The Diminshing Value of “Small” Improvements

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U.S. Patent No. 7,469,381

In a previous post I discussed the problems with the Supreme Court’s Ebay v. Mercantile Exchange decision in the context of the denial of Apple’s preliminary injunction motion (Apple II), and namely my assertion that the nexus test between the claimed invention and sales based upon the inventive attribute should not be strictly applied.

Since then, the district court presiding over the Apple v. Samsung litigation also denied Apple’s request for a permanent injunction, which included additional patents that were deemed to be infringed by Samsung and lead to the 1 billion (yes, billion, with a “b”) dollar verdict.  As part of the court’s analysis, Judge Koh poured cold water on Apple’s claims that sales of iPhones were driven heavily by its design, stating:

But even if design was clearly a driving factor, it would not establish the required nexus.The design of the phones includes elements of all three design patents, as well as a whole host of unprotectable, unpatented features. Apple makes no attempt to prove that any more specific element of the iPhone’s design, let alone one covered by one of Apple’s design patents, actually drives consumer demand. The Federal Circuit made clear in  Apple II that customer demand for a general feature of the type covered by a patent was not sufficient; Apple must instead show that consumers buy the infringing product specifically because it is equipped with the patented feature.695 F.3d at 1376.

Apple v. Samsung, Order Denying Motion for Preliminary Injunction at page 8 (emphasis added).  There is no doubt that the district court’s analysis hues very closely to the intent of the Federal Circuit; however, what is also pronounced in the district court’s analysis is how inappropriate this standard is.  Under the rubric, almost any design patent that is component part of a larger system would not be entitled to an injunction without extraordinary evidence that it is the solely the patented feature that is driving consumer demand.  Consider where this may be a problem for design patent owners:

  • If the product is not being produced (Note: there are caveats in the caselaw for this situation, but their foundation may be shifting];
  • If the product has multiple patented design features that collectively define a design (as proffered by Apple);
  • If the product has a single design element, but that design element is amassed with one or more other unpatented design features;
  • If the design element is contained in a single device (think automobile headlight cover), but the device is contained in a larger product (e.g., car).

In each of the instances presented above, injunctive relief is difficult, if not impossible, to receive and the patentee would have to settle for monetary damages.  Admittedly, monetary damages, such as those granted in Apple’s case, may be sufficient (obviously Apple didn’t think so…); yet, it is bizarre that the courts (and the Supreme Court specifically) has essentially codified corporate march-in rights for patented technologies unless it can be shown that the patented concept has such “power” that it drives consumption of the product.  In the instant case, the district court has determined the license fee due to Apple and by not putting in place a permanent injunction, it has essentially dictated the terms of an agreement between the companies.

Interestingly, if Samsung were to continue to infringe, there would be a very strong argument that the case be deemed exceptional and that treble damages would be awarded.  Of course, this only increases the licensing fee and if Samsung finds it reasonable it will continue to infringe and just incorporate the cost into the device.

The rubric followed by the district court is even more problematic for utility patents.  Specifically, the district court stated that in order to receive an injunction, Apple would need to established that it’s ’381 patent was “necessary for the product to function, or a core technology of the product.”  This statement presents real problems for patentees: rarely, if ever, is a claimed invention “necessary for a product to function.”  Moreover, this presents some puzzling questions:

  1. What is the product? Is it the apparatus defined by the claims? Does it include those non-binding limitations presented in the preamble of a claim? If the novel feature is part of a larger system, is the product the entire system or merely the novel feature?
  2. What level of functionality is required? If the claimed invention is directed to a phone’s wireless connection, but the phone can still transmit data over its cellular connection, is the wireless connection necessary?  It is to certain wireless communications, but not to the phone as a whole.

These issues will likely be ferreted out in future decisions, but for now, this leaves patent practitioners and patentees in the dark as to how to draft claims to novel features of existing devices that would warrant injunctive relief.

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  1. […] Interestingly, the rule associated with whether an inventor could get an injunction, thereby stopping an infringer from continuing to infringe, has changed within the last five years.  In days past, an injunction was almost issued as a matter of course when infringement of a patent was found.  However, since the Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, this tradition has changed and injunctive relief is no longer a guarantee.  In fact, the Supreme Court’s ruling has opened the door for revising the standards for injunctive relief, which we are beginning to see in decisions from the Federal Circuit Court of Appeals (which hears all patent appeals).  Moreover, the Federal Circuit’s reasoning in these recent cases has been construed so as to even further limit the ability of patentees to obtain injunctions, which you can read more about in my previous post. […]

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