Design Patents Taking Center Stage in IP Litigation

Center Stage.pngBy Toban Platt

In Apple v. Samsung, the Federal Circuit court of appeals showed how valuable a design patent can be by affirming the trial court’s award for over $500 million dollars to Apple based largely on its design patents. This decision put design patents in the spotlight of intellectual property protection. The case first started in 2012 and revolved around design patents on particulars of Apple phones, including D618,577 (black rectangle with rounded corners), D593,087 (bezel on surrounding rim), and D604,305 (colorful grid of 16 icons). Apple was able to show that several Samsung phones were substantially similar to the iPhone, which included the design patents at issue. The court found this entitled Apple to collect all of the profits Samsung had made from its infringing phones.

In the world of Intellectual property protection, design patents are often seen as an afterthought, a consolation prize to the far more prestigious utility patent. Application numbers support this, with only 39,097 design patent applications filed compared to 589,410 utility patent applications filed in 2015. Utility patents popularity is at least partially due to the amount of protection they offer, allowing patent holders to exclude any devices that function in a similar manner. Design patents only offer protection against devices that directly copy or are substantially similar to the protected device’s design. However, as Apple has found out, having the right design patent is like finding a golden ticket.

While the protection of a design patent is limited to substantially similar products, substantial similarity is a relatively low bar to clear. In order to show substantial similarity, a design patent holder simply needs to prove that the resemblance between two designs can deceive an ordinary observer, and that this deception may induce a consumer to purchase one product thinking it is another. This requires no proof that any purchasers were actually confused or deceived, just that they could be. When the court of appeals used this “ordinary observer” standard in Apple v. Samsung, Apple was easily able to prove that Samsung phones were substantially similar. Apple didn’t have to find any actual consumers that were confused by the products, it succeeded by essentially putting the devices side by side and pointing out the similarities.

Once substantial similarity has been established, the patent holder is entitled to the entirety of the infringer’s profits made from the article of manufacture bearing the patented design. The “article of manufacture” can be any device which contains a piece protected by a design patent. This means the patent holder doesn’t need to show what percentage of the infringer’s profit is attributable to the infringement. Apple was given the profits from all of the Samsung phones which were found to be substantially similar, resulting in a $500 million windfall. However, this could be the last award of that size given for design patent infringement. On Tuesday, the United States Supreme Court heard oral arguments for Apple v. Samsung on whether an award for design patent infringement should be limited to those profits attributable to a component of a product, or if the patent holder should continue to be awarded the total profits for the product. Based on questions asked by the Justices, it seems likely the Court will issue a very narrow ruling where it distinguishes the outside of the phone from interior components. Whatever the Court decides, it is likely the Justices will ask the legislature to change the law from awarding complete profits to an apportionment requirement. A patent holder would then have to prove what percentage of the infringer’s profit was due to the infringed design.

Companies like Crocs, Tiffany, Adidas, and Jenny Yoo wrote briefs supporting Apple and advocating to keep the current damages. But until the legislature changes the law, design patent applications will likely continue to increase as companies see the potential benefits of large money awards. However, this increase will not be due entirely to tech companies, as companies like eBay, Google, Facebook, H-P, Newegg, and Pegasystems filing their own amicus brief supporting Samsung and advocating for lower damage awards for design patent infringement. With the Court’s opinion not due out for some time, both sides will have to wait to see if design patents stay in the spotlight or fade into the background.

Image Source: Wikipedia

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