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Critical Analysis of Maeda Design in Tech Report 2017

Totally missed the single most important design trend of 2016–17, misstated reasons for expansion of design in tech and provided nothing more than vanity design theory in support of opinions!

Ok…Really, Where is the Data?

Although the Maeda Design In Tech 2017 report provides interesting anecdotes illustrating popular opinion as to the current trends in design, it offers little formal quantitative research to substantiate its conclusions. Mr. Maeda is giddy with good news about management consulting firms snapping up design shops and aspirational design trends like “Computational Design,” as evidence of the increasing value of design.

Regardless of the wide-ranging vanity design theories proffered by Mr. Maeda it is now clear to corporate executives far and wide that the value of design is in question. Maeda is no Mary Meeker when it comes to uncovering and accurately stating trends that reflect the true status of a given professional discipline or application area.

DESIGN In TECH 2017

Where the Maeda 2017 DIT report and nearly all public discourse on design ran off the rails in 2016–17 was in predicting an increasing value and an overwhelmingly positive outlook for design overall.

In fact, last year design took the biggest negative hit in terms of actual value in the marketplace in over a hundred years. Yes, in 2016–17 design lost value on a major scale. The facts speak for themselves. Maeda and other design/tech writers including those from the New York Times Farhad Manjoo and Mark Wilson of Co. Design missed the ball on a grand scale in 2017.

Apple vs. Samsung AND Samsung vs. The Entire Discipline Of DESIGN

The support for the claim that design lost value in 2016–17 does not flow from the failure on the part of designers to deliver their craft to tech companies but from the work of large and skillful teams of lawyers representing Apple and Samsung in what has now become one of the largest patent litigations in US History. This case was not only about two very well-funded corporate entities with legal resources to burn, but is now a story about the wholesale devaluation of design as a primary corporate asset of increasing value.

What is plainly clear today, is that Samsung and its teams of lawyers, law school professors, PR professionals, and Tech journalists successfully utilized the tech media and the US court system to remake design patent law as it has been known for the past 100 years. Few designers realize that Samsung has likely destroyed in large measure the value of design through its successful appeal to the US Supreme Court. The story is at times both interesting and tragic. DIT 2017 failed entirely to note this objective and dramatic change in the value of design.

The iPhone Changed The Game And Then Some

For those who have not tracked the case closely the story goes basically like this: Apple created a world-altering product when it designed the iPhone.

Image of iPhone 1

It was by all standards a total game changer in the smartphone space. Upon application, the USPTO awarded a series of patents on the iPhone based on the product’s distinctive overall visual design and several levels of interactive functionality. The patents of interest to design professionals were the design patents that covered the look of the iPhone.

Apple Had The Right

The record on what happened next is clear in the legal proceedings. Samsung, fearing a massive threat from Apple, copied the iPhone look and feel. Seeing this behavior on the part of Samsung brought Apple to the obvious conclusion that there was probable patent infringement. Apple sued Samsung in the Northern District of CA for infringement of several design patents, utility patents, and the look of the main home screen of the iPhone.

A Simple Chart Tells A Complex Story

After years of discovery, hundreds of depositions, and weeks of trial testimony, the jury found that Samsung did in fact infringe the patents of the iPhone and iPad. The most damning piece of evidence was likely a simple chart (below) showing the design trend of Samsung smartphones prior to and after the introduction of the iPhone.

Image comparing Samsung designs before and after release of Apple's iPhone

Designers Rarely Understand Design Patents

It is important to note that most design professionals have no idea what a design patent actually covers and how infringement is determined. This left many in the broader design and tech community thinking that Apple was attempting to patent a rounded rectangle when in fact if the proper legal tests are applied it was totally clear that the iPhone was, regardless of its apparent simplicity, a patentable invention in terms of overall shape, style and appearance. This wide-ranging lack of awareness as to what a design patent actually covers is a systemic weakness of product design education in the US and abroad.

Show Me The Money

Following the finding of infringement, and based on instructions from the judge defining how to actually calculate damages, the jury set about its assigned task. Rather quickly, the jury returned a big number, in fact a very big number of approximately: 1.2 billion dollars in damages. This is where the case dramatically improved the value of design as a primary corporate asset. The majority of this substantial damage award — almost 1 billion dollars — was attributed to infringement of the iPhone design patents.

Those patents covered only the look (design) of the iPhone. The primary reason that the damage awards were so large for infringement of the Apple design patents was tied directly to the way US design patent law dictates that damages must be calculated when infringement is determined by the jury. Below is a copy of the actual sheet utilized by the jury in the calculation of damages.

Image showing list of handwritten damage calculations, with multiple items into the millions of dollars

As can be seen by simple visual inspection there were many Samsung products that were found to have infringed the Apple design patents. But there was a larger reason that damages from infringement were so large. It is this additional factor that ultimately led Samsung to attack the value of design in the marketplace in addition to the attempting to reduce the funds due to Apple for infringement.

