# Amicus Curiae Brief — Nike, Inc. v. Wal-Mart Stores, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1999
- **Citation:** 528 U.S. 946

## Text

MOTION FILED
JUL & 7 1999

No. 98-1942

IN THE SUPREME COURT OF THE UNITED STATES

NIKE, INC.,

Petitioner.

WAL-MART STORES, INC. and
HAWE YUrc, iNC.,

Respondents.

On Petition for Writ of Certiorari To the United States Court
of Appeals for the Federal Circuit

Amici Curiae Brief Supporting Petitioner and
Motion for Leave to File Amici Curiae Brief

Edward J. Kessler Curt Krechevsky

Attorney of Record Assistant General Counsel
David K.S. Cornwell Douglas A. Batt

Tracy-Gene G. Durkin Technology Counsel

Sterne, Kessler, Reebok International Ltd.
Goldstein & Fox P.L.L.C. The Rockport Company, Inc.
1100 New York 100 Technology Center Drive
Avenue, N.W., Suite 600 Stoughton, MA 02072

Washington, D.C. 20005-3934 (781) 401-5000
(202) 371-2660

AMICI CURIAE REEBOK INTERNATIONAL LTD.
AND THE ROCKPORT COMPANY, INC.’S MOTION
FOR LEAVE TO FILE A BRIEF AMICI CURIAE

Pursuant to Rule 37.2 of the Rules of this Court, amici,
Reebok International Ltd. and The Rockport Company, Inc.,
respectfully move for leave to file the attached Brief of Amici
Curiae in Support of the Petition for Writ of Certiorari.
Petitioner Nike, Inc. has consented to the filing of the brief.
This motion is necessary because Respondents have denied
consent. The amici share a common concern regarding the
interpretation of "damages" in 35 U.S.C. § 287.

Reebok International Ltd. ("Reebok") is a manufacturer
of footwear, apparel and equipment in the United States.
Among its products, Reebok markets REEBOK shoes
throughout the United States. The Rockport Company, Inc.
("Rockport") is a wholly-owned subsidiary of Reebok.
Rockport is also a manufacturer of footwear and apparel in the
United States. Among its products, Rockport markets
ROCKPORT shoes throughout the United States.

Reebok and Rockport, like petitioner Nike, Inc.
("Nike"), have expended substantial sums in designing shoes
and in promoting and protecting these designs. Reebok and
Rockport consider these designs to be among their most
valuable assets and are committed to protecting their rights in
the designs of REEBOK and ROCKPORT shoes through the
United States (utility and design) patent laws.

Neither Reebok nor Rockport have a stake in any of the
parties to this litigation or the result of this case. They are,
however, deeply concerned about the possibility that the Federal
Circuit’s decision in this case, reversing the district court’s
opinion with respect to the interpretation of "damages" in 35

U.S.C. § 287, will be allowed to stand. Such a decision, left
intact, would cause serious harm to design patent holders.

Reebok and Rockport’s interests would be directly and
adversely affected if the Federal Circuit’s decision is not
reversed. Amici therefore respectfully seek leave of this Court
to file the attached brief in support of the Petition for Writ of
Certiorari.

Respectfully submitted,

GOLDSTEIN

STERNE, KESSLE

Date: July 6, 1999

Edward Jt
Attorney of Record
David K.S. Cornwell

Tracy-Gene G. Durkin

Sterne, Kessler, Goldstein & Fox P.L.L.C.
1100 New York Avenue, N.W.

Suite 600

Washington, D.C. 20005-3934

(202) 371-2660

Curt Krechevsky

Assistant General Counsel
Douglas A. Batt

Technology Counsel

Reebok International Ltd.
The Rockport Company, Inc.
100 Technology Center Drive
Stoughton, MA 02072

(781) 401-5000

TABLE OF CONTENTS

I. STATEMENT OF INTEREST ................
II. SUMMARY OF ARGUMENT ................ 2
Il. SS 3

A. DESIGN PATENTS ARE PARTICULARLY
VALUABLE TO THE FOOTWEAR
eee 3

B. THE FEDERAL CIRCUIT’S STATUTORY
CONSTRUCTION AND USE OF
LEGISLATIVE HISTORY WAS
A 7

es EVEN IF THE FEDERAL CIRCUIT’S USE
OF LEGISLATIVE HISTORY WAS
CORRECT, THEIR ANALYSIS WAS
FLAWED IN AT LEAST FIVE
Se i cece caves. 10

‘, THE FEDERAL CIRCUIT’S DECISION
MISREADS THE LEGISLATIVE HISTORY
OF 35 U.S.C. § 287 AND IGNORES
PRECEDENT OF THIS COURT ...... 10

