Apple's iPhone User Interface Held Functional for Trade Dress Infringement, But Not Design Patent Purposes

The Federal Circuit applied the functionality test elucidated in Disc Golf Ass'n v.Champion Discs, Inc., 158 F.3d 1002 (9th Cir.1998), which includes an evaluation of “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.” Apple , at 9-10 (quoting Disc Golf, 158 F.3d at 1006). The test involves an evaluation of these factors as a whole, and no single factor is dispositive. Disc Golf, 158 F.3d at 1006.

Overall, the Federal Circuit faulted Apple's arguments as focusing on the alleged “beauty” of the iPhone design while forgetting that a design can be both beautiful and functional. Apple , slip op. at 14. Marching through each Disc Golf factor in turn, the Federal Circuit found that there was ample evidence to find functionality of the unregistered trade dress and that Apple had failed to proffer adequate rebuttal evidence.

Turning to the first prong (utilitarian advantage), the Federal Circuit found “extensive evidence in the record that showed the usability function of every single element in the unregistered trade dress.” Id. at 11. It found the “pocketability” of the rounded corners as well as the fact that the “icons allow users to differentiate the applications available to the users and the bottom dock of unchanging icons allows for quick access to the most commonly used applications” to contribute to the “usability of the device” and to therefore support functionality. Id at 10-11.

As for the second prong (availability of alternative designs), Apple had proffered the existence of many alternate designs for smartphones. The Federal Circuit, however, framed the inquiry not as whether alternatives existed but whether such “alternative designs 'offer exactly the same features' as the asserted trade dress in order to show non-functionality,” finding Apple failed “to show that any of these alternatives offered exactly the same features as the asserted trade dress.” Id. at 12 (emphasis in original).

The third prong concerned whether Apple touted any utilitarian advantages of its design. The Federal Circuit did not fault Apple's advertising for expressly touting such advantages. Rather, the court faulted Apple for failing to tie the advertisements to “the elements claimed in Apple's unregistered trade dress,” and for failing “to show ' why they were not touting the utilitarian advantage of the unregistered trade dress.” Id. at 13 (emphasis added).

The last prong examines whether a functional benefit of the trade dress arises “from 'economies in manufacture or use.'” The Federal Circuit remarked that any difficulties Apple experienced in manufacturing the iPhone arose from durability issues that were outside the scope of the unregistered trade dress, and that Apple had not provided evidence showing the elements of the trade dress itself “were not relatively simple or inexpensive to manufacture.” Id. at 14.

Having summarily disposed of Apple's unregistered trade dress on functionality grounds, the Federal Circuit moved on to Apple's federally registered trade dress, Reg. No. 3,470,983. The '983 trade dress claims the visual details of 16 icons that make up the front page screen of the iPhone 3G and 3GS, as well as the shape of the iPhones themselves. As a registered mark, the '983 trade dress enjoyed a presumption of non-functionality that the unregistered features did not have. Id. However, without much ado, the Federal Circuit waved away this presumption by simply stating that “[i]t is clear that individual elements claimed by the '983 trade dress are functional,” noting that “Apple's user interface expert testified on how icon designs promote usability,” and finding that “[t]here is no separate overall appearance which is non-functional.” Id. at 15-16 (quotations removed). This shifted the burden back to Apple to dispel functionality. Id. at 17.

Design Patents

In marked contrast to the trade dress claims, the design patents faired admirably for Apple, despite the similarities in Samsung's attack. The three design patents respectively covered the front face of the iPhone, the front face and bezel of the iPhone, and the graphical user interface that included the same arrangement of 16 icons claimed in the trade dress. And although it is well established that the claim of a design patent must be construed to identify the non-functional aspects of the design, the Federal Circuit had no trouble upholding the jury verdict of design patent infringement. In so doing, the Federal Circuit showed that functionality underlying a design in a design patent is not fatal to validity or infringement, as it clearly was in the trade dress context.

Samsung had argued that a design patent should be construed so that its functional or structural aspects are “factored out” of the claim. According to Samsung, when the functional aspects of Apple's designs are factored out, it would be clear that Samsung's products did not infringe on the non-functional remainder. The Federal Circuit disagreed with this analysis, stating that there is no “rule to eliminate entire elements from the claim scope as Samsung argues.” Id. at 20. The Federal Circuit side-stepped any infringement analysis of its own, noting only that it is “the non-functional, design aspects that are pertinent to determinations of infringement,” and that this “principle was properly reflected in this case in the district court's construction of the design patents as claiming only 'the ornamental design' as shown in the patent figures,” and related jury instructions. Id. at 21-22. The Federal Circuit also countered Samsung's arguments that insufficient weight had been given to the prior art and that there was no evidence of any actual consumer confusion, finding no fault with the underlying jury instructions or supporting evidence. Id. at 22-24.

