No. 15-777
`
`In the
`Supreme Court of the United States
`
`SAMSUNG ELECTRONICS CO., LTD.,
`
`v.
`
`APPLE INC.,
`
`Petitioner,
`
`Respondent.
`
`On Writ Of CertiOrari tO the United StateS COUrt
`Of appealS fOr the federal CirCUit
`
`BRIEF AMICUS CURIAE OF THE COMPUTER
`& COMMUNICATIONS INDUSTRY
`ASSOCIATION IN SUPPORT OF PETITIONER
`
`Matthew Levy
`Counsel of Record
`CoMputer & CoMMunICatIons
` Industry assoCIatIon
`900 17th Street NW, Suite 1100
`Washington, D.C. 20006
`
`(202) 783-0070
`
`mlevy@ccianet.org
`
`Counsel for Amicus Curiae
`
`June 8, 2016
`
`266213
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`
`
`In the
`Supreme Court of the United States
`
`SAMSUNG ELECTRONICS CO., LTD.,
`
`v.
`
`APPLE INC.,
`
`Petitioner,
`
`Respondent.
`
`On Writ Of CertiOrari tO the United StateS COUrt
`Of appealS fOr the federal CirCUit
`
`BRIEF AMICUS CURIAE OF THE COMPUTER
`& COMMUNICATIONS INDUSTRY
`ASSOCIATION IN SUPPORT OF PETITIONER
`
`Matthew Levy
`Counsel of Record
`CoMputer & CoMMunICatIons
` Industry assoCIatIon
`900 17th Street NW, Suite 1100
`Washington, D.C. 20006
`
`(202) 783-0070
`
`mlevy@ccianet.org
`
`Counsel for Amicus Curiae
`
`June 8, 2016
`
`266213
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`
`
`i
`
`TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . i
`
`TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . ii
`
`INTEREST OF AMICUS CURIAE . . . . . . . . . . . . . . . .1
`
`RELEVANT CONSTITUTIONAL PROVISIONS
`AND STATUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
`
`INTRODUCTION AND SUMMARY OF
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
`
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`I. The Federal Circuit’s Interpretation
`of Section 289 Expands the “Exclusive
`Right” Described in the Progress Clause
`to Far More Than the Inventor Invented . . . . . .5
`
`
`
`II. T h e C o n s t i t u t i o n a l i t y C o n c e r n s
`With Respect to Section 289 Can Be
`Avoided By Not Limiting “Article of
` Manufacture” to Goods Sold to the Public. . . . . .9
`
`III. Patent Assertion Entities Will Use The
`Federal Circuit’s Interpretation of Section
`289 to Increase Their Leverage . . . . . . . . . . . . .13
`
`
`
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
`
`TABLE OF CONTENTS
`
`Page
`
`
`
`ii
`
`CASES
`
`Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
`
`489 U.S. 141 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
`
`Graham v. John Deere Co.,
`
`383 U.S. 1 (1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
`
`Jones v. United States,
`
`529 U.S. 848 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`Pacific Coast Marine Windshields Ltd. v.
`Malibu Boats, LLC,
` No. 6:12-cv-00033 (M.D. Fla. Aug. 22, 2014). . . . . . . .3
`
`Tidewater Oil Company v. United States,
`
`171 U.S. 210 (1898) . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
`
`United States ex rel. Attorney General v.
`Delaware & Hudson Co.,
`213 U.S. 366 (1909) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`
`
`STATUTES
`
`17 U.S.C. § 1301 . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
`
`17 U.S.C. § 1309 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
`
`17 U.S.C. §§ 1310–20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
`
`17 U.S.C. § 1329 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
`
`TABLE OF CITED AUTHORITIES
`
`Page
`
`
`
`iii
`
`35 U.S.C. § 289. . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
`
`OTHER AUTHORITIES
`
`AIPLA, Report of the Economic Survey 2013
`
`(July 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`Christopher Manasians, Where are the iPhone,
`iPad and Mac designed, made and assembled?
