Apple v Samsung – Design Patents and ‘Damages’

In writing a few days ago about the $1.05 billion jury verdict in the US Apple v Samsung trial, we observed that there was a significant disparity between amounts awarded by the jury where it found design patent infringement and those awarded where only utility patent infringement was established.  (See Billion-Dollar Jury Verdict a Blow to Samsung – But How Bad Is It?)

We speculated that this may be due to the theory that consumers might be ‘tricked’ into buying Samsung devices which have been ‘slavishly copied’ from Apple products, resulting in greater loss of sales by Apple.

However, we have now learned that there is a very specific reason for the high awards for design patent infringement.  As explained in this article on the intellectualIP blog, written by Professor Thomas F. Cotter of the University of Minnesota Law School, there is a peculiar anomaly in the US law relating to the remedies available in cases of design patent infringement which justifies such high monetary compensation.

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Tags: Account of profits, Apple-v-Samsung, Damages, Designs, Infringement, US

NZ Government Backtracks – to Europe – on Software Patents

In New Zealand, the new Patents Bill is at last back on the parliamentary agenda, and looks to have very real prospects of being debated and passed in the coming months, following some further amendments by the government which will, amongst other things, moderate the proposed exclusion of computer programs from patentability.  If passed in its current form, the new Patents Act will contain a limited exclusion in essentially the same terms as the European Patent Convention, and its implementing national laws (including the UK Patents Act 1977).

This will be seen as a positive development by many stakeholders, who had previously argued that patent-eligibility provisions in New Zealand should be modelled on those of one of its major trading partners, e.g. Australia, the US or Europe/UK.

The last-minute computer program exclusion appeared to have become something of a stumbling block for further progress of the Bill, following widespread criticism, including by the Office of the United States Trade Representative (USTR), which stated in its annual report on ‘foreign trade barriers’ in April that the exclusion ‘departed from patent eligibility standards in other developed economies’.

Now, hopefully, the Bill will be able to move forward, and New Zealand will finally have a modern patent law for a modern world!

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Tags: Computer programs, Law reform, New Zealand, Patentable subject matter, Politics

Talking to WSJ ‘Asia Today’ Program About Apple v Samsung

Yesterday evening we spoke with WSJ Asia Digital Network reporter Deborah Kan, and DJN Managing Editor, Asia Equities, Yun-Hee Kim, about the likely global impact of the verdict in the US litigation between Apple and Samsung (for our initial views on that verdict, see Billion-Dollar Jury Verdict a Blow to Samsung – But How Bad Is It?).

Generally speaking, our view is that the immediate ‘global impact’ of the ruling will be negligible.  The US forms only a relatively small part of Samsung’s market – perhaps 20% at most – and it is the one place in which Apple is clearly dominant.  Figures released during the California trial reveal that Apple has sold about four times as many smartphones as Samsung in the US, and about 25 times as many tablets.  Yet Samsung is still the only remotely respectable competitor to Apple in the US, with all other manufacturers forming barely a blip on the charts.  At the same time, Samsung leads Apple globally in Smartphone sales, implying that non-US markets are far more important to the Korean company.

The US is Apple’s home turf.  It has the advantage there over all of its Asian competitors in terms of both marketing and IP strategy.  A loss in a US Federal Court no doubt stings – and Samsung will fight on – but it is no more than a reflection of Samsung’s overall position relative to Apple in that market. 

In Asia, however, Apple’s relative lack of experience with local cultural and legal norms is sometimes apparent.  For one thing, Asian consumers are clearly less likely to be concerned whether they are buying from a US or Asian company.  And perhaps Apple’s most glaring fumble in dealing with substantive differences in Asian IP laws was its settlement with Proview Technology (Shenzhen) to the tune of $60 million, to acquire the IPAD trade mark in China.  Apple not only failed to ensure that it obtained the Chinese rights (for a much lower cost) in the first instance, it seemingly underestimated the strength of the rights conferred by trade mark registration in China, even when the trade mark owner has no significant ongoing business interests or reputation in the mark.

As the various legal manoeuvrings continue in the US, it will be ‘business as usual’ for Samsung in the rest of the world, even as a number of other international cases continue their slow progress.

