Amicus brief for Apple v. Samsung
Five years ago, the United States Court of Appeals for the Federal Circuit construed a statute in a way that led to one of the most disastrous episodes in modern patent law. The court thought its construction unremarkable, based on the “plain language” of the statute. But that court’s interpretation, which authorized vast monetary awards in certain patent lawsuits, had far-reaching effects. The decision would trigger six hundred and seventy-five new lawsuits within a year, create a cottage industry of litigation firms, force companies to scramble to avoid “staggering fines,” and draw criticism as “a shift in wealth to lawyers.”
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. For the Federal Circuit’s decision here, interpreting 35 U.S.C. § 289 to require an award of total profits on any consumer product that infringes a design patent, sets up the same precarious situation as the widely denounced interpretation of 35 U.S.C. § 292 in Forest Group that authorized potentially enormous false marking awards.
This Court should reverse the Federal Circuit and construe § 289 to balance the equities among patent owners, industry, and the public. The statutory text is more open to interpretation than the Court of Appeals assumed it to be. Given that interpretive flexibility, there are at least three reasons why this Court should reject the Federal Circuit’s construction and adopt a different one.
First, the Federal Circuit’s construction will undermine the patent system. With many design patents being directed to only minor parts of products, awarding the total profits on such products will greatly overvalue the patents and undervalue the numerous other features in those products. This possibility will likely raise prices, discourage new goods and services from coming to market, and thus impede consumers’ access to new technologies contrary to the constitutional mandate that patents promote progress. It also opens the door to the economic inefficiencies of patent holdup and royalty stacking, which work to disincentivize future invention and productivity.
Second, there are strong reasons to believe that the Federal Circuit’s interpretation will create a costly and abusive new industry of design patent assertion that will enrich a few clever litigators at the expense of the public. With the Federal Circuit’s decision offering the promise of enormous damage awards, and with extant substantive law already making it easy to obtain broad-scoped design patents, design patent law offers the motive, means, and opportunity for widespread and abusive litigation. Indeed, history shows that, at least three times, the Federal Circuit has devised rigid rules that have fostered patentrelated litigation industries, including the patent marking situation described above.
Third, affirming the Federal Circuit’s reading of § 289 may invite a serious question of the constitutionality of that damages statute. This Court has held for a century that excessively high damages awards, disproportionate to the magnitude of the actual offense, can run afoul of the Due Process Clauses of the Fifth and Fourteenth Amendments, in the contexts of both punitive damages 5 and statutory awards. An award of total profits on a product for infringement of a design patent of minor or inconsequential value to that product is potentially impermissible under this jurisprudence, and may render § 289’s application unconstitutional in many cases should the Federal Circuit’s interpretation stand. This Court has often sought to construe statutes to avoid serious doubts as to their constitutionality where such statutes permit alternative interpretations; it should again do so here.
Too often has the patent system been beleaguered by unbalanced rules that favor a small class of rightsholders at the expense of the public good and the constitutional mandate for that system. Too rarely does this Court receive a timely case allowing it to nip that imbalance in the bud, before the harm is done, simply by correcting a wayward construction of a patent statute. This is that timely case.
To prevent such harm from occurring, to protect the public interest, and to ensure that § 289 comports with the objects of the patent system, this Court should reverse.
