Monday, April 29, 2019

Disgorgement of Profits as an Equitable Remedy

Under section 289 of the U.S. Patent Act and the Supreme Court's December 2016 decision in Samsung v. Apple, the successful design patent owner has the option of demanding the disgorgement of the defendant's profits attributable to the relevant "article of manufacture."  The Supreme Court offered no guidance on determining what the relevant article of manufacture is, however, in a case in which the design patent is not coextensive with the end product (or the end product embodies multiple design patents).  Nevertheless, since Samsung the lower courts have instructed the jury to consider the four factors recommended by the Solicitor General of the United States in his amicus brief in that case.  (For Professor Sarah Burstein's previous discussion on this blog, see here; see also this recent discussion by Tracy-Gene Durkin and Gary Griswold on Law360.) 

One issue that, as I have previously noted, has been pretty much overlooked in the case law to date is whether there is a right to have a jury determine the amount of profit to be disgorged.  I'm not a Seventh Amendment scholar, but in my view there is at the very least a serious argument that this remedy is equitable in nature, and therefore that there is no Seventh Amendment right to a jury trial on this issue.  Indeed, the Federal Circuit itself recently characterized disgorgement as equitable in nature, in the context of trade secret misappropriation and other IP infringement (see here).  

Anyway, though not directly on point the Eleventh Circuit last week in Hard Candy, LLC v. Anastasia Beverly Hills, Inc. held that, in the context of trademark infringement, disgorgement of profits is an equitable remedy bestowing no constitutional right to trial by jury.  The court further rejected the plaintiff's argument that it was entitled to a jury trial because it sought disgorgement only as a proxy for its own actual damages, stating that such a rule would be "inconsistent with the longstanding interpretation of the Seventh Amendment set out by the Supreme Court . . . ."  (The opinion also favorably cites  my former colleague Mark Thurmon's paper Ending the Seventh Amendment Confusion:  A Critical Analysis of the Right to a Jury Trial in Trademark Cases, 1 Tex. Intell. Prop. L.J. 1 (2002).)  Hat tip to Professor Dmitry Karshtedt for bringing this case to my attention.

So again, not directly on point, but the court's analysis would seem to lend some weight to the argument that there is no constitutional right to have a jury determine the amount of profit to be disgorged in a design patent case.  Surely someone will at least raise this argument in a design patent case at some point?


  1. I don't know what effect the codification has, but the disgorgement was definitely in equity - I trace the history in (Un)Reasonable Royalties.

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  3. Michael, do you think then that courts and litigants are missing an important issue in these design patent cases?