Apple v. Samsung court ruling puts small businesses at risk

On the surface, the Apple-Samsung trial that recently concluded appears to be a minor win for Samsung in a long-running patent war. The U.S. Court of Appeals for the Federal Circuit cut Samsung’s damages payment from $930 million to $548 million, a substantial reduction in penalty.

{mosads}The legal reasoning behind the court’s decision has, however, validated some of Apple’s most corrosive arguments and opened an entirely new can of worms for the future of design patent litigation. Worst of all, these consequences won’t just be limited to technology conglomerates like Apple and Samsung, but will percolate throughout the economy and affect businesses everywhere, including in our society’s most vulnerable and underprivileged communities.

In short, the court ruled that Apple’s complaint over Samsung’s infringement of certain design features (such as the “rounded rectangle” shape of smartphones) was valid, and that this infringement entitled Apple up to full profits damages despite the fact that these patents are irrelevant to customers’ purchasing decisions. This is an extremely troubling precedent to set, as it means that basic elements of design, such as shapes, can be patented and used as the basis for extremely costly lawsuits.

If companies can patent something as straightforward as “rounded rectangles,” and can potentially sue for the infringer’s profits even though the shape is likely unrelated to the features that prompt customers to actually purchase a product, then the sky is the limit for predatory litigants. The ramifications will not just be limited to the so-called “smartphone wars,” either, but will spread throughout the economy.

Even worse, the law now holds that business owners found responsible for selling a product that infringes on a design patent are also liable for profits from its sale. This extreme extension of liability could cripple a small business. If a convenience store owner in an underprivileged neighborhood is found to have sold a potato chip brand whose bag violates a design patent, the resulting penalties could easily put him or her out of business.

This extension of legal culpability makes no practical sense. Is a small business owner supposed to validate that each and every product he or she sells does not violate design patents? The answer is obviously no.

Because of the court’s unfortunate ruling, we can only hope that Congress will override this damaging interpretation of the law through a legislative fix. Without this step, there is a substantial chance that the very patent trolls that Congress is currently working so hard to cripple will simply shift from their current tactics to design patent litigation. In fact, if the court’s reasoning stands, design patent litigation will likely be even more financially rewarding for unscrupulous patent trolls than their current practices, making our problem even worse.

There is so much more on the line in this case than the $548 million that Samsung owes Apple. The consequences of the court’s ruling have the potential to permeate every part of the economy as design patents become the default crutch for people and companies willing to twist the law to make a quick buck.

Samsung is a multibillion dollar conglomerate that can afford the occasional setback in court. The black small-business owners who work seven days a week to barely make ends meet will be the ones who truly feel the brunt of the mistake that the U.S. Court of Appeals for the Federal Circuit has made.

Alford is co-founder, president and CEO of the National Black Chamber of Commerce.