABE, WILLIAMSON & WYATT, P.C.


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Case 3:15-cv-00064-HZ Document 150 Filed 03/09/17 Page 2 of 12

PROPOSED LEGAL STANDARD

Arriving at a damages award under 289 involves two steps. First, identify the
article of manufacture to which the infringed design has been applied. Second,
calculate the infringers total profit made on that article of manufacture.

The infringing product bearing the patented design as sold to the consumer is the
relevant article of manufacture if:

1. The product is a single-component product; or

2. The product is a multicomponent product and the patented design is applied to


all or a material part of all of the components; or

3. The product is a multicomponent product and the component or components to


which the patented design is applied creates the basis for the consumers demand
for the product, or substantially creates the value of the other component parts of
the product. This third factor applies where damages on the entire product are
necessary to remedy infringement of the patented design.

In evaluating whether the infringing product should be considered a single-


component product or a multicomponent product, you should consider the
complexity of the infringing product, the separability of its ingredient parts, and
whether portions of that product are sold separately or made by independent
vendors and assembled by or for the infringer. For example, a dinner plate is
considered a single-component product while a modern kitchen oven is
considered a multicomponent product.

If the relevant article does not satisfy one of the three conditions above, the
relevant article of manufacture for calculating disgorgement of profits is the
portion of the product to which the design has been applied.

The defendant bears the burden of producing evidence and proving that the
relevant article of manufacture is a portion of an entire product as sold. 1

I. BACKGROUND
Given the unique subject matter of design patents, Congress long ago enacted a separate,

additional statutory remedy for design patents rooted in the equitable principle of disgorgement.

Specifically, 35 U.S.C. 289 reads:

1
In Columbias letter to the Court dated December 27, 2016, Columbia stated that it was willing
to adopt the four-part test proposed by the Department of Justice as amicus curiae in the
Samsung case for purposes of this case if the parties and the Court were in agreement. Given
that Seirus did not stipulate to using that test, Columbia accepts the Courts invitation to offer a
legal standard that more closely hews to Supreme Court and Federal Circuit jurisprudence.
SCHWABE, WILLIAMSON & WYATT, P.C.
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Case 3:15-cv-00064-HZ Document 150 Filed 03/09/17 Page 3 of 12

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.

Nothing in this section shall prevent, lessen, or impeach any other remedy which
an owner of an infringed patent has under the provisions of this title, but he shall
not twice recover the profit made from the infringement.
For over 140 years, it has been understood that the relevant article of manufacture

referenced in the statute is the infringers end product as sold. Thus, the remedy expressly

provides that if one engages in the prohibited conduct of applying without authority the patented

design to an article of manufacture, the patentee is entitled to the infringers total profit resulting

from such conduct. Nike v. Walmart, 138 F.3d 1437, 1448 (Fed. Cir. 1998) (The statute

requires the disgorgement of the infringers profits to the patent holder, such that the infringers

retain no profit from their wrong.)

In 2011, Apple sued Samsung for infringement of a number of design patents covering

visual aspects of smartphones. Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429, 433 (2016).

The jury found that Samsung infringed and awarded Apple $399 millionthe entire profit
Samsung made from its sales of the infringing smartphones. Id. The Federal Circuit affirmed.

The Supreme Court granted certiorari to answer one narrow question: whether, in the
case of a multicomponent product, the relevant article of manufacture must always be the end

product sold to the consumer or whether it can also be a component of that product. Id. at 434.

Notably, the Court expressly held that its decision in Samsung only applies when the infringing

product is a multicomponent product; the damages analysis for single-component products

remains unchanged disgorgement of the infringers total profits from the sale of the product.

The Supreme Court held that in the case of a multi-component product the term article of

manufacture is broad enough to embrace both a product sold to a consumer and a component of

that product, whether sold separately or not. Id. at 436. Thus, when the product sold to market

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bearing the infringing design is determined by the fact finder to be a multicomponent product, in

some circumstances, a design patent holder will still be entitled to the infringers total profit from

the end product, and in other circumstances, a patent holder will . . . be entitled to the

infringers total profit from a component of the end product. Id. at 434.

However, the Court declined to set out a test for identifying the relevant article of

manufacture at the first step of the 289 damages inquiry. Id. at 436. It remains to be

determined in that case whether the relevant article of manufacture for purposes of total

disgorgement under 289 is (a) the entire phone, or (b) some subset of the smartphone. The case

was remanded to the Federal Circuit, id. at 436, which subsequently remanded the case to the

district court. The district court has yet to identify such a test for determining the relevant article

of manufacture.

This Court is therefore likely to be the first court to determine the legal standard to be

applied for determining the relevant article of manufacture for purposes of 289. Columbia

asserts that the test proposed above follows the statute, the Supreme Courts decision in Samsung

and its multiple decisions concerning damages awards for multicomponent products when a

patent covers only a single component.

II. THE PREAMBLE A TWO-STEP TEST


Following the lead of the Samsung Court, Columbias proposed approach starts with a

two-step test:

Arriving at a damages award under 289 involves two steps. First, identify the
article of manufacture to which the infringed design has been applied. Second,
calculate the infringers total profit made on that article of manufacture.
This language comes directly from Samsung, and therefore should be adopted. Samsung,

137 S. Ct. at 434.

What follows is a test for determining when the product as sold is the relevant article of

manufacture, for purposes of profit disgorgement, and when the relevant article of

manufacture is only a component of the product as sold. Columbia proposes three


SCHWABE, WILLIAMSON & WYATT, P.C.
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Case 3:15-cv-00064-HZ Document 150 Filed 03/09/17 Page 5 of 12

circumstances for which the entire end product sold to market is the relevant article of

manufacture. Each circumstance is explained in the following sections. If no circumstance

applies, the article of manufacture is the component to which the patented design has been

applied.

III. THE ENTIRE INFRINGING PRODUCT IS THE RELEVANT ARTICLE OF


MANUFACTURE WHEN THE INFRINGING PRODUCT IS A SINGLE-
COMPONENT PRODUCT
The first part of Columbias test states that the patentee is entitled to disgorge the

infringers profits from the entire product sold to market where the product is a single-

component product.

In Samsung, the Supreme Court stated that [i]n the case of a design for a single-

component product, such as a dinner plate, the product is the article of manufacture to which

the design has been applied. 137 S. Ct. at 432. The Court contrasted this with a design for a

multicomponent product, such as a kitchen oven, and then expressly held that its decision only

related to multi-component product[s]. Id. at 432, 434. The Samsung decision addressed only

a product that the parties agreed was a multicomponent product (i.e., a smartphone) made up of

an assembly of complex components including cameras, microprocessors, software programs,

hardware cases and packaging, and the like supplied to Samsung from multiple independent

vendors.

Accordingly, where the infringing product sold to market is a single-component product,

the patentee is entitled to disgorgement of the infringers total profits for the sales of those

products. Therefore, and as a threshold issue, the factfinder must first determine whether the

infringing product is a single-component product (i.e., a dinner plate), or a multicomponent

product (i.e., a kitchen oven). Columbias proposed test provides guidance by identifying some

of the principal factors referenced by the Supreme Court (dinner plate vs. kitchen oven) and the

Department of Justice in its proposed test.

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IV. THE ENTIRE INFRINGING PRODUCT IS THE RELEVANT ARTICLE OF


MANUFACTURE WHEN THE PATENTED DESIGN IS APPLIED TO ALL OR
A MATERIAL PART OF ALL OF THE COMPONENTS
The second circumstance where the relevant article of manufacture will be the entire

infringing product as sold at market is when the patented design is applied to all or a material

part of the infringing product as sold. This is consistent with the statute and its legislative

history, which acknowledges that it is the design that sells the article. The Design Patent Act

of 1887 H.R. Rep. No. 1966 at 1 (1886), reprinted in 18 Cong. Rec. 834 (1887). Thus, the

patentee is entitled to disgorge the infringers total profits from the entire infringing product sold

to market where the patented design is applied to all or a material part of the components in the

infringing product.

This step reflects the fact that some patented designs are applied to all or the material part

of an entire end product sold at market. In such cases, the equitable relief of disgorgement

dictates that the relevant article of manufacture is the entire product as sold.

For example, U.S. Design Patent 150,685 is for a Chair.

SCHWABE, WILLIAMSON & WYATT, P.C.


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An infringer could argue that it contains several components (a back, a seat, bars, etc.),

and therefore is subject to a new test for multicomponent products under Samsung. However,

assuming the factfinder determined the chair was a multicomponent product, then the design

patent covers multiple components, and an infringing chair would have the design applied to

those multiple components. In such a case, it would be inequitable to allow an infringer to

escape the remedy codified by Congress merely because the design, on its face, covers a

multicomponent product.

For a further example, in this case, the infringing Seirus glove liners, socks, and hats are

all made entirely from the infringing HEATWAVE fabric:

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Seirus might make the strained argument that these infringing products are, nonetheless,

multicomponent products, because they are made from multiple pieces of fabric for the parts of a

hand (and thread to sew them together). However, the design is applied to each of the pieces of

fabric, comprising a material part of the accused product. Even if the jury found that these

products are multicomponent products, it would again be inequitable to allow Seirus to escape

the remedy codified by Congress simply because it sews together multiple pieces of the same

infringing fabric.

Thus, where the design is applied to all or a material part of all of the components of an

infringing product, the patentee should be entitled to the defendants total profits for the

infringing product as sold to market.

V. THE ENTIRE INFRINGING PRODUCT IS THE RELEVANT ARTICLE OF


MANUFACTURE WHEN THE PATENTED COMPONENT(S) DRIVES
CONSUMER DEMAND FOR THE PRODUCT
Again, if the fact finder concludes that the infringing product is not a single-component

product, the third prong of the proposed test also applies. This final circumstance addresses the

situation where a patented design is not applied to a material part of all of the components of a

multicomponent product.
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When a patentee seeks damages on unpatented components sold with a patented

apparatus, courts have applied a formulation known as the entire market value rule to

determine whether such components should be included in the damage computation. Rite-Hite

Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1549 (Fed. Cir. 1995) (en banc). In essence, the patentee

is entitled to damages for unpatented components where the patented component drove demand

for the entire product. VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1329 (Fed. Cir. 2014).

The entire market value rule has been applied universally in patent law where damages

are sought on sales of unpatented components sold with patented components. Rite-Hite, 56

F.3d at 1550. It permits damages that extend beyond the patented components where damages

on the unpatented components or technology [are] necessary to fully compensate for

infringement of the patented invention. VirnetX, 767 F.3d at 1327 (quoting Cornell Univ. v.

Hewlett-Packard Co., 609 F. Supp. 2d 279, 285 (N.D.N.Y. 2009).

The entire market value rule is applied to allow damages from unpatented components

of a device when the unpatented and patented components are physically part of the same

machine. Rite-Hite Corp., 56 F.3d at 1549. For example, it applies where a particular patented

feature drives consumer demand for a product as a whole. The rule is also applied to allow

inclusion of physically separate unpatented components normally sold with the patented

components. Id. at 1550. For example, if a patented razor handle drives consumer demand for

the associated blades, the patentee may be able to recoup damages from the sale of the

unpatented blades.

The entire market value rule applies both in the context of lost profits, id. at 1549 (citing

Paper Converting Machine Co. v. Magna-Graphics Corp., 745 F.2d 11, 23 (Fed. Cir. 1984)),

and reasonable royalty calculations. Id. (citing Leesona Corp. v. United States, 599 F.2d 958,

974 (1979)). It has also been applied to disgorgement of the infringers profits, as is applicable

here. Garretson v. Clark, 111 U.S. 120, 121 (1884); Westinghouse Elec. & Mfg. Co. v. Wagner

Elec. & Mfg. Co., 225 U.S. 604, 615 (1912).


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The rule was formulated when the remedy of profit disgorgement was available for both

utility and design patents. The Supreme Courts Garretson decision was issued in 1884, and was

decided under the Patent Act of 1870, Ch. 230, 16 Stat. 198-217 (July 8, 1870). Pursuant to Sec.

55 of that Act, the complainant was entitled to recover, in addition to the profits to be accounted

for by the defendant, the damages the complainant has sustained due to the infringement. The

remedy of disgorgement was removed for utility patent damages in the Act of August 1, 1946, c.

726, 1, 60 Stat. 778, 35 U. S. C. (1946 ed.), 67, 70. See Aro Mfg. Co. v. Convertible Top

Replacement Co., 377 U.S. 476, 505 (1964). However, Section 289 of the Patent Act of 1952

preserved the right of profit disgorgement for design patents.

The entire market rule has been part of the U.S. patent law system since at least the

1880s, when the Supreme Court held that the profits and damages are to be calculated on the

whole machine, where the entire value of the whole machine, as a marketable article, is

properly and legally attributable to the patented feature. Garretson, 111 U.S. at 121; see also

Westinghouse, 225 U.S. at 615 (same).

Its modern formulation was most recently articulated in VirnetX, where the court re-

affirmed that when claims are drawn to an individual component of a multi-component

product, damages may be based on the entire market value of the accused product where the

patented feature creates the basis for customer demand or substantially creates the value of the

component parts. VirtnetX, 767 F.3d at 1326 (quoting Versata Software, Inc. v. SAP Am., Inc.,

717 F.3d 1255, 1268 (Fed. Cir. 2013)).

The language proposed by Columbia for this third circumstance derives directly from the

Federal Circuits articulation of the legal standard in VirnetX. The test focuses on the component

(or components) to which the design has been applied, and the extent to which those components

drive consumer demand for the infringing product. That is consistent with design patent law,

which accepts that designs are applied to functional products that are sold to market, and accords

damages for the sales of the products to which the designs have been applied. For example,
SCHWABE, WILLIAMSON & WYATT, P.C.
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Fax: 503.796.2900
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Section 289 states: Whoever . . . applies the patented design . . . to any article of manufacture

for the purpose of sale, or [] sells . . . any article of manufacture to which such design . . . has

been applied shall be liable to the owner to the extent of his total profit . . . It is accordingly

appropriate that the damages analysis is based on the significance to the sale of the article or

components to which the design that has been applied.

VI. BURDEN OF PRODUCTION AND PROOF OF THE ARTICLE OF


MANUFACTURE
The defendant should have the burden of producing evidence that the relevant article of

manufacture is not the entire product as sold to the consumer. As explained by the DOJ in its

Samsung amicus brief:

The defendant should bear the burden of producing evidence that the relevant
article of manufacture in a particular case is a portion of an entire product as
sold. The plaintiff bears the ultimate burden of establishing the amount of the
defendants total profit. See SmithKline Diagnostics, Inc. v. Helena Labs. Corp.,
926 F.2d 1161, 1164 (Fed. Cir. 1991); cf. Horvath v. McCord Radiator & Mfg.
Co., 100 F.2d 326, 330 (6th Cir. 1938), cert. denied, 308 U.S. 581 (1939). But
once the plaintiff has shown that the defendant profited by exploiting a product
containing the plaintiffs patented design, the defendant should be required to
identify, through the introduction of admissible evidence, the component that the
defendant asserts is the article to which the design was applied. Cf. SEC v. Teo,
746 F.3d 90, 112 (3d Cir.) (once government establishes existence of tainted
profits, defendant has burden of production to identify untainted portions), cert.
denied, 135 S. Ct. 675 (2014). The defendant, as the manufacturer or seller of the
accused product, has superior knowledge of the identity of the products
components, as well as of some of the factors relevant to the article
determination, including the physical relationship between the design and the
product; the manner in which the product is manufactured; and the extent to
which the product reflects the innovations of parties other than the plaintiff. See
Alaska Dept of Envtl. Conservation v. EPA, 540 U.S. 461, 494 n.17 (2004)
(placement of burden of production may turn on which party has peculiar means
of knowledge of the facts in question) (citation omitted); accord Medtronic, Inc.
v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, 851 (2014).

Samsung Elects. Co., Ltd. v. Apple Inc., Case No. 15-777, Brief For The United States as Amicus

Curiae Supporting Neither Party, pp. 30-31 (attached hereto as Exhibit 1).

For similar reasons, the design patent infringer should also bear the burden of proof
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where the infringer asserts that the relevant article of manufacture is only a component of the

article that the infringer sold or exposed for sale in commerce. Section 289 is directed expressly

to the product as sold by the infringerto the article of manufacture for the purpose of sale

and sells or exposes for sale any article of manufacture. Given the equitable nature of

disgorgement as a remedy, where the infringer does not separately sell what the infringer later

claims to be the alleged component, the infringer should carry the burden of persuasion that the

statutory standard and the infringers acts in the marketplace should be ignored.

CONCLUSION
Because Columbias test comports with the Supreme Courts decision in Samsung,

Supreme Court and Federal Circuit precedent governing damages for infringement of

multicomponent products, and the history and purposes of the remedy codified in Section 289, it

should be adopted as the standard for design patent damages and the jurys instruction on the

issue.
Dated this 9th day of March, 2017.

Respectfully submitted,

SCHWABE, WILLIAMSON & WYATT, P.C.

By: s/ Nicholas F. Aldrich


David W. Axelrod, OSB #750231
Scott D. Eads, OSB #910400
Nicholas F. Aldrich, Jr., OSB #160306
Telephone: 503.222.9981
Facsimile: 503.796.2900

Of Attorneys for Plaintiff


Columbia Sportswear North America, Inc.

SCHWABE, WILLIAMSON & WYATT, P.C.


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Case 3:15-cv-00064-HZ Document 150-1 Filed 03/09/17 Page 1 of 42

No. 15-777

In the Supreme Court of the United States


SAMSUNG ELECTRONICS CO., LTD., ET AL., PETITIONERS
v.
APPLE INC.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES


AS AMICUS CURIAE SUPPORTING NEITHER PARTY

DONALD B. VERRILLI, JR.


Solicitor General
Counsel of Record
BENJAMIN C. MIZER
SARAH T. HARRIS Principal Deputy Assistant
General Counsel Attorney General
NATHAN K. KELLEY MALCOLM L. STEWART
Solicitor Deputy Solicitor General
THOMAS W. KRAUSE GINGER D. ANDERS
Deputy Solicitor Assistant to the Solicitor
General
SCOTT C. WEIDENFELLER
BRIAN T. RACILLA MARK R. FREEMAN
LORE A. UNT TYCE R. WALTERS
WILLIAM LAMARCA Attorneys
Associate Solicitors Department of Justice
United States Patent and Washington, D.C. 20530-0001
Trademark Office SupremeCtBriefs@usdoj.gov
Alexandria, Va. 22313 (202) 514-2217

Exhibit 1
Page 1 of 42
Case 3:15-cv-00064-HZ Document 150-1 Filed 03/09/17 Page 2 of 42

QUESTION PRESENTED
Section 289 of the Patent Act of 1952 provides that
whoever applies [a] patented design, or any colorable
imitation thereof, to any article of manufacture for the
purpose of sale, or sells or exposes for sale any ar-
ticle of manufacture to which such design or colorable
imitation has been applied, shall be liable to the
[patent] owner to the extent of his total profit. 35
U.S.C. 289. The question presented is as follows:
Whether, when a defendant infringes a design pa-
tent by including the patented design in a multi-
component product that is sold to the public, the pa-
tent holder is entitled to recover the defendants en-
tire profit realized from sales of the finished product.

(I)

Exhibit 1
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TABLE OF CONTENTS
Page
Interest of the United States....................................................... 1
Statement ...................................................................................... 1
Summary of argument ................................................................. 7
Argument....................................................................................... 9
I. Section 289 authorizes a patent owner to recover
an infringers total profit from an infringing article
of manufacture ............................................................... 10
A. Section 289 does not permit apportionment
based on the extent to which the infringers
profit on the relevant article of manufacture
was attributable to the infringing design ............. 11
B. Petitioners identify no sound basis for con-
struing Section 289 to allow an award of less
than the infringers total profit from the rele-
vant article of manufacture .................................... 14
II. To calculate the total profit due under Section
289, the factfinder must identify the article of
manufacture to which the infringing design has
been applied, and that article will not always be
the finished product sold to end-users ........................ 16
A. The relevant article of manufacture for
purposes of Section 289 may be a component
of a multi-component product ................................ 17
1. The term article of manufacture is broad
enough to include components of a complete
product ............................................................... 17
2. Section 289 does not limit the types of articles
that may qualify as the relevant article of
manufacture..................................................... 18
3. The judicial and administrative understanding
of the term article of manufacture has long
included components of products .................... 19

(III)

Exhibit 1
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Case 3:15-cv-00064-HZ Document 150-1 Filed 03/09/17 Page 4 of 42

IV

Table of ContentsContinued: Page


4. Treating the complete product as the
relevant article of manufacture in
every case would often produce greatly
disproportionate infringement liability .......... 23
B. Identifying the relevant article of manufacture
is a task for the finder of fact under the totality
of the circumstances ............................................... 25
C. The Court should remand this case for further
proceedings .............................................................. 31
Conclusion................................................................................ 34

TABLE OF AUTHORITIES

Cases:
Adams, Ex parte, 84 Off. Gaz. Pat. Office 311 (1898) ........ 21
Alaska Dept of Envtl. Conservation v. EPA,
540 U.S. 461 (2004).............................................................. 31
American Fruit Growers, Inc. v. Brogdex Co.,
283 U.S. 1 (1931) ................................................................. 18
Amini Innovation Corp. v. Anthony Cal., Inc.,
439 F.3d 1365 (Fed. Cir. 2006) ........................................... 30
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
489 U.S. 141 (1989)................................................................ 2
Brand, Ex parte, 83 Off. Gaz. Pat. Office 747 (1897) ......... 22
Brower, Ex parte, 4 Off. Gaz. Pat. Office 450 (1873) .......... 22
Bush & Lane Piano Co. v. Becker Bros.:
222 F. 902 (2d Cir. 1915) ..................................... 20, 28, 29
234 F. 79 (2d Cir. 1916) ............................13, 20, 21, 27, 29
Carey v. Piphus, 435 U.S. 247 (1978) .................................. 15
Catalina Lighting, Inc. v. Lamps Plus, Inc.,
295 F.3d 1277 (Fed. Cir. 2002) ........................................... 14
Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct.
1920 (2015) ........................................................................... 24

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CasesContinued: Page
Dobson v. Dornan, 118 U.S. 10 (1886) ................................. 11
Dobson v. Hartford Carpet Co., 114 U.S. 439 (1885).... 11, 12
Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665
(Fed. Cir. 2008), cert. denied, 556 U.S. 1167
(2009) .......................................................................... 3, 28, 30
Forest Grove Sch. Dist. v. T.A., 557 U.S. 230
(2009) .................................................................................... 23
Gorham Co. v. White, 81 U.S. (14 Wall.) 511
(1872) .................................................................2, 3, 18, 26, 30
Graver Tank & Mfg. Co. v. Linde Air Prods. Co.,
339 U.S. 605 (1950).............................................................. 29
Hadden, In re, 20 F.2d 275 (D.C. Cir. 1927) ....................... 18
Hana Fin., Inc. v. Hana Bank, 135 S. Ct. 907 (2015) ....... 30
Horvath v. McCord Radiator & Mfg. Co., 100 F.2d
326 (6th Cir. 1938), cert. denied, 308 U.S. 581 (1939) ...... 31
Hruby, In re, 373 F.2d 997 (C.C.P.A. 1967) ........................ 17
Johnson v. Johnston, 60 F. 618 (C.C.W.D. Pa. 1894) ........ 18
Kapp, Ex parte, 83 Off. Gaz. Pat. Office 1993 (1898) ......... 22
Kellman v. Coca-Cola Co., 280 F. Supp. 2d 670 (E.D.
Mich. 2003)............................................................................. 4
Lorillard v. Pons, 434 U.S. 575 (1978) ................................ 23
Markman v. Westview Instruments, Inc., 517 U.S.
370 (1996) ............................................................................. 28
Medtronic, Inc. v. Mirowski Family Ventures, LLC,
134 S. Ct. 843 (2014) ........................................................... 31
Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437
(Fed. Cir. 1998), cert. denied, 528 U.S. 946 (1999) .......... 13
Nordock, Inc. v. Systems Inc., 803 F.3d 1344
(Fed. Cir. 2015), petition for cert. pending,
No. 15-978 (filed Jan. 28, 2016) ............................................ 5
Pullman Couch Co. v. Union, 39 U.S.P.Q. 100
(D. Md. 1938) ....................................................................... 22

