DoJ backs Apple, says Supreme Court should deny Samsung's most recent cert petition

Just this week, the Wall Street Journal reported on the high-volume business Apple is doing with Samsung, a key supplier of components for various products including the new flagship iPhone, the iPhone X, on which Samsung will reportedly make $110 per unit. But as device makers, the two remain fierce competitors--and adversaries in court.

A few months after the Supreme Court of the United States requested the Trump Administration's perspective on Samsung's most recent petition for writ of certiorari, the Solicitor General of the United States, Noel Francisco, has expressed the views of the U.S. federal government (this post continues below the document):

16-1102 Views of the United States by Florian Mueller on Scribd

The short version is this: the DoJ tells the Supreme Court to deny all three parts of Samsung's petition, but it's not a ringing endorsement of the Federal Circuit's controversial en banc decision. Not at all. It's completely based on procedural and standard-of-review considerations.

The following passages show that the DoJ doesn't necessarily agree with the Fed. Cir. majority:

"The sufficiency-of-the-evidence question presented on appeal was a close one, and the court of appeals may have erred in concluding that substantial evidence supported aspects of the jury's verdict."

"If the Federal Circuit continues to develop and enforce rigid rules for demonstrating obviousness, this Court's review may ultimately be warranted. This case, however, would be an unsuitable vehicle for addressing that issue. Because petitioners did not preserve any objection that the jury instructions [...]"

"Although the phrase 'some connection' may be infelicitous, [...]"

In the famous design patents case, the DoJ agreed with Samsung on the key legal question (article of manufacture). It additionally brought up a procedural question that could have enabled Apple to defend the original damages award. Now, with respect to the more recent petition relating to invalidity, injunctive relief, and infringement, the DoJ cautiously distances itself from the en banc opinion and indicates only between the lines that it may disagree, to some extent, from a policy perspective ("rigid rules for demonstrating obviousness" etc.). It would have been nice if the DoJ had been clearer about the implications of this for U.S. tech companies and for the work of the United States Patent and Trademark Office, which is supposed to protect real technological progress, which is hard to do if even weak evidence of non-obviousness gets a lot of weight. The DoJ could have expressed more clearly a concern over what this means for patent quality, but unfortunately it didn't.

So what does this mean for the prospects of Samsung's cert petition?

The George Mason Law Review published an empirical analysis of cert procedures (PDF), according to which the Supreme Court became more likely to grant certiorari in a case where the Solicitor General was invited to file a brief regardless of whether the SG recommended cert or not. It's a fact that the Supreme Court grants more petitions following a Call for Views of the Solicitor General than the SG recommends should be granted.

Of course, it's too early to have statistics on how the Supreme Court views Solicitor General Francisco's recommendations. But it's not like it's over for Samsung. It's a setback for them and, conversely, a significant intermediate victory for Apple, but the Supreme Court can still decide either way.

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Supreme Court requests U.S. government's input on Samsung's petition (2nd Apple case)

As the docket overview now indicates, the Supreme Court of the United States has decided to ask for the views of the Solicitor General of the United States on Samsung's petition for writ of certiorari relating to the second California Apple v. Samsung case. To be precise, this CVSG (Call for Views of the Solicitor General) is a CVASG--currently there is an Acting Solicitor General, Jeffrey Wall.

This means the Supreme Court's summer recess will be a busy period for the parties--and other stakeholders--as they will both be lobbying the Department of Justice.

Just last week, a Reuters story had the following headline: "RPT-U.S. Supreme Court and top patent court rarely see eye to eye" It is true that the relationship between the Supreme Court and the Federal Circuit is, well, special. That Reuters article is about a rare case in which there was affirmance, but high-profile reversals, such as recently on patent exhaustion in the Lexmark case, are more common.

This is nice progress for Samsung. The likelihood of certiorari being granted has increased substantially.

In connection with design patents (and involving the same two litigants), the DoJ filed an amicus brief that philosophically agreed with Samsung while procedurally leaving the door open for Apple to prevail regardless. After the DoJ had taken a clear position on the high-level issue (article of manufature), the whole argument was more focused on other questions. Some may view it as an exaggeration, but one could make a defensible case that the DoJ actually did a fair amount of the Supreme Court's job in that case.

It's too early to tell what positions the DoJ is going to take here. Once we all learn more about it, I'll comment. I'm cautiously optimistic, though. This case never was the kind of slam dunk that the design patents issue represented, but what the Federal Circuit did (and how it did it) was rather strange. That's not just my opinion. Mr. "Chisum on Patents" said so. And Samsung got fairly broadbased support from amici. There obviously are stakeholders who are against Samsung's petition, and while they didn't file an amicus brief since it would have been counterproductive (it would only have raised the profile of the issues), some will probably try to influence the DoJ now in ways that would benefit Apple (with a view to this case; in the long run Apple would probably benefit from reversal, possibly even in connection with any infringement claims by Qualcomm).

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Supreme Court agrees with Samsung: Federal Circuit got design patent damages ($399 million for Apple) wrong

It has taken the Supreme Court of the United States less than two months since a mid-October hearing and less than ten pages (counting only the opinion per se, not the two-page syllabus) to determine and explain that the United States Court of Appeals for the Federal Circuit got the law on design patent damages fundamentally wrong. A unanimous Supreme Court has overruled a unanimous Federal Circuit panel and whoever hadn't requested a vote on, or voted for, Samsung's June 2015 request for a rehearing.