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Tags: Apple-v-Samsung, Media

Billion-Dollar Jury Verdict a Blow to Samsung – But How Bad Is It?

We presume that everyone reading this blog is by now aware that the jury considering the patent dispute between Apple and Samsung in California reached its verdict on Friday, finding strongly in favour of Apple on numerous counts, and awarding total damages of just over $1 billion against Samsung.

Right now it is harder to avoid coverage of the decision than to find it.  But for posterity, and since it is de rigueur to provide a link, this article at ZDNet provides the basic facts of the jury’s findings.

Clearly this is – for now at least – a big win for Apple.  Equally clearly, however, the dispute is far from over.  The court (i.e. Judge Lucy Koh) now has to review the jury’s decision, and it is certain that Samsung (at least) will request that she overrule many of its findings.  Apple, for its part, may push for Judge Koh to overrule one of more of the points on which it did not prevail, and will also then be pressing for injunctions preventing the continued sale of infringing Samsung products in the US.  Any such injunctions that may be granted will be preliminary in nature, however, because an appeal to the Court of Appeals for the Federal Circuit – at least by Samsung, and possible also by Apple – is also a certainty.

There is not much we could add to the plentiful general reporting of the verdict, however there are four aspects that we find interesting, and worthy of closer scrutiny:

1. firstly, it seems notable that the jury found that Samsung’s Galaxy Tab 10.1 does not infringe Apple’s US design patent no. D504,889, i.e. the Galaxy Tab is not substantially similar in appearance to Apple’s iPad;
2. secondly, for at least two of the three utility patents asserted by Apple, workarounds are either relatively straightforward, or are already in place in the current versions of Samsung’s software;
3. thirdly, the damages awarded by the jury – while substantially less that the $2.5 billion dollars Apple was seeking – are nonetheless strikingly high in some cases, relative to the apparent significance of the infringed Apple IP; and
4. finally, the jury found that Apple’s 3G devices do not infringe the patents asserted by Samsung, even though these are said to be essential to the 3G telecommunications standards.

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Tags: Apple-v-Samsung, Designs, Infringement, Patent litigation, US

US Fast Track Examination Strategy 101

As many readers will be aware, the America Invents Act was signed into law on 16 September 2011.  While it will not take full effect – most notably replacing the first-to-invent priority rule with a first-inventor-to-file rule – until 16 March 2013, one provision that did come into effect almost immediately was a new prioritised examination procedure.

Prioritised examination – also known as Track One – is available for a fee at the time of filing an original utility or plant patent application, or as a once-only option when filing a Request for Continued Examination (RCE).  Further information about Track One can be found on the US Patent and Trademark Office (USPTO) web site.  The fee payable for entry into Track One is currently US$4800, or US$2400 for a ‘small entity’, which generally covers companies up to 500 employees, subject to some additional considerations (further details can be found in the USPTO Manual of Patent Examining Procedure, § 1.27, though if in doubt the advice of a US patent attorney or agent is strongly advised).

Since the Track One program commenced, we have recommended it to a number of our local Australian clients.  In a country where an annual turnover of A$20 million dollars qualifies a company for the ‘big end of town’, very few of our clients need to worry about large entity fees – and those that do can comfortably afford them.  With the Australian dollar currently trading above parity against the US dollar, we think that a fee of less than A$2400 to obtain a US search and examination within about three months, and possible final disposal of the application within 12 months, is something of a bargain.  The alternative – a two or three year wait for a first Office Action, followed by prosecution which might drag on for a year or more – carries costs of its own which can easily exceed the Track One fee.

We therefore considered ourselves very fortunate this week to exchange notes on Track One filing strategy with Michael Cammarata, who is a partner of the US firm Birch Stewart Kolasch Birch LLP, a.k.a. BSKB.  Avid consumers of IP blogs should recognise BSKB as a site-wide sponsor of Gene Quinn’s IP Watchdog blog (where, incidentally, we recently contributed a guest post on Apple’s strategic use of the Australian patent system).

Michael has kindly agreed to let Patentology share some of his considerable insight and experience with the Track One process – to date BSKB has filed about 50 prioritized examination requests.