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VI

CasesContinued: Page
Riley v. California, 134 S. Ct. 2473 (2014) ............................ 5
SEC v. Teo, 746 F.3d 90 (3d Cir.), cert. denied,
135 S. Ct. 675 (2014) ........................................................... 31
Schnell, In re, 46 F.2d 203 (C.C.P.A. 1931) .......................... 3
Sheldon v. Metro-Goldwyn Pictures Corp.,
309 U.S. 390 (1940).............................................................. 27
Simpson v. Davis, 12 F. 144 (E.D.N.Y. 1882) .................... 22
SmithKline Diagnostics, Inc. v. Helena Labs. Corp.,
926 F.2d 1161 (Fed. Cir. 1991) ........................................... 30
Tilghman v. Proctor, 125 U.S. 136 (1888) ........................... 14
Untermeyer v. Freund, 58 F. 205 (2d Cir. 1893) ................ 12
WMS Gaming Inc. v. WPC Prods. Ltd., 542 F.3d 601
(7th Cir. 2008) ...................................................................... 13
Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205
(2000) ...................................................................................... 2
Young v. Grand Rapids Refrigerator Co., 268 F. 966
(6th Cir. 1920) ................................................................ 21, 28

Statutes and regulation:

Act of Feb. 4, 1887, ch. 105, 24 Stat. 387 ............................. 12


1, 24 Stat. 387 ................................................................ 12
2, 24 Stat. 388 ................................................................ 14
Patent Act of July 8, 1870, ch. 230, 55, 16 Stat. 206 ........ 14
Patent Act of 1952:
35 U.S.C. 2(a)(1)................................................................. 1
35 U.S.C. 2(b)(8) ................................................................ 1
35 U.S.C. 101 .................................................................... 17
35 U.S.C. 112(b) ................................................................. 3
35 U.S.C. 171 .................................................... 1, 17, 19, 21
35 U.S.C. 171(a) ................................................................. 2
35 U.S.C. 171(b) ............................................................. 2, 3

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VII

Statutes and regulationContinued: Page


35 U.S.C. 271 ...................................................................... 3
35 U.S.C. 283 .................................................................... 14
35 U.S.C. 284 ............................................................ 4, 5, 14
35 U.S.C. 289 ........................................................... passim
Rev. Stat. 4929 (1878) ......................................................... 21
15 U.S.C. 1125(a) ..................................................................... 2
17 U.S.C. 504(b) ..................................................................... 13
37 C.F.R. 1.153(a) .................................................................... 3

Miscellaneous:
Blacks Law Dictionary:
(1st ed. 1891) .................................................................... 17
(10th ed. 2014) .................................................................. 17
8 Donald S. Chisum, Chisum on Patents (2014) .... 2, 3, 4, 18
P.J. Federico, Commentary on the New Patent Act,
75 J. Pat. & Trademark Off. Socy (1993) ......................... 13
H.R. Rep. No. 1966, 49th Cong., 1st Sess. (1886) ... 12, 16, 25
Giuseppe Macri, Patent Trolls Are Already Abusing
the Apple v. Samsung Ruling, InsideSources
(Oct. 1, 2015), http://www.insidesources.com/
patent-trolls-are-already-abusing-the-apple-v-
samsung-ruling/ .................................................................. 24
1 James A.H. Murray, A New English Dictionary
(1888) .................................................................................... 17
Patent Law Codification and Revision: Hearings
on H.R. 3760 Before Subcomm. No. 3 of the Comm.
on the Judiciary, 82d Cong., 1st Sess. (1951) .................. 13
1 William C. Robinson, The Law of Patents for Use-
ful Inventions (1890) .......................................................... 18
S. Rep. No. 206, 49th Cong., 1st Sess. (1886)...................... 12
The American Heritage Dictionary (3d ed. 1992) ............. 11

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VIII

MiscellaneousContinued: Page
11 The Oxford English Dictionary (1st ed. 1933) .............. 11
U.S. Patent & Trademark Office, Manual of Patent
Examining Procedure (rev. 9th ed. 2015) ............... 2, 3, 28
Websters New International Dictionary of the
English Language (W.T. Harris ed., 1917)...................... 17

Exhibit 1
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In the Supreme Court of the United States


No. 15-777
SAMSUNG ELECTRONICS CO., LTD., ET AL., PETITIONERS
v.
APPLE INC.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES


AS AMICUS CURIAE SUPPORTING NEITHER PARTY

INTEREST OF THE UNITED STATES


This case involves the proper interpretation of 35
U.S.C. 289, which mandates the award of an infring-
ers total profit as a remedy for infringement of a
design patent issued pursuant to 35 U.S.C. 171. The
United States Patent and Trademark Office (PTO) is
responsible for issuing patents andthrough the
Secretary of Commerceadvising the President on
issues of patent policy. See 35 U.S.C. 2(a)(1) and
(b)(8). Several other agencies of the federal govern-
ment also have a strong regulatory interest in the
efficacy of the patent system. The United States
therefore has a substantial interest in the Courts
disposition of this case.
STATEMENT
1. a. Since 1842, the patent laws have authorized
the issuance of patents not only for useful inventions,

(1)

Exhibit 1
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but also for ornamental designs. Gorham Co. v.


White, 81 U.S. (14 Wall.) 511, 524 (1872). Section
171(a) of Title 35 of the United States Code provides
that [w]hoever invents any new, original and orna-
mental design for an article of manufacture may ob-
tain a patent therefor, subject to the conditions and
requirements of this title. 35 U.S.C. 171(a). A pa-
tentable design is not an abstract impression, or
picture, but rather an aspect given to * * * [an]
article of manufacture that gives a peculiar or dis-
tinctive appearance to the manufacture. Gorham, 81
U.S. at 524-525. Design patents thus protect the inno-
vative appearance given to an article of manufacture,
fill[ing] a gap between copyright protection for au-
thors and patent protection for inventors in the me-
chanical arts. 1 8 Donald S. Chisum, Chisum on Pa-
tents 23.02, at 23-6 (2014) (Chisum). To qualify for
protection, a design must present an aesthetically
pleasing appearance that is not dictated by function
alone, and must satisfy the other criteria of patenta-
bility, such as novelty and non-obviousness. Bonito
Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141,
148 (1989); see 35 U.S.C. 171(b).
A design patent must contain a single claim stating
that the patent claims an ornamental design for a
particular article of manufacture, as shown in
drawings contained in the specification. PTO, Manual
of Patent Examining Procedure (MPEP) 1503.01,

1
Design patents are also distinct from trade dress, which pro-
tects a distinctive visual appearance of a product as a unique signi-
fier of the source of goods. Design patents protect designs without
regard to whether consumers associate a specific design with a
particular source of goods. See 15 U.S.C. 1125(a); Wal-Mart
Stores, Inc. v. Samara Bros., 529 U.S. 205, 214 (2000).

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Subsec. III (rev. 9th ed. 2015); see 37 C.F.R. 1.153(a).


Subject to the definiteness requirement applicable to
all patent applications, 35 U.S.C. 112(b), a design
patentee has substantial latitude in designating the
article to which the design is intended to be applied.
MPEP 1503.01.
In defining the scope of the claimed design, the pa-
tent applicant may use drawings, figures, or photo-
graphs, as well as a written description. In a drawing,
the design itself is depicted in solid black lines, while
broken lines are used to depict structures that are not
part of the claimed design but are necessary to show
the designs environment. See MPEP 1503.02. A
patented design may be a surface design such as an
ornament, impression, print, or picture, or it may
be the design for a shape or configuration for an
article of manufacture. In re Schnell, 46 F.2d 203,
209 (C.C.P.A. 1931).
b. A design patent is infringed when a defendant
makes, uses, offers to sell, or sells a product contain-
ing a design that is substantially similar to the patent-
ed design. Gorham, 81 U.S. at 528; Egyptian God-
dess, Inc. v. Swisa, Inc., 543 F.3d 665, 678 (Fed. Cir.
2008) (en banc), cert. denied, 556 U.S. 1167 (2009); see
35 U.S.C. 171(b), 271. In determining whether in-
fringement has occurred, the factfinder focuses on
whether the accused article embod[ies] the patented
design or any colorable imitation thereof. See Egyp-
tian Goddess, 543 F.3d at 678 (citation omitted; brack-
ets in original). 2

2
In virtually all the reported cases, the accused article is of the
same nature as the patented one. 8 Chisum 23.05[2], at 23-186.
If a design were applied to an article different from the one claimed
in the patent, the existence of infringement would turn on the nature

Exhibit 1
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If the defendant in a design-patent case is found li-


able for infringement, the patent holder has a choice
of remedies. Section 284, which applies to both utility
and design patents, authorizes an award of damages
adequate to compensate for the infringement, but in
no event less than a reasonable royalty for the use
made of the invention by the infringer. 35 U.S.C.
284. Section 289, the provision at issue in this case,
establishes an alternative remedy for infringement of
a design patent:
Whoever during the term of a patent for a design,
without license of the owner, (1) applies the patent-
ed 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 manufac-
ture to which such design or colorable imitation has
been applied shall be liable to the owner to the ex-
tent of his total profit, but not less than $250, re-
coverable in any United States district court having
jurisdiction of the parties.
35 U.S.C. 289. Section 289 further provides that the
availability of this remedy does not prevent, lessen,
or impeach any other remedy which an owner of an

of the design and the articles in question. If the design involves


surface ornamentation, such as a drawing intended to be placed on a
watch face, a clock emblazoned with the same design might be
infringing. Id. at 23-186 n.2. But if the design is for the shape of a
particular article, then transposing that design to a different article
might result in a substantial change in the appearance of the
design, thereby avoiding any question of infringement. Id.
23.05[2], at 23-186; see Kellman v. Coca-Cola Co., 280 F. Supp. 2d
670 (E.D. Mich. 2003) (no infringement when defendant reproduced
a design for the shape of a hat as a two-dimensional picture on t-
shirts).

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infringed patent has under [the Patent Act], but he


shall not twice recover the profit made from the in-
fringement. Ibid.; see Nordock, Inc. v. Systems Inc.,
803 F.3d 1344, 1353 (Fed. Cir. 2015) (a design patent-
ee must choose between damages under Section 284
and profits under Section 289), petition for cert. pend-
ing, No. 15-978 (filed Jan. 28, 2016).
2. Petitioners Samsung Electronics Co., Samsung
Electronics America, Inc., and Samsung Telecommu-
nications America, LLC (collectively, Samsung) com-
pete with respondent Apple Inc. in the market for
smartphonesthat is, cell phone[s] with a broad
range of other functions based on advanced computing
capability, large storage capacity, and Internet con-
nectivity. Riley v. California, 134 S. Ct. 2473, 2480
(2014); see Pet. App. 4a-5a. As relevant here, re-
spondent holds three design patents related to its
2007 iPhone. Those patents claim a black rectangular
round-cornered front face of a phone; a phones front
face as well as a bezel surrounding the faces rim; and
a grid of sixteen colorful icons on a black screen. Pet.
App. 19a-20a.
In 2011, respondent sued petitioners for patent in-
fringement, alleging that various Samsung smart-
phones infringed Apples design and utility patents
and diluted Apples trade dresses. Pet. App. 4a. After
a trial, a jury found, inter alia, that petitioners had
infringed respondents design patents. Id. at 57a-61a. 3
Invoking Section 289, respondent sought an award
of petitioners total profits from the sale of the in-

3
The jury also found dilution of respondents trade dresses and
infringement of its utility patents. Pet. App. 4a. The court of ap-
peals affirmed the utility-patent verdict and damages, and vacated
the trade-dress verdict. Ibid. Those rulings are not at issue here.

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fringing phones. Petitioners asserted two objections


to that measure of relief. First, petitioners argued
that, under basic causation principles, they should
be liable only for profits attributable to the infringing
design, as opposed to other attributes of the phones.
Pet. App. 27a, 133a. Second, petitioners argued in
their pretrial brief that profits disgorgement [must]
be limited to the article of manufacture to which a
patented design is applied, and that the relevant
article[s] of manufacture in this case were compo-
nents of the phones, rather than the phones them-
selves. D. Ct. Doc. No. 1322, at 19 (July 25, 2012)
(Pets. Trial Br.). Petitioners submitted proposed jury
instructions that embodied those principles, but the
district court rejected the proposed instructions on
the ground that theres no apportionment for Sam-
sung profits in design patent cases. J.A. 246.
The district court instructed the jury that [i]f you
find infringement by any Samsung defendant * * *
you may award Apple that Samsung Defendants total
profit attributable to the infringing products. Pet.
App. 165a. The jury awarded respondent all the prof-
its that petitioners had received on sales of the in-
fringing phones. Pet. 16. After a partial retrial on
damages resulting from errors not relevant here, the
district court entered a final judgment awarding re-
spondent nearly $1 billion in damages for design-
patent infringement and trade-dress dilution. Pet.
App. 5a.
3. The Federal Circuit affirmed the jurys finding
of design-patent infringement and the award of peti-
tioners total profit on the infringing phones. Pet.
App. 26a-29a. The court first rejected petitioners
argument that the award under Section 289 should

Exhibit 1
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have been limited to profits attributable to the in-


fringement, holding that the clear statutory language
[of Section 289] prevents us from adopting a causa-
tion rule. Id. at 28a. The court next rejected peti-
tioners argument that, for purposes of calculating the
appropriate award under Section 289, the infringing
article[s] of manufacture were the phones exterior
shells and the array of icons displayed on the phones
screens rather than the phones as sold to the public.
Id. at 29a. The court concluded that [t]he innards of
[petitioners] smartphones were not sold separately
from their shells as distinct articles of manufacture to
ordinary purchasers, and that respondent was there-
fore entitled to petitioners entire profits from the
infringing phones. Ibid.
SUMMARY OF ARGUMENT
I. Section 289 states that a person who applies a
patented design to any article of manufacture for the
purpose of sale, or who sells any article of manufac-
ture to which the patented design has been applied,
shall be liable to the [patent] owner to the extent of
his total profit. 35 U.S.C. 289. That language unam-
biguously permits a patent holder to recover the in-
fringers entire profits from the article of manufac-
ture to which the design was applied, regardless of
the extent to which those profits are attributable to
the infringing design. The history of Section 289s
development confirms that understanding.
II. Although Section 289 entitles the patent holder
to recover the infringers total profit on the article
of manufacture to which the design was applied, that
article of manufacture will not always be the fin-
ished product that is sold in commerce. Rather, the
relevant article will sometimes be a component of the

Exhibit 1
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ultimate item of sale. In such cases, the patentee is


entitled only to the infringers total profit for that
component, not its total profit for the finished item.
A. Section 289s text and history establish that an
article of manufacture may be a component of a
product as sold. During the late nineteenth and early
twentieth centuries, the Patent Office and the courts
construed the term article of manufacture, as used
in Section 289s predecessor, to include components
that were intended to be sold and used only as parts of
a larger product. Congress should be understood to
have adopted that construction when it reenacted the
total profit remedy as Section 289 in the Patent Act
of 1952. 35 U.S.C. 289.
The Federal Circuits contrary approach, under
which the relevant article of manufacture is invaria-
bly the entire product as sold, would result in grossly
excessive and essentially arbitrary awards. Under
that approach, when the plaintiffs patented design is
applied to a component of a multi-component product,
the award will turn substantially on the scope and
profitability of other components as to which no in-
fringement occurred. To be sure, Section 289s total
profit standard, which precludes any inquiry into
what portion of the profits on a particular article of
manufacture are attributable to the infringing de-
sign, may sometimes produce awards that exceed the
commercial benefit that the infringer derived by ap-
propriating the patented design. But there is no rea-
son to exacerbate those effects, which follow inevita-
bly from the unambiguous statutory text, by adopting
an overbroad reading of the term article of manufac-
ture.

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B. Identifying the relevant article of manufac-


ture entails a case-specific analysis of the relation-
ship among the design, the product, and any compo-
nents. The factfinder should identify the article in
which the design prominently features, and that most
fairly may be said to embody the defendants appro-
priation of the plaintiffs innovation. Relevant consid-
erations include the scope of the claimed design, the
extent to which the design determines the appearance
of the product as a whole, the existence of unrelated,
conceptually distinct elements in the product, the
extent to which various components can be physically
separated from the product as a whole, and the man-
ner in which the components were manufactured.
While the plaintiff bears the ultimate burden of estab-
lishing the infringers total profit, the defendant, as
the manufacturer or seller of the product in question,
should bear the burden of identifying any component
that it views as the relevant article of manufacture.
C. This Court should remand the case to allow the
courts below to determine whether a new trial is war-
ranted. Although the district courts jury instructions
equated the term article of manufacture with the
finished smartphones, it is unclear whether petition-
ers produced evidence supporting their assertions
that components of the phones should be considered
the relevant articles of manufacture. The lower courts
should be permitted to make that determination in the
first instance.
ARGUMENT
Under Section 289, whoever applies [a] patented
design, or any colorable imitation thereof, to any arti-
cle of manufacture for the purpose of sale * * * shall
be liable to the owner to the extent of his total profit.

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10

35 U.S.C. 289. This case presents the question wheth-


er, when an infringing design is embodied in a multi-
component product, the total profit awarded may
ever be less than the infringers total profit on the
complete product as it was sold to end-users. The
answer to that question is yes.
Once the relevant article of manufacture has
been identified, Section 289 renders the infringer
liable for all its profits for that article; the court or
jury may not award a lower amount on the theory that
only a portion of those profits are attributable to the
patented design. Contrary to the Federal Circuits
apparent conclusion, however, the relevant article of
manufacture need not always be the finished product
as sold to end-users. Where the relevant article of
manufacture is a component or portion of a multi-
component product, the infringers total profit for
that article may be less than its profit for the fin-
ished item of sale.
I. SECTION 289 AUTHORIZES A PATENT OWNER TO
RECOVER AN INFRINGERS TOTAL PROFIT FROM
AN INFRINGING ARTICLE OF MANUFACTURE
Section 289 establishes a disgorgement remedy in
cases where an infringer has sold an article of manu-
facture to which a patented design has been applied.
As we explain below (see pp. 16-31, infra), the rele-
vant article of manufacture will sometimes be the
entire product as sold in commerce, but it will some-
times be only a component or portion of that product.
Once the relevant article of manufacture has been
identified, however, Section 289 makes the infringer
liable for all the profits it received from sales of that
article, even if the articles other attributes contribut-
ed to those profits.

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11

A. Section 289 Does Not Permit Apportionment Based On


The Extent To Which The Infringers Profit On The
Relevant Article Of Manufacture Was Attributable
To The Infringing Design
1. Section 289 provides that whoever applies the
patented design * * * to any article of manufacture
for the purpose of sale, or sells or exposes for sale
any article of manufacture to which such design has
been applied, shall be liable to the owner to the ex-
tent of his total profit. 35 U.S.C. 289. The phrase
total profit is not ambiguous: total means the
entirety. The American Heritage Dictionary 1892
(3d ed. 1992); 11 The Oxford English Dictionary 176
(1st ed. 1933) (defining total as whole, entire).
The source of the total profit to which the patent
holder is entitled is equally clear. The conduct that
triggers liability under Section 289 is (1) applying a
patented design to an article of manufacture for the
purpose of sale, or (2) selling an article to which the
design has been applied. The total profit for which
the seller of infringing goods is liable is therefore the
total profit from the sale of the article of manufacture
to which the design has been applied.
2. The historical development of Section 289 and
its statutory predecessors confirms that understand-
ing. Section 289s total profit standard reflects Con-
gresss rejection of a series of decisions in which this
Court had held that a design patentee was entitled to
recoup only those profits that were attributable to
the use of the infringing design itself. Dobson v.
Dornan, 118 U.S. 10, 17 (1886); see Dobson v. Hart-
ford Carpet Co., 114 U.S. 439, 444 (1885) (Dobson I).
The defendants in the Dobson cases had sold carpets
with infringing designs. The Court held that the de-

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12

fendants were liable for only nominal damages be-


cause the patentees were unable to establish the por-
tion of their lost profits that was attributable to the
patented design, as opposed to the unpatented aspects
of the carpet. Dobson I, 114 U.S. at 444.
In response, Congress enacted a new rule of re-
covery for design patents. S. Rep. No. 206, 49th
Cong., 1st Sess. 2 (1886). The Act of February 4, 1887
(1887 Act), ch. 105, 24 Stat. 387, provided that any
person who applied a patented design to any article
of manufacture for the purpose of sale would be lia-
ble in the amount of two hundred and fifty dollars,
and if the total profit made by him * * * exceeds
the sum of two hundred and fifty dollars, he shall be
further liable for the excess of such profit. 1, 24
Stat. 387. The House Report explained that the new
provision would abrogate the Dobson decisions and
would permit the patentee to recover the infringers
entire profit on the article. H.R. Rep. No. 1966, 49th
Cong., 1st Sess. 3 (1886) (House Report); see id. at 1-2
(discussing Dobson I). Congress deemed that change
necessary and appropriate because, although the
design of an article like a carpet sells the article, id.
at 3, patentees would find it difficult to establish the
portion of an infringers profit that was directly due
to the appearance of those articles as distinguished
from their material, their fabric, [and] their utility,
id. at 2. Accordingly, in the ensuing decades, courts
understood the 1887 Acts manifest purpose to be
to declare that the measure of profits recoverable on
account of the infringement should be considered to
be the total net profits upon the whole article. Un-
termeyer v. Freund, 58 F. 205, 212 (2d Cir. 1893);

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13

Bush & Lane Piano Co. v. Becker Bros., 234 F. 79, 83


(2d Cir. 1916) (Piano II).
In 1952, when Congress reenacted the total profit
standard in Section 289, it did not materially alter the
statutory text or suggest any disagreement with the
settled understanding of that language. 4 See Patent
Law Codification and Revision: Hearings on H.R.
3760 Before Subcomm. No. 3 of the Comm. on the
Judiciary, 82d Cong., 1st Sess. 109-110 (1951) (state-
ment of P.J. Federico, U.S. Patent Office) (explaining
that a materially similar draft of the statute merely
puts [the design-patent provisions] in [their] place
without attempting to make any changes in the stat-
ute); accord P.J. Federico, Commentary on the New
Patent Act, 75 J. Pat. & Trademark Off. Socy 161,
202-203 (1993). The Federal Circuit has accordingly
recognized that Section 289, like its predecessor, enti-
tles a design-patent owner to an infringers entire
profits from the sale of the infringing article of manu-
facture. See, e.g., Nike, Inc. v. Wal-Mart Stores, Inc.,
138 F.3d 1437, 1441 (1998), cert. denied, 528 U.S. 946
(1999). 5

4
While the 1887 Act was limited to knowing infringement, Con-
gress omitted the knowledge requirement in Section 289. 35
U.S.C. 289.
5
Section 289s total profit measure of recovery is unique in
intellectual property law. In copyright and trademark cases, the
plaintiff is entitled to recover the infringers profits only to the
extent they are attributable to the infringement. 17 U.S.C. 504(b);
WMS Gaming Inc. v. WPC Prods. Ltd., 542 F.3d 601, 607 (7th Cir.
2008). In utility-patent cases, the Patent Act does not permit the
recovery of an infringers profits. The patent laws previously
authorized that remedy, however, and the Court construed the
relevant provision to encompass only those profits attributable to

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14

B. Petitioners Identify No Sound Basis For Construing


Section 289 To Allow An Award Of Less Than the In-
fringers Total Profit From The Relevant Article Of
Manufacture
Petitioners contend (Br. 34) that recoverable prof-
its under Section 289 are limited to those attributable
to infringement of the patented design. That argu-
ment is unpersuasive.
1. Petitioners rely primarily on Section 289s sec-
ond paragraph, which states that [n]othing in this
section shall prevent, lessen, or impeach any other
remedy which an owner of an infringed patent has
under the provisions of this title, but he shall not
twice recover the profit made from the infringement.
35 U.S.C. 289 (emphasis added); see 1887 Act 2, 24
Stat. 388 (similar). That language clarifies that, while
Section 289 supplements the generally applicable rem-
edies authorized by other Patent Act provisions, it
does not permit the patentee to combine those reme-
dies to obtain a double recovery. A design patentee
(like a utility patentee) may seek an injunction, 35
U.S.C. 283, or damages adequate to compensate for
the infringement, but in no event less than a reasona-
ble royalty, 35 U.S.C. 284. Section 289s second par-
agraph accordingly specifies that, if the patentee
obtains the infringers profits under Section 289, it
may not recover additional monetary damages under
Section 284 for the same acts of infringement. See
Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d
1277, 1291 (Fed. Cir. 2002).

the infringement. Patent Act of July 8, 1870, ch. 230, 55, 16 Stat.
206; see Tilghman v. Proctor, 125 U.S. 136, 146 (1888).

