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In a column late last year, I highlighted a high-profile example of a mass counterfeiting case gone wrong, at least with respect to one of the defendants, in a case involving music star Luke Combs. That case was a trademark action, but similar uses of what has been referred to as Schedule A litigation in the design patent context as well are being seen. Last week, I mentioned the filing of “two design patent cases targeting online infringement by Chinese companies selling to U.S. customers” as an example of the types of harm to patent owners that “drives patent assertion nowadays.” I also teased the possibility that I would take a closer look at those types of cases in a future column. Aided by an upcoming Harvard Law Review paper titled “The Counterfeit Sham” — authored by former interviewee and current Suffolk Law professor, Sarah Burstein — now is as good a time as any to dive deeper into what is going on with design patent assertions aiming to police online sales activity.
To start, let’s reach agreement on what defines a Schedule A case. As defined by Burstein, such cases contain allegations accusing “large groups of online sellers of infringing various IP rights. In these cases, the defendants are usually listed not on the face of the complaint itself but on a separate document, often labeled ‘Schedule A.’” Often filed under seal, these types of complaints have found welcoming homes in a number of prominent district courts, including NDIL, SDNY, and SDFL. Indeed, the filings I spotted last week were both filed in the NDIL, a district that Burstein notes is known to grant to filers “forms of relief that are supposed to be extraordinary, such as ex parte orders freezing the defendants’ assets — before the defendants even know they have been sued.” It is unsurprising, therefore, that IP owners are attracted to these types of cases, considering the lack of viable alternatives — perhaps short of a barrage of Amazon or eBay takedown notices — to address infringement by online sellers in a commercially meaningful period.
Initially, the primary use of Schedule A cases by IP owners centered on attempts to halt online sales of trademark infringing goods, a la the Luke Combs fiasco mentioned above. But, as Burstein notes, Schedule A cases involving allegations of design patent infringement started to appear on the scene around 2019. Interestingly, that was also around the time a legislative push started to give Customs and Border Patrol agents the ability “to police design patent infringement by allowing CBP to stop imports of infringing products without the need for an ITC exclusion order,” as I mentioned in a column discussing the pros and cons of such an initiative.
With the increased focus at the time on design patent issues, aided in part by Apple’s success in securing a large damages verdict against Samsung based on its own design patent claim, the turning to Schedule A cases as an enforcement mechanism by the design patent plaintiffs bar is understandable. What is less palatable, however, is the co-opting of anti-counterfeiting rhetoric by that same bar — as well as by some jurists — in the design patent context. In fact, Burstein points out that one NDIL jurist “refers to all Schedule A cases as ‘Counterfeit Product Cases’” even when no colorable claim of counterfeiting is made — as is often the case where the only infringement complained about is design patent infringement. Moreover, Burstein’s paper highlights how loose use of counterfeiting language has crept into judicial language around Schedule A cases in other districts as well.
According to Burstein, this is not a harmless phenomenon, since such rhetoric can color how jurists handle Schedule A cases even where no proper counterfeiting claim has been lodged. Making matters worse is the fact that this “mismatch” is made worse by “the fact that the design patent infringement claims brought in Schedule A cases are often not particularly strong — many could even be characterized as frivolous.” Looking at some of the examples she cites in her paper, it is hard to disagree with that sentiment. And having had the prior experience of defending a client accused of design patent infringement in a case where the plaintiffs liked to use the word counterfeit to cast aspersions on my client’s products, albeit incorrectly, I can attest to the challenge of trying to defuse such an explosive characterization in front of a generalist district court judge.
That experience as defense counsel helps me appreciate her suggestions for an increased use of special masters to help determine infringement at the TRO stage, or for an increased uptake in common sense limits on the number of defendants in Schedule A cases. Most importantly, I commend interested readers to consider her paper in full, as it lays out a comprehensive case for greater judicial scrutiny of Schedule A cases in the design patent context, especially in light of the challenges and complexities inherent in the proper adjudication of design patent claims. Those challenges and complexities are hard to deal with in themselves, even without the moralizing use of inflammatory language by plaintiffs looking for a quick win.
Ultimately, it would be wise to heed Burstein’s warning that certain actors on the design patent plaintiff side “seem to be misusing the word ‘counterfeit’ deliberately, to evoke the specter of dangerous and intentional malfeasance” where none exists. The motivation for them to do so may be present, along with at least some rewards for doing so at this stage. Because that strategy is shortsighted, the time is now to contain this type of behavior, as it does no long-term favors for IP owners and may be causing immediate harm to alleged infringers. In short, it’s time we got design patent cases back on schedule, without the hyped-up charges of counterfeiting.
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.
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