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A Review of the Legal Claims in Apple v. Samsung: Utility Patent Infringement

Friday was the last day of evidence in the Apple v. Samsung case. Closing arguments will likely be on Tuesday week and then the jury will get the case. I posted earlier on the trade dress and design patent claims Apple has made against Samsung in Apple’s complaint. In this post I’ll focus on Apple’s utility patents.

Unlike design patents and trade dress, utility patents protect useful articles and methods. Here is a list of the patents originally asserted by Apple in its Complaint:

With over a year of pretrial motions, hearings, and orders, the list of asserted patents has been whittled down to three: the ‘163, ‘381, and ‘915 patents. These patents relate to various features of the iOS UI including pinch to zoom, rebounding list scrolling, and rebounding scrolling on the home screen, respectively. These patents are not so broad as to block any competing smartphone. If fact, earlier versions of the Android operating system did not include rebounding scrolling and

In preparation for closing arguments, Apple prepared and filed a chart outlining which Samsung devices were accused of infringing Apples various patents.

Samsung is arguing that the patents are not valid because the features claimed were already known when Apple filed its patent applications.

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A Review of the Legal Claims in Apple v. Samsung: Design Patent Infringement

Today should be the last day of evidence in the Apple v. Samsung case. Closing arguments will likely be on Tuesday next week and then the jury will get the case. I posted earlier on the trade dress claims Apple has against Samsung that are in Apple’s complaint. In this post I’ll focus on Apple’s three asserted design patents related to the iPhone.

Design patents protect the appearance of an article rather than the functional features. Here is a table with the design patents and their titles:

Design Patent Table from Apple’s complaint

When looking at a design patent, the solid lines show what is claimed and protected. Broken lines provide context but don’t limit the patent. So, while the D677 patent shows the iPhone 4, only the front screen area is in solid lines, so the side buttons and other features don’t restrict the scope of the patent. Similarly, the D790 patent claims the GUI. Only the icons and rectangular touch screen limit the scope of the patent. Below is a table comparing the Samsung Galaxy to these three patents:

Apple’s design patent comparison to Samsung’s Galaxy from Apple’s complaint

Samsung is attacking the validity of these design patents by trying to show that phones with the claimed design elements were publicly known prior to the filing of the applications that issued as these patents. Samsung can also avoid liability if they convince the jury that the design features are functional rather than aesthetic.

One thing Samsung won’t be able to rely on is an argument that they independently developed their own design. In copyright cases a defendant can avoid a claim of infringement if they came up with the material without any reference to the copyrighted material. That is because copyright law protects against, as the name suggests, copying. Patent law, however, doesn’t allow for a defense of independent development.

From what I’ve read so far, Samsung isn’t spending much time arguing that their designs are not similar to Apple’s, but are attacking the validity of the design patents. The jury will get to decide that issue.

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Legislation Limiting Certain Design Patents Hits the House: The PARTS Act

I recently wrote on the power of design patents but now they are under attack, at least in one industry. Reps. Darrell Issa (R-CA) and Zoe Lofgren (D-CA) introduced a bill to be known as the PARTS Act to the House on February 2, 2012 and it had a subcommittee hearing on August 1. Gene Quinn of ipwatchdog.com does a good job of connecting the dots from the witnesses at the subcommittee hearing to vehicle insurance trade groups. The bill would retroactively remove design patent protection for automotive replacement parts. This isn’t about engine components, but rather body panels and interior components that are designed for not just a function but an aesthetic.

With respect to a design patent that claims a component part of a motor vehicle as originally manufactured —

(A) it shall not be an act of infringement of such design patent to make or offer to sell within the United States, or import into the United States, any article of manufacture that is similar or the same in appearance to the component part that is claimed in such design patent if the purpose of such article of manufacture is for the repair of a motor vehicle so as to restore such vehicle to its appearance as originally manufactured; and

(B) after the expiration of a period of 30 months beginning on the first day on which any such component part is first offered to the public for sale as part of a motor vehicle in any country, it shall not be an act of infringement of such design patent to use or sell within the United States any article of manufacture that is similar or the same in appearance to the component part that is claimed in such design patent if the purpose of such article of manufacture is for the repair of a motor vehicle so as to restore such vehicle to its appearance as originally manufactured.

While these patents can protect the appearance of a particular model, automotive companies and their suppliers also pursue design patents on these components to protect their position in the replacement part market. While they could pursue protection on the entire vehicle appearance, typical body repairs involve only one or two body panels. Accordingly, it’s advantageous to obtain a design patent on each new panel design independent of the others.

Under current law, a design patent may be obtained that will have a 14 year term from the date of issue. That effectively covers the life of many cars. The result of the bill would be a wholesale devaluing (really an elimination of value) for design patents already issued in this area. Replacement parts manufacturers would be able to immediately start producing and marketing exact copies of the OEM panels. Two and a half years after the first offer for sale of a vehicle having the patented part, anyone could sell or use the copies.