The top U.S. Court disagrees with the Federal Circuit's interpretation of the term "article of manufacture," which is central to a disgorgement of a design patent infringer's entire profits under 35 U.S.C. § 289. Apple used to argue--in district court and on appeal--that it was entitled to a disgorgement of Samsung's total profits on any smartphones held to infringe any of Apple's three design patents-in-suit (which a jury had held infringed back in August 2012). Samsung asked the Federal Circuit to find that Judge Lucy Koh (United States District Court for the Northern District of California) had erred in how she instructed the jury: Samsung said the article of manufacture could also be a component, such as a smartphone case, as opposed to an entire multifunctional smartphone. The Federal Circuit nevertheless affirmed the related §399 million part of the damages award in the first California Apple v. Samsung case because it argued that consumers buy smartphones, not components.

Today's Supreme Court opinion says the following:

"The Federal Circuit's narrower reading of 'article of manufacture' cannot be squared with the text of §289. The Federal Circuit found that components of the infringing smartphones could not be the relevant article of manufacture because consumers could not purchase those components separately from the smartphones. [...] But, for the reasons given above, the term 'article of manufacture' is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not. Thus, reading 'article of manufacture' in §289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase."

That is absolutely wonderful! Large parts of the (U.S. and global) tech industry will breathe a sigh of relief now. As I said at different points in time, I believe the Federal Circuit's extreme position wouldn't have been good for Apple either--thinking of longer-term implications, not just this one Apple v. Samsung case.

Samsung and its lawyers--Samsung's lead counsel before the Supreme Court was Quinn Emanuel Urqhart & Sullivan name partner Kathleen M. Sullivan--can be proud of what they have achieved here for themselves and for the economy at large. Had they accepted the Federal Circuit opinion as the final word on this issue (considering that cert petitions rarely persuade the Supreme Court to look at a case), numerous companies would have overcompensated design patent holders through settlements and district courts across the United States would have instructed juries the way Judge Koh did, resulting in who-knows-how-many exorbitant damages awards. Sooner or later, someone would have tried to appeal this to the Supreme Court, but who knows whether someone else would have done such a great job (in briefing the court but also in mobilizing industry support) and, therefore, how long it would have taken before the huge mistake at the heart of the Federal Circuit decision would have been corrected.

But...

...it's not really over yet.

The Supreme Court's ruling was so quick and short because it's strictly focused on the key question of statutory interpretation presented. Toward the end of the decision, the Supreme Court says it wasn't possible to determine, in addition to the question that has been resolved, what the right "article of manufacture" should be in this dispute.

At the mid-October hearing, the justices asked the parties questions about what the proper test should be. The parties had not specifically proposed a test (though they both made various points that relate to what the test should be) in their filings. So the Supreme Court "decline[d] to lay out a test for the first step [this means the identification of the relevant "article of manufacture"] of the §289 damages inquiry in the absence of adequate briefing by the parties."

I'm slightly disappointed that no justice filed a concurring or dissenting opinion to express views and outline ideas for the "article of manufacture" test. That could have been so helpful.

Now the case goes back to the Federal Circuit. On remand, the Federal Circuit might develop a test, and if it does so, it hopefully won't reflect the same kind of extreme pro-patentee bias as its interpretation of $nbsp;289 showed. Theoretically, whatever test the Federal Circuit comes up with could be reviewed again by the Supreme Court. But that's purely hypothetical.

I guess Apple will try hard to avoid this, and even Samsung would probably prefer to win rather than get a test. At the Supreme Court hearing, Apple stressed the record, claiming that Samsung hadn't presented any evidence for anything other than a smartphone being the relevant article of manufacture. Samsung argued that Apple had the burden of proof and failed to prove that the relevant article should be an entire smartphone. Obviously, the parties also disagree on the burden of proof...

It's very hard for outsiders like me to form an opinion on a record we don't have access to. The party's filings contained some claims and citations but simply not enough to come down on one side or the other, except that I deem it unlikely (based on what I know now) that a huge record doesn't contain anything about it. Maybe it isn't perfectly specific, but there's probably something. On remand, the parties will address this question and then we'll all be a lot wiser, too.

Absent a miracle (i.e., a near-term settlement), Apple v. Samsung will go into 2017, and possibly way beyond. In connection with their second California case, the Federal Circuit has issued a mandate based on its recent surprise decision (its potentially most controversial one ever according to Donald Chisum of "Chisum on Patents", a treatise that today's Supreme Court opinion cites to), but there would still be time for a petition for writ of certiorari in that context, too.

A lesson for Europe

This is only the latest of many patent cases in connection with which the Supreme Court has restored sanity after an extremist ruling by the Federal Circuit. Knowing that many industry players read this blog, I want to make an urgent call for action here:

Let us try to prevent Europe from putting the Unified Patent Court (UPC) in place in the form in which it was originally envisioned! Otherwise, judges that will be handpicked by the same people who are in charge of the European Patent Office are going to make decisions that will be worse than anything you've ever seen from the Federal Circuit and there normally won't be any chance of petitioning a court with a broader and more balanced perspective.

It's disappointing that the UK plans to ratify the UPC agreement despite this year's Brexit vote. With more political action in the UK, it may be possible to prevent this from happening. I always got along very well with the UK Independence Party, whether it was about software patents or soccer broadcasting rights and sports governance. In the latter context, I had a great conversation with a young assistant to an MEP. His name was Paul Nuttall. He's now the party chairman. Those are the kinds of people that industry players concerned about Federal Circuit-style pro-patentee bias should talk to. I can't help on that front as I must stay in Munich and finish my app (at long last). But please, if you don't want Europe to become a patent troll's paradise, take action now!

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Apple v. Samsung: stark contrast between Supreme Court and Federal Circuit

Within a few days of each other, the Supreme Court of the United States and the United States Court of Appeals for the Federal Circuit had Apple v. Samsung on their agenda. One week ago, the Federal Circuit issued a ruling that was more than surprising: a majority of the full court overruled the three panel judges, including the Chief Judge, with respect to the second California Apple v. Samsung case to reinstate a $119 million verdict for Apple. On Tuesday, the Supreme Court held its hearing on the question of design patent damages (transcript).