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Tags: Accelerated examination, BSKB, Michael Cammarata, Strategy, US

Patent Office Allows Declaratory Evidence in Re-examination

Alza Corporation [2012] APO 70 (21 June 2012)

Re-examination – lack of novelty – inherency – role of expert evidence

Back in February we wrote about the available avenues to challenge a granted Australian patent – requesting re-examination by the Patent Office, and/or commencing revocation proceedings in the Federal Court of Australia (see Attacking Australian Patents – Re-examination & Revocation).

Re-examination is by far the cheaper, faster and less complex option, and in principle it allows the party requesting re-examination to remain anonymous.  However, it has a number of drawbacks, one of which is that re-examination can be based only upon documentary prior art, and not upon prior art information made available only through the doing of an act, i.e. prior use.  Most practitioners would conclude that this limitation prevents the decision maker from considering material other than documents published before the priority date of the patent claims, and in particular that the written or verbal testimony of witnesses would be excluded.

It is therefore interesting that a recent decision of the Australian Patent Office appears to have opened the door to allowing declaratory or affidavit evidence, e.g. of a suitably-qualified expert, to be considered in re-examination proceedings, at least so long as it is ‘primary’ evidence which is pertinent to the matters under consideration.

While the evidence in question concerned the proper interpretation of a prior art document for the purpose of establishing whether or not certain patent claims were novel, there does not appear to be any reason why the same principles would not apply to expert evidence in relation to whether or not a claimed invention involves an inventive step.  Loath as we are to utter the words ‘floodgates’ or ‘slippery slope’, we wonder whether this might lead to re-examination becoming a form of ex parte ‘mini-opposition’?

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Tags: Australia, Evidence, Patent Office, Reexamination

Pharmaceutical Compulsory Licences to Assist Developing Nations

IP Australia has released an ‘exposure draft’ of proposed legislation named the Intellectual Property Laws Amendment Bill 2012.  The main purpose of the legislation is to implement additional compulsory licencing provisions consistent with Australia’s obligations under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Protocol.  The Protocol is aimed at helping developing nations to tackle diseases such as malaria and HIV/AIDS using affordable generic medicines from other countries. 

IP Australia is currently welcoming submissions on the exposure draft, up until 5.00pm, on 1 October 2012.

The Australian Government (then Innovation Minister Senator Kim Carr and Trade Minister Dr Craig Emerson) originally announced, in March last year, its intention to have this legislation drafted and in place by the end of 2011.  It then disappeared without a trace, until now!

We recently wrote about the Productivity Commission’s inquiry into the compulsory licensing provisions of the Australian Patents Act 1990, which is currently accepting public submissions (see Compulsory Licensing Inquiry – Issues Paper Released).  This inquiry is concerned with the domestic impacts of patents and compulsory licences – the primary focus of the Productivity Commission is on ways of achieving a more productive Australian economy, which is seen as the key to higher living standards for the country’s citizens.

Australia’s existing compulsory licensing provisions are consistent with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property (the TRIPS Agreement).  According to TRIPS, products made under compulsory licence must be predominantly for the supply of the domestic market and are not allowed to be exported. 

This restriction makes sense to protect rights-holders in advanced economies, which do not wish to see an influx cheap imported goods from countries where they are manufactured under favourable compulsory licence terms. 

However, the WTO recognises that less-developed member countries may find themselves facing problems in the event of a public health crisis, such as an HIV/AIDS, malaria or influenza epidemic, if they have insufficient capacity to manufacture pharmaceuticals themselves, and can not afford to purchase the required drugs on the open market.  Such countries cannot obtain patented pharmaceuticals produced under compulsory licence in another WTO country, even if they are more affordable, because these products could not be exported under current laws.

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Tags: Australia, Compulsory license, Law reform, Legislation, Pharmaceuticals

Edison Updated for a New Decade

Book Review – Edison in the Boardroom Revisited: How Leading Companies Realize Value from Their Intellectual Property, by Suzanne S Harrison and Patrick H Sullivan (John Wiley & Sons, 2011)

The original Edison in the Boardroom has become a classic text in the intellectual property field, and introduced many people to the basic concepts of intellectual capital, intellectual assets, and their management.

