Friday, January 22, 2016

Broadbased support for Samsung's Supreme Court petition in Apple's design patents case: cert looms large

Persuading the Supreme Court to review a decision is normally a long shot. Even when many pundits predict certiorari, it often doesn't materialize (case in point: Oracle v. Google). In recent years, however, patent law has relatively frequently received the attention of the top U.S. court, which some attribute to the Federal Circuit's exceedingly patentee-friendly approach. "Recent years" does not include design patents, however: the last time the Supreme Court of the United States handed an opinion on a design patent dispute was more than 120 years ago. Is it going to happen now? I have a gut feeling that the answer is yes.

Of course, no one can know what the court will decide. But it's hard to think of a case about design patents that would be more likely than Apple v. Samsung to be of interest to the Supreme Court:

  1. It's the perfect case for a decision on how to apply § 289 (disgorgement of infringer's profits) to today's multifunctional products. Few products embody more patentable designs and inventions than smartphones (given that even screen designs are frequently patented).

  2. It's the perfect case for addressing the need to limit the scope of a design patent to the ornamental aspects of the design, excluding the functional ones. That's because Apple's iPhone design patents at issue in this case (there's also one on an app menu layout) are in no small part about such elements as rounded corners.

  3. The amici curiae ("friends of the court") who filed briefs in support of Samsung's petition credibly demonstrate that large and small corporations, high-tech and low-tech companies, the legal community and consumers are profoundly concerned.

As I wrote yesterday (in a blog post on the fact that Apple and Samsung are the top utilizers of so-called "patent death squads"), it will really be hard for Apple, which has a deadline on February 16 to respond to Samsung's petition, to persuade the Supreme Court that this here is not an important issue. The amicus briefs underscore that this matter has ramifications that make even Apple's original (2012) billion-dollar jury verdict pale by comparison. I venture to guess that Apple's argument will be more of a "there's no need for a review because the law is soooo clear" than a "nothing to see here, move on" message.

Six amicus briefs were submitted a week ago, and the submitters can be categorized as follows (in no particular order):

  1. Major high-tech companies

  2. A high-tech industry body

  3. A leading maker of mechanical devices

  4. Minority and rural communities advocacy organizations (promoting small business as well as consumer interests)

  5. Other non-governmental organizations

  6. IP law professors

A year and a half ago, amicus curiae briefs relating to design patent damages were also filed in support of Apple's maximalist position, but (with only a minor exception) just by low-tech and no-tech companies. I doubt that anyone will file a brief in support of Apple's opposition to the cert petition next month. That's not only because Apple is pretty much isolated on this question among information and communications (ICT) technology companies but also because even those who are on Apple's side won't want to strengthen the impression that this here matters.

Samsung's supporters at this stage are largely the same ones as in 2014. On balance, Samsung's support is slightly more broadbased now, given that it has the same NGOs on its side, the same tech industry heavyweights, but now even 37 IP law professors (10 more than in 2014) and also a mechanical device maker. There are no signs of Apple having found new allies, but if the Supreme Court grants certiorari, I'm sure there will also be filings by those who share Apple's interests in this context. I'm sure it will still be accurate to say that the ICT industry overwhelmingly, if not exclusively (except for Apple), supports Samsung on this one.

All six amicus briefs discuss the disgorgement-related part of Samsung's petition. Only one of them (the law professors' submission) also speaks out on the claim construction issue of limiting the infringement (and validity) analysis to ornamental (non-functional) aspects. With a view to whether or not the Supreme Court will accept to hear the case, I don't view this as a setback for Samsung's efforts. It's easy to understand that outsized damage awards are a particular magnet for third-party submissions. As this dispute continues, most headlines of media reports will likely also focus on the damages-related question. For now, all that Samsung needs is for the Supreme Court to accept to hear the case.

I will now publish a link to each of the six amicus briefs and provide some particularly interesting quotes (so they can be referenced in future posts on this matter).

Google, Facebook, eBay, Dell, HP, Newegg, Pegasytems, Vizio

amicus curiae brief (PDF)

  • "The Federal Circuit's decision is deeply flawed. If allowed to stand, it will lead to absurd results and have a devastating impact on companies, including amici, that spend billions of dollars annually on research and development for complex technological products and their components."

  • "[The Federal Circuit's decision] ignores the reality of modern, multicomponent technologies. These complex products, which have become the norm throughout the consumer electronics industry, are not purchased primarily based on the design of one or more isolated components."

  • "[The Federal Circuit's decision produces] absurd result[s] [that] cannot be squared with the reality of modern, multicomponent technological products."

  • "Awarding a design patentee the total profit from an infringer's product when the design covers only a relatively minor portion of the product is out of proportion with the significance of the design and out of touch with economic realities."

  • "If allowed to stand, the Federal Circuit's decision will create incentives for more [frivolous] litigation, because any technology that somehow encompasses an infringing design—no matter how complex—will trigger the 'total profit' rule and allow the patentee to obtain disgorgement of all profits from the purported infringer."

  • "If allowed to stand, the Federal Circuit’s decision would encourage the procurement and assertion of more low-quality, marginally innovative design patents, in the hopes that those patents will be infringed by the latest smartphone, laptop, or other device."

  • "In all events, the question presented concerning the scope of design-patent damages is an incredibly important one not only to amici, but to the technology industry as a whole."

Computer & Communications Industry Association

amicus curiae brief (PDF)

  • It's worth noting that CCIA already argued in 2014 (as many others do now) that a simple solution to the "total profits" problem is a more up-to-date interpretation of "article of manufacture."