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15

In petitioners view, the second paragraphs refer-


ence to profit made from the infringement has the
additional function of implicitly limiting the total
profit recoverable under Section 289 to profit at-
tributable to the infringing design. Br. 34. That con-
struction should be rejected because it places the two
paragraphs of Section 289 at cross-purposes with each
other. Congress enacted the total profit standard
now contained in Section 289s first paragraph to
relieve the patentee of the burden of demonstrating
the portion of the infringers profit that is attributable
to the infringement. See p. 12, supra.
2. Petitioners also rely (Br. 35-39) on traditional
principles of causation and equity, arguing that Sec-
tion 289 is not sufficiently clear to abrogate the
common-law rule that compensation is limited to the
injury caused to plaintiff by defendants breach of
duty. Br. 36 (quoting Carey v. Piphus, 435 U.S. 247,
254-255 (1978)). Petitioners reliance on those back-
ground principles is misplaced. The whole point of the
total profit standard is to provide a measure of re-
covery different from, and in many cases more expan-
sive than, the award that traditional causation princi-
ples would produce. To be sure, in cases where the
relevant article of manufacture is not sold separate-
ly but is instead a component of a larger product,
identifying the infringers profit on that article may
require an inquiry that is functionally similar to a
traditional causation analysis. There is nevertheless a
significant conceptual and practical difference be-
tween the profit attributable to the infringing article
and the profit attributable to the infringement.

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16

II. TO CALCULATE THE TOTAL PROFIT DUE UNDER


SECTION 289, THE FACTFINDER MUST IDENTIFY
THE ARTICLE OF MANUFACTURE TO WHICH THE
INFRINGING DESIGN HAS BEEN APPLIED, AND
THAT ARTICLE WILL NOT ALWAYS BE THE FIN-
ISHED PRODUCT SOLD TO END-USERS
To calculate the total profit for which the infring-
er is liable, the factfinder must first identify the arti-
cle of manufacture to which the patented design has
been applied. 35 U.S.C. 289. The court below appears
to have assumed that the relevant article of manufac-
ture is necessarily the final product as sold in com-
merce. Pet. App. 29a. That is incorrect.
When Congress first adopted the total profit
standard, it was responding to concerns raised about a
specific set of productscarpets, wallpaper, and the
likethat are composed of a single component.
House Report 3; see pp. 11-12, supra. When an in-
fringing design is applied to that sort of product, there
is only one possible article of manufacturethe
complete product as sold to end-users. But nothing in
Section 289s text or history suggests that the rele-
vant article of manufacture must invariably be the
product as sold. To the contrary, the term article of
manufacture literally encompasses all manufactured
objectsboth complete products and components
and it has historically been understood to include
both. When the product whose sale gives rise to in-
fringement liability is made up of multiple compo-
nents, the factfinder must determine whether the
article of manufacture to which the defendant has
applied the patented design is the entire product as
sold, or a component of that product.

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17

A. The Relevant Article Of Manufacture For Purposes


Of Section 289 May Be A Component Of A Multi-
Component Product
1. The term article of manufacture is broad enough
to include components of a complete product
The term manufacture broadly includes [a]ny
useful product made directly by human labor, or by
the aid of machinery directed and controlled by hu-
man power. Blacks Law Dictionary 751 (1st ed.
1891); accord Blacks Law Dictionary 1109 (10th ed.
2014). The phrase article of denotes an example of a
category of things: [s]omething considered by itself
and as apart from other things of the same kind or
from the whole of which it forms a part; also, a thing
of a particular class or kind. Websters New Interna-
tional Dictionary of the English Language 131 (W.T.
Harris ed., 1917) (example: an article of merchan-
dise); accord 1 James A.H. Murray, A New English
Dictionary 471 (1888). The phrase article of manu-
facture therefore encompasses any item that is made
by human labor, including manufactured items that
are not sold as separate commodities but instead func-
tion as components of a larger product.
That conclusion is reinforced by the construction
given to the identical phrase in Section 171, which
authorizes the PTO to issue patents on designs for
article[s] of manufacture. 35 U.S.C. 171. That pro-
vision, in turn, echoes Section 101, which provides that
an inventor may obtain a utility patent on any new
and useful * * * manufacture. 35 U.S.C. 101.
Courts have long understood Section 171s reference
to an article of manufacture to include any article
that would fall within the definition of manufacture
under Section 101. See In re Hruby, 373 F.2d 997,

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18

1000 (C.C.P.A. 1967); In re Hadden, 20 F.2d 275, 276


(D.C. Cir. 1927); 8 Chisum 23.03[2], at 23-12 to 23-
13. And this Court has construed the term manufac-
ture, as used in Section 101, broadly to include any-
thing made for use from raw or prepared materials.
American Fruit Growers, Inc. v. Brogdex Co., 283
U.S. 1, 11 (1931) (citation omitted); see Johnson v.
Johnston, 60 F. 618, 620 (C.C.W.D. Pa. 1894). As a
leading treatise explained in 1890, the term manufac-
ture is comprehensive enough to encompass the
parts of a machine considered separately from the
machine itself, all kinds of tools and fabrics, and every
other vendible substance which is neither a complete
machine nor produced by the mere union of ingredi-
ents. 1 William C. Robinson, The Law of Patents for
Useful Inventions 183, at 270 (1890).
2. Section 289 does not limit the types of articles that
may qualify as the relevant article of manufac-
ture
Although Section 289 refers to the sale of an ar-
ticle of manufacture, it does not suggest that the
article must always be the entire product as sold. The
relevant article of manufacture under Section 289 is
one to which the patented design has been applied,
i.e., one in or on which the design is embodied or dis-
played. See Gorham Co. v. White, 81 U.S. (14 Wall.)
511, 524-525 (1872). With respect to some multi-
component products, the finished product as sold in
commerce is most naturally viewed as the article to
which the patented design is applied. That will be
so if the peculiar or distinctive appearance (id. at
525) that constitutes the design predominates when
viewing all the components in combination. In other
cases, however, it is more natural to say that the de-

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19

sign has been applied to a single component, or to a


set of components that together are only a portion of
the product as sold.
Section 289 states that an infringer who applies a
patented design to an article of manufacture for the
purpose of sale, or who sells * * * any article of
manufacture to which the patented design has been
applied, is liable for his total profit. 35 U.S.C. 289.
Because the award of profits is premised on the sale
of the article of manufacture, the relevant article
must be capable of being sold. But if a particular
component is otherwise naturally characterized as the
article of manufacture to which the patented design
has been applied, the sale of the complete product in
commerce is properly viewed as a sale of the compo-
nent as well, since title to the component is trans-
ferred as an incident of the larger sale.
3. The judicial and administrative understanding of
the term article of manufacture has long includ-
ed components of products
In the decades preceding Congresss enactment of
Section 289 in the Patent Act of 1952, the courts and
the Patent Office construed the term article of manu-
facture, as used in the statutory predecessors to
Sections 289 and 171, to include components of larger
products. Congress should be understood to have
adopted that prevailing interpretation when it reen-
acted the total profit remedy in Section 289.
a. In the early twentieth century, courts of appeals
occasionally addressed the proper measure of profits
under the 1887 Act when the defendant applied an in-
fringing design to a multi-component product. Those
courts recognized that the phrase article of manufac-
ture included manufactured articles that functioned

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20

as components of a product, and that determining the


relevant article for purposes of calculating profits
involved a case-specific inquiry.
In 1915 and 1916, the Second Circuit held, in a pair
of cases known as the Piano Cases, that a piano
casei.e., the outer body of a piano, which gives the
piano its shape and houses its strings and hammers
that was sold with and as part of a piano was the
relevant article of manufacture for purposes of
calculating profits. Piano II, 234 F. at 81; see Bush &
Lane Piano Co. v. Becker Bros., 222 F. 902 (1915)
(Piano I). The defendant had sold pianos embodying
the plaintiffs ornamental design for a piano case, and
the district court awarded the profits on the piano
proper. Piano I, 222 F. at 904. In reversing that
decision, the court explained that it was necessary to
determine the article to which the design was ap-
plied by examining the relation to the business
whole of the part embodying the patent * * * from
all viewpoints, technical, mechanical, popular, and
commercial. Piano II, 234 F. at 81 (internal quota-
tion marks omitted).
Applying that framework to the evidence before it,
the Second Circuit concluded that the article to which
the patented design had been applied was the piano
case. Piano II, 234 F. at 82. The court acknowl-
edged that there was no separate market for the
piano case standing alone, divorced from the piano
mechanism. Id. at 83. It found, however, that the
piano case was a distinct article of manufacture
because the patentees innovation did not extend to
the pianos mechanism, which served a function dis-
tinct from that of the case. Id. at 81-82. Drawing an
analogy to a patent for a book binding * * * manu-

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21

factured with and for [a single] book, the court ex-


plained that, although the binding would have no
separate commercial existence apart from the liter-
ary work embodied in the book, it would be absurd to
award the patentee of the binding all profits from
sales of the book. Ibid.
Similarly in Young v. Grand Rapids Refrigerator
Co., 268 F. 966 (1920), the Sixth Circuit held that the
relevant article of manufacture was a door latch sold
as part of a refrigerator. Id. at 973-974. The plaintiff
held a patent on a design for the latch, and the de-
fendant sold refrigerators containing a latch that in-
fringed the design. While acknowledging that the re-
frigerator containing the latch was sold as a uni-
tary article, the court stated that it is not seriously
contended that all the profits from the refrigerator
belonged to [the plaintiff]. Id. at 974.
b. Both before and after the enactment of the 1887
Act, the Patent Office and the courts understood the
term article of manufacture, as used in the Patent
Acts provisions governing the issuance of design
patents, to permit the issuance of a patent on a com-
ponent of a product, even when that component would
not be sold separately. See Rev. Stat. 4929 (1878)
(authorizing the Patent Office to issue a design patent
for any original design for an article of manufac-
ture); 35 U.S.C. 171.
During the nineteenth and early twentieth centu-
ries, the Patent Office did not issue design patents on
products with parts that a user would ordinarily de-
tach or move, on the ground that the composite prod-
uct would not embody a single, unitary appearance
that could be patented as a design. See Ex parte
Adams, 84 Off. Gaz. Pat. Office 311, 311 (1898). The

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22

Office repeatedly emphasized, however, that an inven-


tor could obtain a design patent on a component part
of such a product, regardless of whether that compo-
nent could be sold or used separately. The Office thus
treated the component itself as an article of manufac-
ture that could be the subject of a design patent. See
ibid. (The several articles of manufacture of peculiar
shape which when combined produce a machine or
structure having movable parts may each separately
be patented as a design.). The Patent Office opined
on that basis that an inventor could obtain a design
patent on designs for one member or jaw of a pair of
tongs, Ex parte Kapp, 83 Off. Gaz. Pat. Office 1993,
1994 (1898); a glass bottle stopper designed to be used
with a particular inkstand, Ex Parte Brower, 4 Off.
Gaz. Pat. Office 450, 450 (1873); and each of two cast-
ings adapted to interlock and form a joint in a bed-
stead, Ex Parte Brand, 83 Off. Gaz. Pat. Office 747,
748 (1897).
Courts took the same view. In Pullman Couch Co.
v. Union, 39 U.S.P.Q. 100 (D. Md. 1938), the district
court held that a furniture post that is not sold, and
can not profitably be sold separately from the com-
plete sofa, was nonetheless a separate article of
manufacture because it was manufactured inde-
pendently of the rest of the sofa. Id. at 104; see Simp-
son v. Davis, 12 F. 144, 145-146 (E.D.N.Y. 1882) (stat-
ing in dicta that a cap of a railing post was likely a
distinct article because it was manufactured by
itself, even though it was never used except in con-
nection with other parts of the post).
c. Congress is presumed to be aware of an admin-
istrative or judicial interpretation of a statute and to
adopt that interpretation when it re-enacts a statute

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23

without change. Forest Grove Sch. Dist. v. T.A., 557


U.S. 230, 239-240 (2009) (quoting Lorillard v. Pons,
434 U.S. 575, 580 (1978)). Although questions con-
cerning what product or portion of a product should
be considered the relevant article of manufacture
did not arise frequently in the decades preceding the
passage of the Patent Act of 1952, courts and the
Patent Office consistently recognized that items sold
only as part of a larger product could count as arti-
cle[s] of manufacture. Congress should be under-
stood to have adopted that construction in reenacting
the total profit remedy as Section 289 in the Patent
Act of 1952.
4. Treating the complete product as the relevant ar-
ticle of manufacture in every case would often
produce greatly disproportionate infringement lia-
bility
The Federal Circuit concluded that respondent was
entitled to recover petitioners entire profits from
their sales of infringing smartphones because [t]he
innards of [petitioners] smartphones were not sold
separately from their shells as distinct articles of
manufacture to ordinary purchasers. Pet. App. 29a.
The court thus appeared to adopt a categorical rule
that the relevant article of manufacture under Sec-
tion 289 is always the finished product sold to end-
users. That construction of Section 289 will often
generate grossly disproportionate awards. Because
the term article of manufacture is readily suscepti-
ble of a narrower construction, the Federal Circuits
approach should be rejected.
From a potential defendants perspective, the con-
sequences of the Federal Circuits rule could be dra-
conian. That rule would mandate an award of total

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24

profit on the finished product even if the patented


design appears only on a single component that repre-
sents a small fraction of the innovation reflected in the
sold product and of that products overall commercial
appeal. That measure of total profit (e.g., on sales of
refrigerators) will often bear no meaningful relation-
ship to the gain the defendant has realized by appro-
priating a patented design (e.g., on a latch). And be-
cause patent infringement is a strict-liability tort, a
manufacturer could suffer that consequence even if it
did not deliberately copy the patented design.
In addition, many complex technological products
have multiple components that could implicate distinct
patented designs. If a single finished product in-
fringed multiple design patents, the Federal Circuits
approach could allow each patentee to seek an award
of the total profits on the product. That concern is
exacerbated by the possibility that patent-assertion
entities could use the threat of an award of profits on
the whole product as a sword to extract settlements,
even when their claims are frivolous. Commil USA,
LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1930 (2015);
see Giuseppe Macri, Patent Trolls Are Already Abus-
ing the Apple v. Samsung Ruling, InsideSources (Oct.
1, 2015), http://www.insidesources.com/patent-trolls-
are-already-abusing-the-apple-v-samsung-ruling/.
To be sure, even in cases involving unitary (i.e.,
single-component) items of sale, Section 289s total
profit standard may sometimes produce awards that
are disproportionate to the commercial significance of
the patented design. Congress adopted the total
profit standard in the 1887 Act out of concern that,
even when a patented design in fact drives the de-
mand for a particular unitary article, the potential

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25

difficulty of proving the profits attributable to the


design may unfairly deprive the patentee of any mean-
ingful recovery. House Report 3. But while Congress
acted to prevent under-compensation of design pa-
tentees, Section 289s total profit standard has an
evident potential to over-compensate plaintiffs in
some cases. Where the relevant article of manufac-
ture is the finished product as sold in commerce,
Section 289 does not permit the infringer to show that
some or most of its profit is attributable to aspects of
the product (e.g., the quality of the materials used to
create it, or the skill with which it is manufactured)
other than the patented design. See pp. 11-15, supra.
The risk of disproportionate awards would be re-
duced still further if Section 289 allowed such inquir-
ies in unitary-article cases. But Congresss decision to
foreclose apportionment of profits in that circum-
stance provides no legal or logical basis for requiring
infringers to disgorge their entire profits on sales of
multi-component products simply because a single
component incorporated a patented design. The prac-
tical harms wrought by the Federal Circuits interpre-
tation are likely to be much more extreme than any
that may occur in unitary-article cases, and the text of
Section 289 provides a sound basis for distinguishing
between the two situations.
B. Identifying The Relevant Article Of Manufacture Is
A Task For the Finder Of Fact Under The Totality Of
The Circumstances
1. a. Calculating the award of total profit under
Section 289 requires the factfinder to identify the
article of manufacture to which the patented design
has been applied. 35 U.S.C. 289. A patentable design
is one that gives a peculiar or distinctive appearance

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26

to the manufacture, or article to which it may be ap-


plied. Gorham, 81 U.S. at 525. In some cases it will
be clear that the patented design gives a peculiar or
distinctive appearance only to a component (e.g., a
refrigerator latch) of a larger product sold in com-
merce, rather than to the product as a whole. There
will sometimes be legitimate doubt, however, whether
a patented design is best viewed as affecting the ap-
pearance of the sold product as a whole or only the
appearance of a component or other portion of that
product. If the design in question is the shape of the
Volkswagen Beetle, for example, one might reasona-
bly say either that the design determines the appear-
ance of the automobiles body or that it determines the
appearance of the car as a whole.
In conducting this inquiry, the factfinders over-
arching objective should be to identify the article that
most fairly may be said to embody the defendants
appropriation of the plaintiffs innovation. That
framework anchors the inquiry in Section 289s pur-
pose, which is to provide the patentee with a remedy
for (and to prevent the infringer from profiting from)
the unlawful appropriation. In determining whether
the relevant article is the entire product or a compo-
nent, the factfinder therefore should keep in mind the
scope of the plaintiffs innovation and should identify
the article in which the patented design prominently
features, without unnecessarily sweeping in aspects of
the product that are unrelated to that design.
That approach is not inconsistent with Section
289s elimination of the requirement that the patentee
demonstrate that the profits in question are attributa-
ble to the infringement. In Section 289, Congress
deviated from that general rule of causation because it

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27

was concerned that applying that principle to design


patents would often under-compensate patentees. See
pp. 12, 24-25, supra. Congress did not render the
infringer liable for its total profit on the final sold
product, however, but only for its total profit on the
article of manufacture to which the patented design
was wrongfully applied. In cases where the identity of
the relevant article of manufacture is otherwise
open to reasonable dispute, the factfinder may legiti-
mately consider which characterization would appro-
priately compensate (rather than over-compensate)
the patentee for the contribution of the patented de-
sign to the value of the infringers finished product.
See, e.g., Sheldon v. Metro-Goldwyn Pictures Corp.,
309 U.S. 390, 402-408 (1940) (discussing principles
applied by equity courts in awarding profits for patent
and copyright infringement). When a product is com-
posed of distinct components, choosing the article that
most fairly embodies the plaintiffs invention will help
to ensure that neither party will have what justly
belongs to the other. Id. at 408.
b. The article of manufacture inquiry entails a
case-specific examination of the relationship among
the design, any relevant components, and the product
as a whole. See Piano II, 234 F. at 81. Several con-
siderations are relevant to the inquiry.
First, the scope of the design claimed in the plain-
tiffs patent, including the drawing and written de-
scription, provides insight into which portions of the
underlying product the design is intended to cover,
and how the design relates to the product as a whole. 6

6
In an infringement suit, the court determines the proper con-
struction of the patent claims, and the jury determines, based on
the courts construction, whether the defendant has infringed the

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28

See, e.g., Piano I, 222 F. at 903-904; Grand Rapids


Refrigerator, 268 F. at 974. In addition, the patent
identifies the article of manufacture that the patentee
views as the article to which the design is applied.
MPEP 1503.01. In some cases, the patent will indi-
cate that the design is intended to be applied to a
component of the product. See Piano I, 222 F. at 904
(relying on fact that inventor received a patent for a
piano case and not for a piano). But the factfinder
should not treat the patents designation of the article
as conclusive. The inventor of a piano-case design, for
instance, should not be able to obtain profits on the
piano as a whole simply by characterizing his inven-
tion as an ornamental design for a piano.
Second, the factfinder should examine the relative
prominence of the design within the product as a
whole. If the design is a minor component of the
product, like a latch on a refrigerator, or if the prod-
uct has many other components unaffected by the
design, that fact suggests that the article should be
the component embodying the design. Conversely, if
the design is a significant attribute of the entire prod-
uct, affecting the appearance of the product as a
whole, that fact might suggest that the article
should be the product.
Third, and relatedly, the factfinder should consider
whether the design is conceptually distinct from the
product as a whole. As the Second Circuit explained

patent. See Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665,
679 (Fed. Cir. 2008) (en banc), cert. denied, 556 U.S. 1167 (2009);
see also Markman v. Westview Instruments, Inc., 517 U.S. 370,
372 (1996). In identifying the relevant article of manufacture
under Section 289, the jury can similarly take into account the
courts construction of the claims.

Exhibit 1
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29

in Piano II, a book binding and the literary work


contained within it respond to different concepts;
they are different articles. 234 F. at 82. If the prod-
uct contains other components that embody conceptu-
ally distinct innovations, it may be appropriate to
conclude that a component is the relevant article.
Fourth, the physical relationship between the pa-
tented design and the rest of the product may reveal
that the design adheres only to a component of the
product. If the design pertains to a component that a
user or seller can physically separate from the prod-
uct as a whole, that fact suggests that the design has
been applied to the component alone rather than to
the complete product. See, e.g., Piano I, 222 F. at
904; Brand, 83 Off. Gaz. Pat. Office at 748. The same
is true if 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 (for in-
stance, for replacement purposes). See, e.g., Piano II,
234 F. at 81.
2. The task of identifying the relevant article of
manufacture is properly assigned to the finder of fact.
Context-specific judgments about the relationship of
the design to the article as a wholethe designs
effect on the products appearance, the components
physical separability, how the components are manu-
facturedare quintessentially factual in nature. Cf.
Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339
U.S. 605, 609 (1950) (application of doctrine of equiva-
lents in the utility-patent context is a question of fact
because it involves consideration of the purpose for
which an ingredient is used in a patent, the qualities it
has when combined with the other ingredients, and
the function which it is intended to perform); see

Exhibit 1
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30

Hana Fin., Inc. v. Hana Bank, 135 S. Ct. 907, 910-911


(2015) (holding that whether two trademarks create
the same, continuing commercial impression so that
consumers consider both as the same mark is a ques-
tion for the jury) (quotation marks omitted).
Under established law, the question whether a de-
sign patent has been infringed is one for the ju-
ry. See Egyptian Goddess, Inc. v. Swisa, Inc., 543
F.3d 665, 680-683 (Fed. Cir. 2008) (en banc), cert.
denied, 556 U.S. 1167 (2009); Amini Innovation Corp.
v. Anthony Cal., Inc., 439 F.3d 1365, 1371-1372 (Fed.
Cir. 2006). In making that determination, the jury
must compare two designs to decide whether in the
eye of an ordinary observer, giving such attention as a
purchaser usually gives, * * * the resemblance is
such as to deceive such an observer, inducing him to
purchase one supposing it to be the other. Gorham,
81 U.S. at 528. Treating the identification of the rele-
vant article of manufacture as a jury question is
consistent with the jurys role in determining design-
patent infringement, and with this Courts longstand-
ing recognition across a variety of doctrinal contexts
that, when the relevant question is how an ordinary
person or community would make an assessment, the
jury is generally the decisionmaker that ought to
provide the fact-intensive answer. Hana Fin., 135 S.
Ct. at 911.
3. The defendant should bear the burden of pro-
ducing evidence that the relevant article of manufac-
ture in a particular case is a portion of an entire
product as sold. The plaintiff bears the ultimate bur-
den of establishing the amount of the defendants total
profit. See SmithKline Diagnostics, Inc. v. Helena
Labs. Corp., 926 F.2d 1161, 1164 (Fed. Cir. 1991); cf.