`A comprehensive breakdown of Apple’s
`product supply chain, MacWorld (Apr. 18
`2016), http://www.macworld.co.uk/feature/
`apple/are-apple-products-truly-designed-in-
`california-made-in-china-iphonese-3633832/ . . . . . .13
`
`
`
`H.R. rep. no. 105-436 (1998) . . . . . . . . . . . . . . . . . . . .8, 11
`
`Letter from Samuel K. Giles, Managing Director,
`Intellectual Capital Consulting, LLC, to
`Gregory Lee, Samsung Telecommunications
`A merica, LLC (June 2, 2015), https://
`trollingeffects.org/demand/intellectual-
`capital-consulting-ltd-2015-06-02 . . . . . . . . . . . . . . .15
`
`
`
`RPX, 2015 Report: NPE Litigation, Patent
`Ma rk e tpl a c e , a n d NPE Cos t (2 016),
`https: // w w w.r pxcor p.com / w p - cont ent /
`uploads/sites/2/2016/05/RPX-2015-Report-
`NPE-Litigation_ Pat ent -Ma rketplace _
` Cost_High-level_ZFinal.pdf. . . . . . . . . . . . . . . . . . . .14
`
`Cited Authorities
`
`Page
`
`
`
`iv
`
`Sa ra h Bu rst ei n, Th e Pat ent ed Desi gn,
`83 tenn. L. rev. 161 (2015). . . . . . . . . . . . . . . . . . . . .10
`
`
`CONSTITUTIONAl PROvISIONS
`
`u.s. Const., art. I, § 8, cl. 8 . . . . . . . . . . . . . . 1, 2, 5, 8
`
`Cited Authorities
`
`Page
`
`
`
`1
`
`INTEREST OF AMICUS CURIAE1
`
`The Computer & Communications Industr y
`Association (“CCIA”) is an international, nonprofit
`association representing a broad cross section of computer,
`communications and Internet industry firms employing
`more than 750,000 workers and generating annual
`revenues in excess of $540 billion.2
`
`RElEvANT CONSTITUTIONAl
`PROvISIONS AND STATUTES
`
`To promote the Progress of Science and useful
`Arts, by securing for limited Times to Authors
`and Inventors the exclusive Right to their
`respective Writings and Discoveries.
`
`u.s. Const., art. I, § 8, cl. 8 (“Progress Clause”).
`
`Whoever during the term of a patent for a
`design, without license of the owner,
`
` (1) applies the patented design, or any
`colorable imitation thereof, to any article
`of manufacture for the purpose of sale, or
`
`1. No counsel for any party authored this brief in whole
`or part; no such party or counsel made a monetary contribution
`intended to fund its preparation or submission; and no person other
`than amicus made such a contribution. All parties have consented
`to the filing of this brief.
`
`2. A list of CCIA members is available at http://www.ccianet.
`org/members. Petitioner Samsung is a CCIA member, but took
`no part in the preparation of this brief.
`
`
`
`2
`
` (2) sells or exposes for sale any article
`of manufacture to which such design or
`colorable imitation has been applied shall
`be liable to the owner to the extent of his
`total profit, but
`
` not less than $250, recoverable in any United
`States district court having jurisdiction of
`the parties.
`
`Nothing in this section shall prevent, lessen, or
`impeach any other remedy which an owner of
`an infringed patent has under the provisions
`of this title, but he shall not twice recover the
`profit made from the infringement.
`
`35 U.S.C. § 289.
`
`INTRODUCTION AND SUMMARY OF ARGUMENT
`
`The Court should vacate the decision below and
`instruct the Federal Circuit to apply 35 U.S.C. § 289
`correctly.
`
`The Federal Circuit’s decision with respect to
`design patent damages raises constitutional concerns,
`is a misreading of the statute, and is dangerous to the
`technology industry. The decision below interprets Section
`289 to expand the exclusive right granted by a design
`patent well beyond the powers granted to Congress by the
`Progress Clause. The Progress Clause grants Congress
`the power to give an inventor “the exclusive right” to her
`“discoveries.”
`
`
`
`3
`
`By interpreting the term “article of manufacture” to
`apply only to articles sold to “ordinary purchasers,” the
`Federal Circuit’s decision gives the inventor of a fairly
`narrow “discovery” the right to the profits made on a
`complex device that is the result of literally thousands
`of separate, patented, innovations. This interpretation
`of the statute effectively grants exclusive rights over a
`device covered by tens of thousands of utility patents, even
`though the “discovery” covered by the patent-in-suit is an
`ornamental feature.
`
`The constitutionality problem is avoidable by
`interpreting the statute more naturally: the term “article
`of manufacture” as used in 35 U.S.C. § 289 must refer
`to the smallest article to which the patented design is
`applied, not a larger device that incorporates the article
`as one of its components. Were it not, a design patent
`covering a windshield for a boat could be liable for profits
`on the entire boat. See Pacific Coast Marine Windshields
`Ltd. v. Malibu Boats, LLC, No. 6:12-cv-00033, slip op. at
`19–22 (M.D. Fla. Aug. 22, 2014).
