Design patents can award powerful monopolies over designs, as a debate over the iPhone reveals.
Will this ever end? Three years after Apple won a nearly $1 billion jury award against Samsung for copying the iPhone, patents for rounded rectangles are back in the news. The latest dispute is also leading to new attention over how such “design patents” – which grant a 14-year monopoly over a product’s appearance – could touch off a new wave of spurious lawsuits.
The Apple invention in question is US Patent D618,677, which covers design elements of the front face of the iPhone, including its curved corners. At the time of the 2012 trial, Samsung blasted Apple AAPL for trying to own rounded rectangles, but the ‘677 patent has so far held up and formed part of the massive jury award that is still in dispute.
Now, in a new twist, examiners at the U.S. Patent Office have had second thoughts. In an August ruling, they agreed to consider new “prior art” evidence, which led them to a commonsense conclusion: the rounded rectangles design is obvious, and should not have been granted a patent in the first place. Here’s a screenshot showing some of the prior art evidence pre-dating the iPhone that the examiners cited to knock down the patent:
But this finding, stemming from an “ex parte re-examination,” is not final. Apple can appeal the finding to other divisions of the Patent Office, and then to the federal court system too – a process that can tie up the outcome for years. In the meantime, the original verdict against Samsung (which is based on the ‘677 patent and other design and utility patents) stays in place.
As such, the Patent Office’s decision to knock out this particular rounded rectangle patent (there are others) is just a sideshow. For people familiar with intellectual property, the real issue at stake is the growing danger of design patents in the first place.
The problem with these patents is that they are relatively cheap and easy to obtain, and can lead to outlandish damages. In the Apple-Samsung case, for instance, a federal appeals court agreed that Samsung should pay damages on the value of the whole product – not just on the value tied to the design. As patent scholar Gary Griswold points out, this could lead to absurd results. What if someone infringes on the design of a tire attached to a giant tractor, Griswold asks? Under the logic of the ruling, the damages would be calculated on the value of the entire tractor, not just the tire.
This may sound like esoteric stuff, but it poses a real danger for companies everywhere. As Griswold notes, the damages punch of design patents could cause them to become a favorite weapon for patent trolls, whose business model is based on acquiring often-suspect patents and then coercing licensing settlements.
The Federal Circuit Court of Appeals had an opportunity to reconsider its earlier ruling. But last week, in a full panel vote, the court let it stand instead. That earlier decision also chopped down the law of trade dress, which gave other courts a role in intellectual property, in favor design patents. Taken together, these moves will add more grist to criticism that the Federal Circuit has gone “rogue,” and is more concerned with its own power than making sensible laws.
The Supreme Court, which has admonished the lower court in a series 0f 9-0 decisions, may ultimately straighten out the design patent mess. But in the meantime, companies and consumers may have to brace for more design-driven lawsuits. At a time when even the front cover of The Economist is calling for the U.S. to fix the patent system, this is a step in the wrong direction.