We are seeking companies and associations to participate in an amicus brief that we are writing in the Apple v. Samsung case now before the U.S. Supreme Court.
As you are likely aware, the U.S. Supreme Court has granted cert. to review the “total profit” rule of damages in 35 USC 289, which says:
“Whoever during the term of a patent for a design, without licence of the owner (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.”
This case has been dubbed as “the design patent case of the century” in that the Supreme Court has not reviewed a design patent case in well over 100 years. It is not an exaggeration to say that this case is of monumental importance to the future of design patents.
The question as framed by Samsung that will be reviewed by SCOTUS is:
Where a design patent is applied to only a component of a product, should an aware of infringer’s profits be limited to those profits attributable to the component?
Samsung has argued below that total profits do not make sense in considering modern, multi-component products, and should therefore be apportioned. Apple has argued that Congress deliberately removed any requirement of apportionment because it recognized the difficulty in apportioning the value of a design to the overall article of manufacture. The Federal Circuit agreed with Apple’s position in its decision of May 18, 2015.
The brief I am planning to write in support of Apple will reprise and expand upon the amicus brief I wrote in 2014 when the case was before the Federal Circuit.
Since the law is quite clear, the case will likely turn on policy arguments. Some of the reasons why many companies are considering joining the brief are:
- If it wasn’t for the total profit rule, there would be no leverage in stopping knock-offs. For example, if an infringer knows that it will only be liable to pay a 5% royalty, they will regard it as a cost of doing business, and will continue to copy again and again. Knowing it is liable for its total profit allows a cease and desist letter to be much more effective in bringing an infringer to the table, and negotiating a decent settlement, that will include getting the knock-off off the market, and will also discourage further copying.
- There is still no practical way to apportion profits between the value of a design, and the value of the entire product. For a court to try and do this will lead to a plethora of expensive expert witnesses, on both sides, and made design patent enforcement even more problematic.
- Small and medium sized companies can ill afford design patent litigation. The total profit rule is the only protection they have against fly-by-night knockoffs, and if it’s done away with, then the knock-off companies will have all the leverage they need, knowing that litigation is expensive, and that obtaining injunctions is already problematic.
- Copying an original product design is akin to theft of the very face of an innovative company, diluting their goodwill, and destroying their market. Companies will spend less and less on design innovation and development, knowing its efforts can be perniciously copied without an effective remedy.
- The infringer’s alarmist rhetoric about design patent trolls doesn’t wash. First, it’s impossible for a troll to predict someone else’s design in advance of its being released. Second, design-forward companies simply do not licence or sell their design patents because it would be akin to selling their goodwill – the appearance of their products. And lastly, the reality is that there are no reported cases of design patents being used by non-practicing entities to exact damages from unsuspecting companies.
If you or any of your clients are interested in participating in the effort as co-signers of the brief, please contact me: perry.saidman@designlawgroup.com.
The current briefing schedule indicates an amicus brief in support of Apple will be due August 5, 2016.
I look forward to hearing from you. Please let me know if you have any questions or comments.