The Supreme Court could risk creating an “industry of litigation” if it sides with Apple in its design patent case against Samsung, several speakers warned at an Internet Association panel Tuesday morning.
At issue is a seemingly simple question: If a design patent is infringed upon, should the offending party disgorge all its profits from the product in question to the patent holder, or only the portion of profits attributable to the patented design?
For most patents, the answer is the latter, which is called apportionment. But for design patents, which are the type in question in the Apple v. Samsung case, current law states that all profits attributable to the “term of manufacture,” are owed to the patent holder, in this case Apple. That’s why Samsung paid out $548 million last year, its entire profits from its line of Galaxy phones at the time. It agreed to pay that amount on the condition it would be refunded if the Court rules in its favor.
Several speakers at the panel, all of whom had filed amicus briefs in the case, protested that if the Supreme Court affirms the Circuit Court’s decision, it would end up enabling patent trolls aiming to steal companies’ profits down the road.
“We’re particularly concerned about the patent assertion entity, or patent troll, problem that’s been plaguing the tech industry for some years now. And the federal circuit’s decision, we felt, really opened the door because it gave a design patent on the chassis of the phone, or the screen of the phone, to the entire phone,” explained Matt Levy, patent counsel for the computer and communications industry association, or CCIA, which includes Samsung as a member.
Levy’s point was that even if a phone’s chassis was entirely copied, for example, the chassis does not make up the full phone, and therefore damages should only be awarded in proportion to the profits attributable to the chassis.
Ruling otherwise would be particularly harmful, Levy warned, because one of Apple’s patents, D604,305, doesn’t show a phone at all, just a screen with icons on it. Levy asserted that this patent could conceivably even apply to digital car dashboards or other touchscreens.
Alone defending Apple’s claim at the panel was Howard Hogan, a partner at the law firm Gibson Dunn that represents Nike, among other companies. Hogan asserted that design is the major thing separating successful products from unsuccessful products, and therefore argued an apportionment regime would be unsuitable to design patents. He claimed that Congress was well aware of the consequences of that decision when it amended the design patent law in 1952.
“Why would apportionment be bad? Because Congress understood that it is a heliological impossibility to determine why people buy things … they often don’t know themselves why they buy them,” Hogan said.
“Design is an inexhaustible resource,” he added. “If a design infringes, just change the design.”
While that sentiment might sound fair enough, Charles Duan, the director of the Patent Reform Project at Public Knowledge, explained that due to the flexibility in creating and changing design patents, patent holders can easily change their designs to mirror an allegedly infringing product.
“The Patent Office allows people to change their design patents and applications after the fact,” Duan explained. “In every other area of patents, that would be a very uncommon thing to do, to say, ‘Oh, my patent no longer covers the whole thing I invented, only the small part that some other person’s doing.’ But in design patents you’re allowed to do that due to some weird flukes in the law. And as a result, there’s a pretty big opportunity to get people to infringe.”
Given that, the only thing left to create the “industry of litigation,” Duan warned, would be to provide a strong financial motive to undertake such a process – something an Apple victory in the Supreme Court case would provide.
The Supreme Court is currently evaluating amicus briefs and will likely release a decision in the coming months. Even though the Court is currently down to eight members, Duan said it is unlikely to be tied 4-4 as the Court has usually reached unanimous decisions in most recent patent cases.
For more:
- see this Public Knowledge amicus brief (PDF)