Initial arguments in the high-stakes Supreme Court case between Apple and Samsung may have significant ramifications for retailers like Nike (NKE), Tiffany (TIF) and Calvin Klein who participated in the case.
The contentious battle between Apple and Samsung concerns whether patents can be applied to a design, or whether this would stifle innovation. The case has significant implications for the fashion and luxury good industries. For many of their products, design is obviously everything.
In the video above, Retail analyst Brian McGough explains the ramifications for companies like Nike:
“The old precedent was that an infringed company could sue for all profits from a design infringement. The oral arguments lead us to believe that the court will change it to profits attributable to the infringed component. This means the penalty for copying designs will essentially be less severe, therefore more copies will be present, and the costs to defend design patents will be higher.”
Essentially, this case could be modestly negative for these companies to the extent it forces more complex litigation over the degree of design impact in any given product. It’s something all investors should at least be cognizant of before investing in consumer-oriented companies like Nike, Tiffany and Apple.