Nw

THE FEDERAL CIRCUIT’S DECISION
IGNORES THE PURPOSE AND EFFECT OF
THE PATENT ACTOF 1952 ....... 15

TABLE OF CONTENTS

2

4)

IV. CONCLUSION

(CONTINUED)

THE FEDERAL CIRCUIT’S DECISION
DOES NOT ACCORD PROPER WEIGHT TO
THIS COURT’S DECISION IN ARO
MANUFACTURING ......0cceeees 16

THE FEDERAL CIRCUIT’S DECISION
CONVENIENTLY DISMISSES SOME
LEGISLATIVE HISTORY OF THE

PATENT LAWS WHILE CONSIDERING
UU ves coekdes een wodaeees 17

THE FEDERAL CIRCUIT’S DECISION
DID NOT OBSERVE AN “ANOMALY”

IN TITLE 35, BUT INSTEAD CREATED
Se as ova aeds hats eebeas 17

il

TABLE OF CASES

Aerogroup Int'l, Inc. v. Marlboro Footworks. Ltd
1997 WL 83395 (S.D.N.Y. May 7, 1997)

Aldridge v. Williams
3 U.S. (How.) 9 (1844) ..............

Aro Mfg. Co. v. Convertible Top Co.
3T1 US. 476 (1964) .................

Avia Group Int'l, v. L.A. Gear California
853 F.2d 1557, 7 U.S.P.Q.2d (BNA) 1548
[8S eg, | see

Braun, Inc. v. Dynamics Corp. of America
975 F.2d 815, 24 U.S.P.Q.2d (BNA) 1121
ee es SUED hoes scdace eco...

Caminetti v. United States
242 U.S. 470 (1916) .................

Conroy v. Aniskoff
507 U.S. 511 (1993)... 0.0

Duplate Corp. v. Triplex Safety Glass Co.
298 U.S. 448 (1936) .................

Hirschey v. FERC
777 F.2d 1 (D.C. Cir. 1985) ...........

Mansell v. Mansell
490 U.S. 581 (1989) ................

ill

ere he

TABLE OF CASES
(Continued)

Nike, Inc. v. Wal-Mart Stores, Inc.
138 F.3d 1437, 46 U.S.P.Q.2d (BNA) 1001
(Fed. Ci. 1990) 6.6 c<ss20050000se eee cies passim

Nike, Inc. v. Wal-Mart Stores, Inc.
41 U.S.P.Q.2d (BNA) 1146 (E.D. Va. 1996). passim

Trans Alaska Pipeline Rate Cases
4360.5. 631 GSTS) cscs ceea a0 eee 7

United States v. Missouri Pac. R_R.
270 U.S. 200 CIEE). enn ke eee 7

United States v. Public Util. Comm'n of Cal.
345 U.S. 290 (19S) 6. cia eee eee 8,9

IV

TABLE OF STATUTES AND OTHER AUTHORITIES

a |: , ae passim
EM 66 5.050-a4 se a dce ed oddon kee: passim
S| a es passim
PIE es esa yice csvdedsdeece te lin. passim
Act of July 19, 1952, Ch. 950, 66 Stat. 792........ passim
H.R. Rep. No. 1503, 79th Cong. 2d Sess. ............. 1]
128 Cong. Rec. $8659 (daily ed. July 19, 1982). ....... 14

Reed Dickerson, The Interpretation of and Application of
UR 6 50 ihb 40 wed ¥ 0.00 oho los eo ck. 12

Todd J. Gillman, Attorney Puts Foot Down About Sneaker
Patents: Avia Takes Shoe Pirates to Court to Protect Design.
Washington Post, July 20, 1987...................... 6

Oliver Wendell Holmes, Collected Legal Papers ........ 8

Greg Melville, Big Shoe Firms Turn Up Heat In Brand
Wars; Companies Pursue Legal Action to Protect
Trademarked Logos, Designs, Footwear News, March 17.
ST TUS o'We 54 40 645 ¥ 0 belo s'cbbe se Kde'ekcccnc:. 3
Office of Legal Policy, U.S. Dep't of Justice, Using and
Misusing Legislative History: A Re-Evaluation of the

Status of Legislative History in Statutory Interpretation,
seat tl aE ea ne 10

TABLE OF STATUTES AND OTHER AUTHORITIES
(Continued)

Norman J. Singer, Sutherland Statutes and Statutory
Construction § 45.02 (Sth ed. 1992). ................ 7,8

Kenneth W. Starr, The Role of Legislative History in Judicial
Interpretation: A Discussion Between Judge Starr and Judge
Be OR , ere Pore res ore 9