Exhibit 1
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31

Horvath v. McCord Radiator & Mfg. Co., 100 F.2d


326, 330 (6th Cir. 1938), cert. denied, 308 U.S. 581
(1939). But once the plaintiff has shown that the de-
fendant profited by exploiting a product containing
the plaintiffs patented design, the defendant should
be required to identify, through the introduction of
admissible evidence, the component that the defend-
ant asserts is the article to which the design was ap-
plied. Cf. SEC v. Teo, 746 F.3d 90, 112 (3d Cir.) (once
government establishes existence of tainted profits,
defendant has burden of production to identify un-
tainted portions), cert. denied, 135 S. Ct. 675 (2014).
The defendant, as the manufacturer or seller of the
accused product, has superior knowledge of the identi-
ty of the products components, as well as of some of
the factors relevant to the article determination,
including the physical relationship between the design
and the product; the manner in which the product is
manufactured; and the extent to which the product
reflects the innovations of parties other than the
plaintiff. See Alaska Dept of Envtl. Conservation v.
EPA, 540 U.S. 461, 494 n.17 (2004) (placement of bur-
den of production may turn on which party has pecu-
liar means of knowledge of the facts in question)
(citation omitted); accord Medtronic, Inc. v. Mirowski
Family Ventures, LLC, 134 S. Ct. 843, 851 (2014).
C. The Court Should Remand This Case For Further
Proceedings
In this case, the district court instructed the jury
that, [i]f you find infringement[,] * * * you may
award Apple [the] total profit attributable to the in-
fringing products. Pet. App. 165a. That instruction
equated the relevant article of manufacture with the
accused phones as a whole, rather than permitting the

Exhibit 1
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Case 3:15-cv-00064-HZ Document 150-1 Filed 03/09/17 Page 40 of 42

32

jury to determine whether the phone itself or some


portion thereof was the article of manufacture to
which the patented design had been applied. Petition-
ers contend (Br. 58) that a new damages trial is there-
fore necessary. It is unclear, however, whether peti-
tioners presented evidence at trial to support their
assertion that the relevant articles of manufacture
were components of the phones. The Court should
therefore remand this case to allow the lower courts to
determine whether a new trial is warranted.
In the district court, petitioners contended that
under the Piano Cases, the outer case of a functional
product is a separate article of manufacture. Pets.
Trial Br. 21. Petitioners accordingly asked the court
to instruct the jury that [t]he article to which Apples
design was applied may be the same as or different
from Samsungs devices as sold, and that [w]here
the article of manufacture is a case or external hous-
ing of the device, then only the profits from the sale of
the case or external housing of the device should be
awarded. J.A. 207. It is not clear, however, whether
petitioners satisfied their burden of producing evi-
dence to support their arguments.
In their brief in this Court (Br. 54-56), petitioners
rely primarily on testimony that respondents patent-
ed designs extended only to aspects of the phones
physical appearance, rather than to the entire exter-
nal design of the phones. Petitioners also observe (Br.
1) that the phones contain many componentssuch as
the technology governing their functionsthat are
unrelated to the infringing designs. 7 Petitioners have

7
While petitioners were precluded from presenting certain evi-
dence (Pets. Br. 20), that evidence appears to have related primari-

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33

not, however, identified record evidence or argument


concerning other factors, such as the extent to which
users or sellers can physically separate the relevant
components from the other parts of the phones, the
manner in which the components were manufactured,
and the extent to which the designs effectively deter-
mined the entire appearance of the phones. 8 See pp.
27-29, supra. Rather than examine the trial record to
determine whether petitioners presented sufficient
evidence to support their proposed jury instruction,
the Court should remand this case to permit the lower
courts to determine whether a new trial is warranted.

ly to apportioning the profits attributable to the infringement. See


J.A. 25-55, 67-85.
8
It is also unclear whether petitioners argued below, as they do in
this Court (Br. 55-56), that the design for the grid of colorful icons
was applied to the display screen that sits beneath a smartphones
glass front face. Petitioners trial brief and proposed jury instruc-
tions discussed only the two designs relating to the external casing
of the phones, and did not separately discuss the article to which the
icon grid was applied. Pets. Trial Br. 19-22.

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34
CONCLUSION
The judgment of the court of appeals should be vacat-
ed and the case remanded for further proceedings.
Respectfully submitted.
DONALD B. VERRILLI, JR.
Solicitor General
SARAH T. HARRIS BENJAMIN C. MIZER
General Counsel Principal Deputy Assistant
NATHAN K. KELLEY Attorney General
Solicitor MALCOLM L. STEWART
THOMAS W. KRAUSE Deputy Solicitor General
Deputy Solicitor GINGER D. ANDERS
SCOTT C. WEIDENFELLER Assistant to the Solicitor
BRIAN T. RACILLA General
LORE A. UNT MARK R. FREEMAN
WILLIAM LAMARCA T YCE R. WALTERS
Associate Solicitors Attorneys
United States Patent and
Trademark Office
JUNE 2016

Exhibit 1
Page 42 of 42
Case 3:15-cv-00064-HZ Document 151 Filed 03/09/17 Page 1 of 26

JASMINE C. HITES, OSB # 104056


Troutman Sanders LLP
805 SW Broadway, Suite 1560
Portland, OR 97205
Telephone: (503) 290-2344; Facsimile: (503) 290-2405
Email: jasmine.hites@troutmansanders.com
MATTHEW D. MURPHEY, CSB #194111 (admitted pro hac vice)
Troutman Sanders LLP
5 Park Plaza, Suite 1400
Irvine, CA 92614
Telephone: (949) 622-2756; Facsimile: (949) 769-2090
Email: matt.murphey@troutmansanders.com
PAUL E. MCGOWAN, GSB #360460 (admitted pro hac vice)
Troutman Sanders LLP
600 Peachtree St. NE, Suite 5200
Atlanta, GA 30308
Telephone: (404) 885-3000; Facsimile: (404) 962-6842
Email: paul.mcgowan@troutmansanders.com

Attorneys for Defendant Seirus Innovative Accessories, Inc.

UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

COLUMBIA SPORTSWEAR NORTH No. 3:15-cv-00064-HZ


AMERICA, INC., an Oregon corporation,
SEIRUS OPENING BRIEF REGARDING
PLAINTIFF, LEGAL STANDARD FOR DESIGN
PATENT INFRINGEMENT DAMAGES
v. UNDER 35 U.S.C. 289

SEIRUS INNOVATIVE ACCESSORIES, Request for Oral Argument


INC., a Utah corporation,

DEFENDANT.

SEIRUS OPENING BRIEF REGARDING LEGAL Troutman Sanders LLP


100 SW Main Street, Suite 1000
STANDARD UNDER 35 U.S.C. 289 Portland, Oregon 97204
30558502 Telephone: 503.290.2400
Case 3:15-cv-00064-HZ Document 151 Filed 03/09/17 Page 2 of 26

TABLE OF CONTENTS
Page

I. PRELIMINARY STATEMENT ........................................................................... 1


II. BACKGROUND ................................................................................................... 3
A. Procedural Posture and Apple-Samsung .................................................... 3
B. Design Patents Generally ........................................................................... 3
III. THE COURT SHOULD APPLY THE ORDINARY MEANING OF THE
TERM COMPONENT. ...................................................................................... 4
A. Legal Standard ........................................................................................... 4
B. The Term Component, Though Not Expressly Defined, Is In
Common Usage .......................................................................................... 6
C. The Test Proposed by the Department of Justice Is a Reasonable
and Balanced Method to Identify the Article of Manufacture ................. 10
1. Where a Product Is Undisputedly a Single Component, the
DOJ Test May Be Unnecessary ................................................... 11
2. Where the Product is Alleged by Either Party to Be
Multicomponent, the DOJ Test Will Determine What the
Relevant Article of Manufacture Is.............................................. 12
D. The Burden of Proof Should Be on the Plaintiff in the First
Instance .................................................................................................... 15
1. A Plaintiff Always Bears the Burden of Persuasion on
Damages ....................................................................................... 15
2. There Is No Evidence of Legislative Intent to Reverse the
Burden of Persuasion on Damages under 289 .......................... 16
E. The Plaintiff is Entitled to Discovery on the Accused Products to
Identify the Relevant Article of Manufacture and the Instant
Litigation Should Proceed with Plaintiff Disclosing Its Theory
Regarding the Relevant Article of Manufacture and the Parties
Exchanging Discovery ............................................................................. 18
IV. CONCLUSION .................................................................................................... 20

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Case 3:15-cv-00064-HZ Document 151 Filed 03/09/17 Page 3 of 26

TABLE OF AUTHORITIES

Page(s)
CASES

Apple Inc. v. Samsung Elecs. Co.,


Nos. 2014-1335, 2015-1029, 2017 U.S. App. LEXIS 2140 (Fed. Cir. Feb. 7, 2017)
[dkt. 138-1 at Ex. E]...................................................................................................................3

Apple Inc. v. Samsung Elecs. Co.


No. 2014-1335 (Fed. Cir. Jan. 12, 2017) .................................................................................18

Bell Atl. Corp. v. Twombly,


550 U.S. 544 (2007) .................................................................................................................15

Bilski v. Kappos,
561 U.S. 593 (2010) ...................................................................................................................4

Bonito Boats v. Thunder Craft Boats,


489 U.S. 141 (1989) ...................................................................................................................9

Cardiac Pacemakers, Inc. v. St. Jude Med., Inc.,


576 F.3d 1348 (Fed. Cir. 2009)..................................................................................................8

Eolas Techs. Inc. v. Microsoft Corp.,


399 F.3d 1325 (Fed. Cir. 2005)..................................................................................................8

FCC v. NextWave Personal Commcns, Inc.,


537 U.S. 293 (2003) .................................................................................................................17

Life Techs. Corp. v. Promega Corp.,


197 L.Ed.2d 33 (U.S. 2017) .......................................................................................................7

Lucent Techs., Inc. v. Gateway, Inc.,


580 F.3d 1301 (Fed. Cir. 2009)................................................................................................15

Meghrig v. KFC Western, Inc.,


516 U.S. 479 (1996) .................................................................................................................17

Microsoft Corp. v. AT&T Corp.,


550 U.S. 437 (2007) .............................................................................................................8, 13

Samsung Elecs. Co. v. Apple Inc.,


137 S. Ct. 429 (2016) ....................................................................................................... passim

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TABLE OF AUTHORITIES
(continued)
Page

Sargent Mfg. Co. v. Cal-Royal Prods., Inc.,


No. 3:08-CV-408 (CFD), 2011 WL 4804772 (D. Conn. Oct. 7, 2011) .....................................7

Schaffer v. Weast,
546 U.S. 49 (2005) .............................................................................................................16, 18

SEC v. Teo,
746 F.3d 90 (3d Cir. 2014).......................................................................................................16

Sheldon v. Metro-Goldwyn Pictures Corp.,


309 U.S. 390 (1940) .................................................................................................................10

Taltech Ltd. v. Esquel Enters.,


410 F. Supp. 2d 977 (W.D. Wash. 2006) ...................................................................................8

STATUTES AND CONGRESSIONAL RECORD

37 C.F.R. 1.153(a).........................................................................................................................4

15 U.S.C. 1117(a) .......................................................................................................................17

35 U.S.C. 112 ............................................................................................................................4, 8

35 U.S.C. 171 ................................................................................................................................3

35 U.S.C. 271 ......................................................................................................................6, 7, 13

35 U.S.C. 284 ................................................................................................................................4

35 U.S.C. 289 ...................................................................................................................... passim

H.R. Rep. No. 57-1661 (1902) .........................................................................................................3

Act of May 9, 1902, ch. 783, Pub. L. No. 57-109, 32 Stat. 193. .....................................................3

OTHER AUTHORITIES

Blacks Law Dictionary (10th ed. 2014) ..........................................................................................7

Federal Rules of Civil Procedure 12(b)(6).....................................................................................15

PTO, Manual of Patent Examining Procedure (rev. 9th ed. 2015) ..................................................4

Websters II New College Dictionary (1999) ..................................................................................7


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TABLE OF AUTHORITIES
(continued)
Page

Websters New College Dictionary (3d ed. 2008) ...........................................................................7

The American Heritage College Dictionary (3d ed. 2000)..............................................................7

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Defendant Seirus Innovative Accessories, Inc. (Seirus) urges the Court to adopt the

following legal standard for an award of damages for infringement of a design patent under 35

U.S.C. 289 in light of Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016) and in

accordance with the Courts Order at docket no. 144.1

I. PRELIMINARY STATEMENT

The U.S. Supreme Court has dramatically altered the landscape for design patent

damages after issuing its first substantive decision on design patent damages law in over 100

years. Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016) (the Supreme Court decision will

be referred to hereinafter as Apple-Samsung; the overall matter between Samsung and Apple

will be referred to herein as Samsung). That decision jettisoned the prevailing legal standard

governing design patent damages under 35 U.S.C. 289the same standard to be applied in this

case. The Court held that a patentees recovery under 289 will not always be the total profits

for the entire product. Rather damages may, in the context of a design patent that is applied to

only a component of a product, be limited to those profits attributable to the component. In fact,

the Court explicitly held, contrary to earlier precedent, that the term article of manufacture

was broad enough to embrace both a product sold to a consumer and a component of that

product, whether sold separately or not.2 Moreover, the Court implemented this significant

change without defining an applicable test, leaving the lower courts with little guidance on how

1
Seirus incorporates by reference its December 30, 2016 letter to the Court and related response
brief (Dkt. 137) submitted on February 8, 2017 in opposition to Columbias Motion to Amend
the Scheduling Order (Dkt. 129) of December 28, 2016.
2
Columbia has mischaracterized the possibility that an article of manufacture will not be a
product sold separate to consumers as an exception. (Pl.s Mot. Am. at 3.) [Dkt. 129]. The new
definition supplied by the Supreme Court did not affirm the old Federal Circuit standard and
impose an exception, as Columbia would have it; it vacated the old standard and required the
imposition of an entirely new one.
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Case 3:15-cv-00064-HZ Document 151 Filed 03/09/17 Page 7 of 26

to proceed. The task before this Court, thenin what may well be a case of first impressionis

to identify and adopt such a test and develop procedures for how to apply the test within the

Courts trial schedule.

Thus, Seirus proposes that, in a case such as the instant litigation, where there is a

reasonable dispute as to the identity of the relevant article of manufacture, the test proposed by

the Department of Justice (DOJ) as amicus curiae in the Samsung matter should guide the fact

finder in determining the relevant article of manufacture.3 DOJ Br. at 17-31 [Dkt. 138, Exh. F].

The test involves the application of four objective considerations that the DOJ explains can help

identify the article that most fairly may be said to embody the defendants [alleged]

appropriation of the plaintiffs innovation and identify the article in which the patented design

prominently features, without unnecessarily sweeping in aspects of the product that are unrelated

to that design. Those factors are:

1. the scope of the patented design;

2. the relative prominence of the design within the product as a whole;

3. whether the design is conceptually distinct from the product as a whole; and

4. the physical relationship between the patented design and the rest of the product.

3
Seirus discusses here how, in its perspective, the law should be applied to determine the
relevant article of manufacture, including its argument for application of the DOJ test. In arguing
the legal issues, Seirus will not focus on the specific set of facts facing the Court here, but on the
pure question of law presented. In other words, Seirus did not understand the Court to request
briefing on what the article of manufacture is or might be under the facts of this casethat issue
necessarily requires further investigation, discovery and possibly expert testimonybut rather to
identify what the appropriate test is and, more importantly, how that test is to be applied in cases
involving design patent infringement allegations. Because, as Seirus argues, application of the
DOJ test to the specific set of facts facing this Court is a determination for the factfinder, that
analysis is better left for the jury at trial. See DOJ Br., at 25 (describing the identification of the
article of manufacture as a task for the finder of fact under the totality of the circumstances);
see also id. at 27-29. Seirus will, however, propose a schedule for proceeding through trial that is
specific to the procedural posture of this case.
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Whether this Court agrees to adopt the test proposed by the DOJ is crucial, but it does not

end the inquiry. The Court must also determine the related issues such as deciding the

evidentiary burdens on each party in applying the test, and identifying which are issues of fact

for the jury or law for the Court.

II. BACKGROUND

A. Procedural Posture and Apple-Samsung.

In the instant litigation, trial on damages for Columbias design patent is scheduled to

proceed on September 19, 2017. [Dkt. No. 144.] The Apple-Samsung decision necessitates re-

opening of discovery to permit the parties to address the new legal standard for design patent

damages under 35 U.S.C. 289. The Court ordered the parties to submit briefing addressing the

issue of the legal standard for damages. [Dkt. No. 144.]

Meanwhile, the Samsung case has been remanded to the District Court for the Northern

District of California for further proceedings, which may or may not include a new trial on

damages. Apple Inc. v. Samsung Elecs. Co., Nos. 2014-1335, 2015-1029, 2017 U.S. App. LEXIS

2140 (Fed. Cir. Feb. 7, 2017) [dkt. 138-1 at Ex. E]. Neither Apple nor Samsung has submitted

any brief to the District Court on remand, but Seirus anticipates that the California court will be

facing a similar legal question as this Court. No other argument or decision is available to guide

this Court, as of the time of this filing.

B. Design Patents Generally.

A design patent is available for any new, original and ornamental design for an article of

manufacture. 35 U.S.C. 171. Design patents are not available for useful product

configurations. H.R. Rep. No. 57-1661, at 1 (1902); see Act of May 9, 1902, ch. 783, Pub. L. No.

57-109, 32 Stat. 193. Likewise, a design patent cannot protect abstract ideas or physical
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phenomena, like basic shapes or concepts, nor can it cover functional features of a design. Bilski

v. Kappos, 561 U.S. 593, 601 (2010).

A design patent must contain a single claim stating that the patent claims an ornamental

design for a particular article of manufacture, as shown in drawings contained in the

specification. PTO, Manual of Patent Examining Procedure (MPEP) 1503.01, Subsec. III

(rev. 9th ed. 2015); see 37 C.F.R. 1.153(a). Subject to the definiteness requirement applicable

to all patent applications, 35 U.S.C. 112(b), a design patentee has substantial latitude in

designating the article to which the design is intended to be applied. MPEP 1503.01. In

defining the scope of the claimed design, the patent applicant may use drawings, figures, or

photographs, as well as a written description. In a drawing, the design itself is depicted in solid

black lines, while broken lines are commonly used to depict structures that are not part of the

claimed design but are necessary to show the designs environment. See MPEP 1503.02.

III. THE COURT SHOULD APPLY THE ORDINARY MEANING OF THE TERM
COMPONENT.

A. Legal Standard.

In a case involving design patent infringement, the patent holder has a choice of statutory

remedies. Section 284, which applies to both utility and design patents, authorizes an award of

damages adequate to compensate for the infringement, but in no event less than a reasonable

royalty for the use made of the invention by the infringer. 35 U.S.C. 284. Section 289, the

provision at issue here, establishes an alternative remedy for infringement of a design patent. It

provides:

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
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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.
Nothing in this section shall prevent, lessen, or impeach any other remedy
which an owner of an infringed patent has under the provisions of this title, but he
shall not twice recover the profit made from the infringement.

The statute does not define the term article of manufacture. In its Apple-Samsung

decision, the Supreme Court expressly vacated the previous test for determining design patent

damages under 289 in which the Federal Circuit incorrectly required that the allegedly

infringing articles to have been sold separately . . . as distinct articles of manufacture. Apple-

Samsung, 137 S. Ct. at 435-36. In doing so, the Supreme Court held that the term article of

manufacture was broad enough to embrace both a product sold to a consumer and a component

of that product, whether sold separately or not. Id. at 436. The Court expressly declined,

however, to provide a new test. Id.

As an initial matter, the scope of the Supreme Courts opinion is limited: [t]he only

question we resolve today is whether, in the case of a multicomponent product, the relevant

article of manufacture must always be the end product sold to the consumer or whether it can

also be a component of that product. Id. at 434. Thus, the Courts opinion applies only where a

multicomponent product is involved. There is no bright line test, but the Court distinguishes

between a single-component product, such as a dinner plate (for which the article of

manufacture is the entire product) and a multicomponent product, such as a kitchen oven (for

which determining the article of manufacture is a more difficult task). Id. at 432. Nevertheless,

in answering the question posed abovethat the relevant article of manufacture certainly can be

a component of a multicomponent productthe Court squarely rejected any notion that a patent

owner is entitled to the total profit on a product simply because that product bears the allegedly

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infringing design somewhere within the product. Id. at 435. That then leaves the interrelated

questions of what it means for something to be a component (of a multicomponent product)

and whether that component is the relevant article of manufacture for purposes of design

patent damages under 289. The Courts opinion provides guidance on several important

principles, including:

An article of manufacture as used in 289 is defined as simply a thing made


by hand or machine. Id. So, it is the article to which a patented design has been
applied.
A component of a product, no less than the product itself, is [also] a thing made
by hand or machine, and the fact [t]hat a component may be integrated into a
larger product, in other words, does not put it outside the category of the article of
manufacture. Id. Thus, there can be no dispute that a component can be the
relevant article of manufacture for purposes of 289 damages.
And, the term article of manufacture is broad enough to embrace both a
product sold to a consumer and a component of that product, whether sold
separately or not. Id. In other words, whether the component has been sold
separately is not a determinative factor.

At bottom, the Supreme Court has explained that while a component is certainly an

article of manufacture, the Court acknowledged the need for a test for identifying the relevant

article of manufacture at the first step of the 289 damages inquiry for purposes of design

patent damages under 289. Id. at 436.

