Design decision in Apple-Samsung case is a power grab for patent court

May 20, 2015, 12:59 PM UTC
Photograph by SeongJoon Cho — Bloomberg/Getty Images

Court fights between Apple and Samsung are noisy affairs but, from a market standpoint, they serve as little more than fodder for fanboys who want to talk trash. A new appeals court ruling over design patents, however, could ripple beyond the two smart phone makers and their tribes, and impact a wide array of firms that work in tech or design.

The ruling in question came down on Monday from a unanimous three judge panel of the Federal Circuit, a controversial court in Washington that hears every patent appeal in the country, and instructed a California court to revisit a $930 million verdict from 2012. While the figure in question seems large, the court order only touches on a portion of the award and, in any case, the amount at stake is relative pocket change for Apple (AAPL) and Samsung.

Instead, the real significance of the ruling is how the Federal Circuit revised the damages, and what that will mean for two obscure areas of intellectual property law known as “design patents” and “trade dress.” Both of these are used to protect the ornamental aspects of a product, but the tests for applying them are different. (Trade dress cases take into account issues like consumer confusion and how popular the product is, whereas design patent cases do not.)

According to Sarah Burstein, a law professor at the University of Oklahoma, this week’s ruling will make design patents a more attractive legal weapon. This is because the Federal Circuit imposed a functionality standard that makes trade dress protection nearly impossible to invoke as a means to protect the iPhone — or anything else.

The court had no such qualms with design patents, however, and even declared that damages for infringing these patents should be calculated based on the value of the entire product (i.e. the whole iPhone) rather than just the value of the patented feature—like rounded corners. This ensures design patents will pack more of a punch than ever before.

“Design patents are a lot more attractive on a lot of fronts after yesterday,” said Burstein. “Now, design patents are even more important if you’re litigating in [California].”

One further upshot of the decision is more power for the Federal Circuit itself. That’s because, unlike other areas of intellectual property law (including trade dress) the court has exclusive jurisdiction over patent appeals. As such, an uptick in cases based on design patents means more work for its docket.

This is bad news for the Federal Circuit’s critics, who have described the institution as a “rogue court” that fetishizes patents at the expense of innovation, and that bears considerable responsibility for the dysfunctional state of the U.S. patent system. This criticism has also been underscored by a series of Supreme Court decisions that repeatedly reversed the patent court by a 9-0 margin.

For the tech industry, which is already experienced more than a decade of often-pointless patent litigation, the new Federal Circuit ruling could bring new trouble. In a worst case scenario, companies could begin stock-piling design patents as part of a new intellectual property arms race of the sort Apple and Samsung have been locked in for so long, and that the Federal Circuit would be unlikely to check.

Such a scenario, unfortunately, does not appear far-fetched given that design patents are swifter and cheaper to obtain than conventional utility patents. And, according to Burstein, applications for them have soared in recent years. This could mean new patent battles not only in the smartphone sector, but in any consumer category that relies on design to attract customers.
[fortune-brightcove videoid=4245096287001]

It’s too soon to say if the worst case will come to pass, especially given proposed patent reform in Congress, and given that Samsung could eventually appeal the ruling to the Supreme Court. But for now, those tracking Apple-Samsung litigation should focus on the design patents, not the dollar amounts.

Read More

Artificial IntelligenceCryptocurrencyMetaverseCybersecurityTech Forward