`
`The Federal Circuit misinterpreted “article of
`manufacture” to mean the “product of manufacture,” i.e.,
`the product sold to customers. But Congress does not use
`those terms synonymously. In the Vessel Hull Design
`Protection Act, which is based in part on design patent
`law, Congress used the terms distinctly. Congress never
`intended the “article of manufacture” to automatically
`swallow the end-good in which the article incorporating
`an infringing design is included.
`
`If the decision below is allowed to stand, design patent
`infringement will become a new tool for patent assertion
`
`
`
`4
`
`entities to use to gain leverage. Indeed, within a few weeks
`of the Federal Circuit’s decision, a patent assertion entity
`used the decision to threaten Samsung itself with design
`patent infringement.
`
`This issue is of great concern to CCIA’s member
`companies, many of whom sell or market complex
`electronic devices that incorporate many different
`designs. If the Federal Circuit’s interpretation of Section
`289 is affirmed, CCIA’s member companies could be faced
`with potentially massive exposure to attack using design
`patents. Such a rule would disproportionately penalize
`complex integrators, discouraging enterprises from
`bringing complex products and services to market.
`
`ARGUMENT
`
`The decision below interprets the term “article of
`manufacture” in Section 289 to be limited to articles sold
`to “ordinary purchasers.” See Pet. App. 29a. The Federal
`Circuit’s interpretation of 35 U.S.C. § 289 raises serious
`constitutional concerns and has the potential to create
`large problems for the technology industry. Moreover,
`this interpretation is inconsistent with Congress’s usage
`of the term “article of manufacture” in a related statute,
`the Vessel Hull Design Protection Act.
`
`The sheer number of potential design patents that
`could apply to a single smartphone exposes manufacturers
`to grossly unjust liability. For example, Apple has about
`200 active design patents entitled “Electronic device.” If
`Samsung were sued on each of those patents by separate
`entities, Samsung’s potential damages would be many
`billions of dollars.
`
`
`
`5
`
`If the Federal Circuit’s interpretation of Section 289
`is allowed, the result would be damaging to the entire
`smartphone industry, as well as manufacturing of other
`electronic devices. Manufacturers would have to account
`for the risk of liability for design patent infringement,
`which could result in the loss of the entire profit for a
`product line several times over. This increased risk would
`increase costs and likely reduce the number of products
`available to the public.
`
`Accordingly, CCIA respectfully requests that this
`Court vacate the Federal Circuit’s decision with respect
`to design patent damages and provide clarification on the
`proper application of 35 U.S.C. § 289.
`
`I. The Federal Circuit’s Interpretation of Section 289
`Expands the “Exclusive Right” Described in the
`Progress Clause to Far More Than the Inventor
`Invented
`
`The interpretation of Section 289 used by the Federal
`Circuit raises constitutional concerns because it grants
`a design patent an effective monopoly over an entire
`smartphone based solely on certain ornamental features.
`Considering that nearly all of the value of a device like
`a smartphone comes from its functionality, this breadth
`of scope would transform a design patent into a sort of
`super-utility patent, allowing a design patentee to control
`an industry in a way that would be nearly impossible with
`utility patents.
`
`This expansion in scope of a design patent grants an
`inventor exclusive right over far more than she invented.
`This is not simply a question of where exactly to draw
`
`
`
`6
`
`boundaries over patent scope. For example, Apple’s
`patents specifically disclaim the part of the device
`containing all of the inner workings. That is, the drawings
`claim only the front face of the device, and the rest of the
`device is shown in dotted lines, which indicate unclaimed
`subject matter, as shown in Figures 3 and 7 from U.S.
`Patent No. D593,087:
`
`U.S. Patent No. D618,677 is similar:
`
`
`
`7
`
`And U.S. Patent No. D604,305 shows only a screen without
`any device:
`
`Despite this express disclaiming of scope, the
`Federal Circuit granted damages based on the profits of
`entire Samsung smartphones. These are devices whose
`technology is covered by literally tens of thousands of
`patents and many thousands of innovations that are in
`the public domain. Yet a single design patent grants
`Apple, effectively, the exclusive right to those devices,
`even though Apple admits in its patents that they do not
`include the innovations inside the device.
