From Cell Phone to Solar Cell

06 Jul 2016

Five practical patenting lessons from the Apple-Samsung patent war

With the negotiation of the Paris Agreement on Climate Change, the passage of new U.S. tax credits for renewables, and growing customer acceptance, renewable and clean-energy businesses are poised for growth. As in other industries that have recently undergone rapid expansion, renewable energy companies may try to use patents and other intellectual property (IP) rights to increase their share of this expanding market.

Patent filings in the renewable energy sector have grown rapidly in recent years. A 2014 study by the World Intellectual Property Organization (WIPO) reported since 2006, patenting activity has increased across the renewable technology sector. Solar photovoltaic, solar thermal, and wind energy all had annual patent growth rates above 20% from 2006-2011, compared to a 6% growth rate for global patent filings. Data from the U.S. Patent and Trademark Office show more than three times as many patents issued for thermoelectric and photoelectric energy generation in 2015 than in 2011.  

As illustrated by more than five years of IP litigation between Apple and Samsung over smart-phone technology since 2011, other industries that have undergone rapid growth have experienced periods of patent filings, followed by IP litigation. The Apple-Samsung litigation provides valuable lessons for those expecting growth, and IP disputes, in the renewable energy space. Five of those lessons are worth exploring.

Build a diversified IP portfolio

In its 2011 lawsuit, Apple alleged infringement of utility patents, design patents, and trade dress. These three forms of IP each protect different product aspects. Utility patents—the IP rights most think of upon hearing the word “patent”— protect the technical design of a product or the way of using a product. Design patents protect the ornamental aspects of a utilitarian product, such as the rounded corners of the iPhone and the look-and-feel of its graphical user interface (GUI). Trade dress, a form of trademark protection, can protect aspects of a product’s shape or packaging that consumers have come to associate with the product’s source. Other forms of IP protection, such as trade secrets (secret information providing a competitive advantage), trademarks (the name and logo associated with a manufacturer or product), and copyrights (artistic expression, such as photographs, songs, or even user manuals) can also have a place in a company’s IP quiver. Asserting a variety IP rights may increase the IP owner’s odds of recovery.

A manufacturer of photovoltaic cells, for example, may want to seek utility patents on the chemical compositions in its cells, use design patents to cover the shape of its roof-top mounting brackets, adopt distinctive trade dress for its packaging and users manuals, and to maintain aspects of its manufacturing process as trade secrets.  

Protecting a range of IP assets also positions a business for future collaboration, sale, or licensing. Patents are regularly licensed or sold. Licenses to trade secrets and know-how may extend beyond the expiration of related patents. Further, trademarks and trade dress associated with a business may have unique value to potential purchasers or collaborators.

Use design patents to protect the product

Apple’s design patents were aimed at the iPhone’s shape, as well as graphical elements that users interfaced with when using their phones. Jurors could easily assess infringement of these features, as they related to the day-to-day interaction consumers have with the product.  

Pursuing design patents typically costs a fraction of the costs of preparing and filing utility patent applications. Using design patents to cover, for example, graphical user interfaces, the look and feel of metering and control software, the aesthetic aspects of physical products, and the shape of common replacement parts allows manufacturers to economically protect customer-facing features.  

Design patents were responsible for nearly $400 million dollars in damages that Apple recovered through its suit against Samsung—unlike utility patents, the owner of a design patent may recover an infringing party’s total profit. Samsung has appealed this aspect of the decision to the U.S. Supreme Court, meaning the method of calculating damages for design patents may change. But even if the appeal limits the recovery of an infringer’s profits, design patents will remain a relatively inexpensive way to protect aspects of the product design and user interfaces.

Defend against from attacks from competitors

After being sued by Apple, Samsung retaliated by asserting its own patents against Apple. Samsung counterclaimed in the suit brought by Apple, filed a complaint with the U.S. International Trade Commission, and took the fight to courts outside the U.S. Developing and maintaining IP assets, even if the business does not intend to assert or license them, can provide defensive cover in future disputes. If a competitor claims infringement of its rights, the business can use its own IP to reach an acceptable cross-licensing solution or, if necessary, assert its own IP against the competitor. Further, the business should consider where disputes are likely to arise and seek protection for at least select IP assets in those markets. A handful of U.S. patents may not be enough to protect a company engaged in sales activity around the world, especially where, as in the renewables space, others in an industry are expanding their own patenting activities.     

Standards-setting organizations may limit patent rights

Standards setting organizations, such as, IEEE, UL, or ETSI, determine standards used for electronic equipment to operate, connect to utility grids, and communicate. Many of these organizations require members involved in standards-setting activities to license their patents on “fair, reasonable, and non-discriminatory (FRAND)” or “reasonable and non-discriminatory (RAND)” terms. FRAND/RAND obligations may limit a patent owner’s ability to seek injunctive relief (a court order prohibiting a competitor from infringing a patent) or the amount of damages available in litigation. Samsung, for example, was successful in its bid to convince the International Trade Commission (ITC) that Apple infringed Samsung’s patents. But the U.S. Trade Representative, citing Samsung’s obligation to license the patents on FRAND terms, denied injunctive relief. Businesses seeking to license or assert their patents should consider the impact of FRAND/RAND obligations and, where possible, secure IP protecting aspects of their products not subject to those obligations.

Prepare for a long haul

Disputes between arch-rivals can lead, as they did during the “cell phone wars,” to drawn-out, high-stakes IP litigation. When an industry is poised for rapid growth, some companies see litigation as a path to increased market penetration. Their competitors should prepare to meet that challenge with their own IP portfolios.

 

Jeff Totten is a patent attorney who assists clients in the renewable energy sector, as well as other industries, with intellectual property (IP) litigation, patent validity challenges, patent prosecution, and strategic counseling.  He is a partner at Finnegan, Henderson, Farabow, Garrett, & Dunner LLP, one of the world's largest law firms focused on IP.

 

Finnegan, Henderson, Farabow, Garrett, & Dunner, LLP | http://www.finnegan.com

 

1 Monetary damages are not available before the ITC, leaving Samsung with no remedy against Apple in this ITC investigation.


Volume: 2016 July/August