The cover notes of the first edition – published in 2001 – described it as ‘an in-depth look at the revolutionary concept of intellectual asset management (IAM) [which] is changing the way companies all over the world are doing business.’

It is therefore somewhat surprising that, over a decade later, IAM remains a relatively rarefied discipline, explicitly practised by only a small number of specialist service providers.  Indeed, the only private-practice firm of professional advisors which appears in the first ten Google search results for the exact phrase “intellectual asset management” is Watermark [the author’s employer, in the interests of full disclosure].  This perhaps reflects a fragmentation in terminology, as much as conservatism on the part of many traditional providers of IP legal services.

Yet the management practices of many of the world’s largest and most sophisticated owners, developers, commercialisers and monetisers of intellectual capital have advanced significantly since 2001.  Some of the best (or worst, depending on your point of view) examples of this are patent aggregators, such as Intellectual Ventures, RPX Corporation and Acacia Research, amongst others, which have developed a number of novel business models around the acquisition and monetisation of patents for both defensive and offensive purposes.  At the same time, Microsoft is rapidly gaining on IBM in its ability to generate licensing revenues from partners and competitors alike, while Apple is currently giving a number of its own competitors (most notably Samsung) an object lesson in IP strategy.

We have frequently recommended the original Edison in the Boardroom to clients and colleagues, both as an introduction for those new to IAM, and as a useful insight into the best practices of top companies for those with some IP management experience. However, we were becoming concerned that the examples and practices described in the book were somewhat dated in an increasingly fast-moving field.

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Tags: Book review, Intellectual Asset Management, Strategy

It’s On Again – the ABA Journal Blawg 100

Each year, the ABA Journal (‘Law News Now’) produces an annual list of the 100 best legal blogs (or ‘blawgs’).  The final list is determined by ABA Journal staff and, while it is not a ‘popularity contest’, they welcome input in the form of ‘friend-of-the-blawg briefs’, a.k.a. the Blawg 100 Amici.

The 6^th annual search is now on for the top 100 blawgs of 2012.  Now, we are not going to twist anybody’s arm, but if any readers would like to file a Blawg Amici brief on behalf of Patentology, submissions are due by 7 pm (US) ET on 7 September 2012.

More information, and the Blawg 100 Amici submission form, can be found on the ABA Journal web site.

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Tags: News, Patentology admin

Compulsory Licensing Inquiry – Issues Paper Released

As we have reported previously, the Australian Government has asked its Productivity Commission to conduct a nine-month inquiry into the compulsory licensing provisions in the Patents Act 1990 (see Australian Public Inquiry into the Compulsory Licensing of Patents).

As a first step in this inquiry, the Commission released an issues paper on 9 August 2012. The purpose of the issues paper is to clarify the scope of the inquiry, and to assist interested parties in preparing submissions to the Commission.  The paper covers a range of issues on which the Commission is seeking information and feedback.

The deadline for submissions is Friday, 28 September 2012.  Details of how to make a submission are provided in the issues paper, and on the Commission’s web site.

COMPULSORY LICENSING

As the issues paper points out, most countries have adopted mechanisms – including compulsory licensing – to enable, in limited circumstances, access to patented inventions without the permission of the patent holder.  The mechanisms are generally seen as a safeguard for exceptional cases in which the patent system may fail to provide the best outcome for the community as a whole.  Examples include the failure of a patent holder to exploit the patented invention so that it is made sufficiently available to the public, the need to satisfy important public health or security objectives, and cases in which a patent is used in an anticompetitive manner.

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Tags: Australia, Compulsory license, Economics, Innovation policy, Law reform

Bureaucratic Insanity or Rulemaking Error?

[Updated to explain how the Raising the Bar Act will address the problem described in this article.]

A couple of weeks ago we wrote about a surprising change in Australian Patent Office practice requiring a simple change of name of a patent holder to be advertised for opposition purposes (see IP Australia Changes Tack on Changing Names).  This week we have learned of a seemingly even more perplexing issue regarding amendments to the Register of Patents – namely that there are some circumstances in which it may be difficult, or even impossible, to correct an error in recorded details, other than by application to the Federal Court of Australia!