`
`If infringing a single design patent can result in the
`loss of all profits made from a complex device, many (if
`not most) companies will avoid the risk of infringement
`altogether by staying out of the market. Accordingly, the
`result is the same as if the design patent owner held all
`of the patents for the entire device: new products and
`innovations are blocked from the market. While the design
`patent scope may not be coextensive with the scope of the
`utility patents covering the relevant device, the Federal
`
`
`
`8
`
`Circuit’s interpretation of Section 289 certainly increases
`design patent scope far beyond just the actual patented
`design. This expansion of scope is beyond Congress’s
`power under the Progress Clause.
`
`The Congress in the exercise of the patent
`power may not overreach the restraints
`imposed by the stated constitutional purpose.
`Nor may it enlarge the patent monopoly without
`regard to the innovation, advancement or social
`benefit gained thereby. Moreover, Congress
`may not authorize the issuance of patents whose
`effects are to remove existent knowledge from
`the public domain, or to restrict free access to
`materials already available.
`
`Graham v. John Deere Co., 383 U.S. 1, 5–6 (1966). It is
`undeniable that the ornamental features described in
`Apple’s design patents contribute a tiny fraction of the
`innovations contained in a smartphone.
`
`While Congress has broad authority to legislate with
`respect to patents, it is not allowed to remove knowledge
`from the public domain or grant a monopoly to an inventor
`far beyond what the inventor has contributed to the public.
`“[T]he [Patent] Clause contains both a grant of power
`and certain limitations upon the exercise of that power.”
`Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S.
`141, 146 (1989).3 The Federal Circuit’s interpretation of
`Section 289, however, impermissibly expands Congress’s
`power beyond its Constitutional grant of authority.
`
`3. The Vessel Hull Design Protection Act was enacted in part
`to respond to the holding in Bonito Boats that states could not
`enact vessel hull protection. H.R. rep. no. 105-436, at 12–13 (1998).
`
`
`
`9
`
`II. The Constitutionality Concerns With Respect
`to Section 289 Can Be Avoided By Not limiting
`“Article of Manufacture” to Goods Sold to the
`Public
`
`The Federal Circuit created a constitutional problem,
`discussed above, supra 5, by incorrectly limiting the term
`“article of manufacture” to articles sold to “ordinary
`purchasers.” See Pet. App. 29a. This Court, however,
`can avoid that constitutional problem by interpreting
`“article of manufacture” to mean merely an article that is
`manufactured, i.e., by limiting design patent scope to the
`smallest physical article (e.g., the chassis of a smartphone)
`to which the patented design is applied. “[W]here a statute
`is susceptible of two constructions, by one of which grave
`and doubtful constitutional questions arise and by the
`other of which such questions are avoided, our duty is to
`adopt the latter.” Jones v. United States, 529 U.S. 848, 857
`(2000) (quoting United States ex rel. Attorney General v.
`Delaware & Hudson Co., 213 U.S. 366, 408 (1909)).
`
`The term “article of manufacture” means simply, an
`article that is manufactured. As this Court noted more
`than a century ago in a different context:
`
`The primary meaning of the word “manufacture”
`is something made by hand, as distinguished
`from a natural growth, but, as machinery
`has largely supplanted this primitive method,
`the word is now ordinarily used to denote an
`article upon the material of which labor has
`been expended to make the finished product.
`Ordinarily the article so manufactured takes
`a different form, or at least subserves a
`
`
`
`10
`
`different purpose, from the original materials,
`and usually it is given a different name. Raw
`materials may be, and often are, subjected
`to successive processes of manufacture, each
`one of which is complete in itself, but several
`of which may be required to make the final
`product. Thus, logs are first manufactured into
`boards, planks, joists, scantlings, etc., and then
`by entirely different processes are fashioned
`into boxes, furniture, doors, window sashes,
`trimmings, and a thousand and one articles
`manufactured wholly or in part of wood. The
`steel spring of a watch is made ultimately from
`iron ore, but, by a large number of processes or
`transformations, each successive step in which
`is a distinct process of manufacture and for
`which the articles so manufactured receives a
`different name.
`
`Tidewater Oil Company v. United States, 171 U.S. 210,
`216 (1898). Nothing in the legislative history of 35 U.S.C.
`§ 289 or the rest of the Patent Act suggests that “article
`of manufacture” should mean anything other than the
`plain meaning of the term.
`
`At least one commentator has expressly argued that
`the term “article of manufacture” should be considered
`as distinct from the term “product,” which she defines
`as “something sold by an enterprise to its customers.”