Patricia M. Wald, Some Observations on the Use of
Legislative History in the 1981 Supreme Court Term, 68
SE, EF Eo aces oe ateeweseetes ares 8

Design Patents January 1977 - December 1996: A
Technology Assessment and Forecast Report, U.S. Patent
and Trademark Office, Office of Electronic Information
Products/TAF Program, April 1997................. 3,4

Charles J. Zinn, Commentary on New Title 35 U.S. Code
"Patents" 1952 U.S.C.C.A.N. (66 Stat.) 2507 .......... 15

vl

I. STATEMENT OF INTEREST

The parties represented in this amici curiae brief are
Reebok International Ltd. ("Reebok") and The Rockport
Company, Inc. ("Rockport). Reebok is a manufacturer of
footwear, apparel and equipment in the United States. Among
its products, Reebok markets REEBOK shoes throughout the
United States. Rockport is a wholly-owned subsidiary of
Reebok. Rockport is also a manufacturer of footwear and
apparel in the United States. Among its products, Rockport
markets ROCKPORT shoes throughout the United States.

Reebok and Rockport have expended substantial sums
in designing shoes and in promoting and protecting these
designs. Reebok and Rockport consider these designs to be
among their most valuable assets and are committed to
protecting their rights in the designs of REEBOK and
ROCKPORT shoes through the United States (utility and
design) patent laws.

Neither Reebok nor Rockport have a stake in any of the
parties to this litigation or the result of this case. They are,
however, deeply concerned about the possibility that the Federal
Circuit’s decision in this case, reversing the district court’s
opinion with respect to the interpretation of "damages" in 35
U.S.C. § 287, will be allowed to stand. Such a decision. left
intact, would cause serious harm to design patent holders.’

' Pursuant to Rule 37.6, none of the parties or their counsel has
contributed either substantively or monetarily to the preparation of this
brief. Specifically, only Reebok International Ltd. and The Rockport
Company, Inc. have made a monetary contribution to the preparation and
submission of this brief.

Il. SUMMARY OF ARGUMENT

The nature of the footwear industry and the industry's
use of design patents to prevent infringers from making a
considerable profit "knocking off" protected designs warrant the
grant of a writ of certiorari. Limiting a design patent holder to
recovery of an infringer’s profit only after the point when
marking or actual notice is initiated will seriously limit the value
of a design patent, and reverse the trend of cases like Avia
Group Int'l, v. L.A. Gear California, 853 F.2d 1557, 7
U.S.P.Q.2d (BNA) 1548 (Fed. Cir. 1988) that have breathed
new life into the design patent.

The Federal Circuit's statutory construction of 35
U.S.C. § 287, in light of 35 U.S.C. §§ 284 and 289, and use of
legislative history was incorrect. Accepting, arguendo, the
Federal Circuit s use of ‘legislative history was correct, their
analysis was flawed in several respects. The Federal Circuit's
decision misread the legislative history of 35 U.S.C. § 287, and
ignored this Court’s precedent in Aro Mfg. Co. v. Convertible
Top Co., 377 U.S. 476 (1964). The Federal Circuit also
overlooked the purpose and effect of the Patent Act of 1952.

Furthermure, the Federal Circuit’s decision did not
accord proper weight to this Court’s decision in Aro Mfg. The
Federal Circuit's decision conveniently dismisses some
legislative history of the patent laws while considering others.
The Federal Circuit did not observe an "anomaly" in Title 35 but
in essence created one. Accordingly, this Court should grant a
writ of certiorari.

to

iil. ARGUMENT

A. DESIGN PATENTS ARE PARTICULARLY
VALUABLE TO THE FOOTWEAR INDUSTRY

Design patents are now more valuable then ever, in part
due to the Federal Circuit’s line of cases beginning with Avia
Group Int'l, v. L.A. Gear California, 853 F.2d 1557. 7
U.S.P.Q.2d (BNA) 1548 (Fed. Cir. 1988). In the footwear field
especially, the protection provided by a design patent is
extremely valuable in fighting "knock off" products. The
problem of "knock off" products is not new. In 1987-1988.
Avia, a former subsidiary of Reebok, was involved ina design
patent litigation against L.A. Gear, in which L.A. Gear was
found to have infringed two Avia design patents. See id. In this
landmark case, the Federal Circuit affirmed a grant of summary
judgment of infringement in favor of Avia. At the time. the
culture in the footwear industry was that competing companies
felt free to copy the popular styles of its competitors. The Avia
case sent a message to would be infringers that it would be very
expensive for them to "knock off" footwear designs in the
future. No longer could they get a "free ride" on other
companies’ research and development efforts.

