The Supreme Court has granted Samsung’s appeal of a $500 million dollar judgment rendered on the latter’s infringement of Apple’s smartphone (iPhone) design patent. If your company owns patents, you may wonder: What effect will Apple-Samsung have on your patent program? More practically, how can you and your company make money on your patents starting now, in the “incubation period” of the decision that will be announced in about a year? Read further for one simple tip that can make millions for you and your company.
Last summer, I made some predictions on Why Samsung Will Pay (July 23, 2015). It turns out that I was:
- Correct in predicting that Samsung would lose on its petition for rehearing in Apple v. Samsung (Fed. Cir. 2015); and
- Right in my hunch that Samsung would file a petition for certiorari.
I was wrong, however, when I predicted that the Supreme Court would deny Samsung’s cert petition.
I was wrong!
After I predicted “failure of cert” in July, the Court took up two patent damages cases in October, and its grant of cert today in Samsung is best interpreted as an extension of its interest in providing guidance in patent damages cases.
A bet against cert is usually safe, because it is so rare for the Court to grant such petitions. After all, the Court turns down 99% of such requests. Least of all is the Court interested in reviewing “bookkeeping” decisions. But, as noted, things have changed since my blog of last summer.
A trilogy of patent damages appeals
The Court’s interest in Apple-Samsung follows its grant of cert in Halo v. Pulse and Stryker v. Zimmer, both of which petitions were granted in October. In Halo and Stryker, the Court will decide when a patent infringer can be be penalized for willful patent infringement and held liable for up to treble damages plus attorney fees. See Patently-O on the grant of cert in those two cases.
Big money, high profile, powerful friends
As less compelling reasons for the new grant of cert, the Court probably finds Apple v. Samsung interesting because:
- $500 million is big money;
- The case is high profile; and
- Silicon Valley is weighing in with Samsung.
Big money, by the way, is not in itself a good or sufficient reason for the Court to take up an appeal.
As my mentor, the late Circuit Judge Edward S. Smith (Fed. Cir.), once told me, citing his former senior partner, it is better for a court to think of stacks of dollar bills as if they’re a big pile of potatoes. It’s hard to get emotional about a million potatoes, said Judge Smith. A legal issue is the same whether there is much or little at stake. The amount at stake should not be allowed to cloud a court’s thinking. A dispute over a $50 tax refund—especially if the holding will apply to numerous other cases—can be as important as a big money case. But big money attracts more attention.
Similarly, high profile cases get more notice from everyone, courts included, though, again, such cases don’t necessarily present more important issues. News coverage of Apple v. Samsung attracts attention.
As for Silicon Valley, it is ganging up on Apple, demanding the freedom to do whatever it wants without risk of having to pay patent owners handsomely for the privilege. Amicus briefs attract attention.
Watch for the patent damages trilogy
I return to my main reason for the Court’s grant of cert in Samsung. By taking three appeals, the Court can decide one or two cases in favor of the patent owner and the balance of the cases in favor of the infringer. This is a classic Supreme Court pedantic device:
- If the case looks like X, the patent owner gets more money;
- If the case looks like Y, the infringer gets off lightly.
Here’s a tip for Court-watchers: Be alert for a trilogy of patent damages cases: Halo v. Pulse, Stryker v. Zimmer, and now Samsung v. Apple.
In the context of patent infringement damages, “winning” is a matter of degree: How many tens or hundreds of millions will the infringers pay to the patent owner? If Samsung cuts its $500 million payment in half, that is, if it gets a $250 million refund from Apple, that would be a pretty good win. Just think how many rebates Samsung could make with $125 million, even while pocketing $125 million.
According to Apple, a few billion dollars in smooth-screened, round-cornered smartphone sales by Samsung, accounting for a few hundred millions in profits, is enough to warrant a big payday for Apple. Samsung, predictably, attributes its success to other factors.
If you invented the smartphone, you’d sue, too
Many criticize Apple for spending so much on patent litigation. That criticism is misdirected. If you invented the smartphone, you’d sue everyone who copied it, too.
Don’t be short-sighted
Where Apple went wrong is in failing to invest enough in the preparation of its patent applications. For example, its slide-to-unlock utility patent has been struck down in almost every one of the many countries in which it has been litigated to a final decision.
Only its much-ridiculed design patents have withstood attack. And now, asks Samsung, how much is a smooth, round face worth, anyway?
Tip of the Century: Invest in higher quality patents
Here is one thing that you and your company can do to advance your patent interests:
Spend more, not less, on preparation of high quality patent applications.
Spend more, not less, on patent applications
Pay your patent counsel well so they can afford to take a good invention disclosure. Most inventors do not know what their invention is! A full answer to that question is elusive, and it takes a smart, skilled, experienced patent attorney to ferret out the broad outlines and the specific details. It helps if patent counsel is also experienced in post-grant review, district court, and appellate litigation.
While you’re at it, get a good prior art search, also called a “novelty” or “patentability” search. Two reasons: (1) You don’t know what you can validly claim—or what details you must disclose—until you compare and contrast the invention with the prior art, and (2) infringers will search the prior art later, and assert that art in post-grant proceedings, so you might as well know as much as you can going into the Patent Office and the courts.
The value of preparation and prosecution
It is penny-wise and pound-foolish to scrimp on “preparation and prosecution” of patents—which if the invention is any good, will be infringed and attacked—and then to spend hundreds of millions on patent infringement and validity and damages litigation and appeals.
An invention worth millions deserves a custom patent
Any invention worth practicing is worth copying—which is why you need a patent, and a good one, at that—one that will stand up to attack.
The last thing you should want is for your patent counsel to take your inventors’ write-ups at face value—to do nothing more than add a little standard formatting, slap on a cover sheet, and file a provisional application. As one of my fellow bloggers recently pointed out, there is no such thing as a “provisional patent.” A provisional application goes poof after a year.
Even a utility patent application is limited by the disclosure it contains on the date it is filed. By the time a patent examiner or a tribunal act on the application, it may stand or fall based on its original content.
In other words, you may have only one chance to get it right, and that’s at the outset, just as you are preparing to launch your new product.
Do you want a patent or a bushel of corn?
A patent is only as good—and only as valuable—as the invention that’s described and claimed. Patents are not fungible: A patent is not a bushel of corn that sells at a standard market price of $4 per bushel.
How to get a patent of value
At Beem Patent Law, we take written invention disclosures as a starting point. When you want a patent that’s worth more than the paper it’s printed on, we can help.