B. The Term Component, Though Not Expressly Defined, Is In Common Usage.

The term component comes up repeatedly in the Supreme Courts Apple-Samsung

decision, but is not precisely defined beyond the recognition that a component, like an article of

manufacture, is a thing made by hand or machine. Id. at 435. Fortunately, the term

component is a relatively common term that is reasonably easy to understand. In fact, this non-

controversial term appears in other parts of the Patent Act, and has even been used by the parties

to this litigation. See, e.g., 35 U.S.C. 271(c), (f), (g) (explaining contributory infringement and
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inducement infringement, and an exception to infringement of a patent process in the context of

components and a component of a patented invention); accord Life Techs. Corp. v. Promega

Corp., 197 L.Ed.2d 33 (U.S. 2017) (recognizing, in the context of 35 U.S.C. 271(f), which

prohibits supplying from the United States all or a substantial portion of the components of a

patented invention for combination abroad, that components were manufactured in different

locations for combination); see also Dkt. 67 at 3 (noting parties agreed upon construction of the

claim term pairing the heat management body gear material with a piece of body gear as

using the heat management material with other components to form a piece of body gear);

Dkt. 121-1 at 620-22 (describing the process of manufacturing Columbias Omni-Heat

Reflective gloves and jackets as using the Omni-Heat Reflective fabric with other

components to form a glove or jacket).

In its use as a noun, component is defined by commonly-used dictionaries in nearly

identical ways. The definition offered by The American Heritage College Dictionary, A

constituent element, as of a system[,] is exactly replicated in both Websters New College

Dictionary and Websters II New College Dictionary. The American Heritage College

Dictionary 285 (3d ed. 2000); Websters New College Dictionary 236 (3d ed. 2008); Websters II

New College Dictionary 230 (1999);4 accord Sargent Mfg. Co. v. Cal-Royal Prods., Inc., No.

3:08-CV-408 (CFD), 2011 WL 4804772, at *6 (D. Conn. Oct. 7, 2011) (relying upon the

American Heritage College Dictionary definition, and holding Given this definition, a screw

could be considered a component of the mortise lock, and to remove a screw would be to remove

a component of the lock.). The U.S. Supreme Court looked to Websters Third New

4
Blacks Law Dictionary offers no definition for component. Blacks Law Dictionary 346
(10th ed. 2014).
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International Dictionary to define component as a constituent part, element, or

ingredient. Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 449 n.11 (2007) (quoting Websters

Third New International Dictionary 466 (1981)). The Federal Circuit draws the distinction

between a component of a tangible or intangible product: [A] component of a tangible

product, device, or apparatus is a tangible part of the product, device, or apparatus, whereas a

component of a method or process is a step in that method or process. Cardiac Pacemakers,

Inc. v. St. Jude Med., Inc., 576 F.3d 1348, 1362 (Fed. Cir. 2009); accord Eolas Techs. Inc. v.

Microsoft Corp., 399 F.3d 1325, 1339 (Fed. Cir. 2005) (A component of a process invention

would encompass method steps or acts. See, e.g., 35 U.S.C. 112, 6 (2000). A component of

an article of manufacture invention would encompass a part of that construct.).

Thus, a component is anything that is, or could be, part of a larger whole. See, e.g.,

Taltech Ltd. v. Esquel Enters., 410 F. Supp. 2d 977, 987-88 (W.D. Wash. 2006) (finding that a

garment that has been sewn together consists of several components). This is consistent with

how the parties have used the term throughout this litigation. See, e.g., Dkt. 121-1 at 621 &

623 (referring to components of gloves and jackets that include straps, zippers, elastic, [and]

string, among others). For purposes of determining design patent damages in light of the Apple-

Samsung decision, the question will be whether the design patent purports to protect the design

of the accused product, or purports to patent the design of some constituent element, part, or

component of the accused product. Regardless of how that question is answered, for purposes

of identifying a test to be used by the factfinder, the method of answering the question must be

sufficiently flexible to be applicable to all types of products and technologies.

Some products may be easy to evaluate for this purpose. For example, a screw or a dinner

plate may plainly consist of a single component and may not be susceptible to disassembly. See
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Apple-Samsung, 137 S. Ct. at 432. Further, the ornamental and functional aspects of these

products are more readily discerned. Conversely, however, a design patent that pertains to a

screw might well be incorporated into a more complex product, such as a pair of eyeglasses, such

that the patented design is a mere component of the product.5 The same is true whether the

product is highly complex, like a smartphone, or simple, like a t-shirt. Columbia has implied in

its previous briefing of the applicable standard that the complexity of the accused product at

issue in Samsung was somehow relevant to the analysis. Dkt. 129 at 5 (describing a smartphone

as one of the most complex consumer products there is). It is not. Indeed, the Supreme Court

did not seem bothered by the notion that a component of the smartphone it considered in Apple-

Samsung might be the front face, or the rounded rim of that smartphone, or even the placement

of colorful icons on a black screen of the smartphone. See Apple-Samsung, 137 S. Ct. at 433. The

Courts opinion was agnostic to the so-called complexity of the smartphone itself and focused

only on the ornamental aspects of the design, as claimed in the patent. The complexity of the

functional aspects of the product is irrelevant, contrary to Columbias implication, because

functional aspects are not covered by design patents. Bonito Boats v. Thunder Craft Boats, 489

U.S. 141, 148 (1989). Rather, it is the relationship between the component that allegedly bears

the patented design and the product as a whole that drives the determination of the article of

manufacture.

The question, then, is what is the article of manufacture to which the design patent

applies in the context of the accused product? Is it the entirety of the accused product, or is it

5
Of course, at some level of abstraction anything could be considered a component. Seirus
acknowledges this and does not intend to hold out de minimis components (e.g., the thread
used to sew together two parts of a garment). It will be important, however, for the Court to
adopt a test that is sufficiently flexible for all types of designs and products.
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something lessa component of that product? This question is particularly pertinent where, as

here, the parties dispute whether the product at issue is a multicomponent product in the first

instance and/or dispute how to identify the component to which the allegedly infringing design

has been applied. To that end, the Supreme Court noted that the Department of Justice (DOJ)

as amicus curiae suggested such a test that the parties here have largely agreed can be useful in

this regard.

C. The Test Proposed by the Department of Justice Is a Reasonable and Balanced


Method to Identify the Article of Manufacture.

The DOJ submitted an amicus curiae brief in Apple-Samsung supporting neither party, in

which it offered four considerations for determining the article of manufacture under section

289. DOJ Br. at 17 (Dkt. 138, Exh. F). This test involves the application of four considerations

that the DOJ explains can help identify the article that most fairly may be said to embody the

defendants [alleged] appropriation of the plaintiffs innovation and identify the article in

which the patented design prominently features, without unnecessarily sweeping in aspects of the

product that are unrelated to that design. Indeed, the DOJs characterization of its own test is

instructive:

In cases where the identity of the relevant article of manufacture is otherwise


open to reasonable dispute, the factfinder may legitimately consider which
characterization would appropriately compensate (rather than over-compensate)
the patentee for the contribution of the patented de-sign to the value of the
infringers finished product. See, e.g., Sheldon v. Metro-Goldwyn Pictures Corp.,
309 U.S. 390, 402-408 (1940) (discussing principles applied by equity courts in
awarding profits for patent and copyright infringement). When a product is com-
posed of distinct components, choosing the article that most fairly embodies the
plaintiffs invention will help to ensure that neither party will have what justly
belongs to the other. Id. at 408.

DOJ Br., at 27.

In its test, the DOJ noted that the courts and the Patent Office construed the term article
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of manufacture, as used in the statutory predecessors to sections 289 and 171, to include

components of larger products. Id. at 19; accord Apple-Samsung, 137 S. Ct. at 435. The

Supreme Court largely adopted the DOJs reasoning and vacated the Federal Circuits decision.

Ultimately, however, the Court declined to reach the question of what test should apply because

the parties had not briefed the question and it was not necessary to answer the question on

certiorari. Id. at 436.

1. Where a Product Is Undisputedly a Single Component, the DOJ Test May


Be Unnecessary.

The Apple-Samsung decision did not purport to vacate earlier precedent governing the

relevant article of manufacture for a single component product. See Apple-Samsung, 137 S. Ct. at

434. (The only question we resolve today is whether, in the case of a multicomponent

product, the relevant article of manufacture must always be the end product sold to the

consumer or whether it can also be a component of that product.) (emphasis added). Thus,

where the accused product consists of a single component that completely embraces the patented

design, and that fact is not in reasonable dispute, the DOJ test may be unnecessary to draw out

the distinctions and overlaps between the patented design and the accused product. It is

anticipated, however, that in many instances the accused product and relevant patent may present

a reasonable dispute as to whether the design patent claims the entire accused product as the

article of manufacture, and thus that the accused product should be treated as a single component

(even if the accused product could be broken down into discrete parts); or whether the product

consists of multiple components, some of which are not covered by the relevant patent. In such

cases, the DOJ test will be invaluable to draw out the true scope of the patent and the true nature

of the accused product relative to the patented design.

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2. Where the Product is Alleged by Either Party to Be Multicomponent, the


DOJ Test Will Determine What the Relevant Article of Manufacture Is.

The DOJ has proposed four considerations that it describes as relevant to this case-

specific examination of the relationship among the design, any relevant components, and the

product as a whole. DOJ Br. at 27. In summary form, those considerations include the following

factors:

1. the scope of the patented design;

2. the relative prominence of the design within the product as a whole;

3. whether the design is conceptually distinct from the product as a whole; and

4. the physical relationship between the patented design and the rest of the
product.

These factors were expounded upon by the DOJ in its amicus brief, and they deserve

further consideration here with some exemplary explanations. Because each is fact-specific, the

following explanations are not deemed to be limiting on the scope of the factors or the evidence

that may be relevant to each factor.

First, the factfinder should consider the scope of the design claimed in the plaintiffs

patent, including the drawing[s] and written description, which provides insight into which

portions of the underlying product the design is intended to cover, and how the design relates to

the product as a whole. Id. This factor will require a close reading and examination of the

design patent in question, with an eye toward identifying precisely what the scope of the design

patent is. The DOJ contemplated that the patent will identify the article of manufacture, as

intended by the patentee, though it further noted that the patents designation of the article should

not be treated as conclusive. Id. at 28. The factfinder should consider whether the drawings

contained in the patent contemplate the product in question at all, or expressly disclaim any

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portion of a product as drawn through the use of dashed lines. Evidence regarding the scope of

the claimed design, including the prosecution history, would be relevant to this factor.6

Second, the factfinder should consider the relative prominence of the design within the

product as a whole. Id. at 28. For example, the DOJ stated:

If the design is a minor component of the product, like a latch on a


refrigerator, or if the product has many other components unaffected by the
design, that fact suggests that the article should be the component embodying
the design. Conversely, if the design is a significant attribute of the entire product,
affecting the appearance of the product as a whole, that fact might suggest that the
article should be the product.

Id. This factor, then, will look both to the patent and the accused product, using scale and

prominence to evaluate the importance of the design patent to the product. A small or

insignificant feature bearing the patented design, or non-prominent use of the design, would

favor a narrower definition of the article of manufacture. Conversely, a prominent display of the

design would favor a broader definition. Evidence considering placement of the design within

the product, including how the product is displayed, as well as evidence to establish whether the

design as used in the product tends to drive its popularity, would be relevant to this factor.

Third, the factfinder should consider whether the design is conceptually distinct from

the product as a whole. Id. If the product contains other components that embody conceptually

distinct innovations, it may be appropriate to conclude that a component is the relevant article.

6
In a related case, the Department of Justice has provided further insight into this element. Brief
for the United States as Amicus Curiae Supporting Petitioners, Life Techs. Corp. v. Promega
Corp., at 27, No. 14-1538 (S. Ct. Sep. 8, 2016) (a true and correct copy of which is attached
hereto as Exhibit A) (noting that the Supreme Court has held that the term component is
commonly defined as a constituent part, element, or ingredient and that 271(f)(1)
contemplates components amenable to combination[.]) (citing Microsoft, 550 U.S. at 449
n.11). Thus, the defining characteristic of a component is that it can be combined with other
components to form a final product. (All Exhibit references herein refer to the Exhibits to the
contemporaneously filed Declaration of Matthew D. Murphey.)
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Id. at 29. Again, this factor will primarily depend upon a comparison of the patented design to

the accused product, this time considering not the prominence or scale of the patented design

relative to the overall accused product (as in the second factor), but the existence of distinct

components of the accused product, regardless of their prominence or scale, that can be

identified separately from the entire product. Again, as with the first consideration, disclaimed

elements in the design drawing may be relevant, but claiming an element is not dispositive that

the patent, whose scope is properly construed, protects that element. As with the second factor,

evidence related to the popularity of the product, as distinct from a design embedded within the

product, would be relevant to this factor.

Fourth, the factfinder should consider the physical relationship between the patented

design and the rest of the product[,] which may reveal that the design adheres only to a

component of the product. Id. For example, the DOJ explained, if the design is embodied in a

component that is manufactured separately from the rest of the product, it suggests that the

design has been applied to the component alone rather than to the complete product.7 Evidence

regarding manufacturing of the product, and specifically the number and type of components that

comprise the product, would be relevant to this factor.

The parties are in apparent agreement that the DOJ test should apply. What is not clear is

how these considerations would come up organically in litigation filed hereafter, and how the

parties should address these considerations now, in the midst of this litigation with trial just a

7
While the DOJ suggested that whether the component can be sold separately was relevant to
the determination of the article of manufacture, DOJ Br. at 29, the Supreme Court indirectly
rejected this aspect of the fourth factor, explicitly noting that an article of manufacture (and thus
a component) need not be sold separately. Apple-Samsung, 137 S. Ct. at 436 ([T]he term article
of manufacture is broad enough to embrace both a product sold to a consumer and a component
of that product, whether sold separately or not.).
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few months away. To that end, additional and necessary considerations include the evidentiary

burdens on both parties and the identification and distinction, if any, between issues of fact to be

decided by the jury and legal issues for determination by the Court. These issues will influence

the discovery obligations and opportunities afforded to each party, and must be consistent with

the Courts trial schedule for this case.

D. The Burden of Proof Should Be on the Plaintiff in the First Instance.

Of course, the burden of pleading always falls to the plaintiff, in any case. To survive a

motion under Rule 12(b)(6), a plaintiff filing a design patent infringement complaint in the wake

of Apple-Samsung should be expected plausibly to plead the elements of its claims, including the

elements of its claim for damages under 289. See, e.g., Bell Atl. Corp. v. Twombly, 550 U.S.

544 (2007). This pleading standard should require that the plaintiff identify the purportedly

infringing products as well as the alleged article of manufacture for which it seeks recovery.

1. A Plaintiff Always Bears the Burden of Persuasion on Damages.

It is axiomatic that [t]he burden of proving damages falls on the patentee. Lucent

Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). Thus, the burden of

establishing the article of manufacture, which is a central element of proving damages in a

design patent infringement case, must also fall on the patentee. See Reply Brief for Petitioners,

Apple Inc. v. Samsung Elecs. Co., at 16-18, No. 15-777 (S. Ct. Aug. 29, 2016) (a true and

correct copy of which is attached hereto as Exhibit B); Brief for Petitioners, Apple Inc. v.

Samsung Elecs. Co., at 53, No. 15-777 (S. Ct. June 1, 2016) (a true and correct copy of which is

attached hereto as Exhibit C) (describing the presentation of proof that Samsungs profits arose

from the articles of manufacture to which Apples narrow design-patent claims were applied or

that Samsungs profits otherwise resulted from infringement of the patented designs as
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unquestionably Apples burden).

The DOJ proposes reversing this burden. DOJ Br. at 30-31. It would have the defendant

bear the burden of producing evidence that the relevant article of manufacture in a particular

case is a portion of an entire product as sold. Id. at 30. It would then place the burden to prove

the defendants total profit upon the plaintiff. Id. The DOJs logic is that this is comparable to

having the defendant identify the untainted portions of a defendants profit. Id. at 31 (citing by

analogy SEC v. Teo, 746 F.3d 90, 112 (3d Cir. 2014)). This analogy does not hold here, however,

unless and until the plaintiff has identified the specific products which it claims infringe its

design patent, and produced evidence supporting the conclusion that those products are the

relevant article of manufacture. Unlike the defendants profits and expenses, which Courts

understandably often conclude are most easily parsed by the defendant, the DOJs test to identify

the article of manufacture does not only look at the defendants product, but also requires a close

reading and presentation of evidence related to the plaintiffs patent. Requiring the defendant to

parse the plaintiffs patent in the first instance, and present expert evidence of how that patent

should apply to the defendants product before the plaintiff has presented any evidence

especially evidence that the patent covers the entire accused productunfairly shifts the burden.

Such a rule would encourage plaintiffs holding design patents on minor components to sue

manufacturers of complex and costly products, knowing that the plaintiff need only allege

infringement, and then the burden of defending the allegations will shift to the defendant.

2. There Is No Evidence of Legislative Intent to Reverse the Burden of


Persuasion on Damages under 289.

The ordinary default rule is that Plaintiff bears the burden of persuasion. Schaffer v.

Weast, 546 U.S. 49, 56-57 (2005) (describing the ordinary default rule as requiring the

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plaintiff[] bear the burden of persuasion regarding the essential aspects of the [his] claims. . .

.). In limited circumstances, howeverand only by the express will of Congressdamages

burdens have been shifted to defendants. For example, the trademark damages statute allows the

plaintiff to seek an accounting or disgorgement of profits and provides for a shifted burden. 15

U.S.C. 1117(a) (the plaintiff shall be entitled . . . subject to the principles of equity, to recover

(1) defendants profits . . . .). Under that remedy, the plaintiff need only prove defendants sales,

and then the statute explicitly shifts the burden of proving damages to the defendant. Id. (In

assessing profits the plaintiff shall be required to prove defendants sales only; defendant must

prove all elements of cost or deduction claimed.). Section 289 contains no such explicit shift.

This is despite the similarities between the statutes: both being intellectual property provisions;

and both allowing for disgorgement of profits. It must therefore be assumed that Congress made

this choice deliberately. See, e.g., Meghrig v. KFC Western, Inc., 516 U.S. 479, 485 (1996)

(Congress . . . demonstrated in CERCLA that it knew how to provide for the recovery of

cleanup costs, and . . . the language used to define the remedies under RCRA does not provide

that remedy.); FCC v. NextWave Personal Commcns, Inc., 537 U.S. 293, 302 (2003) (when

Congress has intended to create exceptions to bankruptcy law requirements, it has done so

clearly and expressly).

Therefore, once the parties have come forward with whatever evidence they may have to

offer on the subject of the article of manufacture, it should be the plaintiffs burden of persuasion

to convince the finder of fact that the article of manufacture is whatever it claims. The opposite

result would have the defendant arguing against itself, which, is not the default rule and, while it

has been explicitly authorized by Congress in trademark disputes, is not the rule for design

patents. These distinctions regarding the proper placement of the burden are important. In the
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event that the plaintiff were to put on no evidence establishing what the relevant article of

manufacture is, and instead simply offer evidence of the defendants total profits, the DOJs

proposed formulation would improperly shift the burden immediately to the defendant to

establish the proper scope of the plaintiffs patenta fundamentally inapposite result in

American jurisprudence. Schaffer, 546 U.S. at 56-57. Rather, the plaintiff should have to come

forward with evidence establishing by a preponderance of the evidence that the product (or some

component thereof) is in fact the relevant article of manufacture.

E. The Plaintiff is Entitled to Discovery on the Accused Products to Identify the


Relevant Article of Manufacture and the Instant Litigation Should Proceed with
Plaintiff Disclosing Its Theory Regarding the Relevant Article of Manufacture
and the Parties Exchanging Discovery.

As argued above, it should be without question that the plaintiff has the burden, in the

first instance, to identify what products it alleges infringe its patent. In the instant litigation,

Columbia should be able to identify the products that infringe its design patent without need for

further discovery, given that it has already obtained summary judgment of infringement. [Dkt.

105.] Columbia must also explicitly state whether it claims that the relevant article of

manufacture is, in each instance, the entire product; or, if not, what component of the product

Columbia claims is the article of manufacture. Columbia will also need to come forward with

evidence to support its theory, under the DOJ considerations. It may also elect to use survey

evidence to demonstrate the value that consumers assign to the relevant articles of manufacture

in the accused products or show the price differential between [products] with and without

articles embodying the infringing designs. Statement of Defendants-Appellants in Supp. of

Remand for New Trial, Apple Inc. v. Samsung Elecs. Co., at 56, No. 2014-1335 (Fed. Cir. Jan.

12, 2017) [Dkt. 138-1 at Ex. B].

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In the event that expert testimony is necessary to support its case, Columbia should be

required to disclose such testimony, so that Seirus has the opportunity to depose Columbias

expert and prepare a rebuttal report. Given the time constraints here, it is advisable for the parties

to disclose the substance of any expert reports in advance of opening deadlines, to permit

sufficient time for the identification and engagement of rebuttal experts without unduly

extending discovery.

Presumably the parties will also exchange written requests for discovery on the subject of

the relevant article of manufacture. This and any other evidence beyond expert reports should be

exchanged and disclosed well in advance of trial. Again, this will facilitate timely discovery,

since additional depositions will likely be necessary, including both depositions of any experts

that may be disclosed and depositions of any fact witnesses that offer testimony elucidating non-

expert evidence relevant to determining the article of manufacture.

In keeping with the foregoing, Seirus proposes the following timeline for the parties to

exchange their discovery requests and disclosures. This timeline is similar to one previously

proposed by Seirus [dkt. 137], prior to this Courts setting of a September trial date, but includes

additional disclosure deadlines in keeping with the burdens described above. These deadlines are

proposed with the understanding that the Court will receive responsive briefs on the subject of

the appropriate standard on March 23, 2017 and based on the assumption that the Court will rule

on this matter within a week thereafter; deadlines may need to be extended further if those

assumptions are incorrect.

Plaintiffs preliminary disclosure of alleged article(s) of manufacture: April 6,

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20178

Supplemental discovery request deadline: April 28, 2017

Expert reports due: June 9, 2017

Rebuttal expert reports due: July 7, 2017

Expert discovery cut-off: July 31, 2017

Pre-trial: September 11, 2017

Trial: September 19, 2017

As with the schedule Seirus previously proposed, this schedule would permit the parties,

witnesses, and the Court ample time to prepare for a complete and thorough presentation of the

relevant evidence, without unduly burdening witnesses or parties, or failing to discover relevant

evidence due to insufficient time.

IV. CONCLUSION

For the foregoing reasons, Seirus respectfully requests that the Court adopt the above-

described considerations for determining the article of manufacture to which a design patent

applies; placing the burden upon Columbia, in the first instance, to identify what it alleges to be

the relevant article of manufacture and produce evidence supporting that allegation; and further

placing the burden upon Columbia to persuade the finder of fact that the article of manufacture it

has identified is the correct article under the totality of the circumstances.

8
This preliminary disclosure deadline is proposed as a substitute for amending Plaintiffs
Complaint to fulfill the pleading standard, as described above. It is not proposed as a final
statement of Plaintiffs position, which may be subject to modification based upon the results of
discovery and expert analysis, and presumably will be disclosed through the fact and expert
discovery process.
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Case 3:15-cv-00064-HZ Document 151 Filed 03/09/17 Page 26 of 26

DATED: March 9, 2017 Respectfully submitted,

TROUTMAN SANDERS LLP

s/ Matthew D. Murphey
JASMINE C. HITES, OSB # 104056
Troutman Sanders LLP
805 SW Broadway, Suite 1560
Portland, OR 97205
Telephone: (503) 290-2344
Facsimile: (503) 290-2405
Email: jasmine.hites@troutmansanders.com

MATTHEW D. MURPHEY (admitted pro hac vice)


5 Park Plaza, Suite 1400
Irvine, CA 92614
Telephone: (949) 662-2700
Facsimile: (949) 622-2739
Email: matt.murphey@troutmansanders.com

PAUL E. MCGOWAN (admitted pro hac vice)


Troutman Sanders LLP
600 Peachtree St. NE, Suite 5200
Atlanta, GA 30308
Telephone: (404) 885-3000
Facsimile: (404) 962-6842
Email: paul.mcgowan@troutmansanders.com

Attorneys for Defendant Seirus Innovative


Accessories, Inc.

