Here in California, the latest battle of the smartphone wars between Apple and Samsung before the U.S. Court of Appeals for the Federal Circuit is just the latest example of why our nation’s patent laws need reform. This highly public feud has increased the average consumer’s awareness of patents and their role. Washington has paid attention too, and California’s own Congressman Darrell Issa is settling in as Chairman of the House Judiciary subcommittee on intellectual property (IP) and technology issues. Rep. Issa has confirmed patent legislation is a top priority and he will play a key role in the bill that Congressman Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee, is expected to introduce in the coming weeks.
Why all the chatter about patents in the courts and Congress, you ask? Patents play a vital role protecting ideas; and these innovations fuel technologies and products we all use daily. Design patents, for instance, protect the ornamental design of something, and utility patents protect the function of a product. When a patent is alleged to have been violated, the patent holder can file an infringement lawsuit in court to protect their patent. Rapid advancements in technology are increasing the number of patents, and thus the opportunities for lawsuit abuse related to patents.
The Apple v. Samsung dispute is just the latest to highlight how badly the U.S. needs to reform its patent laws. Apple sued Samsung claiming the tech giant had infringed several of its design patents, including the rounded rectangle shape of the iPhone and the ornamental design of a screen of icons. According to current design patent law interpretations, Samsung could have been forced to pay Apple the total profits of all the infringing devices, regardless of the role the design patent(s) played in the smartphones’ sales success.
Apple and Samsung, two juggernaut companies, have the resources to fight expensive lawsuits, but a majority of smaller businesses don’t – and they especially do not have the financial resources to pay for total profits of an infringing design patent when it is only a part of an overall product. One example given in the December oral arguments in the Apple v. Samsung case equates the scenario to a cup holder in a vehicle. The shape of the cup holder and its function were not selling points of the car itself. But if the person with the cup holder design patent sues the car maker for infringement, the car maker could be forced to pay total profits for all vehicles sold with that cup holder.
This “loser pays total profits” scenario is damaging to the companies defending their IP, and leaves companies open to abusive lawsuits. Because of loopholes in patent laws, some companies have become “patent trolls,” buying or licensing patents and then aggressively pursuing licensing fees or filing infringement lawsuits against other companies. The high cost legal cost of defending these claims, as well as the potentially disastrous result of having to pay out all the profits for a product, leads many companies to simply settle an abusive patent lawsuit – saving their company a costly legal battle, but encouraging even more lawsuit abuse by the patent troll.
The situation is cumbersome and unfair. Patent law needs reform to prevent this sort of abuse of our lawsuit system.
As Congress re-enters the patent reform push, it needs to evaluate patent law, and make changes to it to stop the abuse of our lawsuit system. Rep. Issa is in a leading position to champion patent legislation and as one of his priorities, California Citizens Against Lawsuit Abuse urges him to be take action to stop lawsuit abuse by patent trolls in 2015.