Was it just a coincidence that the Federal Circuit made a decision on an Apple petition for a rehearing about eight months after the original decision and just days before the design patents hearing in the top U.S. court? It may very well have been. But when there are already other oddities (such as the decision not to invite further briefing from the parties and hold a rehearing), it's not impossible that there is a hidden message or agenda.

The Federal Circuit decision certainly gives Apple leverage. Limited leverage, though: the relatively most valuable one of the three patents on which Apple had prevailed at the spring 2014 trial has expired and the most iconic one, slide-to-unlock, is about as valuable in the age of Touch ID and comparable technologies as an ISDN or floppy disk patent.

The Supreme Court hearing, by contrast, went fairly well for Samsung--to the extent that one can say at this procedural stage. While the Federal Circuit had said in May 2015 that Samsung was liable to the extent of its total profit on any phones deemed to infringe any Apple design patent(s) and that arguments against that holding would have to be directed to Congress, Apple itself softened its stance after the U.S. federal government had warned against absurd results: Apple told the Supreme Court that the "article of manufacture" with respect to which an unapportioned disgorgement of profits was warranted might be less than an entire smartphone.

At the Tuesday hearing, there really was no indication that the Supreme Court would agree with the lower courts. The focus was completely on what the right test for the relevant article of manufacture should be--a test that the Federal Circuit (and Judge Koh before it) hadn't even considered necessary. Despite the parties' agreement at this stage and the U.S. goverment's position, the Supreme Court could have said the same as the Federal Circuit: talk to Congress. It didn't. The justices appear convinced that a solution can be worked out without changing the statute, just by interpreting it reasonably. A couple of examples:

Chief Justice Roberts: "It seems to me that the design is applied to the exterior case of the phone. It's not applied to the --all the chips and wires, so why [...] So there should - there shouldn't be profits awarded based on the entire price of the phone."

Justice Breyer (sympathetically paraphrasing an Internet Association brief): "you know, wallpaper, you get the whole thing. A Rolls Royce thing on the hood? No, no, no. You don't get all the profit from the car."

In light of those statements, I would not advise patent trolls to acquire broad and trivial design patents at high prices right now. The Federal Circuit opinion on disgorgement may have encouraged some organizations to do that, but the Supreme Court decision will almost certainly be a lot more balanced.

The big question mark at the hearing was how to solve the problem (of totally unreasonable design patent damages due to the application of the law of the spoon to modern-day smartphones or entire cars or airplanes). What rule would work?

Justice Kennedy, whose concurring opinion in the eBay case on patent injunctions has been cited over and over, said something I agree with and that even the parties to this case here might agree with philosophically:

"My preference, if --if I were just making another sensible rule, is we'd have market studies to see how the --the extent to which the design affected the consumer, and then the jury would have something to do that. But that's apportionment, which runs headlong into the statute."

In the case of a design patent-infringing cupholder in a car, the impact on purchase decisions would be zero, or at least negligible. In the case of a rug or a wallpaper, design would be a huge part of the value. And when it comes to a smartphone, it's somewhere in between (not in the middle, but somewhere in between).

That kind of standard, however, would either require new legislation or an interpretation of § 289 under which the phrase "profit made from the infringement" would result in a causal-nexus requirement, which in effect would lead to apportionment despite the statute containing the world "total."

Samsung's counsel proposed focusing on "article of manufacture," which is also what certain amici had advocated in their briefs, and the patent specifications ("the article of manufacture to which a design has been applied is the part or portion of the product as sold that incorporates or embodies the subject matter of the patent"). Justice Kennedy said that as juror he wouldn't know what to do with an instruction like that, but there's lots of things that are hard for juries to resolve, such as highly technical infringement questions.

It's hard to make a prediction here but I think it's a relatively likely outcome that the Supreme Court will ultimately support Samsung's proposed approach of looking at the cost of the different components. It would be the lesser one of two "evils" the statute could lead to. The position of the courts below, which was an "entire product" or "largest saleable unit" kind of rule, could drive companies into bankruptcy. The net effect of basing damages for a design of the casing of a smartphone on the cost of the exterior parts covered by the design patent could be that design patent holders feel they are undercompensated. The result could be substantially below what Justice Breyer would like to be the test if he could make new law; but the Supreme Court has to interpret the existing statute.

Unless someone comes up with a creative new idea or the Supreme Court somewhat surprisingly goes down the "causal nexus" avenue, it will be a situation of "tertium non datur." It will be a choice between the devastating and absurd "entire product" approach or Samsung's (and also Google's, Facebook's etc.) "smallest saleable unit" rule. The latter would not drive companies out of business, which is a strong argument in its favor, and not the only one.

The reason why I would be less concerned about some potential undercompensation than about totally outrageous and absurd overcompensation is that design patent law is not the only kind of legal protection for design-oriented companies like Apple. Certain designs are protected by copyright. And designs that drive demand are protectable under trademark law including "trade dress," a type of intellectual property right Apple also asserted in this case (but on that one the Federal Circuit disagreed with it).

Apple still hopes--though probably much less now than it did before the Supreme Court hearing--to get the original verdict(s) affirmed because, according to Apple's lawyers, Samsung failed to present enough evidence that the smartphone as a whole was not the correct article of manufacture for determining design patent damages in this case. Based on how the hearing went, it's highly unlikely that the Supreme Court (except maybe one or two dissenters) would affirm the Federal Circuit decision on that basis. Apple's counsel was repeatedly told to focus on what the correct rule should be rather than stress the record:

Chief Justice Roberts: "Mr. Waxman, we're spending an awful lot of time on an issue about what was raised below, what wasn't raised below, what was raised below, what wasn't raised. Maybe it's a good time to turn to Justice Breyer's question."