Since the Avia decision, design patent applications and
enforcement actions have increased not only within the
footwear industry, but have spread to other industries as well.
One commentator has observed that "today’s shoemakers are
protecting the integrity of their emblems and designs at all costs,
taking their competitors to court when they believe they are
being unlawfully ripped off." Greg Melville, Big Shoe Firms
Turn Up Heat In Brand Wars: Companies Pursue Legal Action
to Protect Trademarked Logos, Designs, Footwear News.
March 17, 1997, at 1. This trend is further evidenced by the
rise of issued design patents from approximately 4000 per year

3

in the early 1980's, to over 11,000 per year since 1994. See
Design Patents January 1977 - December 1996: A Technology
Assessment and Forecast Report, U.S. Patent and Trademark
Office, Office of Electronic Information Products/TAF
Program, April 1997.

The district court awarded $6 million to Nike. See Nike,
Inc. v. Walmart Stores, Inc., 41 U.S.P.Q.2d (BNA) 1146 (E.D.
Va. 1996). This award represents the largest design patent
award to date and is the high point of this trend of increased
protection and value offered by the design patent. However,
most design patent infringement cases never make it to trial. As
the infringing products are often times identical copies of the
patented design, infringement is not usually contested by the
accused party. All that remains to be determined is the amount
of damages owed to the patent holder. In making this
determination, it has been the practice to account for infringer’s
profits both before and after marking or actual notice, in light of
the Federal Circuit’s decision in Braun Inc. v. Dynamics Corp.
of America, 975 F.2d 815, 824 (Fed. Cir. 1992) (holding that
because "total damages" and "profits" have different meanings,
total profits are not subject to enhancement under 35 U.S.C. §
284). The Federai Circuit’s recent panel decision in the Nike
case goes against this commonly held and long standing
interpretation of patent damages, as set out by the Federal
Circuit's own precedents.

As stated above, few design patent cases make it to trial
and even fewer make it to the appellate level. In fact, since its
birth in 1982, the Federal Circuit has only had the opportunity
to consider a handful of design patent cases. The success of the
design patent cannot be measured by the number of reported
cases. The enormous value of the design patent is found in the
silent enforcement actions which are undertaken daily by design
patent holders. Due to the scarcity of appealed design patent

4

cases, however, the important issue of interpreting the meaning
of the word "damages" as used in 35 U.S.C. § 287(a) may not
come before this Court again for some time. It would be
disastrous for many design patent holders and entire industries
if an erroneous panel decision were allowed to stand and be
afforded precedential weight. This Court has before it now the
opportunity to reinforce the proper interpretation of the
remedies available under design patent law, and clarify an
important aspect of design patent law.

Most disturbing is the fact that the Federal Circuit’s
decision ignores not only this Court’s precedent and its own
prior rulings, but also the reasoning of the most recent district
court design patent cases to rule on the issue. The lower court
Nike decision properly held that the marking provisions do not
limit recovery of infringer’s profits, given the "*longstanding’
and ‘important’ distinction in patent law between damages and
profit." Nike, 41 U.S.P.Q.2d (BNA) at 1149 (quoting Braun,
975 F.2d at 824). At least one other district court has similarly
held that "the marking statute does not preclude an award of the
infringer’s profits prior to the patentee marking the product or
giving notice to the infringer." Aerogroup Int'l, Inc. v.
Marlboro Footworks, Ltd., 1997 WL 83395, *6(S.D.N.Y. May
7, 1997) (also citing Braun, 975 F.2d at 824).

Both district court opinions relied on the only precedent
afforded them by the Federal Circuit (i.e., Braun). The Nike
panel, however, quickly distinguished the Federal Circuit’s prior
decision in Braun, despite recognizing that its decision in light
of the controlling precedent is "anomalous." Nike, Inc. v. Wal-
Mart Stores, Inc., 138 F.3d 1437, 1445 (Fed. Cir. 1998). As
the Federal Circuit’s decision will have the effect of overruling
these recent district court decisions, developed in light of the
Federal Circuit’s earlier holding in Braun, it is important that
this Court have an opportunity to consider the issue.

be

Furthermore, it is important to realize that the nature of
the design field and how complying with the marking provisions
is often impractical. The following 1987 observation by
Michael W. Blommer, then Executive Director of the American
Intellectual Property Law Association, remains true today:

In footwear and fashion, items go out of
style faster than patents get granted... . In
the area of designs, sometimes the market's
passed you by the time the patent issues.
Manufacturers like Reebok [and Nike],
they re constantly changing the style of their
shoes. They're going to start selling their
shoes while the patent is pending. The
knock-off artists are in and out of the market
in a year or two.