Specifically, we have become aware of a case in which the name of an inventor was misspelled on an international application filed under the Patent Cooperation Treaty (PCT) back in 2008.  When the application entered the national phase in Australia, the error was carried over into the Australian Patent Office records.  And when a patent was recently granted, the error was reproduced on the Patent certificate. 

The error in question has all the hallmarks of a simple typographical mistake.  The name of the inventor, e.g. ‘John Smith’ (not his real name, to avoid identifying the actual application), has been entered as ‘Jhon Smith’.  Throughout the entire application process, nobody involved noticed the mistake, which is perhaps unsurprising since all of the relevant records, going right back to the original PCT application, were consistent with one another.

Nonetheless, it ought to be a simple matter to correct such an error.  The fact is that, for whatever reason, the details recorded on the Register are incorrect.  This serves nobody’s interests.  However, in this case the Patent Office has refused to amend the Register unless it is provided with evidence, such as a declaration or affidavit of a person with knowledge of the facts, as to how and when the error occurred.

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Tags: Australia, Error correction, Patent Office, Register of Patents

The US ‘Anti-Troll’ SHIELD Act – A Waste of Legislative Effort?

In 1 August 2012 a new bill was introduced into the US House of Representatives with the stated intention of curbing the activities of ‘patent trolls’.

In a fabulous example of acronym contrivance (which perhaps took longer to devise than the content of the the proposed legislation itself) the bill is named the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act.

The SHIELD Act has caused a flurry of excitement amongst the anti-software-patent lobby, not least because it supposedly has bipartisan support – having been co-sponsored by Rep Peter DeFazio (D-OR) and Rep Jason Chaffetz (R-UT) – and because it is explicitly targeted at curbing the enforcement of ‘dubious’ computer software and hardware patents.

The principle of the SHIELD Act is simple: it permits a court to award a full recovery of costs against an unsuccessful litigant asserting a ‘computer hardware or software patent’ in the event that the court determines that the patent holder ‘did not have a reasonable likelihood of succeeding’.

Even more excitement has been caused by the fact that the bill includes definitions of computer hardware and software patents, along with an express statement that nothing in the bill should be construed as amending or interpreting the categories of patent-eligible subject matter defined by 35 USC 101.  This means that Congress will neither endorse nor oppose the patenting of software should the bill be passed.  And while this would maintain the status quo, under which software is patentable in principle, this has not prevented some commentators from placing additional emphasis on the refusal to endorse.

In our view, however, the SHIELD Act is a complete waste of the Congress’ precious time.  While its co-sponsors’ hearts are doubtless in the right place – not to mention that it is playing well in the media, for now – its passage will achieve little of any consequence in terms of change, and may actually be harmful to the innovators and small technology startups it is intended to protect.

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Tags: Law reform, Legislation, Patents and society, Trolls, US

Patent Trolls: As American As Apple Pie?

Whether they are called patent trolls, non-practicing entities, patent assertion entities, invention capitalists, defensive patent accumulators or patent licensing organisations, one thing is for certain – the only place in the world you will find them roaming the courts is the United States of America.

While some commentators have suggested that it is only a matter of time before similar business models are deployed in other jurisdictions, we are not convinced that this is an inevitable – or even very likely – outcome.

We would suggest that there are features of the US patent system in particular, and its legal system in general, which together make it a uniquely profitable environment for patent assertion entities (PAEs – we will use this relatively neutral term throughout this article to avoid the need to distinguish between different business models).  Conversely, the systems in other countries are configured so that turning a profit purely on licensing and litigation is a decidedly marginal business proposition.

But before anybody starts to get too excited about the prospect of slaying the monster trolls with a few well-placed legal reforms in the US, we need to point out that many of the PAE-friendly features of the US system are exactly the same features which many believe have fostered a historical culture of innovation and entrepreneurial spirit among individual inventors and the small businesses that are the backbone of the US economy.  In other words, the very reforms which might actually make a difference to the prevalence or PAE’s would also shift the balance of the system against smaller innovators and in favour of big companies and multinationals.

The major features of the US patent and judicial systems which we see as contributing to the PAE ‘problem’ are discussed in greater detail below.

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Tags: Economics, Innovation policy, Patents and society, Trolls, US