Wednesday, September 13, 2017

“Next Up In Apple/Samsung Smartphone Wars: Design Patent Remedies Following The SCOTUS Decision”

Panel at the National Press Club

RT: Huge debt to Sarah Burstein’s work, the best and most scholarly work on the subject—says things that aren’t clearly on either “side” of the present dispute, but I find persuasive.  Her conclusion based on the history and early caselaw: article of manufacture is a concept distinct from “machines” or “compositions of matter,” and the phrase “article of manufacture” should be interpreted to refer to a tangible item made by humans that has a unitary structure and is complete in itself for use or for sale, as long as it isn’t also a machine or composition of matter. The relevant question is whether anyone manufactures, uses, or sells that kind of item separately.  For example, outer shells are typically the articles of manufacture, not the entire car or other machine.  I strongly recommend her recent articles on the article of manufacture in 1887 and today, especially her description of the temptation to “aggregate different design patents into a single Frankenclaim,” which may be at issue here.  She also suggests that the article of manufacture at issue in any given case is primarily a legal question to be determined by a judge in a way similar to a Markman hearing.

Howard Hogan, Gibson Dunn & Crutcher: Filed amicus brief for Nike on neither side.  SCt decision took a lot of legal community by surprise b/c of its narrowness.  Unanimous court, narrow holding rejecting claim that design patent statute has a rule that the article of manufacture must be the complete device as sold.  Now to figure out the alternative: unlike the Lanham Act, which has an explicit burden-shifting provision, the design patent damages statute says “total profits on the article of manufacture … to which the infringing design has been applied.”  Apple +at least two other cases: courts are wrestling with burden and definition of article of manufacture.

Carl Cecere, Counsel, Hispanic Leadership Fund and the National Grange: amicus of coalition of rural/minority interest groups.  Clients recognized potential for weaponizing design patent damages as threat to competition and innovation.  Clarity is important. Apple’s proposed test is designed to ensure it gets the profits it got in the first trial, but the factors are too squishy for predictability: proposes a test that includes factors such as how the defendant sells the product and how it accounts for the profits internally, as well as visual contribution of patent to design as a whole.  [That’s the Frankenclaim aspect in this case, given the different patents in suit and the findings of infringement that differed per phone.]  Designers will tell you that cupholders are part of the overall design and flow into it/contribute to it—but Apple’s test would encourage the cupholder patent holder to claim profits from the whole.  For the phone: no one would buy the phone if it didn’t make phone calls etc; it can’t really be the whole thing.  Relatedly: the problem of partial claiming: a curve, the bezel. The designer is in the driver’s seat.  If they claim less than the whole, they think there’s functionally severable pieces; when you partially claim, you shouldn’t get the entire product, just the attached article.  Apple’s proposed test adopted most of the gov’ts proposed SCt test, but omitted the first factor: what is the design patent claiming?   If they really want to claim the entire design, they should do so, but if they do less than that, the risk of multiple awards for the same thing—3 different patents covering the front face of the phone.  Apple suggests that an award of triple Samsung’s total profit would be appropriate (at least in theory) and that makes no sense.

Charles Duan, Public Knowledge: Patents affect a lot of people, not just tech/pharma. SCt has a tradition of rejecting Fed. Cir.’s patentee-friendly rules; is there a systemic reason?  Seems unlikely it’s just b/c the Fed. Cir. keeps making mistakes; Fed. Cir. thinks patent ought to be strict rules, while SCt goes back to more foundational, flexible concepts.  History plays a role: SCt has gone back to historical sources for patent law, e.g., Impressions v. Lexmark, TC Heartland.

Josh Landau, CCIA: design patent claim serves as notice to public.  Apple says jury should decide what the article is; how does that correspond to the notice function?   Balancing defendant’s intention & other factors makes it harder to figure out what the article of manufacture is in advance.

CC: yes, also confuses parts of the test—what role does this part play in the entirety of the product?

RT: I want to emphasize that Apple’s premise has clear support in the caselaw, that the article described or illustrated in the patent does not limit the article to which an infringing defendant may apply the patented design (from that, Apple concludes that you should not look at what the design patent claims to determine the article of manufacture, a conclusion that is not logically entailed by the premise, especially where the parties are competitors). Though it’s not vitally important to the outcome here because the parties are in fact competitors, this is an interesting and important argument for two reasons: (1) design patents are currently granted on known designs applied to new objects: a rubber ducky USB.  If you get a design patent on a rubber ducky USB, should that allow you to bring an infringement claim against a manufacturer of ordinary, tub-time rubber duckies?  If the answer is no, then the novelty/anticipation inquiries should probably be very different: you shouldn’t get the design patent just for deciding to put a rubber ducky around a USB core.  (2) 2D designs, such as the icons on the screen, can be fully reproduced by many forms of reporting, including newspapers and online news sources.  Unlike ©, patent has no fair use doctrine.  Did the NYT infringe when it printed a newspaper showing the design patent Samsung was found to infringe?  If yes, we have a number of problems, not least of them a free speech one; if no, we have to somehow adapt the claim about the breadth of potentially infringing articles.

Hogan: The NYT wouldn’t infringe b/c it’s not a design applied to an article of manufacture.

RT: According to what test for article of manufacture?  The paper is definitely sold to me.

Duan: That’s the problem with overlapping IP. This is basically a © type issue.  Recently, © is even more likely to apply to these types of things—Star Athletica—you have ©, TM and patent overlapping.

CC: Samsung’s test could deal w/the NYT problems—look for a severable component.  Apple’s patents don’t cover any possible application of the 16 icons everywhere—just for a screen.  Profits attributable to NYT putting design into the paper are also minimal. The squishier/more subjective the test, the more troublesome it becomes.

Hogan: other tests protect the interests described here: there’s examination and enforcement—requires novelty/lack of anticipation.  Pretty exacting test.  Test for infringement is identical to the obviousness/anticipation test. Whether a reasonable observer would think they’re buying the same item. [but partial claiming]  There’s a difference b/t the point of novelty entitling one to the design patent and the article at issue—appropriate to look at design patent to determine the article: here a screen with a layout like Apple’s.  Might weigh against saying a newspaper can infringe.  SCt wants courts to wrestle with these issues.  Why design patents exist: to encourage design—overlapping is ok, as in the rest of the industrialized world. Most of the rest of the world has separate industrial design.  Design patent is less protective of investment/IP.  We haven’t seen the parade of horribles from design; the current statute was in reaction to a SCt case that limited damages recovery.

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