`Sarah Burstein, The Patented Design, 83 tenn. L. rev.
`161, 208 (2015).
`
`Under this definition, “product” would not
`be a synonym for “article of manufacture.”
`
`
`
`11
`
`For example, naturally-occurring items such
`as berries could be sold as a “product” but
`they would not fall under any reasonable
`interpretation of the statutory phrase “article
`of manufacture.” And multiple articles of
`manufacture can be sold as a single product—
`for example, a set of flatware containing a
`spoon, a knife, and a fork.
`
`Id. It is simply common sense that “article of manufacture”
`is not limited to “products.”
`
`The Vessel Hull Design Protection Act (“VHDPA”), a
`sui generis form of protection for boat hull designs, also
`provides strong evidence that an “article of manufacture”
`is not restricted to a product sold to customers. The
`VHDPA was enacted to fill a particular gap in intellectual
`property protection for the industrial designs of boat hulls.
`Design patents can be difficult to obtain for boat hull
`designs, because ornamental features may be considered
`“dictated by functional considerations.” H.R. rep. no. 105-
`436, at 11 (1998). Because a boat hull design is typically
`functional (e.g., it may improve boat performance), it can
`be ineligible for protection by copyright. Id. The VHDPA
`offers protection of both ornamental and functional
`features of hull designs. See 17 U.S.C. §§ 1301 et seq. Hull
`designs are registered for protection with the Copyright
`Office and are not examined as design patents are. See
`17 U.S.C. §§ 1310–20.
`
`The VHDPA expressly distinguishes between a
`“product of manufacture” (i.e., a boat) and an “infringing
`article” (i.e., a vessel hull): “A person who incorporates
`into that person’s product of manufacture an infringing
`
`
`
`12
`
`article acquired from others in the ordinary course of
`business . . .” 17 U.S.C. § 1309(d) (emphases added). An
`“infringing article” is “any article the design of which has
`been copied from a design protected under this chapter,
`without the consent of the owner of the protected design.”
`17 U.S.C. § 1309(e) (emphasis added). That is, an “article”
`is the object that infringes (in this case, a boat hull), but a
`“product of manufacture” is the entire consumer product
`incorporating that infringing article.
`
`The VHDPA coordinates its protection with design
`patents to ensure that no one receives both a VHDPA
`registration and a design patent for the same boat hull:
`“The issuance of a design patent under title 35, United
`States Code, for an original design for an article of
`manufacture shall terminate any protection of the
`original design under this chapter.” 17 U.S.C. § 1329
`(emphasis added). The “article of manufacture” referred to
`in Section 1329 of the VHDPA is a boat hull, not an entire
`boat sold to ordinary consumers. See 17 U.S.C. § 1301(a)
`(2) (“The design of a vessel hull, deck, or combination of
`a hull and deck, including a plug or mold, is subject to
`protection under this chapter. . .”). Given that Congress
`deliberately intended to coordinate design patents with
`VHDPA protection for boat hulls, it must have intended the
`term “article of manufacture” to take the same meaning
`in both statutes.4
`
`4. Apple complains that “the 1887 Congress’s intent [cannot] be
`discerned from a very different (and ‘sui generis’) law enacted well over a
`century later.” Resp. Br. at 29 n. 12. This is a red herring. Congress made
`clear its current understanding of the term “article of manufacture,” as
`used in both the VHDPA and the Patent Act. The two acts are expressly
`linked by 17 U.S.C. § 1329; Congress must have intended the term
`“article of manufacture” to have the same meaning in both statutes.
`
`
`
`13
`
`Moreover, the designs at issue in two of the patents-in-
`suit, the ’087 and ’677 patents, are for part of the “chassis” of
`an electronic device. Apple actually purchases the chassis
`from its suppliers. Christopher Manasians, Where are the
`iPhone, iPad and Mac designed, made and assembled?
`A comprehensive breakdown of Apple’s product supply
`chain, MacWorld (Apr. 18 2016), http://www.macworld.
`co.uk/feature/apple/are-apple-products-truly-designed-
`in-california-made-in-china-iphonese-3633832/. That is,
`the chassis is an article of manufacture. Indeed, it is the
`“article of manufacture” that should have been used in
`assessing damages. The screen depicted in the ’305 patent
`is also a separate article of manufacture.
`
`Limiting “article of manufacture” to its plain meaning
`avoids any constitutional concerns. An inventor would be
`limited to damages based on the article actually depicted
`in his or her design patent. That is completely consistent
`with the power to “secur[e] for limited Times to …
`Inventors the exclusive Right to their … Discoveries.”
