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By Tony Dutra
Jan. 19 — The Federal Circuit's design patent rulings are “deeply flawed,” “out of touch with economic realities” and will lead to a new opportunity for abusive patent litigation, according to third-party briefs filed Jan. 15 supporting U.S. Supreme Court review of Samsung's petition.
The high-tech community, intellectual property law professors and consumer advocacy groups—joined by an unusual coalition of minority groups and farmers—urged the high court to overturn a ruling that arguably makes a design patent more valuable than any utility patent, at least with respect to multi-component devices.
Samsung Electronics Co. is appealing its smartphone design patent battle loss to Apple Inc. Samsung challenges both the test the Federal Circuit defined for determining the scope of design patent protection—Samsung argues that Apple can't possibly claim rounded smartphone corners—and how damages are assessed against a design patent infringer.
A $399 million award to Apple for Samsung's design patent infringement is at stake.
In another development in the patent battle Apple is waging against Samsung, the U.S. District Court for the Northern District of California on June 18 issued the injunction the Federal Circuit had asked for—barring Samsung from supporting or even advertising data detection/linking, slide-to-unlock and autocorrect features in its smartphones. Apple Inc. v. Samsung Electronics Co., No. 5:12-cv-00630 (N.D. Cal. Jan. 18, 2015).
Samsung has until mid-February to comply. The court rejected Apple's request to make the injunction effective immediately.
Most of the arguments in the six amicus briefs focused on the decision by the U.S. Court of Appeals for the Federal Circuit that 35 U.S.C. §289—written over 130 years ago, when one patent tended to cover one product—requires an infringer to hand over all its product profits even if only a small aspect of design is infringed.
A federal court found that Samsung's smartphones infringed Apple's patents on the shape, corners, translucent screen and colorful icon arrangement relevant to the iPhone and the iPad. U.S. Patent Nos. D593,087; D604,305; and D618,677. The Federal Circuit then held that Section 289 unequivocally left Samsung liable to pay Apple its entire profits on sales of infringing Samsung phones and tablets, even if the design patents didn't cover the entire product. Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983, 114 U.S.P.Q.2d 1953 (Fed. Cir. 2015).
The appeals court's ruling, according to an amicus brief filed by nine high-tech firms headed by Dell Inc., “could allow the owner of the design patent to receive all profits generated by the product or platform, even if the infringing element was insignificant to the user and it was instead the thousands of other features, implemented across the remainder of the software, that drove the demand generating those profits.”
That and other briefs pointed out a duplication problem: If multiple companies own multiple design patents on a smartphone, Samsung would have to pay each of those companies its entire profit, or else the first patent infringement complainant would get all of it.
The briefs also predicted a boon for patent assertion entities—some using the derogatory term “patent trolls”—whose litigation strategy is to extract a payment in settling the case to avoid court costs and damages if infringement is found.
“If PAEs are allowed to threaten operating companies with the loss of the total profits made on an accused product, few companies will be willing to take the risk of fighting back,” according to the Computer & Communication Industry Association's brief. “And they will settle for substantially more than they otherwise might have.”
A brief filed by the Hispanic Leadership Fund, the National Black Chamber of Commerce and the National Grange of the Order of the Patrons of Husbandry focused on a prediction of increased costs for smartphones and other multi-component devices. The Federal Circuit's ruling “risks making it unaffordable for millions of low-income, rural, and minority Americans to obtain Internet access, an indispensable tool for social and economic mobility in the United States,” according to the brief.
Thirty-seven IP law professors filed a brief with equal focus on the Federal Circuit's test for a design patent's scope, to the extent it does or does not weed out functional features.
The court rejected Samsung's arguments that smartphones are multi-function devices with separable ornamental and functional elements.
“[T]he Federal Circuit upheld a finding of design patent infringement based on the very same Apple designs that it found functional under trade dress law,” the professors said. “Such a counterintuitive outcome is possible because the Federal Circuit has constructed a highly constrained definition of functionality in design patent law, which is at odds with [the Supreme] Court's precedent in both utility patent and trade dress cases.”
Kathleen M. Sullivan of Quinn Emanuel Urquhart & Sullivan LLP, New York, filed Samsung's petition. William F. Lee of Wilmer Cutler Pickering Hale & Dorr LLP, Boston, is counsel of record for Apple, whose response is due Feb. 16.
Kannon K. Shanmugam of Williams & Connolly LLP, Washington, filed the Dell brief, which eBay, Facebook, Google and five other firms joined. The CCIA's Matthew Levy filed its brief. J. Carl Cecere of Cecere P.C., Dallas, filed the minority and grange organizations' brief. Mark A. Lemley of the Stanford Law School is lead author on the professors' brief.
Charles Duan of Public Knowledge, Washington, filed a brief on behalf of his consumer advocacy organization and the Electronic Frontier Foundation. Philip P. Mann of the Mann Law Group, Seattle, filed a brief on behalf of Systems Inc., a Wisconsin-based firm involved in a similar patent dispute.
To contact the reporter on this story: Tony Dutra in Washington at email@example.com
To contact the editor responsible for this story: Mike Wilczek in Washington at firstname.lastname@example.org
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