Justice Sotomayor: "Please don't go to the --to the record."

It's impossible to form an opinion from the outside on whether the record contains enough evidence to support Samsung's position, but in this case the evidentiary body as a whole must amount to (literally) truckloads of material and Samsung's reply brief gives some examples on its pages 20-22. It's good news that the Supreme Court is inclined to focus on the rule rather than on the record. Further below, the record will play a greater role.

In the very short term, the Tuesday hearing could clearly have gone better for Apple. Over time, however, even Apple will benefit from case law that makes overcompensation less likely. Otherwise Apple itself could find itself exposed to various attempts to siphon off its profits.

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Samsung to Supreme Court: Apple has made a "remarkable about-face" on design patent damages

This tit-for-tat took almost four years. In December 2012, Apple informed the United States International Trade Commission of what it portrayed as a "remarkable about-face" by Samsung in the form of withdrawing injunction requests in Europe. Samsung's August 29, 2016 reply brief in support of its Supreme Court appeal concerning design patent damages--thankfully published by the SCOTUSblog (PDF)--says the following about Apple's opposition:

"In its brief, Apple makes a remarkable about-face. It now admits, agreeing with Samsung and the government, that the "article of manufacture" to which a patented design is "applied" may be only a component of a product. And it now admits, agreeing with Samsung and the government, that, where the patented design is applied only to a component of a product, the total profit under Section 289 is the profit attributable to the component, not the product."

On page 36 of Apple's July 29 brief, Apple indeed says that "article of manufacture" has a broad definition ("anything made by human labor"), specifically, "that it may include a complete final product or a component thereof." Apple, hgowever, argues that this broad definition works in its favor and doesn't limit application of the total-disgorgement rule to "decorative" articles. Apple continues to argue that even highly complex, multifunctional products may fall under that rule for infringing a single design patent.

Having re-read some older documents from this litigation, I can't help but feel that Apple has indeed adjusted--or one might just say "softened"--its position as a result of the amicus curiae brief filed by the Solicitor General on behalf of the U.S. federal government.

Very closely related to this is how some of the "friends of the court" supporting Apple argued in their filings. There's something rather atypical about it when you see certain amici raise very case-specific, partly just procedural reasons for or against a decision instead of focusing more or less exclusively on a fundamental, substantive legal question. To a non-party it normally shouldn't matter too much whether a certain party did or did not present a particular kind of evidence or raise a particular kind of objection somewhere in the process. If anything like that turned out outcome-determinative, the key substantive issue in the case might not (and often would not) be adjudicated.

If an amicus curiae just wants to do one of the parties a favor, that's a different story. But the likes of Calvin Klein aren't Apple vassals. They have an interest in design patents being as powerful as possible, and the power of design patents is a more generic question than the specifics of this litigation.

Amici should care about clarification in their favor, and somehow they appear to be afraid that the Supreme Court might agree with the U.S. government on the definition of "article of manufacture"--in fact, on the broad and inclusive definition that Apple now also, suddenly, accepts.

A simplistic way to put it is that Apple and some of its amici would now content themselves with Samsung being the last victim of Judge Koh's and the Federal Circuit's interpretation of § 289, knowing that any remotely savvy litigant in future cases would know how to avoid the same problem. For Apple, winning is the only thing. And its amici primarily just don't want to lose. Another plausible explanation is that some amici believe that even a finding by the Supreme Court that the district court was too narrowminded on "article of manufacture" wouldn't affect the value of design patents too much in the public perception because people would just see that Apple gets many hundreds of millions of dollars. That would, of course, benefit trolls asserting design patents, at a minimum by showing to prospective defendants that an unapportioned disgorgement can be the ultimate outcome. The worst-case scenario makes trolls money.

We're still about four weeks away from the Supreme Court hearing, and I'll write about this case again in the meantime. For the remainder of this post I just want to focus on what's very likely (not certain though) to be the outcome-determinative issue. A few months ago I would have assumed that the meaning of "article of manufacture" would be at the center of the hearing. It still might be if that's what the justices focus on. But if the top U.S. court agrees with both parties and the U.S. federal government that "article of manufacture" can also be a component, then the question would be whether the record of this case supports one party or the other. Unsurprisingly, either party argues that the other has the burden of proof and failed to shoulder it, so the respective party could win even without a remand. With respect to the burden of proof, Apple has the U.S. government on its side. It's the only key issue on which the DoJ agreed with Apple (the rest doesn't really matter). At the October 11 hearing, the most important indication of the outcome that the justices give could be what they say about who has the burden of proof on what the appropriate "article of manufacture" in this case was.

Samsung's argument concerning the burden of proof is that patent holders generally bear the burden of proof for their claims and that § 289 differs from other disgorgement statutes that "explicitly shift burdens to defendants." Samsung also quotes from the legislative record, and the following passage suggests rather strongly that Apple had the burden of proof:

"'the patentee recovers the profit actually made on the infringing article if he can prove that profit' H.R. Rep. No. 49-966, at 3 (emphasis added)"

If the Supreme Court (or Judge Koh on remand) finds that Apple failed to identify the relevant "article of manufacture," then there won't have to be another jury trial--and the clear message to the rest of the world would be that rationality has been restored with respect to design patent damages, period.

