Tim Sparapani: Apple vs. Samsung ‘Has Real Implications for Everybody Who Wants to Build the Next Great Business’

Peter Macdiarmid/Getty Images
Peter Macdiarmid/Getty Images

Tim Sparapani, former director of Public Policy at Facebook and currently tech and privacy analyst for SPQR Strategies, joined SiriusXM host Alex Marlow on Tuesday’s Breitbart News Daily to discuss the battle between Apple and Samsung at the Supreme Court. The case will decide how much of Apple’s $399 million patent infringement lawsuit Samsung must pay.

“It’s a titanic struggle between two business titans before the Supreme Court, but it has real implications for everybody around America who wants to build the next great business,” said Sparapani.

“In short, we’re maybe five years into, six years into, a fight over whether or not Samsung has infringed on the design – meaning like the look, the feel – of the iPhone, the original iPhone” he explained. “Now, you might think this is a pretty esoteric debate, and we should let two big businesses fight it out, and if Samsung infringed on Apple’s design, that would be fine. And everybody wants Apple to continue to build cool new products that are sexy and appealing.”

“The debate here is whether or not a federal circuit court got the law completely wrong, and upended more than 200 years of patent jurisprudence by deciding that because they believed that Samsung had infringed on Apple’s design of its iPhone, that they were going to award a massive damage return that was calculated based on the total value of all of the iPhones that were not purchased because Samsung was selling a competing product – as opposed to deciding what the percentage was of the design that went into people’s decision about whether or not to buy the Samsung phone versus the Apple phone,” he continued.

Sparapani explained that the Supreme Court’s decision could have huge repercussions for the entire U.S. economy.

For example, he said, “Just imagine that you and I went out and bought a car. Now, we’re buying a car. It’s a thing that takes us from place to place; it allows us to drive ourselves, our children, our families. When you go into a dealership, and you choose between car A and car B, you are still choosing between cars, and 99 percent of the value to you as a purchaser is based on the car. Maybe it’s 90 percent, but it’s not 100 percent, based on whether the car looks like a Corvette or whether it looks like a Chevy. And if Chevy decides to build another car that looks like a Corvette or a Porsche, the question for the Supreme Court is, ‘Should the entire value of that patent infringement be awarded to Corvette or Porsche because Chevy knocked off their design?’”

“That’s a pretty big deal. Here’s why: Around the country, we’ve had an enormous number of litigation shops. We call them ‘patent trolls.’ One- and two-person law firms that stand up, and all they do is look to sue companies and force them to go to court and give away damage settlements because what they have to decide is whether or not years of litigation in our federal court system, and all of the millions of dollars of costs of defending a frivolous lawsuit, are worth the effort and the time and the sapping of the resources of that particular company,” Sparapani said.

“These trolls go around and find small companies that have just been funded by advisers, by angel investors, and they say, ‘Aha! Here’s a company that’s ripe for suit! It’s young; if we sue it now, we can force them to settle us, effectively give us a damage settlement, rather than going through years of court litigation, only to have the case dismissed because, of course, it was frivolous in the beginning,’” he said.

Sparapani worried that if the Supreme Court upheld the judgment against Samsung, awarding Apple damages based on all potentially lost sales of iPhones based on Samsung’s patent infringement, “a whole new group of lawyers will set up shop around the country and file off lawsuit after lawsuit after lawsuit that are completely frivolous, designed to sap the innovation of the next great American companies, all based on the misinterpretation of our patent dispute.”

Marlow related the experience of a friend who was sued by patent trolls, but also made the argument that strong patent laws, with steep penalties for infringement, are essential for nourishing the spirit of innovation because they help ensure a payday for inventors and risk-takers. “How can we have a common sense patent system when it seems like both extremes are so devastating?” he asked.

“It’s amazing that the court system had gotten this right for literally the entire history of our democracy, since we began to have patents in the United States,” Sparapani replied. “It’s only in this particular instance, where the lower court seems to have re-interpreted the law, that we’re really deviating from the rules and boundaries.”

He said it was important to evaluate both sides of the argument, understanding that patent laws could either help innovation to flourish or crush it beneath heavy legal judgments.

“I buy all of my products from Apple. I think they’re great products,” said Sparapani. “We want Apple to continue to receive the value of providing cool new designs and great new products, and nobody should deny that. We want the pharmaceutical companies to be incentivized to have great new blockbuster drugs they develop. The same is true with every small inventor around the country. We want them to get a chance to build a great new product, a sexy new design, and give us stuff that we really like and need as consumers.”

He said the Apple vs. Samsung case gave the Supreme Court “a chance to go back to the way the law has always been,” which, he said, “I think is the way it should be in this case – which is to say that yes, we give Apple some benefit for its great new design; they should be rewarded for cool new designs and cool new products, but we don’t give them the entire award of the entire value of all the lost phones. Rather, we find a percentage that is calculated based on the amount that the design influenced a consumer’s purchase. And that’s the amount that is awarded in any design infringement case.”

He said there have been “years of expert testimony” in this particular high-profile case, to help courts arrive at a reasonable percentage.

“We’ve had design experts. We’ve had people talk to multiple juries. We’ve had the juries fight it out. And somewhere in there – there’s no mathematical formula for how much design matters. It may matter more to you than it matters to me. I go and buy a car just simply because I need a car. Other people love the look and feel of a particularly new car, and they want to have it. They believe it’s a showpiece, and it says something about them. Somewhere in there, we can find an approximation of what the average consumer, that theoretical person, would do and how much influence it would have. And it’s worked for the entire history of our republic,” Sparapani argued.

He noted that the background cases behind the Apple vs. Samsung suit were about “shovels and sewing machines, and they were decided in the nineteenth century.”

“These aren’t new problems, and somehow, we’ve been able to figure it out and decide that a shovel is a thing. It’s got utility. We buy it to shovel dirt or snow. And we may like the look and feel of a particularly new shovel, or a new shovel may have a revolutionary design that makes it easier to use and cause less injury to people who are lifting heavy things. There’s a value proposition in there, which has to be weighed. And I think we can find a way to reach that average consumer, and what he or she would want, to see in terms of how much their design, how much the look and feel of something has influenced the consumer’s opinion and purchasing power,” he urged.

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