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 1 of 26

JASMINE C. HITES, OSB # 104056


Troutman Sanders LLP
805 SW Broadway, Suite 1560
Portland, OR 97205
Telephone: (503) 290-2344; Facsimile: (503) 290-2405
Email: jasmine.hites@troutmansanders.com
MATTHEW D. MURPHEY, CSB #194111 (admitted pro hac vice)
Troutman Sanders LLP
5 Park Plaza, Suite 1400
Irvine, CA 92614
Telephone: (949) 622-2756; Facsimile: (949) 769-2090
Email: matt.murphey@troutmansanders.com
PAUL E. MCGOWAN, GSB #360460 (admitted pro hac vice)
Troutman Sanders LLP
600 Peachtree St. NE, Suite 5200
Atlanta, GA 30308
Telephone: (404) 885-3000; Facsimile: (404) 962-6842
Email: paul.mcgowan@troutmansanders.com

Attorneys for Defendant Seirus Innovative Accessories, Inc.

UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

COLUMBIA SPORTSWEAR NORTH No. 3:15-cv-00064-HZ


AMERICA, INC., an Oregon corporation,
SEIRUS REPLY BRIEF REGARDING
PLAINTIFF, LEGAL STANDARD FOR DESIGN
PATENT INFRINGEMENT DAMAGES
v. UNDER 35 U.S.C. 289

SEIRUS INNOVATIVE ACCESSORIES, Request for Oral Argument


INC., a Utah corporation,

DEFENDANT.

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 2 of 26

TABLE OF AUTHORITIES
Page
I. PRELIMINARY STATEMENT ........................................................................... 1
II. COLUMBIAS PROPOSED TEST IS FATALLY DEFICIENT AND
SHOULD BE REJECTED ..................................................................................... 3
A. Columbias Proposal Is Incomplete, Unclear, Biased, and Without
Legal Support ............................................................................................. 3
1. Columbias Proposal Is Incomplete ............................................... 3
2. Columbias Proposal Is Confusing, Ambiguous, and
Internally Inconsistent .................................................................... 5
3. Columbias Proposal Is Not Neutral .............................................. 8
4. Columbias Proposal Is Not Sufficiently Tied to Section
289 or Apple-Samsung ................................................................. 10
B. The Test Proposed by the Department of Justice Is a Reasonable
and Balanced Method to Identify the Article of Manufacture ................. 13
C. This Court Should Not Reverse the Customary Allocation of
Burdens .................................................................................................... 19
III. CONCLUSION .................................................................................................... 21

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 3 of 26

TABLE OF AUTHORITIES
Page
CASES

Apple, Inc. v. Samsung Elecs. Co.,


No. 11-CV-01846-LHK, 2014 U.S. Dist. LEXIS 29721 (N.D. Cal. Mar. 6, 2014) ..................1

Apple Inc. v. Samsung Elecs. Co.,


Nos. 2014-1335, 2015-1029, 2017 U.S. App. LEXIS 2140 (Fed. Cir. Feb. 7, 2017) ...............1

Bell Atl. Corp. v. Twombly,


550 U.S. 544 (2007) .................................................................................................................19

Bilski v. Kappos,
561 U.S. 593 (2010) .................................................................................................................11

Garretson v. Clark,
111 U.S. 120 (1884) .................................................................................................................12

LaserDynamics, Inc. v. Quanta Computer, Inc.,


694 F.3d 51 (Fed. Cir. 2012)....................................................................................................12

Life Techs. Corp. v. Promega Corp.,


197 L. Ed. 2d 33 (U.S. 2017) .................................................................................................5, 6

Nordock, Inc. v. Sys., Inc.,


No. 11-C-118, 2014 U.S. Dist. LEXIS 104746 (E.D. Wis. July 31, 2014) ...............................1

Nordock, Inc. v. Sys., Inc.,


Nos. 2014-1762, 2014-1795, 2017 U.S. App. LEXIS 4732 (Fed. Cir. Mar. 17, 2017) .............1

Rite-Hite Corp. v. Kelley Co.,


56 F.3d 1538 (Fed. Cir. 1995)..................................................................................................11

Samsung Elecs. Co. v. Apple Inc.,


137 S. Ct. 429 (2016) ....................................................................................................... passim

Versata Software, Inc. v. SAP Am., Inc.,


717 F.3d 1255 (Fed. Cir. 2013)................................................................................................12

VirnetX, Inc. v. Cisco Sys.,


767 F.3d 1308 (Fed. Cir. 2014)..........................................................................................11, 12

Westinghouse Elec. & Mfg. Co. v. Wagner Elec. & Mfg. Co.,
225 U.S. 604 (1912) .................................................................................................................12

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 4 of 26

TABLE OF AUTHORITIES
(continued)
Page

STATUTES

35 U.S.C. 271(f) ............................................................................................................................6

35 U.S.C. 284 ........................................................................................................................10, 11

35 U.S.C. 289 ...................................................................................................................... passim

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I. PRELIMINARY STATEMENT

When the Supreme Court vacated the legal standard for design patent damages in

December, 2016, it specifically left the determination of a new standard to the lower courts. The

lower courts have thus been charged with determining how best to identify the relevant article

of manufacture in light of the scope of a given patented design and the manner in which the

design has been applied in an accused product. As this Court enters these uncharted waters,1 it is

in need of even-handed and practical guidance to devise a test for these damages. The test

proposed by the DOJ2 provides both; Columbias proposal offers neither. Instead, Columbia has

cherry-picked those elements of the DOJ test it finds most favorable in the current casenone of

which even involve a close review of the design patent itselfand proposed a test that it believes

supports its ultimate conclusion that the accused products in this case must be the relevant article

of manufacture. In doing so, Columbia essentially ignores the possibility that the Court might

ever be confronted with a situation in which less than the entire end product constitutes the

article of manufacture. Columbias test simply restates the now-vacated law, and it is designed to

achieve disgorgement of profits attributable to the entire product sold to consumers without

regard to determining what the article of manufacture really is.

To determine the relevant article of manufacture, the Court will need to determine if the

accused product contains multiple components, and if it does, which component(s) embodies the

1
Seirus has identified two other Courts that may face similar questions in the near future, though
apparently neither has yet solicited briefing on this specific issue. See Apple Inc. v. Samsung
Elecs. Co., Nos. 2014-1335, 2015-1029, 2017 U.S. App. LEXIS 2140 (Fed. Cir. Feb. 7, 2017)
(District Court docket available at Apple, Inc. v. Samsung Elecs. Co., No. 11-CV-01846-LHK
(N.D. Cal.)); Nordock, Inc. v. Sys., Inc., Nos. 2014-1762, 2014-1795, 2017 U.S. App. LEXIS
4732 (Fed. Cir. Mar. 17, 2017) (District Court docket available at Nordock, Inc. v. Sys., Inc., No.
11-C-118 (E.D. Wis.)).
2
Seirus will continue to use the defined terms from its opening brief (doc. 151).
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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 6 of 26

article of manufacture protected by the design patent. To be sure, the product as sold will not

always comprise multiple components. But, the Court needs to determine that threshold question,

and Columbia provides almost no guidance. Instead, Columbia focuses on its self-serving goal of

equating the article of manufacture with the accused product, and nothing less.

The parties were in agreement that the DOJ test from its Apple-Samsung amicus brief was

an even-handed and well-designed test. Indeed, it was Columbia that initially advocated for

using that testincluding on multiple occasions in front of this Court. Now, however, Columbia

has backtracked. The self-serving nature of Columbias test is made worse by the fact that it is

unworkable. For example, Columbias legal standard is presented in the form of a jury

instruction with multiple parts and sub-parts. It is not realistic or feasible for a jury to parse

Columbias multipart proposed test, that usesbut does not define or explainterms like

material part of all of the components or ingredient parts or portion of the product to which

the design has been applied.

At bottom, Columbias proposal fails in at least four ways. First, it offers an incomplete

answer to the question of how to identify the article of manufacture, offering the Court no

meaningful guidance when the article of manufacture is anything less than the entire product as

sold, or how to practically determine whether a product is single- or multi-component. Second,

what guidance it does offer is ambiguous and internally inconsistent, raising many questions that

Columbia makes no effort to answer. Third, Columbias proposal is not neutral to the problem at

hand. Fourth, Columbias proposal is insufficiently grounded in the principles articulated in

289 and Apple-Samsung, the only binding guidance on this subject. For these reasons,

Columbias proposal should be rejected.

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 7 of 26

II. COLUMBIAS PROPOSED TEST IS FATALLY DEFICIENT AND SHOULD


BE REJECTED

A. Columbias Proposal Is Incomplete, Unclear, Biased, and Without Legal Support.

1. Columbias Proposal Is Incomplete.

This Court directed the parties to define what the appropriate standard should be for

design patent damages. (Tr. of Feb. 13, 2017 hearing (Feb. Tr.), excerpts of which are attached

as Exhibit A to the declaration of Matthew Murphey, filed contemporaneously herewith, at

117:16-18; accord Dkt No. 153.) In discussing the appropriate legal standard during the hearing,

Columbia suggested it involved two issues: Are you dealing with a multi-component product?

If not, all the old rules apply, [] 289 applies. Then the question is: Are you dealing with a multi-

component product? . . . . [T]hen what test do you apply to determine what specific component

within the multi-component article the patented design has been applied to and how should it be

treated? (Feb Tr. at 120:9-20.) Notably, Columbia has failed to even respond to these questions

in its brief as it framed them for the Court.

Columbias proposal contemplates three conditions under which a Court will treat the

entire product as the relevant article of manufacture.3 In Columbias first formulation, if the

product is a single component, the product will be the relevant article of manufacture. The

3
Columbia proposes a test designed to ensnare the entire product as sold. Rather than propose a
test to determine what is the relevant article of manufacture without any preconceived notion of
whether it encompasses the entire product as sold, Columbia begins with the premise that the
relevant article of manufacture is the entire product if one of three conditions is satisfied. If
not satisfied, however, Columbia provides no meaningful guidance in determining what
constitutes the relevant article of manufacture. Further, Columbia ignores the specific teachings
of Apple-Samsung in which the Supreme Court jettisoned the idea that the entire product must be
the relevant article of manufacture and plainly held that a component could be the relevant article
of manufacture under 289, whether or not that component had been sold separately. 137 S. Ct.
429, 435-36 (2016).
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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 8 of 26

parties agree on this point; Seirus made the same argument in its opening brief.4 (Seirus

Opening Brief (Dkt No. 151) (Ser. Br.) at 10.) If the product is not a single component

product, however, Columbia argues the entire product should nonetheless be treated as the

relevant article of manufacture in the second and third circumstances it describes: if the

patented design is applied to all or a/the5 material part of all of the components[,] or if the

component or components to which the patented design is applied creates the basis for the

consumers demand for the product, or substantially creates the value of the other component

parts of the product[.] (Columbias Opening Brief (Dkt No. 150) (Col. Br.) at 2.)

To further complicate matters, however, if the relevant article does not satisfy one of the

three conditions that Columbia proposed, Columbia asserts that the relevant article of

manufacture for calculating disgorgement of profits is the portion of the product to which the

design has been applied. (Id.) At no point in Columbias brief does it expand upon this directive

or even attempt to answer basic questions such as: What is a portion of a product? What is the

design? What does it mean for the design to have been applied to that portion? Columbia

devotes an entire page to describing the largely uncontroversial first circumstance (or

condition) described above, in which the product is a single componentthough it offers no

workable definition of component, as discussed below at subsection 2yet Columbia

completely neglected to provide this Court with any guidance on how to identify the relevant

article of manufacture if it is not determined to be the entire product. The question the parties

were directed to brief, as even Columbia described it, was what test do you apply to determine

4
Unlike Columbia, however, Seirus acknowledged the possibility of a reasonable dispute
between the parties on this question. An objective test such as that proposed by the DOJ will be
invaluable in such a circumstance.
5
See Col. Br. at 6. This inconsistency is addressed below in subsection 2.
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what specific component within that multi-component article the patented design has been

applied to and how should it be treated? (Feb. Tr. at 120:18-20.) Columbia at no point in its

brief answers the question of what test should be applied to determine the specific component

within the multi-component product to which the patented design has been applied. For this

reason alone, Columbias test is unhelpful and should be disregarded.

2. Columbias Proposal Is Confusing, Ambiguous, and Internally


Inconsistent.

Throughout its proposal, Columbia uses undefined terms that could easily be construed in

many different ways. Terms such as component and phrases such as material part and

portion of the product are susceptible to reasonable disagreement on their meaning, and as

such a discussion of what these terms mean is essential before a standard can be adopted that

uses such terms. Moreover, Columbia has failed to set forth its own standard consistently

throughout its brief, raising questions as to exactly what the test is and how it is to be applied.

Accordingly, Columbias proposal should be rejected.

Columbia utterly fails to offer a detailed analysis of what a component is or how the

Court or a jury should understand that term. See Life Techs. Corp. v. Promega Corp., 197 L. Ed.

2d 33, 39 n.2 (U.S. 2017) (declining to consider how to identify the components of a patent

where the parties had stipulated to the components in the case before the Court). Instead,

Columbia appears to point to the Supreme Courts suggestion of a dinner plate and a kitchen

oven as examples of a single component and multi-component product, respectively, as

conclusive determinations that a dinner plate is, as a matter of law, a single component product,

while a kitchen oven is, as a matter of law, a multi-component product. (Col. Br. at 2, 5.) To the

contrary, these were offered by the Supreme Court as illustrative examples of ordinary products

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 10 of 26

with which most readers would be familiar, not legal determinations. Apple-Samsung, 137 S. Ct.

at 432.

Similarly, Columbia fails to explain its second condition in which the product will be the

article of manufacture if the patented design is applied to all or a material part of all of the

components of a multicomponent product. (Col. Br. at 2.) Columbia does not explain how a

material part should be defined or evaluated. This critique is not a straw man; Supreme Court

case law has specifically addressed similar questions, and Columbia fails to include any such

references in its discussion of its proposed standard. See, e.g., Life Techs. Corp., 197 L. Ed. 2d at

40-44 (analyzing the meaning of all or a substantial portion of the components in the context

of 35 U.S.C. 271(f)). Instead, Columbia proposed an ambiguous rule that does little to aid the

finder of fact.

Moreover, within Columbias proposal, there are repeated inconsistencies that render the

proposed standard unworkable and unreliable. These inconsistencies include:

Columbia states that the defendant must bear the burden of producing
evidence and proving that the relevant article of manufacture is a portion of
an entire product as sold[,] (Col. Br. at 2), but Columbias proposal does not
direct the jury that a presumption exists that the entire product is the article of
manufacture, as would apparently be required for the burden to apply as
Columbia suggests. Whose burden is it to establish one of the three
conditions in which the relevant article of manufacture is the entire product?
Columbias brief is silent on this issue.

Columbia alternately describes its second condition as applying when the


patented design is applied to all or a material part of all of the components of
the product (Id. at 2; see also id. at 8 (describing when the third condition may
apply)); or when the patented design is applied to all or a material part of the
infringing product as sold (Id. at 6) (emphasis added); or when the patented
design is applied to all or the material part of an entire end product sold at
market. (Id.) (emphasis added). These are three completely separate
formulations of the condition Columbia proposes to enforce, each with a
different meaning in plain English. Which does Columbia actually propose for
the jury to apply?
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Columbia repeatedly describes the two-step test necessary to arrive at a


damages award under 35 U.S.C. 289 as beginning with identify[ing] the
article of manufacture to which the infringed design has been applied. Id. at
2. Yet, critically, no part of Columbias proposal attempts to identify the
article of manufacture to which a patented design has been applied, or to
provide guidance on how to do so. Thus, Columbia appears to have missed the
entire point of the Supreme Courts remand in Apple-Samsung that a test for
determining the relevant article of manufacture was necessary. Apple-
Samsung, 137 S. Ct. at 436 (Doing so would require us to set out a test for
identifying the relevant article of manufacture at the first step of the 289
damages inquiry and to parse the record to apply that test in this case.)

Each of these inconsistencies undermines the credibility and reliability of Columbias proposal.

In addition to the internal inconsistencies, Columbias multiple steps and undefined terms

provide further uncertainty for the jury. For example, each of Columbias three conditions for

defining the article of manufacture as the entire product is increasingly complex and convoluted

with nested tests and sub-tests. While the first condition is concise, it contains the undefined term

component. The second condition also contains the undefined term component as well as the

undefined phrase all or a material part of all of the components, while also consisting of two

separate conditions (i.e., the product is multicomponent AND the design is applied to all or a

material part of all of the components). The third condition takes this complexity to another

plane, requiring that the product be multicomponent AND that the component or components

to which the design is applied creates the basis for the consumers demand for the product OR

that the component to which the design is applied substantially creates the value of the other

component parts of the product. To make matters worse, this third condition then adds a further

qualification: it applies where damages on the entire product are necessary to remedy

infringement of the patented design. (Col. Br. at 2.) Whether this is truly an addition to the third

condition, or rather an alternative basis to apply the third condition where the other elements are

met, is entirely unclear.


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In short, no juror could understand such a complicated and confusing (and legally

incorrect6) set of instructionsmuch less be able to apply it in the setting of a design-patent

infringement case. The standard this Court adopts must be consistent, readily applied to a variety

of patented designs and accused products, and understandable to a reasonable jury. Columbias

proposal lacks all of these characteristics and should not be adopted.

3. Columbias Proposal Is Not Neutral.

Columbias proposed standard was plainly reverse-engineered for the express purpose of

reaching the conclusion that Seirus products are the relevant articles of manufacture in this case.

This purpose is exposed by Columbias failure to actually answer the question of how to identify

the specific component within that multi-component article the patented design has been

applied to . . . [.] (Feb. Tr. at 120:18-20.) This is not an acceptable approach to defining a test

that will be applied in a case of first impression in the courts of the United States. Whatever test

this Court adopts must be unbiased and impartial to the patented design and the accused product

and sufficiently flexible to permit application to the incredibly broad array of patented designs

and accused products that may come before this Court or others in the future. The confusing and

ambiguous terminology in Columbias proposal undermines those goals and thus Columbias

proposal should be rejected.

Rather than apply the DOJ test, which the parties have already agreed is an acceptable

and neutral proposal, and which was the only test mentioned by the Supreme Court, Columbia

has cherry-picked favorable elements from the DOJ test. It identifies its cherry-picked elements

6
See subsection 4, infra.
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as dispositive, offering no explanation for its rejection of the other DOJ factors.7 And, Columbia

abandons identification of the component to which the patented design has been applied. Indeed,

under Columbias proposal, there is no point at which the Court is even required to look to the

scope of the design patent in question to aid it in determining what the relevant article of

manufacture is. Columbia simply refers to the patented design (or simply the design), but

nowhere does it guide the Court on how to apply the design patent to the infringing product to

evaluate whether all or a material part of the product bears the infringing design. Columbia

includes an image of one of Seirus accused products in its brief,8 but never once refers to its

own design patent. (See Col. Br. at 8.) This effort to construct a result that favors Columbias

7
For example, Columbia proposes that whether portions of [the] product are sold separately
should be a consideration in determining whether the infringing product is a single-component
product or a multicomponent product. (Col. Br. at 2.) Columbia appears to have lifted this
from the fourth factor of the DOJs proposed test for determining what the article of manufacture
is. See DOJ Br. at 29 (discussing relevant elements to evaluate the physical relationship between
the patented design and the rest of the product, including whether the component is
manufactured or sold separately); Ser. Br. at 2. But Columbia blatantly ignores that the DOJ
offered this consideration before the Supreme Court directed that whether the component is sold
separately is not a determinative factor to identifying the article of manufacture. Apple-Samsung,
137 S. Ct. at 436. And Columbia further ignores that the DOJ offered this consideration as but
one part of the evaluation of a single factor to determine what the article of manufacture is, not
whether the accused product is single- or multicomponent. While this consideration is relevant, it
certainly should not be dispositive.

Similarly, Columbia offers the complexity of the infringing product as another consideration in
this analysis. (Col. Br. at 2.) The reference to complexity is a red herring to the extent this term
is used to incorporate functional aspects of the accused products. Functionality is irrelevant to
the analysis of design patent infringement and damages. (Ser. Br. at 14.) The only way in which
complexity is relevant, is the extent to which a complex product might be one that consists
of multiple components, where a simple product might be one that consists of a single
component. In that case, complexity is merely a semantic device, and not a useful tool for
determine whether a product consists of a single component or multiple components, or whether
the article of manufacture should be the entire product or a component thereof.
8
The Court should be aware that the product Columbia chose to depict in its brief is certainly not
representative of the array of Seirus HeatWave products, including those products with multiple
components, but where only one such component bears the allegedly infringing design.
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damages theory should be rejected in favor of a more objective, neutral standard that will be

workable in all cases that may look to this Court for guidance in the future.

4. Columbias Proposal Is Not Sufficiently Tied to Section 289 or Apple-


Samsung.

Perhaps the most egregious flaw in Columbias proposal is its failure to tie the governing

statute and case law to its proposal. The Supreme Courts decision in Apple-Samsung provides

the starting point for any determination of design patent damages. That decision does not offer a

test to determine the article of manufacture, but it does tell us that:

An article of manufacture is simply a thing made by hand or by machine. 137 S.


Ct. at 435.

A component of a product, no less than the product itself, is [also] a thing made by
hand or machine, and the fact [t]hat a component may be integrated into a larger
product, in other words, does not put it outside the category of the articles of
manufacture. Id.

[T]he term article of manufacture is broad enough to embrace both a product sold
to a consumer and a component of that product, whether sold separately or not. Id. at
436.

(Ser. Br. at 6.)

Despite this guidance, Columbia proposes to import the language of 35 U.S.C. 284,

requiring damages adequate to compensate for the infringement, into 289, without offering

any legal basis for adopting such an approach. Indeed, such an approach is flawed as there is no

justification for intertwining these alternative statutes. As Columbia has acknowledged, 289 is

an alternative remedya plaintiff can instead elect to pursue damages under 284 without the

need for identifying the relevant article of manufacture. So, not surprisingly, the case law

Columbia cites on the applicability of the entire market value rule all involves 284, not 289.

The two statutes are intended to be applied differently. In Apple-Samsung, the Court

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enforced the Congressionally adopted limitation of the equitable remedy of disgorgement by

requiring that damages under 289 be applied only to the article of manufacture that

encompasses the patented design. 137 S. Ct. at 436; 35 U.S.C. 289. In contrast, the entire

market value rule approach proposed by Columbia is an exception to the general principle, under

284, that a patentee will recover only for damages arising from the individual component

patented, not for all of the components of a multicomponent product. This exception expands,

rather than limits, the calculation of damages to include other components not protected by the

utility patent. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549-51 (Fed. Cir. 1995). Thus,

while Apple-Samsung limits disgorgement damages available to a design patent holder in the

context of an infringing multicomponent product, the entire market value rule expands the

damages available to a utility patent holder in the context of an infringing multicomponent

product. Those two approaches are irreconcilable.

