In documents filed late Friday, Bob Kohn asked U.S. District Judge Denise Cote to stay her ruling on the grounds that consumers will be irreparably harmed by new e-book prices if the settlement goes forward.

Cote approved the settlement last week as a means to fix what she concluded to be blatant price-fixing by Apple and the publishers. The arrangement calls for Simon & Schuster, Hachette and HarperCollins to truncate their contracts with Apple by this Friday and to notify other ebook retailers that they are no longer bound by contracts that set a minimum price for ebooks.

What this means in practice is that, within weeks, mega-retailer Amazon will be able to resume selling ebooks at bargain basement prices, including below cost.

Kohn, Apple and two other publishers had urged Cote to hold off approving the Justice Department settlement until the price-fixing issues could be addressed at a trial next summer. In a surprise move last week, however, Cote threw aside planned court hearings and said the settlement could go into effect.

Kohn, a prominent entertainment industry lawyer, now says that the process should be halted until it goes before the Second Circuit Court of Appeals. If Cote doesn’t grant a stay, he says, “consumer welfare” will be harmed immediately as the new ebook prices will take effect and shift pricing power to Amazon. He also points out that, if the Second Circuit ultimately sides with the Justice Department, ebook buyers will not be hurt; they can simply collect more money under a proposed compensation scheme that proposes to pay them between 25 cents and $1.32 per overpriced ebook.

In an interesting tactical shift, Kohn appears to acknowledge that the publishers did in fact collude to fix prices but that the price-fixing was not illegal. Until recently, publishers have denied that they conspired.

This suggests that the publishers who did not settle are now putting all their hopes on a Supreme Court decision that held that price collusion is not illegal in the case of market failure. The argument is based that on the idea that Amazon, with a 90 percent ebook market share, was a monopsony (a single buyer with all the power) and that publishers had to take a one-time step to fix that.

Kohn first made the argument in a remarkable comic-strip he submitted to the court last week:

Judge Cote will rule on Kohn’s request for a stay in the next few days. According to Peter Toren, a veteran federal court litigator, Cote will almost certainly turn down the request. Toren added that this will pave the way for the settlement opponents to make an urgent request for a stay to the Second Circuit.

If the Second Circuit also rejects the stay, it’s effectively game over. This is so because it would take the Second Circuit many months to address the settlement itself — and, by that point, the new ebook prices will have gone into effect and changed the market.

Here is Kohn’s stay request with some relevant parts underlined:

Kohn Request for Stay

The storyline (true or not) is simple enough — a popular inventor fights to protect the fruits of its genius from a shameless imitator. But Apple’s ability to tell that simple story in court is based on a sophisticated legal strategy that took as much time and creativity to develop as any one of its products.

Apple’s custom-built legal strategy can be seen in the unusual legal arrows it’s using to sling Samsung. The company’s dramatic accusations that Samsung “slavishly copied” the design of the iPad and iPhone, for instance, are based on a type of patent (called “design patents“) unfamiliar even to most intellectual property lawyers.

Far less common than conventional “utility patents,” design patents protect the ornamental aspects of a practical object. According to law professor Sarah Burstein of the University of Oklahoma, design patents were traditionally limited to fields like furniture and lighting until Apple began obtaining them for consumer electronics.

“It’s a credit to Apple and its patent counsel who made progress in getting them through clever claiming,” said Burstein, who specializes in design patents.

In addition to design patents, Apple is also using another lesser known form of intellectual property known as “trade dress” to jab Samsung. Unlike trademarks which protects names and logos, trade dress protects distinctive shapes and packaging like Jif’s lemon juice bottle or, in this case, the iPad.

“Most companies don’t do much with design patents and trade dress. It’s an after-thought but wasn’t for Steve Jobs,” said intellectual property lawyer Peter Toren of Weisbrod, Matteis & Copley, noting that Jobs has his name on hundreds of design patents, including the stairs of the Apple store.

Interlocking legal forcefields

Neil Wilkof, an Israeli law professor and IP lawyer, says the company’s fixation with intellectual property dates back to the 1980s when it confronted clones that copied the operating systems of Apple II computers. Apple made history in 1982 when it won an appeals court verdict declaring for the first time that companies could use copyright to protect the software embedded in chips.

For Apple, this was just the beginning of an effort to push out the legal boundaries protecting its products. By the 1990s, Apple lawyers had developed a strategy of wrapping layer after layer of legal rights around each gadget. These layers can include one of its dozens of i-related trademarks or some of the thousands of patents in Apple’s portfolio.

“Apple is very much a believer in using a coordinated, comprehensive intellectual property protection scheme,” said Toren, the IP lawyer.

In practice, this means that any Apple product — from basic headphones to a 16 GB iPad — is bristling with utility patents, design patents, trade secrets, trade dress, copyright and other legal spikes designed to keep its competitors far, far away.

The company’s obsession with intellectual property is also reflected in its refusal to prune its patent portfolio. Typically, companies let some of their weak patents lapse rather than paying thousands of dollars in maintenance fees to hold onto them. Not Apple. According to the Patently-O blog, Apple never abandons a single patent.

And the company is still at it. Apple’s most recent coup is what appears to be an unprecedentedly broad design patent for the wedge shape of its Mac Book Air laptop.

More harm than good?

Apple’s bulging intellectual property package is paying off in its fight with Samsung. The company can hold up each patent or trademark as a badge to tell the jury and the press that it alone is the inventor. If the company wins in San Jose, the verdict will vindicate both its narrative and its aggressive legal strategy.

In the bigger picture, though, Apple’s innovative use of intellectual property may ultimately be harming it and everyone else. In the years since Apple won its 1982 copyright claim, more and more companies are clogging the courts with IP claims of every description. These include big companies who use their IP to squash startups that can’t afford lawyers as well as  patent trolls — shell companies that don’t make anything but use second-hand patents to shake down companies that do (including Apple).

In the hype surrounding the Apple-Samsung, it can be easy to forget that, for consumers, more intellectual property means more monopolies — and higher prices. It also means that companies divert research money to lawyers and that the overall space for innovation shrinks.