`
`III. Patent Assertion Entities Will Use The Federal
`Circuit’s Interpretation of Section 289 to Increase
`Their leverage
`
`This case is important to the thousands of businesses
`that are the targets of patent assertion entities (“PAEs”),
`also called patent monetization entities. PAEs are
`companies whose business is licensing and enforcing
`patents, typically using purchased patents. PAEs cost
`the U.S. economy billions of dollars per year, targeting
`businesses of all sizes and in a wide variety of industries.
`PAEs were responsible for more than 60% of patent
`
`
`
`14
`
`litigations in 2015,5 and 60% of the defendants were small
`businesses (i.e., businesses with less than $100 million in
`annual revenue).6
`
`The PAE business model relies on the difficulty of
`proving patents invalid. PAEs are profitable because
`accused infringers have a strong incentive to settle.
`It is extremely expensive to defend against a patent
`infringement claim, in large part because there are few
`ways to dismiss even a weak claim on the pleadings.
`Accordingly, nearly every such case will require discovery,
`which costs hundreds of thousands, or even millions
`of dollars. In 2012, the mean cost through the end of
`discovery for cases filed by PAEs worth less than $1
`million was $516,000; for such cases with $1 to 10 million
`at risk, that figure was $998,000; and for cases with $10
`to $25 million at risk, the mean cost through the end of
`discovery was over $1.7 million.7
`
`Because smartphones (and similarly complex
`electronic devices) provide enormous functionality,
`the value of a smartphone is much greater than any
`ornamental feature. Few would buy an empty case that
`looked like a smartphone but did nothing.
`
`5. RPX, 2015 Report: NPE Litigation, Patent Marketplace,
`and NPE Cost 7 (2016), https://www.rpxcorp.com/wp-content/
`uploads/sites/2/2016/05/RPX-2015-Report-NPE-Litigation_
`Patent-Marketplace_Cost_High-level_ZFinal.pdf.
`
`6. Id. at 30.
`
`7. AIPLA, Report of the Economic Survey 2013, at I-145
`(July 2013), http://library.constantcontact.com/download/
`get/file/1109295819134-177/AIPLA+2013+Survey _Press_
`Summary+pages.pdf.
`
`
`
`15
`
`Yet, the Federal Circuit’s interpretation of Section 289
`allows a design patent owner to capture all of the value
`of the functions of a smartphone in addition to any value
`attributable to the infringed design. Such patent owners
`include PAEs.
`
`Patent assertion entities have already begun using
`the Federal Circuit’s decision below as leverage. A PAE
`called Intellectual Capital Consulting, based in Colorado,
`recently threatened Samsung with damages for design
`patent infringement:
`
`Moreover, as you may be aware, Apple Inc. v.
`Samsung Electronics, Ltd. (Fed. Cir. 2015)
`further solidified damages for design patent
`infringement. 35 U.S.C. § 289 explicitly
`authorizes the award of total profits from the
`article of manufacture bearing the patented
`design. That is, unlicensed sales . . . will
`dramatically increase damages liability.
`
`Letter from Samuel K. Giles, Managing Director,
`Intellectual Capital Consulting, LLC, to Gregory Lee,
`Samsung Telecommunications America, LLC (June 2,
`2015), https://trollingeffects.org/demand/intellectual-
`capital-consulting-ltd-2015-06-02. This letter was sent
`less than one month after the Federal Circuit’s decision,
`which issued on May 18, 2015.
`
`If PAEs are allowed to threaten operating companies
`with the loss of the total profits made on an accused
`product, few companies will be willing to take the risk of
`fighting back. And they will settle for substantially more
`than they otherwise might have. PAEs do not need more
`
`
`
`16
`
`tools that help extract money from operating companies;
`the Federal Circuit’s decision in this case, however, gives
`them such tools.
`
`CONClUSION
`
`For the foregoing reasons, amicus CCIA requests
`that this Court vacate the opinion below and remand with
`further instructions.
`
`
`
`Respectfully submitted,
`
`Matthew Levy
`Counsel of Record
`CoMputer & CoMMunICatIons
` Industry assoCIatIon
`900 17th Street NW, Suite 1100
`Washington, D.C. 20006
`
`(202) 783-0070
`
`mlevy@ccianet.org
`
`Counsel for Amicus Curiae
`
`June 8, 2016
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