Tuesday, June 3, 2014

Industry group presents another theory for slashing Apple's $929 million award in Samsung case

A few days ago I blogged about an amicus curiae brief submitted by 27 law professors in support of Samsung's appeal of the $929 million aggregate damages award in the first California Apple v. Samsung case. A large part of the award is due to the fact that Judge Koh allowed Apple to seek a disgorgement of unapportioned infringer's profits. The law professors advocate apportionment (based on fairly high standard -- "causal nexus" -- that Apple wasn't able to satisfy in the injunction context).

The Computer & Communications Industry Association (CCIA), an industry group that counts Samsung but also other major companies among its members, has meanwhile published its submission to the Federal Circuit. I wouldn't have done this blog post (especially since I really intend to limit the number of monthly blog posts) if the CCIA's filing just amounted to more of the same. Only a part of the CCIA's argument (the part that explains a disgorgement of total profits for one design patent can't be the answer since Apple holds multiple smartphone-related design patents, in which case a damages claim could theoretically amount to many billions of dollars) is duplicative of the professors' simultaneous filing. The most intriguing part of the CCIA's submission arrives at the same result via a different -- at least differently-presented, but in my view also substantively-different -- route.

The CCIA (with which I disagree on Oracle v. Google and a couple of other issues, just like I disagree with some of the professors on those and/or other issues) bases its argument for apportionment on the question of what the proper "article of manufacture" should be with respect to which a disgorgement of profits can be sought. According to CCIA, the term "article of manufacture", which appears in the paragraph that enables design patent holders to demand a disgorgement (35 U.S.C. § 289), "must refer to the article in the design patent itself, not a larger device that incorporates the article as one of its components." Judge Koh agreed with Apple that the appropriate article of manufacture is an entire phone. But CCIA says Apple's D'087 and D'677 design patents "are directed to an outer shell of an unspecified electronic device," while D'305 "is directed to a display screen for a graphical user interface for an unspecified device." Interestingly, "[t]he [D]'087 and [D]'677 patents both expressly acknowledge that the device inside the patented case is irrelevant, and could be a 'media player (e.g., music, video and/or game player), media storage device, a personal digital assistant, a communication device (e.g., cellular phone), a novelty item or toy.'" The CCIA concludes from this content-unrelated definition that the article of manufacture (and thus the damages base) "must be the outer case of the device."

I'm not sure that the commercial value of the outer case alone is the proper damages base here. It's an extreme position. But the other extreme would mean that a device maker could be liable for several times or even many times the profits (because each of multiple asserted design patents would on its own entitle its owner to a disgorgement of total profits), which underscores how little sense the absence of any apportionment makes in this world, no matter how reasonable it may have appeared to Congress in the late 19th century when design patents related to no-tech products like carpets.

I agree with the professors and with the CCIA that an unapportioned disgorgement is the wrong result. It would imply that all of the technology that goes into these products has no commercial value on its own. As I wrote before, the question is what the appeals court can do about it. Can the problem be solved through interpretation or just through updated legislation? The devil's advocate perspective on the professors' brief would be that they propose a contra legem approach (a decision that intentionally goes against the language of the statute). If that was a concern, then the CCIA's proposed approach would be an alternative for addressing the issue. The CCIA's suggested interpretation and application of the term "article of manufacture" may seem ambitious, but one could interpret the statute that way without going against it.

I just wanted to draw attention to the CCIA's interesting line of thought on this issue.

A couple more things that are unrelated to design patent remedies. If you read very closely, you may have noticed that I now use, finally, the correct punctuation in connection with quotes, putting periods and other symbols inside the quotation marks. I always considered it more logical to have only the original text -- including punctuation symbols -- inside the quotes, but I wanted to get this right at some point.

Finally -- and this is infinitely more important than my punctuation -- the announcements Apple made yesterday at its WWDC developer conference. The priority platform for my own app development project is Android for various reasons, but I'm obviously aware of the iOS opportunity. I'm extremely excited about Apple's new programming language, Swift. I honestly think I've never been nearly as excited about an Apple announcement. If you follow me on Twitter, you may have noticed it yesterday (and that was even before I had the time to read about it in detail). While I liked Apple's rather expressive, verbose function and variable names, I really found Objective-C awkward and have for some time preferred the Java/.NET-style managed code approach (Objective-C seemed to me like semi-managed at best). It really appears to me that Swift will make it easier to get over the iOS learning curve and result in greater developer productivity (and greater stability of programs). This is wonderful, and enabling developers to be productive has the potential to contribute much more to Apple's bottom line than lawsuits over patents of rather limited strength.

I heard that Swift apps may run even faster than Objective-C apps. That's not the most important thing to me because the app I'm currently working on would run fine even if Swift apps had just half the performance (or even significantly less) of Objective-C apps. What's important is that developers can learn the thing quickly and be productive, and that the results make end users happy. I did a fair amount of assembly language programming in the 1980s. At the time, you couldn't avoid it for performance reasons. Nowadays computers, including the mobile computers called smartphones and tablets, are so powerful that the focus should really be on developer productivity. I'm very happy that Apple made this such a high priority. I always thought it was wrong and unfair to assume that Apple's ability to innovate depended on just one person. That one person originally didn't even like the idea of allowing third-party apps, and could have done something about the Objective-C problem years ago but didn't. The new Apple appears more developer-friendly than the old Apple. If only it could also start to think of developers' needs when lobbying for or against different patent reform measures...

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