Further, VirnetX, which Columbia relies on heavily, is inapplicable for at least two

reasons. VirnetX, Inc. v. Cisco Sys., 767 F.3d 1308 (Fed. Cir. 2014). First, VirnetX is not a design

patent case but rather is concerned with infringement of utility patents.9 Second, VirnetX did not

apply the entire market value rule. Instead, it held that the plaintiffs expert committed error

when failing to apportion damages under 284. See VirnetX, 767 F.3d at 1328-29. Moreover,

VirnetX is indeed altogether critical of the entire market value rule. In fact, it explicitly held that

when claims are drawn to an individual component of a multi-component product, it is the

9
The entire market value rules focus on function indicates that the rule was developed in the
context of utility patents, and that the rule was only contemplated in that context. Compare Rite-
Hite, 56 F.3d at 1550 (the entire market value rule requires that the unpatented components
must function together with the patented component in some manner so as to produce a desired
end product or result.) (emphasis added), with Bilski v. Kappos, 561 U.S. 593, 601 (2010)
(finding that design patents cannot protect functional features). Columbia ignores this glaring
flaw in its proposed use of the entire market value rule.
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exception, not the rule, that damages may be based upon the value of the multi-component

product. VirnetX, 767 F.3d at 1326-27 (citing LaserDynamics, Inc. v. Quanta Computer, Inc.,

694 F.3d 51, 67-68 (Fed. Cir. 2012)). The Court in VirnetX only reaffirmed the existing rule as

applied to utility patents that, in the absence of a showing that the patented feature creates the

basis for customer demand or substantially creates the value of the component parts[,] . . .

principles of apportionment apply. Id. (quoting Versata Software, Inc. v. SAP Am., Inc., 717

F.3d 1255, 1268 (Fed. Cir. 2013)).

Columbia then improperly argues that the entire market value rule is applicable to design

patents because of two antiquated Supreme Court decisions. (Col. Br. at 9-10 (citing Garretson

v. Clark, 111 U.S. 120, 121 (1884); Westinghouse Elec. & Mfg. Co. v. Wagner Elec. & Mfg. Co.,

225 U.S. 604, 615 (1912).) This line of argument is flawed, however, becauseas Columbia

admitsthe approaches used to award damages for infringement of design patents and utility

patents diverged decades after these cited cases, when disgorgement of profits was no longer

available as a damages remedy in the utility patent context. (Id. at 10 (The remedy of

disgorgement was removed for utility patent damages in the Act of August 1, 1946.)). Indeed,

and unsurprisingly, Columbia offers no citations to cases after Westinghouse that apply the

reasoning of Westinghouse in the context of design patent damages. More than a century later, in

the wake of Apple-Samsung, the Supreme Court has made clear that 289 is not a traditional

disgorgement remedy. The statute explicitly limits the accounting of profits to those attributable

to the article of manufacture. Apple-Samsung, 137 S. Ct. at 436; 35 U.S.C. 289. Thus, even if

Columbias strained theory on the relevance of the entire market value rule for disgorgement of

profits is true, it is not applicable to 289 because the legislatively proscribed limitation of

disgorgement damages under 289 creates a unique, alternative remedy.


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Because Columbias proposal is not sufficiently tied to either the Congressionally

approved language of 289 or the Supreme Court directives of Apple-Samsung, it should not be

adopted.

B. The Test Proposed by the Department of Justice Is a Reasonable and Balanced


Method to Identify the Article of Manufacture.

The Department of Justice has already offered a workable, neutral framework for

determining the relevant article of manufacture. The parties agreed that this standard was

reasonable and reliable in their previous submissions to this Court. (See Columbias Mot. Am.

Scheduling Order (Dkt. No. 129 at 2 (asking the Court to adopt the recommended test proffered

by the Department of Justice as the governing legal standard to be applied in this case to the

determination of articles of manufacture pursuant to 35 U.S.C. 289); Seirus Resp. to Mot.

Am. (Dkt. No. 137 at 14) (responding to Columbias motion by proposing a stay or continuance,

and arguing that the Court should not adopt a binding determination of the applicable test, but

noting the parties agreement that they will both utilize this [DOJ] test to guide their discovery

efforts in the absence of a stay); letter dated December 27, 2016, from David Axelrod to the

Court at 2 (stating that Columbia has proposed that the parties agree to the standard offered by

the DOJ as amicus in Samsung, and that Seirus has offered no objection); letter dated December

30, 2016, from Matthew Murphey to Court at 2 (acknowledging the DOJ test is the only

standard available to the parties to evaluate the article of manufacture).) Columbia has now

attempted to rewrite this history, claiming that Seirus did not stipulate to using that test[.] (Col.

Br. at 2 n.1.) Seirus primary objections to the DOJs proposal, as addressed fully in its opening

brief, were (1) its reliance, at least in part, on whether the component bearing the patented design

was sold separately to determine whether it could be the article of manufacturea consideration

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the Supreme Court expressly rejected in Apple-Samsung; and (2) the DOJs allocation of

burdens. Nothing short of full briefing of this issueas ordered by this Courtwould permit

these issues to be fully teased out. See also Tr. of Jan. 10, 2017 telephonic hearing, excerpts of

which are attached as Exhibit B to the declaration of Matthew Murphey, filed

contemporaneously herewith, at 6:20-7:1 (Your Honor, we dont believe we have exact

agreements. Theres a motion pending before you, I believe, filed by Columbia, that addresses

this topic [of adopting the DOJ test for design patent damages under 289] in whole or in part.

[Seirus] still wish[es] to submit a brief on that to the Court, because Mr. Aldrich used the word

minor, and we believe that the change in the law is major, and its going to require more.); id.

at 7:3-5 (So at this point -- at this point I think the Court would benefit from briefing [on this

issue], and even the sides would benefit from briefing on the issue.); accord Dkt No. 140.)

Seirus requested the opportunity to identify its concerns with how the DOJs proposed test was

to be applied. Columbia, on the other hand, advocated the DOJ test until the Court provided an

opportunity to support that position fully, and then abandoned the test entirely.

Whatever one is to make of the proposal Columbia has spun from whole cloth, the reality

is that the DOJ test remains the only standard that was actually cited by the Supreme Court

among the various proposals cited by numerous amici. Apple-Samsung, 137 S. Ct. at 436

An Exemplary Application of the DOJ Test

As Seirus argued in its opening brief, the DOJ has proposed a flexible and neutral

standard that will work with a great variety of patented designs and accused products. How that

test will apply to this design patent and these accused products will be determined by the results

of further discovery, the evidence put on at trial, the jury instructions agreed to between the

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parties or decided upon by the Court,10 and the enlightened conscience of the jury. It may be

worth considering, however, how the DOJ test would apply to the example raised in Columbias

brief: the design patent for a chair. (Col. Br. at 7-8.) This is an imperfect analog for the case at

bar, of course, because the exemplar patent Columbia cites covers the design of a single product

in its entirety (i.e., a chair with a seat, a back, and support bars), whereas Columbias patent

covers only the design born by fabric to be incorporated into various products, as illustrated by

the dashed-out lines in Columbias patent that expressly disclaim the global products bearing its

patented designs, such as the shoe:


Columbias design patent covers The example design patent cited by
only the ornamental design of a Columbia (Col. Br. at 7) covers the
heat reflective material but entire chair and thus includes all of
expressly excludes the footwear the constituent parts (i.e., seat,
into which it is incorporated. back, support bars) within the
D093 Patent, cover. scope of the design patent.

The broken
linesform
no part of
the claimed
design.

Nonetheless, applying the DOJ test to Columbias selected example demonstrates the flexibility

and impartiality of the DOJ test.

10
While the Court will presumably issue an order directing the parties what standard to apply to
guide their discovery efforts going forward, the time for preparing jury instructions is still many
months away. To the extent the Court is inclined to fashion a jury instruction at this stage,
however, Seirus respectfully reserves the right to respond to such instruction.
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The DOJ test consists of four considerations to determine whether the relevant article of

manufacture in a multicomponent product is the product itself, or a component of that product.

These considerations are:

1. the scope of the patented design;

2. the relative prominence of the design within the product as a whole;

3. whether the design is conceptually distinct from the product as a whole; and

4. the physical relationship between the patented design and the rest of the product.

(Ser. Br. at 2.) Beginning with the first element, the scope of the patented design: based on the

information offered in Columbias example, the chair patent covers the design of an entire chair,

consisting of approximately 3 separate partsa seat, a back, and multiple lengths of a pipe or

rod that serves as the legs and support for the seat and back. Nothing in the figures of the

patented design is disclaimed, indicating that the design patent claims all elements of the design

of the chair: the trapezoidal, curved-edge shape of the seat and back, the lower back support legs,

the connection of the support elements to the seat and back without any visible screws or

attachment points from the users point of view.

With this careful analysis of the patented design itself, one then moves to consider the

second factor, the relative prominence of the design within the product as a whole.

Unfortunately, Columbias example failed to identify what the hypothetical product would be in

proposing its test. There are two obvious possibilities, very generally speaking: Scenario A

where the accused product is simply a chair that looks much like the chair in the images of the

patented design, or Scenario B where the accused product is a larger productperhaps a

school childs desk of the type that has a chair attached to itthat contains the patented design

within it, but also includes additional features (in this hypothetical, perhaps an additional arm
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with a writing surface attached, and/or a basket beneath the seat for storing books).11 In Scenario

A, the analysis is quite simple: the design patent and the accused product overlap 100%, with no

additional unpatented features included on the product. The relative prominence of the design

would thus presumably be quite high. In Scenario B, however, the relative prominence of the

design would likely depend upon the prominence of the unpatented features of the overall

product. For sake of discussion, it will be assumed that even in the case of a larger product

incorporating the patented chair design, the patented design is somewhat prominent, though less

so than in the former example.

This leads directly into the third consideration: whether the design is conceptually distinct

from the product as a whole. In Scenario A, where the accused product is the chair, the answer is

simply no; the accused product is entirely subsumed within the patented design. In Scenario B,

by comparison, the answer would be yes, at least because the product as a whole includes

additional features such as a writing surface and basket that is beyond the scope of the patented

design.

Consideration of such features is offered by the fourth factor of DOJ test, the physical

relationship between the patented design and the rest of the product. In Scenario A, this physical

relationship cannot be minimized; the product embodies the design, and there is no rest of the

product to consider. In Scenario B, however, it is relevant whether the additional elements of

the larger product are manufactured separately from the infringing chair and added later, or

whether it is all manufactured together. Lets assume, for the sake of discussion, that the product

is manufactured all in one facility in a single process, and not through the construction of several

11
For purposes of discussion, it is assumed that the accused product infringes and in fact bears
the patented design on at least some component(s).
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separate sub-parts that are compiled at a final assembly facility.

Taking these considerations together, for Scenario A there can be no question that using

the DOJ test the design patentee would be able to establish that where the accused product is the

chair, that chair is the relevant article of manufacture as to which it should recover profits under

289. There is a close match between the claims of the design patent and the hypothetical chair

itself. While Columbia would have the Court compress this conclusion into a single step that

asks whether the patented design is applied to all or a material part of all of the components,

(Col. Br. at 2, 6), the DOJ test provides the more logical analysis in asking the Court to both

provide a careful review of the patented design (to determine the patents scope) and the accused

product (to identify in what manner and to which component(s) the design has been applied to

the product).

Perhaps more importantly for this case, for Scenario B the DOJ test is the only competent

analysis for the larger accused product. Under the DOJ test, one can see that the design is

entirely embodied within the accused product, but that the product does not only embody the

design (i.e., the design patent covering the entirety of the chair is included within the accused

product even though the accused product also includes additional features such as a writing

surface or storage basket). The jury would thus be instructed to consider what is the scope of the

patented design (first DOJ factor), how much of the patented design is included within the

accused product (second DOJ factor), whether the accused product embodies distinct aspects not

captured within the patented design (third DOJ factor), and the physical relationship between

aspects of the accused product that incorporate the patented design and the rest of the product

(that does not incorporate the patented design) (fourth DOJ factor).

The jury might reasonably conclude, from these considerations, that the patented design
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is so significant within the context of the accused product that the article of manufacture must

nonetheless be the accused product. The jury might also reasonably conclude that the additional

features of the larger accused product are sufficiently distinct and significant to warrant

distinguishing the chair itself as the article of manufacture and the attached writing surface and

basket as simply other features of the accused product for which the patentee should not recover.

In either case, the jury will have had the benefit of significantly more meaningful evidence and

guidance than simply asking it to determine whether all or a material part of all of the

components bear the patented design as Columbia proposes.

The example above is, of course, only a hypothetical. There are unlimited adjustments

that could be made to these hypothetical facts that could affect the outcome of the article of

manufacture analysis. This is precisely why the DOJ test is so useful: it is designed to permit the

unique facts of each case to drive the outcome of the analysis rather than a backward-looking

analysis that is designed to reach only a given outcome. The DOJ test is the best option available

to the Court, and should be adopted.

C. This Court Should Not Reverse the Customary Allocation of Burdens.

The burden of pleading always falls upon the plaintiff; Columbia has not argued

otherwise. As such, as Seirus argued in its opening brief, the plaintiff should be expected

plausibly to plead the elements of its claims, including the elements of its claim for damages

under 289. (Ser. Br. at 15 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)).)

The burden of establishing the article of manufacture should also fall on the patentee.

Though the DOJ and Columbia would both have the Court reverse this burden, Columbia merely

parrots the DOJs own words and offers no independent justification for the reversal of the

customary burdens. (Col. Br. at 11-12.) As Seirus addressed in its opening brief, the DOJs logic
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(adopted by Columbia) is flawed in its analogizing the defendants burden to prove the

untainted portions of a defendants profits. (Ser. Br. at 16.) Unless and until the patentee

identifies the accused products and produces evidence supporting the patentees belief that those

products are the relevant article of manufacture, the defendant will be left fencing a paper tiger.

A party defending a patent infringement suit should not be forced to parse the patentees patent

and incur significant expense to present expert testimony on the subject of the appropriate

construction of the patentees patent in the context of the defendants accused product(s) until

some minimum showing is made by the patentee. Likewise, the patentee should not be permitted

to demand extortionate settlement figures to permit the defendant to extract itself from patent

litigation that places zero burden upon the plaintiff. Such an outcome would be unfair and

irresponsible. As cited in Seirus opening brief, the case law supports the conclusion that the

burden of persuasion typically lies with the plaintiff, and should not be reversed here until after

the patentee has presented a prima facie case.

The reversed burden that Columbia proposes is particularly confounding under its own

proposal. Columbias formulation of the legal standard suggests three exceptions to the

apparent default assumption that the relevant article of manufacture for calculating

disgorgement of profits is the portion of the product to which the design has been applied. (Col.

Br. at 2.) However, it proposes allocating the burden to the defendant to prov[e] that the

relevant article of manufacture is a portion of the entire product as sold. (Id.) Apparently,

then, the defendant would need to disprove the existence of one of the three exceptions in order

to establish that the relevant article of manufacture is only that portion of the product to which

the design has been applied. This simply does not comport with Columbias proposed legal

standard; this is an inherent flaw in Columbias approach. Columbias proposal is plainly


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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 25 of 26

designed to capture the accused products in this case within one of the three exceptions

Columbia has defined. Indeed, Columbias intent is belied by its failure to even address how the

Court would proceed if the fact finder were to find that none of the three exceptions applied. It

offers no guidance on how to determine the portion of the product to which the patented design

has been applied. The Supreme Court did not say, in Apple-Samsung, that there may be

exceptions to the general rule that the entire product is the article of manufacture. Rather, the

Supreme Court jettisoned the idea that the entire product must be the article of manufacture and

plainly held that a component could be the relevant article of manufacture under 289, whether

that component has been sold separately or not. 137 S. Ct. at 436.

Columbias proposed legal standard is stated completely inverse to how it would need

to be stated for the defendant to properly bear the burden of proof, as opposed to the burden to

rebut whichever of these conditions the patentee asserts and presents evidence to support. As

discussed above, this is yet another shortcoming of Columbias self-serving proposal that further

supports rejecting Columbias proposal in favor of the DOJ test for determining the relevant

article of manufacture and the usual allocation of burdens between plaintiff and defendant.

III. CONCLUSION

For the foregoing reasons, Seirus respectfully requests that the Court reject the standard

and burden allocation proposed by Columbia and instead adopt the DOJ test, placing the burden

upon the plaintiff in the first instance as discussed in Seirus opening brief (Dkt. No. 151). Seirus

further requests that the Court direct discovery as described in Seirus opening brief.

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Case 3:15-cv-00064-HZ Document 154 Filed 03/23/17 Page 26 of 26

DATED: March 23, 2017 Respectfully submitted,

TROUTMAN SANDERS LLP

s/ Matthew D. Murphey
JASMINE C. HITES, OSB # 104056
Troutman Sanders LLP
805 SW Broadway, Suite 1560
Portland, OR 97205
Telephone: (503) 290-2344
Facsimile: (503) 290-2405
Email: jasmine.hites@troutmansanders.com

MATTHEW D. MURPHEY (admitted pro hac vice)


5 Park Plaza, Suite 1400
Irvine, CA 92614
Telephone: (949) 662-2700
Facsimile: (949) 622-2739
Email: matt.murphey@troutmansanders.com

PAUL E. MCGOWAN (admitted pro hac vice)


Troutman Sanders LLP
600 Peachtree St. NE, Suite 5200
Atlanta, GA 30308
Telephone: (404) 885-3000
Facsimile: (404) 962-6842
Email: paul.mcgowan@troutmansanders.com

Attorneys for Defendant Seirus Innovative


Accessories, Inc.

Troutman Sanders LLP


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Case 3:15-cv-00064-HZ Document 156 Filed 03/23/17 Page 1 of 17

David W. Axelrod, OSB #750231


Email: daxelrod@schwabe.com
Scott D. Eads, OSB #910400
Email: seads@schwabe.com
Nicholas F. Aldrich, Jr., OSB #160306
Email: naldrich@schwabe.com
SCHWABE, WILLIAMSON & WYATT, P.C.
Pacwest Center
1211 SW 5th Ave., Suite 1900
Portland, OR 97204
Telephone: 503.222.9981
Facsimile: 503.796.2900

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

COLUMBIA SPORTSWEAR NORTH No. 3:15-cv-00064-HZ


AMERICA, INC., an Oregon corporation,
PLAINTIFF COLUMBIA SPORTSWEAR
Plaintiff, NORTH AMERICA, INC.S RESPONSE TO
DEFENDANT SEIRUSS OPENING BRIEF
vs. REGARDING LEGAL STANDARD FOR
DESIGN PATENT INFRINGEMENT
SEIRUS INNOVATIVE ACCESSORIES, DAMAGES
INC., a Utah corporation,

Defendant.

SCHWABE, WILLIAMSON & WYATT, P.C.


Page 1 - COLUMBIAS RESPONSE TO SEIRUSS OPENING Attorneys at Law
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Portland, OR 97204
DESIGN PATENT DAMAGES Telephone: 503.222.9981
Fax: 503.796.2900
Case 3:15-cv-00064-HZ Document 156 Filed 03/23/17 Page 2 of 17

I. INTRODUCTION
The Supreme Court issued its decision in Samsung Elects. Co. v. Apple Inc., 135 S. Ct.

429 (2016) (Samsung) on December 6, 2016. 1 At that time, trial on damages for Seiruss

infringement of the design patent and on the two utility patents in suit was scheduled for April

2017. [Dkt. No. 40.] Columbia immediately sought a meet and confer with Seirus to discuss the

impact of Samsung on this case, and to discuss a path forward toward trial in April. (Ex. 1 2 ) In

light of the short time frame, and the fact that the test offered by the Department of Justice

(DOJ) as amicus curiae in the Samsung case was the only test offered for determining the

relevant article of manufacture, Columbia proposed that the parties agree to adopt the DOJ

test for this case, to simplify the Courts and the parties work. (Id.) An agreement to use the

DOJ test would allow the parties to complete supplemental discovery in time for trial in April.

By letter and motion, Columbia proposed that the Court adopt the DOJ test for this case, and

modify the operative Scheduling Order to allow the parties to supplement their disclosures in

light of the change in the law. (Ex. 2; [Dkt. No. 129].)

In response, Seirus requested a stay of the trial date. (Ex. 3) For two months, Seirus

refused to engage in any discovery or supplementations required under Rule 26 and necessary for

the parties to prepare for trial. Then, at the February 13, 2017 summary judgment hearing, the

Court asked the parties whether they would agree to use the test proposed by the DOJ. Columbia

responded that the DOJ test was acceptable. [Tr. at 116:17-19.] Seirus responded that it was

not of that opinion. [Tr. at 116:21.] Again, Seirus refused to engage in discovery respecting

any issues pertaining to the impact of Samsung. As a result of Seiruss disagreement with the

DOJ test, the Court continued the trial date until September 2017 and ordered the parties to

1
Contrary to Seiruss hyperbole, Samsung did not vacate or jettison or dramatically alter[]
the landscape for design patent damages. [Cf. Dkt. No. 151 p. 6 & n. 1 (emphasis in original).]
The majority of design patent cases will be unaffected by the Courts decision, which was
narrowly tailored to multi-component products.
2
Ex. ___ refers to the exhibits to the Declaration of Nika Aldrich in support hereof.
SCHWABE, WILLIAMSON & WYATT, P.C.
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DESIGN PATENT DAMAGES Telephone: 503.222.9981
Fax: 503.796.2900
Case 3:15-cv-00064-HZ Document 156 Filed 03/23/17 Page 3 of 17

submit briefs concerning the standard that should be applied to section 289. [Tr. at 116-122;

Dkt. No. 144.]

Thus, it is telling that, having successfully sought a delay in the trial on the utility patents

by informing the Court that it disagreed with the DOJ test, thereby allowing it to continue to sell

infringing goods for yet another season, Seirus now proposes to adopt that very test. Indeed, it

appears that Seirus never actually disagreed with the DOJ test at all, and never had an alternative

to provide.

As explained below, although Columbia would have stipulated to using that test given an

impending trial deadline, it believes that the test it proposes is more consistent with legal

precedent, and puts the factual inquiries posited by the DOJ into a proper and workable

framework for the jury, consistent with longstanding patent damages jurisprudence.

II. THE DEFICIENCIES OF THE DOJ TEST


The DOJ test, upon reflection, contains a number of deficiencies, because the test is

not a legal test but a recitation of factors. The DOJs factors are to be evaluated after a

determination that the defendants infringing product is, in fact, a multicomponent product.

The DOJ test does not address this threshold question and provides neither a standard nor

considerations for making this initial determination. Seirus concedes that this is a threshold

inquiry, Dkt. No. 151, pp. 9 (the parties dispute whether the product at issue is a

multicomponent product in the first instance), 10, but proffers no standard for instructing the

jury on this issue.

If the threshold inquiry is passed and a multicomponent product is at issue, the DOJ test

fails to set forth a standard by which to determine when the relevant article of manufacture may

be a component or some portion thereof rather than the entire product as sold to the consumer.

Instead, it only identifies several relevant factors without teaching a jury how these factors are to

be weighed or applied. How, for example, do the various factors relate to each other, how are

they to be balanced, and how is a jury supposed to use these facts? How does the analysis help
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the jury to then decide what the relevant article of manufacture is for a given case? How will

the Court determine whether the jury properly assessed these factors and determined the relevant

article of manufacture?

To this end, some parts of the DOJ test are ambiguous. For example, the third inquiry

states that [i]f the product contains other components that embody conceptually distinct

innovations, it may be appropriate to conclude that a component is the relevant article. (Ex. 4,

p. 37) But, under what facts would it be so appropriate? Similarly, the first prong states:

In some cases, the patent will indicate that the design is intended to be
applied to a component of the product. . . . But the factfinder should not
treat the patents designation of the article as conclusive.
(Id., p. 36) How will a jury know, with this instruction, how much relevance to give to the fact

that the design is intended to be applied to only a component of the product?