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Companies, associations and professors join 111 designers in supporting Apple against Samsung

[UPDATE] An earlier version of this post was based on the (false) assumption that last week's widely-reported amicus brief by 111 designers and design educators was the only amicus brief supporting Apple. This misperception was due to the delay with which both the court's own website and the SCOTUSblog get updated. Actually, a total of 10 briefs were filed in support of Apple. Furthermore, the first version of this post noted an "artsy font" used on the title page of the designers' brief. However, that font was only used in the version published on Apple's website. I've now updated this post and may still have been first to upload (to Scribd) all of these amicus briefs. [/UPDATE]

An amicus curiae brief filed with the Supreme Court by 111 designers and design educators in support of Apple's design patent damages position against Samsung last week drew lots of attention. Understandably so, as Apple indeed managed to get support from a group that included some very famous people such as Calvin Klein and Norman Foster.

The brief was authored by a team of Orrick appellate lawyers.

Two months ago I commented on various amicus briefs filed in support of Samsung as well as some filed in support of neither party, most notably the position taken by the U.S. government. In that post I wrote that Apple might still orchestrate something big to show support for its position that the infringement of a design patent entitles its holder to an unapportioned disgorgement of the infringer's profits made with multifunctional, complex products. But I expressed doubts.

While Apple has clearly exceeded my expectations in terms of the individuals supporting its cause (great work, no doubt), support from companies is about in line with my expectations, especially since Apple's position appears to be an outlier position among large U.S. technology companies. The following companies and industry bodies support Samsung: The Internet Association, The Software & Information Industry Association, Dell, eBay, Facebook, Garmin, Google, HP, Lenovo, Motorola Mobility, Newegg, Pegasystems, Red Hat, SAS Institute, Varian Medical Systems, Vizio; and the Computer & Communications Industry Association, which has been a thought leader on this issue.

Apple garnered support from companies that are mostly non-tech/low-tech: Crocs, Nordock, Tiffany, Bison Designs, Deckers Outdoor Corporation, Design Ideas, Kohler, KRC Capital, Lutron Electronics, Method Produts, Novo Nordisk, Nuelle, Nuvasive, Oakley, Sun Products, SZ DJI Technology, Thule Group, and Cleveland Golf. Many of those companies operate in industries where a product is typically covered by only one design patent, and products with a very substantial part of their value lying in designs.

The only industry association backing Apple is ACT, which has always positioned itself as a voice of small innovative businesses though its funding came from large organizations, with smaller companies being offered free memberships. A few years ago ACT all of a sudden started positioning/portraying itself as an association of app developers. I'm an app developers and don't see my interests being represented by them, and especially not in this context here.

Companies (and industry associations) are really important in a case that has huge economic implications. Individuals, no matter how famous and well-respected, can say whatever they want but they don't have to defend against design patent infringement claims by others. At most, the companies they're affiliated with will have to defend, but those companies can then disown whatever the individuals wrote in their personal filing. Take Calvin Klein, for example: he sold his company a decade and a half ago.

Not only have Apple's lawyers been unable to counterbalance Samsung's tremendous support from industry but they also have far fewer law professors on their side. There's 50 of them in Samsung's camp (a number that has increased at every stage of proceeding). Apple has five of them, and while it's not just about a headcount, there's really no basis for a claim that those five counterbalance Samsung's 50. However, the notoriously right holder-friendly American Intellectual Property Law Association (AIPLA) also supports Apple, as does a local organization of the same kind, the Boston Patent Law Association.

Let's not forget about another important group of amici: public-interest advocates. I'm sometimes skeptical of some of those organizations and of what they write, but if a party has zero support from that group and no support from industry, then it could just be that its positions run counter to the public interest. Designers and IP lawyers have their professional interests just like Apple is pursuing certain objectives in this litigation. But what's good for the economy at large? For society? Hardly any neutral party appears to agree with Apple, while Samsung got support from representatives of minorities and rural communities, the Electronic Frontier Foundation,Public Knowledge, R Street Institute, American Antitrust Institute, IP Justice, Engine Advocacy, and the Software Freedom Law Center.

Obviously, amicus curiae briefs are just a factor that can influence decisions and the public perception, but amici don't make the law. I'll talk about the legal arguments made by Apple and its amici later this month. For now I just wanted to share my observations on who supports, and especially who doesn't support, Apple's positions in this case. The PR impact of the 111 designers' brief is one story. The actual weight thrown behind Apple's legal position is another. There's more weight here than just the designers, but for the reasons outlined above, Samsung has far more (and far more credible) support from large technology companies.

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Amicus curiae briefs in Samsung v. Apple (design patent damages): all the documents and the key points

There never was any doubt that the question of whether the infringement of a single design patent by a complex, multifunctional product warrants an unapportioned disgorgement of profits would be an extraordinarily important one. Previous rounds of amicus curiae briefs already demonstrated broadbased support. But the level of support the petition has just received at this decisive stage exceeds my expectations.

One major caveat is that Apple might still be able to orchestrate something big as well. I doubt it for two reasons, though. First, the interpretation of the law that Apple is defending in this case is not really in the interest of a lot of companies. I wholeheartedly believe that Apple itself, if it weren't the beneficiary of an outsized damages award in this particular case, would be the most logical amicus curiae supporting Samsung in this context. Second, some potential Apple allies have now declared themselves in support of neither party, stopping short of supporting Apple's position in its entirety. Some companies just want to ensure the Supreme Court won't weaken design patents too much, but they don't say the law of the smartphone should follow from the law of the spoon. And the U.S. government's position is like "we disagree with Apple on the law and on policy, but we don't want to rule out that Samsung might still somehow become the last victim of an incorrect interpretation." That's a major win for Samsung and everyone with a balanced position on the issue.

I'll now point to all of the amicus briefs filed in the first round (I'll do the same when Apple's backers file later this summer) and sum up what I consider to be their key points.