Profits Determine Damages…For The Past 100+ Years

The calculation of damages for design patents at that time went simply as follows: if I copy your product and am found to have infringed your design patents I must give you all of my profits from the infringing products. For over a hundred years, the way in which damages were calculated in design patent cases was elegantly simple. So simple, in fact, that the methodology was widely regarded as one of the simplest damage calculations ever created by the US congress.

The damages process is known technically as Rule 289. Not only were damage calculations simple they were a massive deterrent to those who would wholesale copy your design solutions. This is also why the jury awarded Apple almost 1 billion dollars for Samsung having infringed Apple’s design patents. Apple was awarded the total profits of Samsung for the iPhone (and iPads) found to have infringed. The damage calculation for utility patents is different and far more complex. This is one of the reasons that the damages for the utility patent infringement was low compared to Apple design patents.

DESIGN Suddenly Increased In Value

Historically, design patents have been considered less valuable than utility patents. But suddenly, based on the Apple damages award, the value of design patents — and therefore design overall — improved on a massive scale almost overnight.

Upwards pointing green arrows

It is interesting to note that even in prior Maeda DIT reports (15–16–17) there was virtually no mention of intellectual property or related trends impacting design.

Based on the Apple v. Samsung award, major corporations saw that design had real value worth promoting and protecting. But that is not the end of the story. What happened in the following 2–3 years based on the concerted appeals and behavior of Samsung reversed the gains in the value of design and in fact caused damage to the value of design on a scale unseen in the last 100 years. Here is how that happened.

Appeal After Appeal and A Bevy Of Second String Law School Professors

Obviously, Samsung was stung by the loss and set about marshaling one appeal after another in an attempt to overturn the judgement and reduce the dollar value of the damages. This was of course their legal right. No one denies that fact.

However, aside from its legal appeals focused on reducing the amount to be paid to Apple, Samsung also began quietly applying less direct and more insidious pressure to advance its larger legal agenda. Much to the surprise of design patent experts tracking the case, Samsung suddenly rallied a large body of mostly second-string law professors and tech journalist who as a group began attacking the very core of how damages were calculated in US designs patents cases.

Samsung Takes Aim At US Design Patent System Overall

Quietly, but with significant financial and tactical resolve, Samsung changed focus from only reducing the award to be paid to Apple to a full-fledged attack on the legal framework of US Design patent system. You read that last sentence correctly. Samsung added to its focus of reducing the amount to be paid to Apple a new strategy to remake the entire design patent law to its liking. Almost immediately, the group of law school professors’ focused on attacking how damages are calculated (Rule 289) in design patent cases.

Graphic of displaying text "Rule 289"

As you will recall at that time damages were disgorgement of total profits. They carefully and skillfully attacked the damages law through carefully choreographed media interviews, amicus briefs, speeches, tech articles and blog posts. The Samsung effort was, in fact, a tour de force of PR, hitting the media with surprising sophistication and coordination.

Hypothetical Cases That Never Happened and Likely Never Will Happen

At the core of the attack by Samsung on design patent damage calculation formula was a series of loopy hypothetical examples of how design patents could be used to extract massive damage awards based on clever use of design patent protection theory. It is interesting to note that in over 100 years no such hypothetical case has ever reached a single court nor is it likely that one ever would.

The design press failed to even mention the impending train wreck. As a result Samsung’s campaign remained under the radar in terms of awareness by global design professionals. As a result, the arguments put forth by the law school professors, bloggers and tech journalists gained some measure of traction. Again, this was entirely aside from the actual fact that the briefs filed by the law school professors failed to cite a single actual case where the hypothetical abuse had occurred.

Damages Decline But Design-Patents Law Remained Safe

Through a series of appeals, Samsung did get the award to be paid to Apple reduced, but on the important issue of how design patent damages are calculated Samsung made little progress. Even when the federal circuit reviewed the case the court maintained the way design patent damages were calculated. But Samsung did not give up. Suddenly in May of 2016 the case took a turn that will likely impact the value of design for decades to come.

The Supreme Court Talks Design For The First Time In Over 100 Years

Image showing a curtain being pulled to reveal the US Supreme Court Chamber

Finally, with all other appeal options exhausted, Samsung appealed the case to the Supreme Court of The United States (SCOTUS). To almost everyone’s surprise, the primary issue Samsung appealed to SCOTUS was the damages rule 289 for calculating the damages in design patent cases. Samsung did not appeal the high court for a reduction in damages. It became instantly clear that Samsung only wanted to destroy the value of design on a global scale by asking the US Supreme court to change the damage calculation which had been in place for more than 100 years.