For these reasons, the DOJs test does not articulate a legal standard that can be

consistently followed, and that risks confusing the jury, while providing little guidance to the

Court. On the other hand, the standard offered by Columbia is based on the Supreme Courts

language in Samsung and 130 years of binding Supreme Court and Federal Circuit jurisprudence,

while also incorporating the DOJs factors. 3

III. COLUMBIAS PROPOSED LEGAL STANDARD PROVIDES AN


APPROPRIATE FRAMEWORK FOR THE DOJ FACTORS
Columbias proposed legal standard provides what is missing from the DOJ brief: a

legally supported framework with which to assess the relevance of the factual inquiries. As

explained in its opening brief [Dkt. No. 150], Columbia asserts that disgorgement applies to the

entire product bearing the patented design as sold to the consumer where:

3
The DOJ relies primarily on two cases in support of its analysis. (Ex. 4, pp. 35-37 (citing Bush
& Lane Piano Co. v. Becker Bros., 222 F. 902 (2d Cir. 1915) (Piano I), following remand, 234
F. 79 (2d Cir. 1916) (Piano II); Young v. Grand Rapids Refrigerator Co., 268 F. 966 (6th Cir.
1920)).) Each of these cases was decided approximately 100 years ago, under the Act of
February 4, 1887, not the statute before the Court. Neither of the cases is precedential. South
Corp. v. United States, 690 F.2d 1368, 1370-71 (Fed. Cir. 1982) (decisions from the circuit
courts of appeals are not precedential authority in any patent dispute).
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1. The product is a single-component product; or

2. The product is a multicomponent product and the patented design is applied to


all or a material part of all of the components; or

3. The product is a multicomponent product and the component or components to


which the patented design is applied creates the basis for the consumers demand
for the product, or substantially creates the value of the other component parts of
the product.
If none of these conditions is met, then disgorgement is applied to the component or portion of

the product to which the design is applied.

A. Unitary products are by definition the relevant article of manufacture.


The first condition of the Columbia proposed standard addresses the threshold issue:

where the product sold to the end user is a single component, or unitary, product. Columbia

identifies a standard for that determination. For such unitary products, the Supreme Court has

expressly held that disgorgement applies to all of the profits from the entire product. 4 Samsung,
136 S. Ct. at 432. If this condition is met, further inquiry is unnecessary.

B. Where the design covers a material portion of the product.


The second condition provides a legal standard for assessing whether disgorgement

applies to an entire multicomponent product. Under this second condition, the finished good

sold to the consumer is the relevant article of manufacture where the patented design is applied

to all or a material part of all of the components of the product. Thus, where the scope of the

design is drawn to a component or components that play prominently in the design of the product

as a whole, the second condition may be satisfied. On the other hand, a design that has an

insignificant role in the overall product design will not satisfy the second condition.

4
In its brief, Seirus hedges on this issue, suggesting that, even for a single component product, a
test may still be necessary to determine whether disgorgement applies to that product. [Dkt. No.
151, p. 11 (Where a Product is Undisputedly a Single Component, the DOJ Test May Be
Unnecessary. (emphasis added)).] However, the Supreme Court was unmistakably clear on this
point: In the case of a design for a single-component product . . . the product is the article of
manufacture to which the design has been applied. (emphasis added).
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Applying this legal standard, the four factors posited by the DOJ may be still relevant in a

given case. For example, the DOJs first and second factors cover the scope of the [patented]

design and the relative prominence of the design within the product as a whole. (Ex. 4, pp.

35-36 5) These factors are used to determine whether the patented design is applied to all or a

material part of all of the components. Similarly, the DOJs third and fourth factors, 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, will also help inform the jury about

whether the patented design is applied to a material part of all of the components. Accordingly,

Columbias second condition provides a legal standard that can be assessed by resort to the

DOJs four factors.

C. Where the component or portion to which the design is applied drives


consumer demand.
The DOJs factors may also be relevant to Columbias third condition, that the

components drive consumer demand for the finished product. As explained in Columbias

opening brief, Columbias third condition implements longstanding principles in patent litigation

for determining when recovery of damages based on the value of the entire apparatus containing

several features, where the patent related feature is the basis for customer demand. State Indus.,

Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1580 (Fed. Cir. 1989). Consistent with longstanding

precedent, in such a case, it is proper to attribute the profits for the entire product to the

infringing component. In the context of section 289 after Samsung, the patentee is entitled to

disgorge the profits of the entire good as sold to market when the component to which the design

is applied sufficiently drives consumer demand.

This application of entire market value rule principles in the design patent context flows

from an important feature of section 289. Section 289 was adopted by Congress to relieve that

design patentee of the burden of proving the value of, or damages attributable to, the design

5
Throughout this brief, the page numbers provided are to the exhibit page number, not to the
page number in the underlying document as it was originally numbered.
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itself. To achieve that goal, section 289 mandates disgorgement of the total profits attributable to

the article of manufacture to which the design has been applied. It is the article of

manufacture, not the design or its value, that measures the total profit under section 289. Under

longstanding principles, where the article to which the design is applied drives consumer demand

for the entire product, profits from the entire product are attributable to the component bearing

the design.

At the Supreme Court, Samsung argued for a contrary rulethat damages should be

based off of the profits made from the infringing design, not the profits from the article of

manufacture to which the design was applied. 6 The DOJ repudiated that idea, noting the
language in the statute and the significant conceptual and practical difference between the profit

attributable to the infringing article and the profit attributable to the infringement. (Ex. 4, p. 23)

Section 289 makes the infringer liable for all the profits it received from sales of that article,

even if the articles other attributes contributed to those profits. (Id., p. 18; see also id., pp. 22-

23, 33, 34-35.)

But if the component to which the design is applied creates the basis for the customer

demand, or substantially creates the value of the other component parts, then the profits for that

article really encompass the profits for the finished product as a whole. VirnetX, Inc. v. Cisco

Sys. Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014). This is because the patented component [is] of

such paramount importance that it substantially create[s] the value of the component parts.

Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549 (Fed. Cir. 1995) (en banc) (quoting Marconi

Wireless Telegraph Co. v. United States, 99 Ct. Cl. 1, 49 (U.S. 1942), aff'd in part and vacated

in part, 320 U.S. 1 (1943)). Accordingly, where the patented design is applied to a component

6
The Supreme Court expressly noted Samsungs abandonment of this argument. Samsung, 137
S. Ct. at 434, n.2.
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that drives consumer demand for the entire product, disgorgement of the profits attributable to

that component includes all profits earned from sales of the entire product. 7

The DOJ anticipates and thus supports Columbias third condition. [I]n cases where the

relevant article of manufacture is not sold separately but is instead a component of a larger

product, identifying the infringers profit on that article may require an inquiry that is

functionally similar to a traditional causation analysis. (Ex. 4, p. 23) The entire market value

rule is such a traditional causation analysis. See, e.g., Garretson v. Clark, 111 U.S. 120, 121

(1884) (requiring that the entire value of the whole machine be properly and legally

attributable to the patented feature.). Several of the DOJ factors not surprisingly are applicable

to Columbias third condition. For example, Seirus acknowledges that the popularity of the

product, as distinct from a design embedded within the product, would be relevant to the DOJs

third factor. [Dkt. No. 151, p. 14.] Thus, the DOJs third factor would help establish the extent

to which the designed components drive consumer demand for the product.

D. Where none of the three conditions apply.


If none of the three conditions of Columbias standard apply, then section 289 and

Samsung authorizes disgorgement of only the total profits attributable to the component or

portion of the product to which the design is applied. In this circumstance, no DOJ factors apply

but the allocation of the infringers profits would be made on the particular facts of the case. No

separate test is needed.

Accordingly, Columbias standard does not ignore the efforts, analysis, or suggestions of

the DOJ, but rather incorporates them into a framework that is consistent with extensive

precedential authority. For these reasons, Seiruss proposal to adopt the DOJs four factors,

without more, should be rejected, and Columbias proposed legal standard should be adopted.

7
Under Columbias third condition, whether the relevant article of manufacture is considered the
component or the full product, the results are the same.
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IV. SEIRUSS CONSTRUCTION OF COMPONENT SHOULD BE REJECTED


It is important to appropriately construe component, because it is used to determine the

threshold question provided in Samsungwhether the accused product is a single-component or

a multicomponent product.

While pretending to be a disinterested proponent of a universal standard, Seiruss self-

interested advocacy is nowhere more blatant than its proposal to define a component as any

piece or part of a product. Seirus relies on out-of-context dictionary definitions and a court

decision that was asked in claim construction to define the term garment component in a utility

patent in support of its construction. But that authority has nothing to do with the inquiry before

this Court: ascertaining whether a finished product sold to market is a single component or a

multicomponent product.

Seirus argues that a component is anything that is, or could be, part of a larger whole.

[Dkt. No. 151, p. 8.] It suggests, on the one hand, that a component is something that may

not be susceptible to disassembly, like a dinner plate or a screw. [Id.] But on the other hand, it

contends that a rounded rim or a front face of a device may be a component of the device.

[Id., p. 14.] Neither a rounded rim nor a front face of a device such as a smartphone or a

glove can be disassembled from the finished good. Taking this construction, any surface to
which a design has been applied (rather than a part itself) could be considered an independent

component, reducing the Supreme Courts threshold determination to absurdity. Even Seirus

acknowledges that at some level of abstraction anything could be considered a component.

[Dkt. No. 151, p. 9 n. 5.]

Fortunately, both Congress and the Supreme Court have provided guidance as to the
meaning of component. Not every discrete part of a finished good is a separate component.

For example, in Samsung, the Supreme Court declared that a dinner plate is a single-

component product. Samsung, 137 S. Ct. at 432. Of course, dinner plates, like every other

article of manufacture, are made of constituent parts. Dinner plates are made from ceramic,

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glazes, dyes, foils, metals, and other discrete ingredients. (Ex 5, Ex. 6.) Any plate with a

design, almost by definition, has multiple ingredients, as is necessary to effectuate the design.

A walk through any china shop confirms this fact, but U.S. design patents to dinner plates make

the point, such as the following:

(Ex. 7, Fig. 3 ). Clearly, this design-patented dinner plate has multiple ingredients, though the

Supreme Court holds that it is a single component product.


Thus, the term component cannot mean a mere surface of a finished good. And a

single-component product can still include many separate ingredients. To suggest that the

Supreme Court in Samsung held otherwise would serve to eliminate the existence of single-

component products. But the Supreme Court affirmed that there are single-component products.

Samsung, 137 S. Ct. at 432.

Similarly, 35 U.S.C. 271(c) and (f) both use the term component when determining

the significance of a portion of a larger product for infringement liability and damages purposes.

Seirus cites those same provisions, but they directly support Columbias proposed standard.

Interpreting these sections, the Supreme Court has held that a component under 271(c) can

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include complex computer software programs, Microsoft Corp. v. AT & T Corp., 127 S. Ct.

1746, 1756 (a copy of Windows . . . qualifies as a component under 271(f)); and multi-part

machinery for cleaning shrimp, Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 524

(1972) (applying 271(c)). Therefore, a component can include a combination of multiple

parts, and, by extension, so can a single-component product.

Seirus has provided no guidance for identifying a single-component product, though it

is the threshold question identified by the Supreme Court in the opening paragraph in Samsung.

For this reason alone, Seiruss test should be rejected.

Moreover, Columbias proposed standard for a single-component product is consistent

with the Supreme Courts guidance. Columbia proposed the following standard:

In evaluating whether the infringing product should be considered a single-


component product or a multicomponent product, you should consider the
complexity of the infringing product, the separability of its ingredient parts, and
whether portions of that product are sold separately or made by independent
vendors and assembled by or for the infringer. For example, a dinner plate is
considered a single-component product while a modern kitchen oven is
considered a multicomponent product.
[Dkt. No. 150, p. 2.] Thus, this standard looks to the complexity and separability of the

constituent parts in determining whether the product should be considered a single-component

product. 8 Columbias standard also includes, for guidance to the jury, the analogy provided by
the Supreme Court: a dinner plate is a single-component product, and a kitchen oven is a

multicomponent product. Samsung, 137 S. Ct. at 432.

Columbias standard also aligns with the DOJs analysis of the overriding purpose of the

inquiry:
In cases where the identity of the relevant article of manufacture is
otherwise open to reasonable dispute, the factfinder may legitimately
consider which characterization would appropriately compensate (rather
than over-compensate) the patentee for the contribution of the patented
design to the value of the infringers finished product

8
This part of the standard should be unobjectionable to Seirus, which notes that a single
component product may not be susceptible to disassembly. [Dkt. No. 151, p. 8.]
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(Ex. 4, p. 35) Columbias standard allows the jury to find that a finished product may be

considered a single-component product, thereby allowing disgorgement of total profits from its

sale so as to appropriately compensate . . . the patentee for the infringers wrongdoing.

Accordingly, the Court should adopt Columbias proposed standard for ascertaining

whether a product is a single-component product, and should reject Seiruss internally

inconsistent construction of component that contradicts the Supreme Courts holding in

Samsung.

V. THE BURDENS TO DEPART FROM SECTION 289s FOCUS ON THE


PRODUCT AS SOLD TO THE CONSUMER SHOULD BE ON THE INFRINGER
Seirus objects to the burden of persuasion being on the infringer, but makes no

meaningful objection to the infringer bearing the burden of production. As explained by the

DOJ, [t]he defendant, as the manufacturer or seller of the accused product, has superior

knowledge of the identity of the products components, as well as of some of the factors relevant

to the article determination, including the physical relationship between the design and the

product; the manner in which the product is manufactured; and the extent to which the product

reflects the innovations of parties other than the plaintiff. (Ex. 4, p. 39) These are longstanding

and well-accepted factors in allocating the burden of production.

Seirus makes three contrary arguments, none of which has merit. First, Seirus argues

that:

Requiring the defendant to parse the plaintiffs patent in the first instance, and
present expert evidence of how that patent should apply to the defendants
product before the plaintiff has presented any evidenceespecially evidence that
the patent covers the entire accused productunfairly shifts the burden.

[Dkt. No. 151, p. 16.]


But this argument makes no sense. The patentee must identify the infringing product in

its Complaint. See Rule 8. The parties then have the various tools of discovery, including

contention interrogatories, available to develop the record. This all takes place before the

defendant is required to produce evidence establishing that the relevant article of manufacture
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is less than the whole. The burden is not unfairly shifted at all. To the contrary, it would be

unfair to require that the plaintiff prove a negativethat there is a lack of components that might

qualify as the relevant article of manufacture for purposes of section 289.

Seiruss second argument is equally unavailing. It argues that:

Such a rule would encourage plaintiffs holding design patents on minor


components to sue manufacturers of complex and costly product, knowing that
the plaintiff need only allege infringement, and then the burden of defending the
allegations will shift to the defendant.
[Dkt. No. 151, p. 16.] This is manifestly untrue. The burden of proving infringement

indisputably lies with the patentee. Bn v. Jeantet, 129 U.S. 683 (1889). The rule is no

different for design patents. Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 679 (2008) (en

banc). The burden of defending the allegations will never shift to the defendant.

Regardless, in this case, that infringement is already determined. The issue here is the

defendants attempt to limit its liability for that infringement by proving that damages should be

reduced from the profits it earned by selling an infringing article to the public.

Seirus finally argues that there is no evidence of legislative intent to reverse the burden

of persuasion on damages under 289. [Dkt. No. 151, p. 16.] But that argument also makes no

sense. At the time of the passing of section 289, the law was clear that the article of

manufacture was always the finished product sold to the end consumer. That has been the law

for the last 130 years, since [t]he Act of 1887, specific to design patents, removed the

apportionment requirement. Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1441 (Fed. Cir.

1998). 9 The language in the Act of 1887 has become what, as of the Patent Act of 1952, is

Section 289. Id., at 1442. Given the stable state of the law for, at that time, 75 years, there was

no need for Congress to include express language about the burden of proof in section 289. Only

the advent of more complex, sophisticated products and the Supreme Courts decision in

9
The Piano cases cited in the DOJ brief were based on the commercial practice in 1915 in
which ordinary purchasers regarded a piano and a piano case as distinct articles of manufacture.
Apple Inc. v. Samsung Elects Co., 786 F.3d 983, 1002 (Fed. Cir. 2015) (reversed in Samsung).
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Samsung have necessitated a test for determining the relevant article of manufacture, which

Congress could not have anticipated. Even Seirus admits that this is a case of first impression.

[Dkt. No. 151, p. 2.] Moreover, Congressional intent is clear insofar as Congress intended to

allow the patentee to disgorge the total profit from the infringer. That remains the law post-

Samsung.

As with the burden of production, the burden of persuasion should also rest with the

infringer. That burden is dictated by the language in section 289 itself: anyone who applies [a]

patented design . . . to any article of manufacture for the purpose of sale shall be liable for

his total profit. As articulated by the DOJ, Congress enacted the total profit standard now

contained in Section 289s first paragraph to relieve the patentee of the burden of demonstrating

the portion of the infringers profit that is attributable to the infringement. (Ex. 4, p. 23) The

total profit is recoverable (the infringer shall be liable) upon proof that an infringing design has

been applied to an article of manufacture for the purpose of sale or who sells or exposes for

sale such article. The total profit attributable to the article of manufacture is recoverable

regardless of the contribution to that profit from the design itself as contrasted with other

attributes of the article. (Id., pp. 18, 22-23, 33, 34-35.) In context, section 289 itself and 100

years of decisional law applying it, without more, qualify the entire article of manufacture sold

as a relevant article of manufacture.

As the DOJ recognizes throughout its amicus brief, it is common to allocate the burdens

of production (pleading and proffer of evidence) and proof in the calculation and entitlement to

profits to the defendant in intellectual property cases where the equitable remedy of

disgorgement is applicable. (Id., pp. 38-39.) This practice was an established rule in copyright

and trademark cases when section 289 was enacted. And it is utilized elsewhere. In cases

involving disgorgement of ill-gotten gains, the burden is on the wrongdoer to prove that some of

the identified profits were not tainted. For example, courts have adopted a burden shifting

approach to causation in which the SEC is required to produce evidence supporting a reasonable
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approximation of actual profits on the tainted transactions . . . This creates a presumption of

illegal profits. Once the SEC has made this showing, the burden shifts back to the defendant to

demonstrate that the disgorgement figure [is] not a reasonable approximation. SEC v. Teo, 746

F.3d 90, 105 (3d Cir. 2014) (internal citations and quotations omitted). The Court noted that, in

such a disgorgement case, the risk of uncertainty should fall on the wrongdoer whose illegal

conduct created the uncertainty. Id. (quoting Rest. (Third) Restitution 51(5)(d)). Importantly,

the defendants burden is not simply one of carrying the ball back across the fifty-yard line by

presenting a merely plausible alternative explanation for the profit. Rather, the defendant must

adduceat a minimumspecific evidence explaining why the disputed profits should not be

disgorged. Id. at 107-08.

Because Seirus has failed to rebut the DOJs well-reasoned position on this issue, the

Court should adopt the DOJ position.

VI. SEIRUS MUST PRODUCE ITS CONTENTIONS


Seirus asserts that Columbia should explicitly state whether it claims that the relevant

article of manufacture is, in each instance, the entire product . . . [Dkt No. 151, p. 18.] But as

noted above Columbia long ago notified Seirus of its position. This case deals with unitary

articles that cannot be disassembled and are analogous to carpets, dinner plates and wallpaper.

Hats, gloves, socks, and liners are the productsnecessarily the articles of manufactureon

which Columbias damages claim have been predicated for more than a year. For the avoidance

of doubt and shortly after the Samsung decision issued, Columbia wrote to Seiruss counsel:

Columbia contends that each of Seiruss HeatWave marketed products is an article

of manufacture pursuant to Section 289, with respect to the D093 Patent. (Ex. 1.) That

position has not changed. Columbia also asked Seirus to identify:

what articles of manufacture Seirus thinks are at issue. We assume, but tell us
if we are wrong, that Seirus does not contest that its hats, socks, and glove liners,
which are all made exclusively from HeatWave fabric bearing the infringing
wavy lines design, are each an article of manufacture with respect to the D093
Patent. We also assume that Seirus will contend a glove is not the relevant article
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Case 3:15-cv-00064-HZ Document 156 Filed 03/23/17 Page 16 of 17

of manufacture with respect to the D093 Patent. Please confirm and advise us of
Seiruss ultimate position with respect to its gloves. This will save
everyone significant work as we enter the few months before trial.
There is a distinction in this case between Seiruss gloves, which have the HeatWave

fabric only on the inside, on the one hand, and its hats, socks, and glove liners, which are made

entirely from the HeatWave fabric, on the other hand. Columbia repeated its request for Seirus

to state its position multiple times. (Ex. 8; Ex. 9; Ex. 2, p. 2 n. 1) Seirus has still failed to

respond, though an answer is long overdue pursuant to Fed. R. Civ. P. 26(e).

Seirus must start by articulating what it contends are the relevant articles of

manufacture in this case and the basis for such contentions. Then the parties can engage in

meaningful, efficient discovery based on the actual disputed issues in this case.

VII. RESPONSE TO SEIRUSS PROPOSED SCHEDULE


On pages 20-21 of its opening brief, Seirus proposes a schedule for completion of

damages discovery. [Dkt. No. 151.] Clearly, that schedule will not work. The first two dates in

Seiruss proposed schedule, including a Supplemental discovery request deadline, are in April.

But the Court said that it could be the end of May before it decides what standard will apply to

this issue. [Tr. at 121:16-21.]

Once the standard that will be adopted for this case is established and Seirus produces its
required contentions, Columbia is amenable to an expedited exchange of discovery such that

discovery will be completed with sufficient time before the scheduled September 19 trial date.

Given the narrow issues and the extensive damages discovery requests already outstanding to

both parties, the panoply of written discovery available under the Federal Rules is not

necessaryboth parties can produce the evidence they will rely on at trial in support of their
contentions, pursuant to Rule 26. Seirus, as the party with the burden of production, should

produce its evidence first.

Thus, Columbia proposes the following schedule, giving each party approximately three

weeks to produce its evidence following the Courts decision:

SCHWABE, WILLIAMSON & WYATT, P.C.


Page 16 - COLUMBIAS RESPONSE TO SEIRUSS OPENING Attorneys at Law
Pacwest Center
BRIEF REGARDING THE LEGAL STANDARD FOR 1211 SW 5th Ave., Suite 1900
Portland, OR 97204
DESIGN PATENT DAMAGES Telephone: 503.222.9981
Fax: 503.796.2900
Case 3:15-cv-00064-HZ Document 156 Filed 03/23/17 Page 17 of 17

Three weeks after the Courts ruling on this issue Seirus produces its evidence in

support of its contentions, including supplemental disclosures and expert reports

Six weeks after the Courts ruling Columbia produces its evidence in support of its

contentions, including supplemental disclosures and expert reports

Nine weeks after the Courts ruling Close of discovery.

CONCLUSION
For the reasons provided above, Seiruss proposed legal standard should be rejected, and

the Court should adopt the legal standard and jury instructions proposed by Columbia.
Dated this 23rd day of March, 2017.

Respectfully submitted,

SCHWABE, WILLIAMSON & WYATT, P.C.

By: s/ Nicholas F. Aldrich


David W. Axelrod, OSB #750231
Scott D. Eads, OSB #910400
Nicholas F. Aldrich, Jr., OSB #160306
Telephone: 503.222.9981
Facsimile: 503.796.2900

Of Attorneys for Plaintiff


Columbia Sportswear North America, Inc.

SCHWABE, WILLIAMSON & WYATT, P.C.


Page 17 - COLUMBIAS RESPONSE TO SEIRUSS OPENING Attorneys at Law
Pacwest Center
BRIEF REGARDING THE LEGAL STANDARD FOR 1211 SW 5th Ave., Suite 1900
Portland, OR 97204
DESIGN PATENT DAMAGES Telephone: 503.222.9981
Fax: 503.796.2900

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