  • Until Apple can show support from at least one significant CCIA member, I come from the assumption that all CCIA members share the concerns raised--and that is an impressive membership base. There was no indication whatsoever of dissenting members in 2014, and there still isn't any.

  • "The Federal Circuit's decision with respect to design patent damages raises constitutional concerns, is a misreading of the statute, and is dangerous to the technology industry."

  • "If the decision below is allowed to stand, design patent infringement will become a new tool for patent assertion entities to use to gain leverage."

  • "The interpretation of Section 289 used by the Federal Circuit raises constitutional concerns because it grants a design patent an effective monopoly over an entire smartphone based solely on certain ornamental features." (in light of the claim construction issue I mentioned above, one could even argue that a largely functional design could have this effect, making this even worse)

  • "While Congress has broad authority to legislate with respect to patents, it is not allowed to remove knowledge from the public domain or grant a monopoly to an inventor far beyond what the inventor has contributed to the public."

  • "The Federal Circuit's interpretation of Section 289, however, does exactly what Congress is not allowed to do."

  • I particularly like this citation from a Supreme Court decision:

    "[W]here a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter." Jones v. United States, 529 U.S. 848, 857 (2000) (quoting United States ex rel. Attorney General v. Delaware & Hudson Co., 213 U.S. 366, 408 (1909))

  • "This case is important to the thousands of businesses that are the targets of patent assertion entities, also called patent monetization entities."

Systems Inc. (leading maker of dock levelers, i.e., mechanical devices)

amicus curiae brief (PDF)

  • "The Federal Circuit has adopted an interpretation of Section 289 that appears to contradict over a century of established jurisprudence."

  • "The Federal Circuit's erroneous interpretation has resulted in a foot race to the courthouse with design patent holders seeking exorbitant windfalls in some cases that offend all notions of substantial justice."

  • "The problem presented in Petitioner's case is not isolated or unique."

  • "The Federal Circuit's erroneous interpretation of Section 289 is contrary to a century of established law and is having a rapidly-increasing detrimental impact on patent litigants."

National Black Chamber of Commerce, Hispanic Leadership Fund and the National Grange of the Order of the Patrons of Husbandry (rural communities/farmers)

amicus curiae brief (PDF)

  • "The threat posed by these total-profit disgorgement damages also will hand design-patent-holding companies a weapon so powerful that it threatens to distort markets in a variety of industries and exact tangible harms on the vulnerable communities amici represent."

  • "Minority and rural entrepreneurs will be particularly hard-hit by the anti-competitive harms posed by the Federal Circuit's interpretation of Section 289 because of their vulnerable position in the American marketplace."

  • "The anti-competitive forces set in motion by the Federal Circuit’s decision also threaten to make smartphones far more expensive, rendering it impossible for millions of low-income, minority and rural Americans to connect to the Internet."

  • "[T]he Federal Circuit's interpretation of Section 289 harms entrepreneurs from minority and rural communities by inhibiting the potential success of their developing businesses. It also harms the consumers and citizens of these communities, pricing them out of the only affordable means of obtaining the essential benefits of Internet access."

Electronic Frontier Foundation (EFF) and Public Knowledge

amicus curiae brief (PDF)

  • "It would be entirely unsurprising if the Federal Circuit's damages rule spawned a new generation of abusive patent litigation."

  • "[T]he Court of Appeals opens the door to a new species of abusive patent litigation, namely those over design patents, that will potentially plague future innovators for years to come."

  • "[A]warding 'total profits' on an entire product for a patent only on a small component overcompensates the design patent owner to an absurd degree."

  • "The Federal Circuit's absolute 'total profits' rule, in practice, will serve [...] to promote abusive litigation and licensing practices, and provide yet another mechanism for suppressing competition."

  • "[T]he Federal Circuit's interpretation may raise constitutional doubts, specifically because an absolute 'total profits' rule can result in excessively high and disproportionate damages awards that could violate the Fifth Amendment."

37 (IP) law professors

amicus curiae brief (PDF)

  • Stanford Professor Mark Lemley is counsel of record for his colleagues

  • The professors describe as "counterintuitive" that the "Federal Circuit upheld a finding of design patent infringement based on the very same Apple designs that it found functional under trade dress law."

  • "There is no justification in statutory text, history or policy for interpreting functionality differently for design patents than for trade dress."

  • he Federal Circuit has applied a "draconian" total-profits rule that "dates back more than a century to circumstances that no longer apply."

  • "As applied to a modern, multicomponent product, the entire profit rule drastically overcompensates design patent owners, undervalues technological innovation and manufacturing know-how, and raises troubling questions about how to handle other potential claims to a share of the defendant's profits."

  • "If there is more than one patented design in a product, the assumption that any particular patented design drives the sale of the product falls apart."

  • "Nor does all, or even most, of the value of a product come from patented designs. People do not buy iPhones for their appearance alone; they buy them for their functions."

  • I've saved (a part of) the best for last:

    "It is (barely) possible to argue with a straight face that it is the shape and overall ornamental design of the iPhone, rather than its functionality, that motivates consumers to buy it. It is not even remotely plausible that the shape of the Apple iTunes icon is what motivates people to buy the whole iPhone. And it literally cannot be the case that the phone shape patent and the iTunes icon patent are each the sole driver of a consumer buying the phone. Notably, all of the patents Apple asserted in this litigation cover discrete parts, rather than the entire phone. And while these patents on different aspects of the iPhone's design happen to be owned by the same company, there is no reason to think that the same will always be the case for similarly complex products."

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