While this could conceivably reduce repair costs (a boon to car insurance companies) it will also reduce the return on investments in new vehicle design and body styles. There are pros and cons to the concept of trying to increase competition in a particular market, but immediately devaluing design patents is not the way to promote competition in the area.

Like the SHIELD Act, the PARTS Act targets a specific industry and aims to weaken patents in those industries. It seems that efforts to weaken intellectual property protection in the United States are moving away from comprehensive changes and are instead being applied to specific industries.

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Bill in the House Would Make Losing Patent Owners Pay Some Litigation Costs

Reps. Peter DeFazio (D-OR) and Jason Chaffetz (R-UT), have introduced the “Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act.” The bill, if passed, would award attorney’s fees and costs to the winning putative infringer if the judge finds that the patent owner “did not have a reasonable likelihood of succeeding…” The bill is limited to patents related to computer hardware and software.

There are a few things I want to point out. First, despite the statement (reported by arstechnica.com) from Rep. Chaffetz that “A single lawsuit, which may easily cost over $1 million if it goes to trial, can spell the end of a tech startup and the jobs that it could have created,” this bill will likely not affect cases that go to trial. While not congruent with the standard for summary judgement or a Rule 12(b)(6) motion, I don’t think many cases that make it to trial would fit the standard set out in the SHIELD Act.

Second, the bill does not address the situation of an accused infringer who loses a case in which they did not have a reasonable likelihood of succeeding. This puts a disincentive on patent owners, especially small business patent owners (many of whom are technology startups), who would otherwise want to defend their intellectual property. At the same time, it encourages infringers to drag their feet, avoid settlement, and force the patent owner to rack up legal fees even if the infringer has a strong feeling they may lose on summary judgement.

Many technology startups chose to use patents to protect their ideas. Those patents are only useful if they can be enforced and this one-sided legislation will make it harder for small businesses to do so. It may also impact their value to potential suitors who may chose to emulate the technology rather than acquire it.

A better approach would be to impose a “loser pays” system across all patent cases (or even all cases brought in federal court). Whatever is done, it should be done across the board to apply to all technology areas.

As the bill stands, I doubt it will impact the behavior of patent trolls. Defendants will still settle because the mere hope of recovering their defense costs won’t offset the potential downside of not settling. The suits that will be deterred are those brought by innovative startups who now will have to fear paying the accused infringer’s costs should the startup lose. Those costs could break a small company and the fear of paying them will keep small businesses from asserting valid patents.

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Apple v. Samsung: Independent Development is Not a Defense

There has been a lot of coverage of the Apple v. Samsung case going on. I’ve posted on the value of design patents that this litigation highlights. One topic is that of the public release of excluded evidence by Samsung’s lawyers. Some tech blogs have taken issue with the ruling saying Samsung should be able to show evidence that the design was their own idea.

This misses a critical point. Independent development is not a defense to patent infringement. Even if you never saw the design or the patent you are accused of infringing, that will not protect you. This is true even in you came up with the idea first.

Unless an earlier developed design fits into a statutory category of prior art (such as a printed publication, patent, article for sale, etc.) then its existence is irrelevant to validity and infringement. This surprises some people and it is different than other areas of intellectual property law.

For example, trade secret law protects against misappropriation; copyright law protects from copying. In these areas, a defendant can avoid liability by demonstrating independent development. I’m sure the attorney’s for Samsung were well aware of this, and it will be interesting to see what Judge Koh does in response to the public statements and release of evidence that was deemed irrelevant.

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Apple v. Samsung: The Power of Design Patents

Design patents are often maligned as limited in their usefulness. Many clients want to obtain one or more utility patents for their new products but don’t think of the potential power of design patents. In the United States, design patents are used to protect the aesthetic aspects of a product. That may sound narrow or easy for competitors to design around, but that may not always be the case.

Apple’s design patents for the iPhone are an extreme example of the potential power of design patents. It should be noted that nearly 80% of Apple’s damages claim is based on design patent infringement.

Like any other patent, Apple can (and has) also assert infringement in the International Trade Commission. The result of a finding of infringement in the ITC is not damages, but rather an exclusion order that is enforced by customs who prevent the infringing devices from being imported. In the electronics (and many other industries) where production is done offshore, this is a heavy hammer to wield that effectively excludes the infringing products from one of the larges consumer markets in the world.

Because ITC proceedings are streamlined, they are considerably less expensive than litigation. This makes them available to a broader range of patent owners, including smaller companies.

Update —

The Federal Circuit has again held that patent licensing companies can utilize the ITC. There is a requirement that their be potential damage to “domestic industry” and licensing satisfies that requirement.