Todd J. Gillman, Attorney Puts Foot Down About Sneaker
Patents; Avia Takes Shoe Pirates to Court to Protect Design,
Washington Post, July 20, 1987, at F3. Retooling to mark
products after a patent issues takes time and is expensive. By
the time the design patent is granted and the shoe is marked,
desire for the original design may be waning due to the presence
of "knock-offs." Further, in the time it takes to mark the
product with the patent number, the infringer continues to make
a considerable profit "knocking off" the protected (and
apparently quite popular) design at the expense of companies
who perform research and development to create the popular
styles.

Limiting a design patent holder to recovery of an
infringer’s profits only after the point when marking is initiated
will seriously limit the value of a design patent and reverse the
trend that has to this point allowed design patents to flourish.
Such a holding is not required by a plain reading of the statute
and is in conflict with recent district court and Federal Circuit
decisions that have helped strengthen the design patent right.

B. THE FEDERAL CIRCUIT’S STATUTORY
CONSTRUCTION AND USE OF LEGISLATIVE
HISTORY WAS INCORRECT

Reebok and Rockport generally agree with Nike's
position set forth in their Petition for a Writ of Certiorari as to
the Federal Circuit's erroneous method of statutory
construction. Thus, those arguments concerning the Federal
Circuit’s departure from such precedents as Mansell y Mansell.
490 U.S. 581 (1989) and Trans Alaska Pipeline Rate Cases,
436 U.S. 631 (1978), are not repeated herein. The Federal
Circuit's decision, if left intact, would set design patent law on
a perilous path. Thus, this brief further sets out more Clearly
those areas in which Reebok and Rockport believe the Federal
Circuit’s analysis was flawed.

Any analysis of the use of legislative history must first
begin with the plain meaning rule. The rule. Originating from
Sir William Blackstone's Commentaries, states. "Where the
language is plain and admits of no more than one meaning the
duty of interpretation does not arise and the rules which are to
aid doubtful meanings need no discussion." Caminettiv. United
States, 242 U.S. 470, 485 (1916). Under the rule. if the words
of a statute are clear and construction of them will not lead to
an absurd result, the words are assumed to be the "final
expression of the meaning intended." United States v. Missouri
Pac. R.R., 278 U.S. 269, 277-78 (1929). It is only when a

5

statute is ambiguous that courts should refer to legislative
history. Norman J. Singer, Sutherland Statutes and Statutory
Construction § 45.02 (Sth ed. 1992). In short, statutes must
not be made a plaything for lawyers to manipulate and
transmogrify to suit the purpose of their clients. A statute is
considered ambiguous when it is capable of being understood
by reasonably well-informed persons in either of two or more
senses; or some of the words used may refer to several objects
and the manner of their use does not disclose the particular
objects to which words refer. /d. Therefore, the Federal
Circuit’s resort to legislative history after admitting, as the
district court found, that 35 U.S.C. § 287(a) is clear on its face
1s very troubling.

Many esteemed judges have commented on the
problematic aspects of using legislative history (especially in
light of unambiguous statutes). Judge Wald of the D.C. Circuit
has observed that the use of legislative history has become so
prevalent that, "no occasion for statutory construction now
exist when the Court will not look at legislative history."
Patricia M. Wald, Some Observations on the Use of Legislative
History in the 198] Supreme Court Term, 68 lowa L. Rev. 195
(1983). Justice Holmes wrote, "we do not inquire what the
legislature meant; we ask only what the statute means." Oliver
Wendell Holmes, Collected Legal Papers 207 (1920). Justice
Jackson concurred in this position, stating his preference for
making decisions "by analysis of the statute instead of by
psychoanalysis of Congress." United States v. Public Util.
Comm'n of Cal., 345 U.S. 295, 318 (1953).

The concerns about the use of legislative history can be
placed into two broad categories: separation of powers and
practical. Kenneth W. Starr, The Role of Legislative History in
Judicial Interpretation: A Discussion Between Judge Starr and
Judge Mikva, 1987 Duke L.J. 371, 375. First, separation of
powers concerns arise when courts consult legislative material,
thus creating winners and losers as they "elevate the views of
some and denigrating or rejecting the views of others. The
courts may be acting in an area that should be out of bounds to
the unelected branch." /d. at 375. In accordance with this view
was Justice Jackson, writing:

"When we decide from legislative history . .
. We must place ourselves in the place of the
majority of Congress and act according to
the impression we think this history should
have made on them... . That process seems
to me to be not the interpretation of a statute
but creation of a statute."

