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Will the Apple-Samsung battle help modernize patent law?

Bret Swanson | Oct. 13, 2015
Currently, the balance tips in favor of clever lawyering rather than promoting true innovation

us patent trademark office

The patent conflict between Apple and Samsung may finally be heading to a resolution, possibly at the Supreme Court. After four years of court battles around the world, Samsung says it will appeal federal circuit rulings that it pay Apple $548 million. The tussle is complicated, technically and legally. In the end, however, the case may have the salutary effect of simplifying and modernizing patent law, sweeping away some of its 19th century shortcomings and making it practical for a 21st century smartphone world.

The smartphone patent wars have touched nearly every technology company in some way. The complexity of smartphones, which contain many thousands of parts and millions of lines of software code, means numerous firms own intellectual property in any device, no matter whose name is on the label. Over the past five years, many firms have found ways to resolve their differences — through, for example, cross licensing — but Apple continues its litigation strategy in the U.S.

For all the real innovation in smartphones, this particular case came down to three rather pedestrian Apple design patents that Samsung was found to have infringed. Design patents govern the appearance of a product, not its functionality. Functionality is the province of utility patents. Here, the design patents covered not earth-shattering technological advances but a shiny black screen and rounded corners.

After a long series of jury trials and hearings, a court ordered Samsung to pay most of the original jury award, in the amount of $548 million. In the meantime, however, something very important happened. The U.S. Patent and Trademark Office had re-examined some of the patents in question and judged that Apple’s patent for the rounded rectangle shape of the phone should never have been issued in the first place. (The PTO also ruled that one of the utility patents involved in this case is invalid).

Samsung questioned why it should have to pay the large judgment immediately. Not only had one of the key patents been invalidated, but Samsung also publicly stated it was appealing to the Supreme Court. It argued that the order of immediate payment could result in irreparable harm, and on Friday a judge issued an emergency temporary stay of the judgment.

This particular case may seem narrow and petty, but larger issues are at stake. The applicable 1887 law giving rise to the majority of the hundreds of millions of dollars in damages, for example, says an infringer is liable “to the extent of his total profits.” But if Apple infringed an unimportant patent of a tiny firm, could that firm be awarded Apple’s “total profits” of tens of billions of dollars? It’s not at all clear in today’s modern economy of highly complex products that “total profit” refers to the entire product, if it ever did. The phrase “to the extent” appears to be an important modifier. So is additional text noting that any award shouldn’t exceed “twice the profit made from the infringement.” Isn’t a plain reading that any award related to the harm of the infringement? Put another way, if the infringement isn’t shown to cause the harm, the remedy doesn’t make sense.


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