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In Response to Hyperbole: Apple and the “Andriod Killer” Patent

There has been a lot of discussion of a patent issued to Apple last week. U.S. Patent 8,223,134, issued to Apple on July 17, 2012, and has been called everything from an “Android Killer” to something all other smartphone makers should fear. This patent relates to the the user interface of various iOS devices. However, many people don’t realize how the exclusionary power of a patent is defined. Only the claims, those numbered paragraphs at the end of the patent, define what is protected.

Some have characterized the claims of the ‘134 patent a overly broad, but take a look at the broadest device claim:

A portable multifunction device, comprising:

a touch screen display;

one or more processors;

memory; and

one or more programs,

wherein the one or more programs are stored in the memory and configured to be executed by the one or more processors,

the one or more programs including instructions for: displaying a portion of an electronic document on the touch screen display, wherein the displayed portion of the electronic document has a vertical position in the electronic document;

displaying a vertical bar on top of the displayed portion of the electronic document, the vertical bar displayed proximate to a vertical edge of the displayed portion of the electronic document,

wherein: the vertical bar has a vertical position on top of the displayed portion of the electronic document that corresponds to the vertical position in the electronic document of the displayed portion of the electronic document; and

the vertical bar is not a scroll bar;

detecting a movement of an object in a direction on the displayed portion of the electronic document;

in response to detecting the movement: scrolling the electronic document displayed on the touch screen display in the direction of movement of the object so that a new portion of the electronic document is displayed,

moving the vertical bar to a new vertical position such that the new vertical position corresponds to the vertical position in the electronic document of the displayed new portion of the electronic document, and

maintaining the vertical bar proximate to the vertical edge of the displayed portion of the electronic document; and

in response to a predetermined condition being met, ceasing to display the vertical bar while continuing to display the displayed portion of the electronic document, wherein the displayed portion of the electronic document has a vertical extent that is less than a vertical extent of the electronic document.

The claims are actually fairly narrowly tailored to cover the iPhone and other devices non-scroll bar on list and document displays. The vertical bar must not be a scroll bar; it mus be imposed over the image being displayed; it must change its position as the image is moved vertically by the user (who must be moving the image via natural scrolling); the vertical bar must stop being displayed, i.e., after a preset time with no movement on the screen. All of these conditions must be met by another device’s UI before it can infringe this claim. Omitting any of them will avoid literal infringement.

I realize it’s not as exciting as claiming that the patent will shut down all competition in smartphones, but it won’t.

I personally think this shows the value of patents in this area. What Apple has done with these claims is to provide itself with some protection against direct copying of these features of its UI. Other companies still have a lot of room to develop competing systems and devices, even better ones. These patents help prevent knockoffs from eliminating the incentive to create while still leaving the door open to new competition. In the end, consumers win.

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Should You Assign Your IP to a Holding Company?

When you have a piece of intellectual property, like a patent, it’s a good idea to make sure it’s clear who owns it. Under U.S. law, inventions are owned by their inventors unless there is an agreement to the contrary.  That usually means that the inventor executes an assignment of the ownership rights in the patent to their employer or other entity.

Some entities have set up holding companies that hold the intellectual property of the parent entity.  This is done for a variety of reasons, including simplified portfolio management, tax planning, and others, but there is a cost. In some cases, damages from an infringement suit brought on behalf of an IP holding company may be limited to the “reasonable royalty” minimum, and not include lost profits. That’s because the patent owner (the holding company) doesn’t generate a profit and thus had not profits to lose.

The question, though, has come up anew with the recent news that Qualcomm is spinning off some of its R&D functions into a new company. It’s important, though, to keep in mind the wide array or pros and cons to using an IP holding company. Whether you will practice the patent, intend to license it, if it embodies standard-essential technology, and your competitive position in the market that the technology relates to all impact the decision.

As with assigning any corporate asset, it isn’t a clear cut decision and will require good advice from a variety of professionals. In the case of patents assignments, consulting with a patent attorney may be as important, or even more so, than consulting with a tax planner.

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Myriad Case Sent back to the Federal Circuit after Mayo v. Prometheus

The Myriad case has been sent back to the Federal Circuit to review that court’s previous decision in view of last weeks Supreme Court decision in Mayo v. Prometheus.  I discussed the Mayo decision, which dealt with medical diagnostic claims.  The myriad claims are also diagnostic in nature in that they relate to testing patients for particular genetic mutations that can be contributing factors for ovarian cancer.

Here is the entirety of the order:

11-725
ASSN. FOR MOLECULAR PATHOLOGY V. MYRIAD GENETICS, ET AL.
The petition for a writ of certiorari is granted. The
judgment is vacated, and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

Myriad’s stock took a beating after the Mayo decision as many suspect that a majority of the court would invalidate the claims in the Myriad case.  However, with the remand order today, Myriad’s stock is, oddly enough, benefiting from the uncertainty.  The new procedural posture means it will likely be at least a year, and more likely two, before the case is taken up by the Supreme Court again.  That gives Myriad another year or two where prospective competitors may not be willing to enter the market for these gene diagnostic tests.