The design patents were instrumental in maintaining much of the damages award. Samsung offered many theories in an attempt to escape the disgorgement strictures of 35 U.S.C. '189, which states that an infringer of a design patent “shall be liable to the owner [of that design patent] to the extent of [the infringer's] total profit.” Samsung stated that this profit amounted to about $399 million. None of its theories was successful.

Samsung had argued that basic causation principles should apply, tying the damages to the harm caused by the alleged infringement. The Federal Circuit disagreed, observing that Congress specifically rejected this approach when it rejected the apportionment requirement for calculating design patent damages. Id. at 26. Samsung also tried to limit the calculations to the actual infringing article of manufacture, which would presumably be a subcomponent rather than the entire Samsung cell phone. However, the court noted that “[t]he innards of Samsung's smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers,” and thus found no error in the district court's award. Id. at 27-28.

Samsung fared no better challenging the damage calculations and validity of Apple's utility patents. The Federal Circuit dealt with each challenge as a basic battle of the experts issue, finding that Samsung had not adequately rebutted Apple's experts and that the jury had substantial evidence to rely upon in support of both validity and damages. Id. at 29-33.

The district court is now tasked with the job of untangling and subtracting the trade dress damages from the patent damages, a task that could also very well end up before the Federal Circuit.

M. Michael Lewis is a registered patent attorney with Stroock & Stroock & Lavan, LLP in New York. He has assisted his clients in obtaining and litigating patents across a wide number of technologies, including telecommunications, digital electronics, control software, biomedical devices, business methods and the mechanical arts. He can be reached at [email protected].'Matthew Siegal'is a partner in the Intellectual Property Group of Stroock & Stroock & Lavan LLP. A member of this newsletter's Board of Editors, Mr. Siegal concentrates his practice on extensive patent litigation, prosecution, opinion, licensing and due diligence activities for both large multi-national corporations and smaller start-ups. He can be reached at'[email protected].

In the long-running Apple v. Samsung dispute, the Federal Circuit has highlighted a marked difference between the effectiveness of trade dress and design patents in protecting the visual characteristics of a product, which could potentially cost Apple hundreds of millions of dollars in lost damages. Explaining that both the registered and unregistered trade dress features of Apple's iPhone products are functional and thus not protectable, the Federal Circuit remanded the case back to the district court for entry of damages awards “not predicated on Apple's trade dress claims.” On the other hand, the court affirmed awards on design patents that arguably cover many of the same features present in the trade dress.

Trade Dress

The evisceration of the trade dress-related damages, which Samsung contends amount to $381,683,562, but which the Federal Circuit did not specifically account for, began with Apple's unregistered trade dress and the observation that trade dress can only protect the non-functional elements of an article. Apple Inc. v. Samsung Elecs. Co., Nos. 2014-1335, 2015-1029, slip op. at 7 (Fed Cir. May 18, 2015). The unregistered trade dress claimed various hardware and software features, such as the rounded-corner rectangular design of the iPhone, and a user-interface including “a matrix of colorful square icons with evenly rounded corners within the display screen, and an unchanging bottom dock of colorful square icons with evenly rounded corners set off from the display's other icons.” Id. at 9. Performing the analysis under Ninth Circuit law, the Federal Circuit concluded that Apple had not carried its allegedly heavy burden of proving non-functionality, noting that Apple “had not cited a single Ninth Circuit case that found a product configuration trade dress to be non-functional.” Id. at 7-8.

The Federal Circuit applied the functionality test elucidated in Disc Golf Ass'n v.Champion Discs, Inc., 158 F.3d 1002 (9th Cir.1998), which includes an evaluation of “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.” Apple , at 9-10 (quoting Disc Golf, 158 F.3d at 1006). The test involves an evaluation of these factors as a whole, and no single factor is dispositive. Disc Golf, 158 F.3d at 1006.

Overall, the Federal Circuit faulted Apple's arguments as focusing on the alleged “beauty” of the iPhone design while forgetting that a design can be both beautiful and functional. Apple , slip op. at 14. Marching through each Disc Golf factor in turn, the Federal Circuit found that there was ample evidence to find functionality of the unregistered trade dress and that Apple had failed to proffer adequate rebuttal evidence.

Turning to the first prong (utilitarian advantage), the Federal Circuit found “extensive evidence in the record that showed the usability function of every single element in the unregistered trade dress.” Id. at 11. It found the “pocketability” of the rounded corners as well as the fact that the “icons allow users to differentiate the applications available to the users and the bottom dock of unchanging icons allows for quick access to the most commonly used applications” to contribute to the “usability of the device” and to therefore support functionality. Id at 10-11.

As for the second prong (availability of alternative designs), Apple had proffered the existence of many alternate designs for smartphones. The Federal Circuit, however, framed the inquiry not as whether alternatives existed but whether such “alternative designs 'offer exactly the same features' as the asserted trade dress in order to show non-functionality,” finding Apple failed “to show that any of these alternatives offered exactly the same features as the asserted trade dress.” Id. at 12 (emphasis in original).

