Tuesday, August 5, 2014

No-tech and low-tech companies side with Apple on design patent damages in Samsung case

After Apple very recently dropped its cross-appeal in the first Samsung case, the case is just about money. The immediate issue on appeal is the $929 million damages award (resulting from two jury trials), which is mostly about design patents; after the appeal, the attention may turn again to utility (i.e., technical) patents once Apple seeks post-judgment royalties for alleged or potential infringement further down the road.

Apple is trying hard to defend the verdict(s), and Samsung is facing a significant but not insurmountable hurdle in its quest for adjustments.

The bulk of Apple's damages award would be history if the Federal Circuit agreed with 27 law professors and industry group CCIA that, for whatever reason or combination of reasons, an unapportioned, wholesale disgorgement of infringer's profits is not what the law requires, even though Judge Koh thought it did and Apple still says it does.

Yesterday (Monday) any amici curiae filing letters in support of Apple had their deadline. None of the filings is publicly accessible by the time I'm writing this, but the headlines of the docket entries are interesting enough by themselves (and unless I find anything in the submissions that warrants immediate reporting, I'll wait with my analysis of those filings until I comment on Samsung's reply brief, which is due in less than a month further to an extension that was granted).

Two things are noteworthy about the headlines of those submissions:

  • While I've disagreed more than once with the Computer & Communications Industry Association, I thought it raised an interesting argument in this particular context of design patent damages. And while CCIA routinely files amicus briefs in support of members, the fact of the matter is that the organization does have a reasonably broadbased membership. If I see a CCIA brief that any significant part of its membership openly disagrees with (such as in Oracle v. Google), then I'm usually not impressed. But if no CCIA member dissociates itself from the group in connection with a certain issue or case, then (and only then) a CCIA submission must be seen as a position of very significant parts of the information and communications technologies (ICT) industry, or even as a consensus position of very large parts of the industry.

    Unlike Oracle, which enjoys tremendous support from other high-tech companies in its defense of software copyrightability, Apple is isolated in the (ICT) sector with its pursuit of exorbitant design patent damages. Traditional ICT innovators apparently don't want design patent holders to be overcompensated to an extent that would have chilling and stifling effects on true innovation.

    The companies supporting Apple's design patent damages award are, relatively speaking (i.e., by comparison with CCIA's membership), no-tech and low-tech companies and one pharma/medical devices company (Novo Nordisk; not an ITC player either): Crocs, Inc.; Design Ideas, Ltd.; Novo Nordisk, Inc. ; Lutron Electronics, Inc.; Nuvasive, Inc.; Method Products, Pbc; Oakley, Inc.; Deckers Outdoor Corp.; and Kohler Co.

    The fact that only companies that make products like shoes, furniture or (at best) light switches (compare that to a smartphone...) support Apple on this issue actually strengthens the argument made by Samsung and its amici that the notion of unapportioned design patent damages may have been appropriate a couple of centuries ago but would completely devalue the innovative technologies of our times.

  • Non-industry Apple-supporting amici include "54 distinguished industrial design professionals" (whose interest in maximizing the commercial value of design patents is obvious) and a group of "Design Educators".

    I haven't seen a list of names, but no matter how competent and credible those people may be (most probably they are), it strikes me as odd that these two groups are represented by Apple's own lawyers -- something I haven't seen in any of the other appellate proceedings I've watched over the last few years. Those amicus curiae briefs always come with a disclaimer that no party took part in drafting the brief or supported it financially. Such a disclaimer will most likely also be found in those briefs. But I've never before seen so much proximity between amici curiae and the party they support. Counsel for "Design Educators" are Gibson Dunn lawyers some of whose names I've seen on countless Apple filings (Mark Perry, Mark Lyon), while Orrick lawyers led by Mark S. Davies, who played a key role (very successfully, by the way) in several Apple-Motorola appeals, represent the "54 distinguished industrial design professionals".

    This doesn't make any argument in those briefs weaker. However, I've said in connection with multiple cases that amicus curiae briefs are not just about what is said but also about by whom it is said. The more independent an amicus curiae is, the more credibility the related filing will enjoy. For example, it's a very strong message if even fierce competitors of a party, who would benefit in the short term from their rival losing a case, express an overarching concern over an issue. Here, it surprises me that the design educators and professionals supporting Apple's design patent damages award apparently couldn't find lawyers without close Apple ties to represent them. Maybe other high-profile lawyers really don't want to support exorbitant design patent damages and believe that their existing clients are more likely going to need help to fend off whatever outrageous design patent damages claims others would bring if Apple defended the verdict(s) on appeal.

    To be clear, I don't think those design educators and professionals could have found better lawyers than these in terms of expertise and skills. In particular, I can't think of a better firm for the Federal Circuit than the Orrick team that represented Apple in the Motorola case and has also won, on Oracle's behalf, the reversal of Google's non-copyrightability ruling. But displaying so much proximity to a party is, as I said, unusual and (in the cases I watch) unprecedented for a group of amici curiae.

While the first Apple v. Samsung case has become a lot less interesting as a result of Apple's withdrawal of its cross-appeal, Judge Koh's post-trial rulings in the second case will be more interesting. Those will probably come down this summer.

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