This has been a good year for the Texas technology industry. Houston boasts the second-highest rate of tech job growth over the past five years in the United States. Our universities are advancing in research and attracting the brightest, most innovative minds.
Meanwhile, the Texas court system is attracting patent infringement lawsuits like moths to a flame. More than 800 lawsuits were filed between April and June in the Eastern District of Texas — a haven for patent litigation. Unfortunately, a dispute in a higher court has the potential to bring a new type of trolling to the arena.
Design patents are the newest name in the patent infringement game. Apple and Samsung have litigated over design patents since 2011. One of the design patents at issue is the shape of a device. The problem with current interpretation of the law is that if the jury finds design patent infringement occurred, the jury must award to the patent holder the total profit the alleged infringer received from the sale of the product.
This interpretation is flawed because the success of a given device does not necessarily rest on a design element. Even if a company can prove that a design feature was not the main reason behind the success, current interpretation gives all the profits to the design patent holder.
The case illustrates that if a company such as Apple can convince a jury that a company such as Samsung infringed on a design patent, Samsung must pay Apple the total profit it made from the supposed infringing devices.
The saga continues as a federal district court recently ordered Samsung to pay $548 million in damages immediately rather than waiting out the appeals process.
Why should Texans care? Ongoing disputes around design patents and related litigation threaten our ingenuity as the tech sector expands. In 2014, Texas passed California as lead exporter of tech goods, with Houston adding 45,000 tech workers since 2010, the second-highest increase in the nation.
This progress is at risk if the courts fail to use the Apple-Samsung case as an opportunity to clarify design-patent infringement remedies.
Dell, HP, Google, Facebook and others echoed this alarm with the appeals court, stating that the “decision (to award the total profits immediately) will lead to absurd results and have a devastating impact on companies … who spend billions of dollars annually on research and development.”
We cannot afford to lose these huge investments, certainly not at the hands of lawsuit abuse.
An award of reasonable royalties is the standard for damages in all other areas of patent law; damage awards should reflect the actual value of the patented technology rather than be used to cripple competition.
Texas is already a happy hunting ground of patent trolling. If we are not careful, a flurry of design patent lawsuits could become another claim to shame.
A clarion call to Congress may be in order to stop the patent design lawsuit shakedown. All eyes will be on the Supreme Court later this year when Samsung appeals the federal district court’s dangerous decision.
Tony Bennett is president of the Texas Association of Manufacturers.
View this column as published in the San Antonio Express-News.