Prof. Contreras Cited in Apple v. Samsung Being Eyed in D.C.

By Michelle Quinn, via Politico

For Washington, there’s a more complex issue at the heart of the trial over whether the South Korean electronics maker violated Apple’s patents — Samsung contends it did not — in making rival products that now outsell Apple’s devices in some markets. Some lawmakers are starting to consider whether Congress needs to do more to protect American innovation from being copied around the world.

“I think this obviously is something [the Hill] will watch very closely,” said Chris Israel, a lobbyist who is partner at the American Continental Group. Even though the ink is barely dry on the America Invents Act, the first patent reform from Congress in 60 years, “Now they’re seeing this next set of issues come across their desks.”

Nearly a year after Congress passed patent reform, lawmakers are watching as the battle over smartphones and tablets has turned into a legal war on four continents. Apple v. Samsung marks the first time Apple will make its claims to a U.S. jury. The case raises questions about whether the American intellectual property system, at the ready to fight counterfeiters and software pirates, is able to help a company that makes big bets on new products — “heart transplant moments” is how Apple describes it — only to see its ideas deployed more cheaply by rivals.

“This may be one of the biggest stages yet for airing issues that policymakers are recognizing they need to address,” a Senate Judiciary staffer, who declined to be quoted by name, told POLITICO.

Apple has some new ammunition to show it’s been hurt by Samsung’s actions.

Last week, Samsung reported record quarterly profits, while Apple recently missed Wall Street earnings estimates. Technology research firms IDC, meanwhile, reported that Samsung broadened its smartphone lead against Apple, with 32.6 percent of market share, compared to Apple’s 16.9 percent. In the last quarter, Samsung reportedly shipped twice as many smartphones as Apple, making it the top phone seller in the world.

Those kinds of numbers speak loudly in Washington.

“People thought the America Invents Act would fix the patent system to some degree,” said George Contreras, a professor of intellectual property law at American University’s Washington College of Law. Now people are asking whether “it did enough to address the perceived problems in the patent issue.”

In recent hearings on the Hill, congressional committees have tackled some of the most pressing questions in the tech industry, such as whether it is appropriate for patent-holders who promised to make their technology available as part of industry standards to ever ask courts or the International Trade Commission to block the sale of phones, tablets, game consoles and other products.

Others see the court system as having been hijacked by companies like Apple and others that use patents to keep competition at bay. 

Judges appear to be exasperated everywhere. A federal judge recently called into question the entire legal process used by technology competitors when he threw out a patent case involving Apple and Google’s Motorola Mobility. In a piece in the Atlantic titled "Why There Are Too Many Patents In America,” U.S. Court of Appeals Judge Richard Posner wrote that "most industries could get along fine without patent protection."

That is not the view of Apple and Samsung as they face off in San Jose, Calif..

Already, Apple has achieved a significant moral victory in the case — the temporary blocking of some Samsung products from store shelves. U.S. District Court Judge Lucy Koh issued a preliminary injunction stopping the sale of Samsung’s Galaxy tablets and Galaxy Nexus smartphones, both powered by Google's Android operating system.

A federal appeals court has since lifted the phone ban.

This isn’t only a case between a Silicon Valley company and a foreign firm either; the company supplying the software operating system to power Samsung’s popular devices is none other than Google.

The trial gives the public and policymakers a chance to “see the ridiculousness of the system,” said Daniel O’Connor, senior director public policy and government affairs at the Computer & Communications Industry Association.  “They are going to ask, ‘Why can't I buy this phone?’”

Most patent cases are settled in mediation or negotiations, with each side making patent claims to neutralize the other’s case and lower the final price of damages and royalties. The fact that this case is going to a jury — a wild card for all sides — signals a broken patent system, some say. 

“A lot of this is dead weight economic loss,” said the Senate staffer. “It's disconcerting. You want to protect rights but you obviously don't want too much in the way of resources consumed in battles and disputes that aren't contributing in a meaningful way to economic development.”

So far, each side has found mixed reception worldwide to its arguments. In Europe, some Samsung Galaxy tablets were recently banned from sale because they were deemed to violate Apple’s design patents. Other Samsung tablets were deemed not to infringe. The European Commission is also looking at whether Samsung is using its patents essential to wireless communications to stifle competition.

In the United Kingdom, a judge said Samsung’s products were not as “cool” as Apple’s, and ordered Apple to take out ads saying that Samsung didn’t copy the iPad. Apple succeeded in getting that order delayed. In Australia, the judge called the Apple Samsung dispute over Samsung’s wireless transmission technology “ridiculous” and asked why the issues were not handled with mediation.

In Apple v. Samsung, the iPhone and iPad design — the curved edges, the way to scroll and the tap to zoom — are among the patents at issue.

Apple has referred to moments when it introduces a new product like the iPhone and iPad and kills its old product line as “heart transplant” moments. That risk-taking is undercut, Apple argues, when companies like Samsung infringe its design and utility patents.

Apple, in its trial brief, said that it would present evidence from Samsung documents “that show consumers returned the Galaxy Tab 10.1 to Best Buy because they mistakenly thought that they were buying an Apple product.” Apple called Samsung’s counterclaims an effort to “deflect attention from its own copying.”

Apple seeks both $2.525 billion in damages and a permanent ban on the sales of the Samsung Galaxy tablet and the Samsung smartphone.

For its part, Samsung describes Apple as “serially” suing in its worldwide quest to “stifle legitimate competition and limit consumer choice to maintain its historically exorbitant profits.” Samsung, in its claim, has accused Apple of violating its patents, including patents that are part of industry standards.

The company denies ripping off the iPhone and iPad and says if anything, aspects of Apple’s iPhone design were derived from Sony, LG Prada and Palm.   

“Apple is attempting to stifle legitimate competition and innovation in the mobile industry by bringing litigation against android competitors, including Samsung,” a Samsung spokesman said.  “Apple is not only trying to limit choices for consumers, it is also seeking a free ride to use Samsung’s patents.”  

Design patents are often viewed as being very narrow and have not been tested much in U.S. court system, particularly when it comes to technology firms. It will be ironic if one of Apple’s design patents turns out to be the killer patent, observers say.

Carl Howe, vice president of research at the Yankee Group, said the worldwide fight over intellectual property is a clash of differing views about the idea of copying.

“How unique does the U.S. want to be in regards to IP?” he said. “The biggest challenge to the whole system is speed. If you want to litigate patents, you have to do it faster. You would like to have these patents decided before the technology is obsolete.”

Permalink :