Pro-Samsung brief #1: The Internet Association, The Software & Information Industry Association, Dell, eBay, Facebook, Garmin, Google, HP, Lenovo, Motorola Mobility, Newegg, Pegasystems, Red Hat, SAS Institute, Varian Medical Systems, Vizio

20 years ago I served (for only a short time because I then founded my first startup, which I later sold to Telefónica) on the board of the Software Publishers Association (SPA) Europe. The SPA merged with another body to form the Software & Information Industries Association, which now has more than 700 members, and Ken Wasch is still its president. He's done so much for the software industry over the decades. You can find the SIIA's press release on the amicus brief here, and the amicus curiae brief here.

The brief accurately mentions "the spurious quality of many design patents." This blog hasn't talked about all the ridiculously obvious designs for which the USPTO has granted patents. Even the USPTO now regrets having originally issued Apple's D'677 patent, which covers little more than a round button. Microsoft's tiny-arrow-in-a-corner patent is no better. And that slider design patent is probably not far below the quality of the average design patent.

The brief talks about how design patents have become weaker and weaker over the centuries:

"Whatever the degree of invention in Apple's design, this example amply illustrates that even design patents belonging to major technology companies may involve only minimal, if any, advances over the prior art. Design patents in the modern era are seldom directed to fashionable carpet designs or classic Coca-Cola bottles; they are often sought, and issued, for relatively mundane design features."

On the importance of technical innovation relative to design, I like the following passage from the brief:

"To state the obvious, the investment in research and development for information and communication technologies—currently estimated at $250 billion annually—extends well beyond design to include the hardware, software, and services that are incorporated into the technological products. [...] The reason is simple: technology companies know that consumers want a product that works well, not simply one that looks good."

That's true. For example, the nice design of my iPhone 6S (now my primary phone so I can always test the latest beta version of my app) doesn't help me as much as the shortcomings of Apple's on-screen keyboard and autocomplete algorithms affect me. I use two languages, sometimes in the same message, and always have to switch between keyboards in order to get the right dictionary. And even with the right dictionary, the iPhone's autocomplete won't find the word I want to type if I mistype the first character. None of that is an issue for Android, with or without the right to build devices with round buttons, rounded corners etc.

As for statutory interpretation, I already discussed the term "article of manufacture" in a post shortly before Samsung's opening brief. The Internet Association, SIIA et al. brief contains an interesting explanation of how "article of manufacture" must be interpreted differently from a "machine." A smartphone as a whole would, of course, be a machine.

Being familiar with patent licensing and litigation tactics of always singling out the most lucrative target, I also wish to quote the following passage:

"Finally, the Federal Circuit's interpretation could lead to arbitrary results. That is because it could make the measure of damages in design-patent cases depend on the identity of the infringer. Consider, for example, the market for smartphone components. [...] If Samsung or Apple were to infringe a component manufacturer's design patent and to incorporate it in a smartphone, the component manufacturer could recover profit from sales of the entire smartphone. But if the component manufacturer were to infringe an identical patent held by Samsung or Apple, Samsung or Apple could recover damages based only the manufacturer's sales of the component. In other words, an identical act of infringement would yield two different damages awards simply because the infringers packaged their products in different units."

Pro-Samsung #2: Computer & Communications Industry Association

I have a huge problem with the CCIA's positions on software copyright, but I will always credit the organization (of which Samsung is a member) for its pioneering role in placing the emphasis on how to interpret the term "article of manufacture" in an amicus brief filed with the Federal Circuit two years ago.

The organization's new amicus brief is consistent with previous filings. One subject it discusses in more detail than most other briefs is the problem of patent assertion entities (PAEs).

Pro-Samsung #3: Engine Advocacy

Engine is a startup advocacy organization. Its list of members is really impressive, including lots of Internet household names. I've uploaded its amicus curiae brief to Scribd. In filing this letter, Engine was joined by a 3D printing startup. 3D printing is definitely an area in which excessive design patent damages could have a devastating effect.

The brief does a very good job of looking at the problem from a startup angle. It's worth noting that a Stanford Law School clinic is representing Engine here.

It's disappointing and inexplicable that no major app developer organization filed a brief. But Engine raises pretty much the same issues as app developers face.

Pro-Samsung #4: Hispanic Leadership Fund, National Black Chamber of Commerce, National Grange (rural communities)

Minority advocacy groups Hispanic Leadership Fund and National Black Chamber of Commerce once again teamed up with the National Grange of the Order of the Patrons of Husbandry (advocacy group representing America's farmers and rural communities) to voice their specific concerns over outsized design patent damages. I've also uploaded their joint amicus brief, which contains an interesting reference to historic "design patent sharks" (the predecessors of today's trolls) while pointing out that patent-abusing competitors are the worst threat:

"Indeed, this is not the first time that design patents have spawned abuse. In the late 1860s, the Patent Office experimented with allowing 'design' patents to be issued for minor functional improvements on already existing products. [...] This ill-considered effort spawned the creation of 'design patent sharks,' who took out 'design' patents on basic farm machinery like plows, shovels, and other basic farm tools, and then sued unsuspecting farmers for using the protected technology. Cases like Nordock illustrate that an overly expansive interpretation of the recovery available under Section 289 could lead to a resurgence in this patent-enabled chicanery, by allowing excessive damages to be extracted on the basis of the 'design' of what is, in essence, a purely functional article. There is thus no shortage of abusers that will exploit the availability of entire-profit damages under Section 289. Although larger companies like Apple may be unconcerned about fostering a market for such abusive conduct, because they have the resources to fend off, or buy off, even the most abusive non-practicing entities, these abusers can be expected to exact a heavy toll upon smaller, entrepreneurial companies that lack the means to effectively defend against them.