Public Util. Comm'n, 345 U.S. at 318. Second, practical
concerns arise because it is well known that "technocrats,
lobbyists, and attorneys have created a virtual cottage industry
in fashioning legislative history so that the Congress will appear
to embrace their particular view in a given statute... . This
history-making can work as an abuse of the legislative process."
Starr, supra at 377. More recently, Justice Scalia, concurring
in Conroy v. Aniskoff, 507 U.S. 511 (1993), criticized the
majority for employing legislative history after declaring a
statute to be "unambiguous" and "unequivocal." He wrote:

That is not merely a waste of research time and
ink; it is a false disruptive lesson in the law . . .
. This undermines the clarity of law .. . We are
governed by laws not by the intentions of

9

legislatures. As the Court said in 1844: The law
as it passed is the will of the majority of both
houses, and the only mode which is spoken is in
the act itself.

Id. at 519 (quoting Aldridge v. Williams, 3 U.S. (How.) 9, 24
(1844)). A 1989 report to the Attorney General is in accord
with this view. It states:

[A] basic principle is that legislative history that
specifies how general statutory language is to be
applied should not be considered binding on the
interpreter.

Office of Legal Policy, U.S. Dep't of Justice, Using and
Misusing Legislative History: A Re-Evaluation of the Status of
Legislative History in Statutory Interpretation, Jan. 5, 1989, at
80. Thus, given the admittedly clear and unambiguous statue in
question, the Federal Circuit’s use of legislative history which
results in something other than a plain meaning application, is
inappropriate and not supported by precedent.

c EVEN IF THE FEDERAL CIRCUIT’S USE OF
LEGISLATIVE HISTORY WAS CORRECT,
THEIR ANALYSIS WAS FLAWED IN AT LEAST
FIVE RESPECTS.

1. THE FEDERAL CIRCUIT’S DECISION
MISREADS THE LEGISLATIVE HISTORY OF 35
U.S.C. § 287 AND IGNORES PRECEDENT OF
THIS COURT

The Federal Circuit’s decision on the meaning of the
word "damages" in 35 U.S.C. § 287(a) rests, in part, on the
legislative history of the 1946 Patent Act. Nike, 138 F.3d at

10

1442. More specifically, the Federal Circuit points to a
Committee on Patents Report, H.R. Rep. No. 1503, 79th Cong.
2d Sess., where Representative Pepper stated this bill "would
not preclude recovery of profits as an element of general
damages." The Federal Circuit then mis-characterizes Pepper’s
statement by stating that, "calling infringer’s profits ‘an element
of general damages’ was not unusual, for it reflected common
usage." Nike, 138 F.3d at 1442. The text of H.R. 531] (the bill
that amended the predecessor of 35 U.S.C. § 287), however,
changed the statute from:

"for an infringement the complainant shall be
entitled to recover in addition to the profits
to be accounted for by the defendant, the
damages the complainant has sustained
thereby"

(emphasis added), to:

"for an infringement the complainant shall be
entitled to recover general damages which
shall be due"

(emphasis added).

The report went on to state that "the object of the bill is to
make the basis of recovery in patent-infringement suits general
damages, that is any damages that the complainant can prove,
not less than a reasonable royalty . . . rather than profits and
damages" (emphasis added). In fact, this Court cited the same
committee report to justify its holding that no recovery for
infringer’s profits may be obtained under Section 287. Aro
Mfg. Co. v. Convertible Top Co., 377 U.S. 476. 506 (1964).

1]

Thus, the legislative history demonstrates that the term
"general damages" in the amended bill meant damages at law--
economic loss or just compensation to the complainant which
can include the complainant’s lost profits--and not "infringer’s
profits" which is why they are specially set out in 35 U.S.C. §
289.° If this argument seems to make the legislative history
unclear, perhaps one should follow one commentator’s sarcastic
advice that "whenever the legislative history is ambiguous it is
permissible to refer to the statute." Reed Dickerson, The
Interpretation of and Application of Statutes 164 (1975).

In Hirschey v. FERC, 777 F.2d 1 (D.C. Cir. 1985), then
Circuit Judge Scalia wrote in a concurring opinion:

I frankly doubt that it is ever reasonable to
assume that the details, as opposed to the
broad outlines of purpose, set forth in a
committee report come to the attention of,
much less are approved by, the House which
enacts the committee's bill.

In 1982, the following illuminating exchange occurred
between members of the Senate, in the course of floor
debate on a tax bill:

* Should one accept the Federal Circuit's “common usage"
argument to call infringer’s profits part of general damages, it is
worthwhile to consider 35 U.S.C. § 296 adopted in 1992: "remedies
[against a state for patent infringement shall] include damages, interests,
costs, and treble damages under section 284, attorneys fees under section
285, and the additional remedy for infringement of design patents {of the
infringer’s profit] under section 289" (emphasis added).

