By Harry C. Alford
In December, the U.S. Court of Appeals for the Federal Circuit heard arguments in the long- running patent war between Apple Inc. and Samsung Electronics Co. Ltd. over claims that the South Korean tech firm infringed upon Apple’s design patents. While that case has been broadly discussed, there is another case with the same parties that has garnered less attention but could have severe consequences. This time, Apple is claiming loss of market share and injury to its “reputation for innovation” – all because of Samsung’s alleged infringements.
For consumers, and particularly minorities, this case raises important questions of business competition, innovation, and social justice. That’s why the National Black Chamber of Commerce (NBCC) recently filed a brief in support of Samsung’s position. Patents serve a very useful purpose for protecting companies that innovate and invest in new technologies and products. But care should be taken to prevent a company from using its self-proclaimed “reputation for innovation” to “leverage” its patents for competitive gain far beyond what the intrinsic value of the patent warrants.
The dispute at hand concerns three utility patents held by Apple: 1) recognizing certain patterns in data such as phone numbers and email addresses and linking them to actions such as touch to dial; 2) “slide-to-unlock” to prevent accidental activation; and 3) automatically correcting spelling errors on the touchscreen. The courts awarded Apple $119 million plus supplemental damages for any future violations, and Apple sought a permanent injunction to bar Samsung entirely from using features of Samsung’s products found to infringe.
Injunction claims, as Apple is asserting, have traditionally been applied where reputational harm was caused by consumer confusion over a product. Apple claims that it will suffer irreparable harm if its patented features are included in the “products of a less prestigious competitor” – a reason in itself for skepticism of the accusing brand’s intentions. NBCC thinks it is fair to state that consumers rarely, if ever, confuse Samsung and Apple devices, and would certainly not mistake them based on the three features in question.
That leads us to the court stating that in order to “satisfy the irreparable harm factor in a patent infringement suit,” a patentee must establish a strong causal nexus between the irreparable harm and alleged infringement. The lower court rightfully rejected Apple’s argument that the mere potential for harm to its “reputation as an innovator” does not justify injunction against Samsung.
The causal nexus requirement should not be relaxed or much less abandoned simply because the patentee wishes to enjoin alleged infringing features rather than the entire products. In Apple’s case, there is no sufficient proof that the company’s reputation is being harmed because of Samsung’s alleged infringement on the particular patents in question. If the features are as minor as to not even drive demand for the products at issue, then there is absolutely no reason to suggest that these isolated features are so powerful as to harm Apple’s very reputation as an institution.
If Apple gets its way, industry leaders claiming the need to protect their own reputations would be able to force less-established competitors out of the market. This is particularly impactful to small and minority-owned businesses that already have lesser influence in the marketplace. The harm, if any, that high profile companies like Apple are suffering is from their competitors’ legitimate, non-infringing competition or outside sources all together.
Apple’s patents are meant to serve as only a small part of its own complex, multi-feature devices. When Samsung and other developers build products to compete, their devices will inevitably have many similarities. It is reasonably expected that new ideas are built upon existing frameworks. The addition of a few alleged infringements on a feature will not drive consumer’s assumptions about the innovativeness of the companies whose products they buy, and are therefore unlikely to lead to catastrophically harmful effects on a patentee’s reputation. But these types of injunction claims can cause damage to companies, especially smaller ones without a global reputation and capital to support lengthy legal disputes.
Many of the Black-owned businesses NBCC represents own patents, and many compete for business against others that own patents. Blacks today own only 5.5 percent of all American businesses and an even smaller – 4 percent – of high-tech businesses.
Black-owned businesses therefore rely on open competition in the technology sector, including the ability to at least compete on a level playing field with their more-established, better funded, patent-wielding rivals, in order to overcome these historic disparities.
The National Black Chamber of Commerce is concerned that industry leaders like Apple will misuse their patents, and their claims of needing to protect their reputations for “innovation,” to prohibit legitimate competition from less-established minority owned businesses. That’s bad not only for minority inclusion and our communities, but American business competitiveness overall.
Harry C. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce. Website: www.nationalbcc.org Email: email@example.com.