Moreover, non-practicing entities are only part of the problem. Indeed, the outsized risks associated with entire-profit awards could be even more harmful when asserted in disputes between product-producing competitors."

As for the consumer argument that certain citizens depend on affordable smartphones to a greater extent than others, and that minority businesses on average have a disadvantage in terms of resources to fend off threats, the brief provides statistical facts that lend those claims significant credibility--even in my eyes, though I'm not easily persuaded by minority arguments (for example, I think Apple simply doesn't need a minority quota for its Board of Directors, and if affirmative action ever made sense, I believe we're way past the point where it did).

Pro-Samsung #5: Electronic Frontier Foundation, Public Knowledge, R Street Institute, American Antitrust Institute, IP Justice

The EFF is far too anti-copyright for my taste, and I find its positions on Oracle v. Google misleading and troubling beyond belief. However, its patent policy positions aren't nearly as radical as its views on copyright. On patent policy, the EFF is fairly balanced and reasonable. With respect to design patent damages it has partnered with some other advocacy groups. The EFF's press release can be found here, and it contains a link to the brief.

The EFF habitually bashes the Federal Circuit. Here, however, it does have a point that a patent marketing decision gave rise to a cottage industry of trolls:

"The case thus described was Forest Group, Inc. v. Bon Tool Co. and related to patent marking, but it could be the present design patent damages case in five years' time if history is any guide."

Pro-Samsung #6: Software Freedom Law Center

Despite strong reservations concerning the Software Freedom Law Center, I have uploaded its brief, which uniquely raises a free-speech issue in connection with design patents. I'd be extremely surprised if this argument got traction with the Supreme Court.

Pro-Samsung #7: 50 intellectual Property professors

The list of intellectual property professors supporting Samsung has grown over time: now there are 50 academics who signed the latest brief, including a number of very well-known ones. This is a very persuasive passage (and just an example; there's more of that in the brief):

"Nor does all, or even most, of the value of a product normally come from patented designs. People don't buy iPhones for their appearance alone; they buy them for their functions. Those functions contribute substantially to the phone's value and they are covered by many utility patents.

Indeed, by one estimate, there are 250,000 patents that arguably cover various aspects of a smartphone. To conclude that one design patent drives the purchase of the product, and therefore that the defendant's entire profit is attributable to infringing that patent, is to say that none of those functional features contribute anything to the value of the phone – a ludicrous proposition."

Neutral #1: Bar of the City of New York

The New York City bar association filed a brief in support of neither party. It raises two distinct issues. The first part is just about generating more business for lawyers even if it's against the public interest; they want Section 289 (disgorgement) to be deemed an additional, not alternative remedy to Section 284. The second issue is, of course, also just in the interest of lawyers: they argue that "a design patent holder's monetary recovery under section 289 should be on a sliding scale from $250 up to the extent of the infringer's profits, with the precise value being determined based on the facts of each particular case."

While the motivation is very transparent here (just more business for trial lawyers and for lawyers writing and responding to demand letters), the fact that these New York lawyers think the statute leaves room for different interpretations benefits Samsung.

Neutral #2: BSA | The Software Alliance

The organization formerly known as the Business Software Alliance (originally created by Microsoft, which is currently trying to get leverage out of design patents of questionable quality). I've uploaded its brief, which is vague and weak.

It doesn't address Apple's smartphone case patents (two of the three design patents at issue in the case) and focuses on screen design patents (which one of the patents-in-suit is):

"Design patents provide an essential element of legal protection for software innovations. This Court should ensure that design patents in the software context receive appropriate protection against infringement."

This is like saying "please don't take an extreme position on screen design patents" without clearly advocating affirmance or any particular rule or policy.

One reason (and not the only one) why the Supreme Court shouldn't take that filing seriously is that it's rather unclear to what extent the BSA's members even back that filing. It may just be the lowest common denominator, but it's probably even less than that. Dell and SAS Institute support the Internet Association/SIIA/Google brief. Salesforce and Intuit are not only BSA but also Internet Association members.

Neutral #3: Nike

Nike would have been a first-rate ally for Apple, and the fact it has declared itself neutral with respect to screen design and smartphone case patents is a huge lost opportunity for Cupertino:

"As the owner of more than two thousand active design patents, Nike holds the third largest portfolio of design patents in the United States."

Nike's brief focuses entirely on the relevance of design patents to its business:

"In consumer product markets and in fashion industries, including the highly competitive market for athletic footwear and apparel, product designs are often a key factor driving sales. Consumers largely choose products with designs that appeal to them and reflect their aesthetic sensibilities, their personalities, and the image they wish to convey to those around them."

As to statutory interpretation, Nike appears close to Apple's position (it wants the "total profit" rule to remain in place):

"The reality of facing a´substantial, actual damages award is a deterrent to would-be intentional infringers, making it less likely that intellectual property owners like Nike (as well as law enforcement agencies) will need to expend significant resources addressing knockoff products. Conversely, if the Court were to water down the remedies provided under Section 289, it would embolden potential infringers to treat the risk of an infringement judgment as simply the price of doing business, and one that can be managed by advancing arguments as to the appropriate apportionment of costs."

You'd be hard-pressed to find a bigger supporter of the idea of deterrence than me. For example, I'm part of a small minority of Europeans supporting the death penalty and the "castle doctrine." But even I don't think the end of deterrence always justifies the means. Here, what Nike wants is for my industry to suffer so that Nike enjoy a maximum degree of leverage over infringers. Sorry, but this is not only a sports apparel world.

Here's a couple of particularly unconvincing passages:

"[Reversal of the Fed. Circuit] would also create, for the first time in more than a century, a host of difficult questions of first impression that courts would have to resolve without guidance from Section 289's text."