1?

Mr. ARMSTRONG. ... My question, which
may take [the chairman of the Committee on
Finance] by surprise, is this: Is it the
intention of the chairman that the Internal
Revenue Service and the Tax Court and
other courts take guidance as to the intention
of Congress from the committee report
which accompanies this bill?

Mr. DOLE. I would certainly hope so....
Mr. ARMSTRONG. Mr. President, will the
Senator tell me whether or not he wrote

the committee report?

Mr. DOLE. Did I write the committee
report?

Mr. ARMSTRONG. Yes.

Mr. DOLE. No; the Senator from Kansas
did not write the committee report.

Mr. ARMSTRONG. Did any Senator write
the committee report?

Mr. DOLE. I have to check.

Mr. ARMSTRONG. Does the Senator
know of any Senator who wrote the
committee report?

Mr. DOLE. I might be able to identify one,
but I would have to search. I was here all
during the time it was written, | might say,
and worked carefully with the staff as they
worked....

Mr. ARMSTRONG. Mr. President, has the
Senator from Kansas, the chairman of the
Finance Committee, read the committee
report in its entirety?

Mr. DOLE. | am working on it. It is not a
bestseller, but | am working on it.

Mr. ARMSTRONG. Mr. President, did
members of the Finance Committee vote on
the committee report?

Mr. DOLE. No.

Mr. ARMSTRONG. Mr. President, the
reason I raise the issue is not perhaps
apparent on the surface, and let me just state
it:.... The report itself is not considered by
ue Committee on Finance. It was not
subject to amendment by the Committee on
Finance. It is not subject to amendment now
by the Senate... . If there were matter
within this report which was disagreed to by
the Senator from Colorado or even by a
majority of all Senators, there would be no
way for us to change the report. I could not
offer an amendment tonight to amend the
committee report . . . [FJor any jurist.
administrator, bureaucrat, tax practitioner, or
others who might chance upon the written
record of this proceeding, let me just make
the point that this is not the law, it was not
voted on, it is not subject to amendment, and
we should discipline ourselves to the task of
expressing congressional intent in the statute.

Hirschey, 777 F.2d at 7-8 n.1 (citing 128 Cong. Rec. $8659
(daily ed. July 19, 1982)). Therefore reliance on the committee
report discussing Section 287 is tenuous at best.

14

_ THE FEDERAL CIRCUIT’S DECISION IGNORES
THE PURPOSE AND EFFECT OF THE PATENT
ACT OF 1952

The Federal Circuit correctly noted that with the 1952
codification of the patent law, "Section 284 as written did not
state the 1946 Act’s concept of recovering profits as an element
of general damages, a purported ambiguity." Nike, 138 F.3d at
1442. The Federal Circuit, however, chose not to follow the
logical result of its observation. The Patent Act of 1952. Pub.
L. No. 82-593, 66 Stat. 792, did more than codify all of the
Revised Statutes sections pertaining to patents. The Act’s
purpose was to "revise and codify the laws relating to patents."
H.R. 7794, 66 Stat. 792. This bill was a result of:

a preliminary draft [being] prepared and
distributed widely during the year 1950. .
Since this draft was intended principally to
elicit suggestions and criticisms from the
patent bar and others interested in the subject
it contained many proposed changes in
substantive law which had been suggested
during the past quarter century.

* * A

Finally in May of 1952 the [House
Committee on the Judiciary] reported out a
‘clean’ bill.

Charles J. Zinn, Commentary on New Title 35 US. Code
"Patents", 1952 U.S.C.C.A.N. (66 Stat.) 2507. Therefore,
assuming the legislative history of the 1946 Act. upon which the
Federal Circuit relied, is clear, it must be viewed in light of the
subsequent codification and interpretation of the 1952 Act.

