This post deals with recovering total profits under 35 U.S.C. §289 for design patent infringement.
Under Section 289, a design patent infringer is “liable to the owner to the extent of his total profit,” that is, all the profit made from the manufacture or sale “of the article of manufacture to which the design or colorable imitation has been applied.” The section further provides that the patentee “shall not twice recover the profit made from the infringement.” Under Supreme Court law, §289 design patent damages involve two steps: (1) identify the ‘article of manufacture’ to which the infringed design has been applied; and (2) calculate the infringer’s total profit made on that article of manufacture. Apple v. Samsung.
Article of manufacture. Section 289’s “article of manufacture” covers both a product sold to a consumer and a component of that product. Apple v. Samsung. Thus a component of an infringing product may be the relevant article of manufacture despite that consumers cannot buy the component separately from the infringing article. Id. Moreover, §289 apply only to the article sold, and not to a secondary or accessory article embodying the patented design. Trans-World v. AL Nyman (holding that patentee could not recover total profits for the eyeglasses sold where only the display rack embodied the patented design). The asserted design patent must cover the article sold.
Willfulness and enhancement. There is no requirement that the accused infringer knew of the patented design for entitlement to total profits. Catalina Lighting v. Lamps Plus. Thus, one may recover Section 289 damages regardless of whether the infringement was willful. Id. A patentee recovering an infringer’s profits under §289 may not receive an enhancement of the total profits. Braun v. Dynamics (holding that district court erred by trebling § 289 total profits). “The profits recoverable under Section 289 do not constitute `damages’ that may be increased up to three times under Section 284.” Id. In fact, §289 explicitly precludes a patentee from “twice recover[ing] the profits made from the infringement.”
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Pre-tax vs post-tax profits. An award of total profits should be based on pre-tax profits. Nike v. Wal-mart. An award of only the infringer’s post-tax profits would leave the accused infringer in possession of its tax refunds. And the statute “requires the disgorgement of the infringers’ profits to the patent holder, such that the infringers retain no profit from their wrong.” Id.
Interplay with Section 284. A design patentee is entitled to recover the greater of either (1) a reasonable royalty or lost profits under §284, or (2) total profits under §289. Nordock v. Systems. A patentee cannot recover a reasonable royalty for infringement of a utility patent as well as total profits for infringement of a design patent, where both patents cover the same article. Catalina Lighting v. Lamps Plus. The patentee is “entitled to damages for each infringement, but once it receives profits under §289 for each sale, [it] is not entitled to a further recovery from the same sale because the award of infringer profits under §289 also constitutes damages adequate to compensate for the infringement.” Id.