If that's what it takes for the law of the smartphone to be different from the law of the spoon, then that's just simply necessary. But Nike totally overstates the problem anyway. Courts have to deal with apportionment all the time, such as in connection with standard-essential patents.

"For design patents, the risk of innocent infringement is low."

The average Nike shoe is more intelligent than that sentence. Tiny arrows, round buttons, rounded corners etc. are examples of how ridiculously broad many design patents are, and when patents are overbroad, incidental infringement is more frequent than willful infringement. To Nike's credit, a different passage limits the rarely-innocent-infringement claim to its own industry:

"The scenario that Congress feared is particularly real in markets such as the footwear and apparel market, where products sell at a fast pace and in high volumes, where innocent infringers are rare, and where product lifecycles are short. In such markets, infringers can effectively divert innovators' profits by entering and exiting the market swiftly in hopes that innovators will not detect the infringement in time or find enforcement worth the cost."

Just one last misguided part (of many) of Nike's filing:

"The validity of issued design patents can be challenged in an administrative 'inter partes review' proceeding before the United States Patent and Trademark Office (35 U.S.C. § 311(a)), and in a 'post-grant review' proceeding within nine months after a design patent issues (id. § 321)."

Yeah, it just takes so many years that it doesn't help much if devastasting remedies are imposed in the meantime. Look at this Apple-Samsung case: the D'677 patent is a dead design patent walking, but Apple will exhaust all appeals.

Neutral #4: Department of Justice

The federal government of the United States, represented by the Solicitor General, agrees with Samsung that the Federal Circuit and Judge Koh got the law wrong, but leaves the door open to a finding that Samsung failed to present the evidence necessary to benefit from the correct interpretation. I've also uploaded the DoJ's brief.

The legal argument that the Justice Department supports is the one relating to the term "article of manufacture":

"Although Section 289 entitles the patent holder to recover the infringer's 'total profit' on the 'article of manufacture' to which the design was applied, that 'article of manufacture' will not always be the finished product that is sold in commerce. Rather, the relevant article will sometimes be a component of the ultimate item of sale. In such cases, the patentee is entitled only to the infringer's total profit for that component, not its total profit for the finished item."

"[T]he term 'article of manufacture' literally encompasses all manufactured objects—both complete products and components—and it has historically been understood to include both. When the product whose sale gives rise to in-fringement liability is made up of multiple components, the factfinder must determine whether the 'article of manufacture' to which the defendant has applied the patented design is the entire product as sold, or a component of that product."

"If the product contains other components that embody conceptually distinct innovations, it may be appropriate to conclude that a component is the relevant article."

The DoJ also warns against the practical consequences of affirmance:

"The Federal Circuit's contrary approach, under which the relevant 'article of manufacture' is invariably the entire product as sold, would result in grossly excessive and essentially arbitrary awards."

"From a potential defendant's perspective, the consequences of the Federal Circuit's rule could be draconian."

Nike won't like the following:

"To be sure, even in cases involving unitary (i.e., single-component) items of sale, Section 289's 'total profit' standard may sometimes produce awards that are disproportionate to the commercial significance of the patented design."

Presumably for political reasons, the DoJ didn't want to support Samsung all the way against the most profitable U.S. company:

"Although the district court's jury instructions equated the term 'article of manufacture' with the finished smartphones, it is unclear whether petitioners produced evidence supporting their assertions that components of the phones should be considered the relevant articles of manufacture."

I don't have access to the complete record of the case. As far as I've been able to monitor the proceedings from a distance, Samsung repeatedly argued in favor of apportionment, so I guess there's enough in the record. And let's not forget that Samsung argues Apple failed to present evidence in this regard.

Apple has achieved that the DoJ isn't against the notion of a one-time windfall profit for Apple, but has failed to persuade the DoJ that the legal standard Apple is defending here is in the interest of the U.S. economy at large.

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Supreme Court wants U.S. government to weigh in on Google's petition to hear Oracle's Android-Java copyright case

The Supreme Court of the United States had put Google's petition for writ of certiorari (request for Supreme Court review) in Oracle's Android-Java copyright case on its list of items to be discussed at the Friday (January 9) conference. The list of decisions, which was just released this morning, indicates that the top U.S. court has not made a decision yet. Instead, "[t]he Solicitor General is invited to file a brief in this case expressing the views of the United States."

In my two previous posts on this case, I explained why I don't consider Google's proposed distinction between allegedly non-copyrightable header and potentially-copyrightable non-header code to be workable, and noted that the software industry at large philosophically opposes Google's petition.

Only about 1 in 100 cert petitions succeeds. But Google apparently hopes that a well-orchestrated (rather than organic) amicus brief campaign (see 1, 2, 3, 4) will persuade the top U.S. court to hear the case.

The Supreme Court appears unconvinced for now that this case really needs to be heard (otherwise it could have decided based on the submissions it already has on file), but in light of Google's amicus brief campaign it apparently wants to double-check whether there really is a key issue at stake here for innovation. That's why the U.S. government is asked to chime in. Google is known to have excellent government relations, but I'm sure the Department of Justice is absolutely aware of the extent to which the software industry--which is so important to U.S. economic growth and employment--depends on legal certainty with respect to software IP protection. A decision to grant certiorari would create enormous uncertainty since Google wants to raise the general question of whether program code, no matter how creative, expressive, original or sizeable, can be devoid of copyright protection. It would be downright irresponsible for the U.S. government to support Google's cert petition because it would discourage investment in software development at least until the case is resolved and, if anything goes wrong, for a very long time. I'm sure the software industry at large, which is firmly on Oracle's side here, will convey that message to its government.

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