The third prong concerned whether Apple touted any utilitarian advantages of its design. The Federal Circuit did not fault Apple's advertising for expressly touting such advantages. Rather, the court faulted Apple for failing to tie the advertisements to “the elements claimed in Apple's unregistered trade dress,” and for failing “to show ' why they were not touting the utilitarian advantage of the unregistered trade dress.” Id. at 13 (emphasis added).

The last prong examines whether a functional benefit of the trade dress arises “from 'economies in manufacture or use.'” The Federal Circuit remarked that any difficulties Apple experienced in manufacturing the iPhone arose from durability issues that were outside the scope of the unregistered trade dress, and that Apple had not provided evidence showing the elements of the trade dress itself “were not relatively simple or inexpensive to manufacture.” Id. at 14.

Having summarily disposed of Apple's unregistered trade dress on functionality grounds, the Federal Circuit moved on to Apple's federally registered trade dress, Reg. No. 3,470,983. The '983 trade dress claims the visual details of 16 icons that make up the front page screen of the iPhone 3G and 3GS, as well as the shape of the iPhones themselves. As a registered mark, the '983 trade dress enjoyed a presumption of non-functionality that the unregistered features did not have. Id. However, without much ado, the Federal Circuit waved away this presumption by simply stating that “[i]t is clear that individual elements claimed by the '983 trade dress are functional,” noting that “Apple's user interface expert testified on how icon designs promote usability,” and finding that “[t]here is no separate overall appearance which is non-functional.” Id. at 15-16 (quotations removed). This shifted the burden back to Apple to dispel functionality. Id. at 17.

Design Patents

In marked contrast to the trade dress claims, the design patents faired admirably for Apple, despite the similarities in Samsung's attack. The three design patents respectively covered the front face of the iPhone, the front face and bezel of the iPhone, and the graphical user interface that included the same arrangement of 16 icons claimed in the trade dress. And although it is well established that the claim of a design patent must be construed to identify the non-functional aspects of the design, the Federal Circuit had no trouble upholding the jury verdict of design patent infringement. In so doing, the Federal Circuit showed that functionality underlying a design in a design patent is not fatal to validity or infringement, as it clearly was in the trade dress context.

Samsung had argued that a design patent should be construed so that its functional or structural aspects are “factored out” of the claim. According to Samsung, when the functional aspects of Apple's designs are factored out, it would be clear that Samsung's products did not infringe on the non-functional remainder. The Federal Circuit disagreed with this analysis, stating that there is no “rule to eliminate entire elements from the claim scope as Samsung argues.” Id. at 20. The Federal Circuit side-stepped any infringement analysis of its own, noting only that it is “the non-functional, design aspects that are pertinent to determinations of infringement,” and that this “principle was properly reflected in this case in the district court's construction of the design patents as claiming only 'the ornamental design' as shown in the patent figures,” and related jury instructions. Id. at 21-22. The Federal Circuit also countered Samsung's arguments that insufficient weight had been given to the prior art and that there was no evidence of any actual consumer confusion, finding no fault with the underlying jury instructions or supporting evidence. Id. at 22-24.

The design patents were instrumental in maintaining much of the damages award. Samsung offered many theories in an attempt to escape the disgorgement strictures of 35 U.S.C. '189, which states that an infringer of a design patent “shall be liable to the owner [of that design patent] to the extent of [the infringer's] total profit.” Samsung stated that this profit amounted to about $399 million. None of its theories was successful.

Samsung had argued that basic causation principles should apply, tying the damages to the harm caused by the alleged infringement. The Federal Circuit disagreed, observing that Congress specifically rejected this approach when it rejected the apportionment requirement for calculating design patent damages. Id. at 26. Samsung also tried to limit the calculations to the actual infringing article of manufacture, which would presumably be a subcomponent rather than the entire Samsung cell phone. However, the court noted that “[t]he innards of Samsung's smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers,” and thus found no error in the district court's award. Id. at 27-28.

Samsung fared no better challenging the damage calculations and validity of Apple's utility patents. The Federal Circuit dealt with each challenge as a basic battle of the experts issue, finding that Samsung had not adequately rebutted Apple's experts and that the jury had substantial evidence to rely upon in support of both validity and damages. Id. at 29-33.

The district court is now tasked with the job of untangling and subtracting the trade dress damages from the patent damages, a task that could also very well end up before the Federal Circuit.

M. Michael Lewis is a registered patent attorney with Stroock & Stroock & Lavan, LLP in New York. He has assisted his clients in obtaining and litigating patents across a wide number of technologies, including telecommunications, digital electronics, control software, biomedical devices, business methods and the mechanical arts. He can be reached at [email protected].'Matthew Siegal'is a partner in the Intellectual Property Group of Stroock & Stroock & Lavan LLP. A member of this newsletter's Board of Editors, Mr. Siegal concentrates his practice on extensive patent litigation, prosecution, opinion, licensing and due diligence activities for both large multi-national corporations and smaller start-ups. He can be reached at'[email protected].