3. THE FEDERAL CIRCUIT’S DECISION DOES NOT
ACCORD PROPER WEIGHT TO THIS COURT’S
~~ DECISION IN ARO MANUFACTURING

The Federal Circuit states that while this Court, in Aro
Mfg. “clarified the measure of recovery for infringement, it did
not deal with the patent marking requirements." Nike, 138 F.3d
at 1442. In Aro Mfg., this Court held that "damages" as used
in 35 U.S.C. § 284 meant that a patent infringement
complainant can only recover their losses and not infringer’s
profits. Aro Mfg., 377 U.S. at 507. Thus, the Federal Circuit's
statement is baffling for at least two reasons. One, they accept
the fact that "damages" in Section 284 does not include the
equitable relief of infringer’s profits, notwithstanding their
earlier reliance on the 1946 Act's legislative history; and two,
they presume this Court was not aware of Section 287’s
marking requirements when this Court decided a case under
Sections 271 and 284 of the same title. This is simply too much
to swallow. The Federal Circuit attempts to limit the holding of
Aro Mfg. to utility patents by stating that while it "eliminated
recovery for infringer’s profits in utility patent infringement, this
remedy for design patents was unaffected." Nike, 138 F.3d at
1443. However, this Court stated, generally, that "in patent
nomenclature what the infringer makes is ‘profits,’ and what the
owner of the patent loses by such infringement is ‘damages.’
Aro Mfg., 377 U.S. at 505 (quoting Duplate Corp. v. Triplex
Safety Glass Co., 298 U.S. 448, 451 (1936)). Therefore, this
Court drew a distinction between design and utility patents
when they distinguished between "damages" and "infringer’s
profits."

16

4. THE FEDERAL CIRCUIT’S DECISION
CONVENIENTLY DISMISSES SOME
LEGISLATIVE HISTORY OF THE PATENT LAWS
WHILE CONSIDERING OTHERS

The Federal Circuit mentions that in the 1952 Patent
Act, the phrase "knowing that the same has been so applied"
was removed from Section 289 which provides an additional
remedy (i.e., infringer’s profits) to holders of design patents.
Nike, 138 F.3d at 1442. The Federal Circuit admits that this
phrase, which was in the original 1887 version of Section 289,
is "relevant to the marking statute." /d However, the Federal
Circuit simply dismissed this fact rather than naturally
concluding that the additional remedy afforded by Section 289
(i.e., infringer’s profits), at least after 1952, is irrespective of the
marking provisions of Section 287.

5. THE FEDERAL CIRCUIT’S DECISION Dip Not
OBSERVE AN "ANOMALY" IN TITLE 35, BUT
INSTEAD CREATED ONE

The Federal Circuit goes on to suggest that the
"marking statues underwent an independent evolution leading
to the anomaly we today observe where the word ‘damages’ has
different meanings in different provisions of Title 35." /d at
1443. The supposed "anomaly," however, has not been residing
in the patent statute, but rather was created by the Federal
Circuit. This "independent evolution" analysis again ignores the
purpose of the 1952 codification of the patent laws.’

The plain meaning of 35 U.S.C. § 287(a) does not lead
to an absurd result when collectively considered with Sections

* See supra note 1.

17

287, 284 and 289, and the prior case law. The only absurd
result is the now internal judge-created inconsistency within the
patent laws, which the Federal Circuit and its exclusive patent
appellate jurisdiction was, in part, created to prevent. The
consistency that was previously exhibited in Aro Mfg. (damages
do not include infringer’s profits) and Braun (no trebling of
infringer’s profits because they are not damages) has been
destroyed by the Federal Circuit’s decision. The word "profit"
is used only once in Title 35 (i.e., Section 289) whereas the
word "damages" appears six times. The only reasonable
conclusion is that the word "profit" was intentionally used in
Section 289 and that the drafters of the Patent Act of 1952 were
well aware that one does not include the other. The Federal
Circuit’s decision, if left intact will open the door for equally
absurd arguments such as "offers to sell, or sells" as recited in
35 U.S.C. § 271 is not equivalent or means something different
than "offering to sell, or selling" as recited in 35 U.S.C. § 287,
and thus producing countless more "anomalies." This court
should act to prevent such an unwarranted increase in statutory
construction issues for lower courts and this Court to decide.

18

IV. CONCLUSION

For the foregoing reasons, Reebok and Rockport
respectfully submit that the district court correctly found that
Nike was entitled to the infringers’ profits under 35 U.S.C. §
289 irrespective of the marking requirements of 35 U.S.C. §
287(a). Accordingly, this Court should grant a writ of

certiorari.

Dated: July 6, 1999

Respectfully submitted,

STERNE, KESSLER, GOLDSTEIN

Attorney of Record
David K.S. Cornwell

Tracy-Gene G. Durkin

Sterne, Kessler, Goldstein & Fox P.L.L.C.
1100 New York Avenue, N.W. Suite 600
Washington, D.C. 20005-3934

(202) 371-2660

Curt Krechevsky

Assistant General Counsel
Douglas A. Batt

Technology Counsel

Reebok International Ltd.
The Rockport Company, Inc.
100 Technology Center Drive
Stoughton, MA 02072

(781) 401-5000

19

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_0923%3A3. Public record. Not legal advice.