Design Is Now Worth Pennies On The Dollar

Following the oral arguments by both parties the Supreme Court ruled on December 6, 2016 in favor of Samsung. Now, thanks to the recent US Supreme ruling in the case, payment of total profits is no longer how damages are calculated for those who would infringe your design solutions.

Samsung successfully gutted the US design patent protection system by securing a new damages calculation formula from the US Supreme Court. Under the new system, it will be far more complex and expensive to sue those who would infringe your creative design solutions. In fact the high court failed to define an actual test as to how the new rules should be applied, thus leaving even more uncertainty related to design protections and the value of design overall. This question will only be resolved as cases work their way through the legal system in a process that will likely take years if not decades.

The Door is Open To Copyist

The field is now open to those who would copy your designs with impunity. Those who thrive on copying your designs now understand that it will be far too costly for small firms and too complex and time consuming for large businesses to pursue infringement of their designs. Extremely successful designs will likely be copied routinely and sold without resistance. Thank you Samsung. But that is not the end of the story.

Design Patent Infringement as a Cost / Benefit Analysis

The new methodology for calculating damages in design patent infringement cases essentially says that an infringing party does not always owe their total profits made from their use of the patented design. Instead, the new damages calculation requires that the patent holder must prove the relative contribution that design makes to the profits of their product. The court also said that damages could be awarded on component parts of designs and not the entire product as in the prior formula. How do these changes impact the value of design?

Design Value Is Now Reduced

Simply put, this development has caused serious damage to the value of design overall. For the first time, a patent holder must objectively measure and prove in a formal legal setting the extent to which the patented design drives profits of a product to which the design has been applied.

Red downwards pointing arrows

To be totally clear, if you want to receive damages from an infringing party, now you must be able to assign an actual objective numeric value (or range of values) to a design’s contribution as a proportion of the overall profits of the product. Think about that.

As any product design research professional knows, this new model is costly and far more complex than the prior calculation, which was based simply on disgorgement of total profits by the infringing party. It is clear that the new Samsung damages calculation will require more experts, more expert analysis, more reports, more depositions, more time at trial, more of everything that drives up the cost of design patent litigation. There are other issues too complex to cover here that further increase the complexity of design patent protections and reduce the value of design as a protectable corporate asset.

Copy Now, Determine Cost Later

Gone entirely is the well-understood deterrent keeping copyist at bay, the threat of having to disgorge their total profits. Now the thousands of such infringers who were anticipating this decision can copy your design solutions with probable impunity because the risk has migrated from absolute to relative. Lawyers love relative risk.

Design infringement will merely be a cost/benefit analysis on the part of the infringers. This is not a good place for design. It is astounding how this issue has failed entirely to gain attention in design circles, let alone in supposedly summative industry reports like Maeda’s Design In Tech series. This development will have a significant impact on design in tech and design in all other major fields of commercial endeavor including consumer electronics, consumer products, fashion, UX Design, Industrial Design, GUI design, interactive services, automotive, entertainment, gaming, furniture, and hundreds of other fields of design application.

Not Every Designer Was Silent

During the entire case, there was a small group of leading design patent experts and design professionals who worked to counter the Samsung effort. That group prepared amicus briefs for both the federal circuit and the Supreme Court cases.

Cover page of legal document overlayed on image of base of columns from front of Supreme Court

The SCOTUS amicus brief was signed by 113 world-class design professionals from a wide range of design industries including Dieter Rams, Sir Norman Foster, Terence Conran, Sir Edward Sorel, Calvin Klein, Robert Brunner, the design directors of major fashion houses, world-class automotive studios and many other leading design executives and practicing designers and design researchers. (Disclaimer: I was a primary author of both amicus briefs submitted to federal circuit and SCOTUS.) This was an effort without meaningful reporting in the design press, and only earned far more extensive attention after the SCOTUS ruling.

The Challenge Going Forward

Exactly how the damages calculations will be determined in design-patent cases following the SCOTUS ruling is yet to be determined. However, one thing is certain: Chaos will rule in design patent law for the foreseeable future and the value of design will be dramatically diminished. We are likely to see a decline in investment in design services overall. The case has been remanded by the Supreme Court back to the Federal Circuit which has sent the case all the way back to the original district court judge in the Northern District of CA.

Does Samsung get to trash our entire design patent system and get a do-over on damages…Probably?

The original judge may decide to allow a new Apple v. Samsung case that focuses on damages. Should the new case materialize it will utilize the new damages calculation process put forth by the US Supreme Court. But no matter what, the way damages will be calculated has fundamentally altered the value of design on a global scale.

Something To Think About

If you are a design professional, think about the value of design as you check your email on your new Samsung phone. Ponder your future job security as you navigate the aisles of Best Buy looking for your next new gadget. The future of design is not what it used to be. Perhaps next year Mr. Maeda might consider less vanity design theory and more actual business analysis?

 

Charles L Mauro CHFP
President / Founder
MauroNewMedia

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