Threats to Consumers and Small Businesses Continue in Latest Round of Apple v. Samsung

HLF Files Another Amicus Briefing Warning of Effect on Prices, Innovation, and Small Businesses

On July 1st, the Hispanic Leadership Fund filed an amicus brief with the United States Court of Appeals for the Federal Circuit regarding the Apple v. Samsung case dealing with smartphone design and supposed patent infringement. If the monetary damages the lower court awarded are upheld, consumers and small businesses will bear an unfair and unnecessary burden.

This is not our first time weighing in on this case, which is remarkable not only because of the roughly $399 million in damages awarded by the court, but also for the long-ranging negative effects it will have on technology and mobile smartphone use in the United States.

Excessive penalties in cases such as Apple v. Samsung will reduce consumer choice, raise prices, and undermine the functionality of smartphones that compete with the iPhone. This will undoubtedly make it more difficult for consumers to obtain phones with features they desire at prices they can afford. In addition, small businesses will risk being bankrupted if they inadvertently have a product designed similar to that of a patented design.

HLF president Mario H. Lopez wrote about the curious reasoning found in the most recent court decision:

Essentially, the Court determined that the shape of the smartphone (or of any product for that matter) is more important to consumers rather than the functionality. However for smartphone consumers, research and common sense tells us that features, functions, reliability, and cost are far more important factors than the shape of a product.

This case in particular could spike costs in technology and smartphones, as litigious behavior could become a trend that forces smartphone producers to raise prices to pay for costly litigation. Today, Latinos are likely to use their mobile device to access government services and participate in civic activity engage in classroom learning, access healthcare resources, and pursue business opportunities. Without limits on impractical damages in the design patent system, the Hispanic community could end up bearing the biggest burdens of any rising costs.

The rapid growth of smartphone use among Hispanics in the United States makes the continuing availability of competitive phone options at reasonable prices, and preventing excessive burdens on innovation and consumer choice, of great importance to the Hispanic community. Hispanics are among the fastest growing segments of small business owners and employees, and the severe liability and damages rules applied by the panel are a threat to competitors generally and small businesses especially.

This case has shined a light on an aspect of the law that needs to be addressed not just by the Courts but also by Congress as they continue to address patent reform. In the short term, HLF hopes the Court will heed our warnings about the detrimental effects of the massive damages and appeal their prior decision.