Friday, February 16, 2018

Apple v. Samsung: Advocacy groups, patent experts concerned about legal uncertainty surrounding design patent damages

Last week, Engine Advocacy organized a panel discussion on "Design Patents and Defining the Article of Manufacture – One Year Later," with the latter referring to the fact that the Supreme Court ruling in Apple v. Samsung came down more than a year ago. Engine had invited three speakers:

  • Matt Levy, the CCIA's former patent counsel (in which capacity he was really a thought leader with respect to "article of manufacture" as the key determination to be made in connection with an otherwise-unapportioned disgorgement of design patent infringer's profits) and now a consultant;

  • Charles Duan, formerly with the Public Knowledge Foundation (for which he also authored amicus curiae briefs in connection with Apple v. Samsung and now with R Street; and

  • G. Nagesh Rao, a former patent examiner and policy advisor.

A video recording of the event is available on YouTube.

An Apple v. Samsung--far from the first, to put it that way--will be held in three months. The Engine panel discussion was not exactly a trial preview. The perspective was very high-level, including an outlook (by Matt Levy) as to what might happen after the trial. Mr. Levy believes the Federal Circuit will again take an exceedingly patentee-friendly position, and the Supreme Court will have to correct it again.

Nobody on the panel appeared to believe that the 19th-century unapportioned-disgorgement rule in 35 U.S.C. § 289 is appropriate with respect to today's multifaceted technology products. However, the focus of the panel wasn't on advocating new legislation, though the subject did come up. It was more about the high degree of uncertainty surrounding not just the Apple v. Samsung re-retrial but presenting an issue to the industry at large.

All speakers made good points, and a particularly important issue was raised by Mr. Levy: one of the three design patents-in-suit covers a screen layout, which apart from and beyond the question of damages is problematic. Admittedly, I'd have liked that question to be reviewed by the Supreme Court, but the emphasis there was on damages and, above all else, the "article of manufacture" question.

For a recap, these are the four factors that the Department of Justice had proposed to the Supreme Court and that Judge Koh recently adopted:

  • "[T]he scope of the design claimed in the plaintiff's patent, including the drawing and written description";

  • "[T]he relative prominence of the design within the product as a whole";

  • "[W]hether the design is conceptually distinct from the product as a whole"; and

  • "[T]he physical relationship between the patented design and the rest of the product," including whether "the design pertains to a component that a user or seller can physically separate from the product as a whole," and whether "the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately."

There is so much uncertainty that no one can really predict what the jury will make of the above factors. The outcome could hardly be less predictable.

As I look at those factors, I feel that the first factor favors Samsung (the patents-in-suit cover certain aspects of a phone, not an entire phone) but the other three factors could go either way. The jury will be free to attach different weight to each factor, and Samsung's best chance here is that the jury (which won't have to explain its reasoning in any way) might look at the devastating consequences of an unapportioned disgorgement of infringer's profits (not devastating in Samsung's particular case as it is a huge organization, but in other cases it would be) and just conclude that a decision in Samsung's favor is the lesser evil.

Mr. Duan explained that design patent litigation isn't nearly as widespread as software patent litigation, but depending on what happens in Apple v. Samsung and other design patent damages cases, design patents could give rise to many lawsuits by patent trolls in the not too distant future.

Without a doubt, industry groups are concerned about the lack of legal certainty. One of the questions from the audience (toward the end of the YouTube video) came from the Software & Information Industry Association (SIIA).

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