United States: Apple v. Samsung: Design Patents Reap Profits

Design patents are an often-overlooked form of intellectual property, lying somewhere at the crossroads of trademark law, utility patent law, and copyright law. After the Federal Circuit's May 18, 2015 decision in Apple v. Samsung, however, something should be very clear: design patents can be an effective competitive tool, and can pay dividends if infringing activity arises.

The appeal concerned Apple's now-famous billion-dollar verdict against Samsung on claims that Samsung infringed Apple's trade dress and patent rights in the iPhone. The Federal Circuit struck down the portion of the verdict that was premised on trade dress rights, finding that Apple's iPhone design was too functional to be deserving of trade dress protection. In essence, the Federal Circuit found that the shape of a rectangular casing with rounded corners was dictated by utilitarian concerns, and it would be inappropriate to allow Apple to have an indefinite monopoly on those features under trade dress law. The court reached a similar conclusion with respect to the iPhone's digital icons.

In sharp contrast, however, the Federal Circuit affirmed the portion of the verdict that was premised on infringement of Apple's design patents, despite the fact that the design patents claimed rights in essentially the same features that Apple had alleged were covered by its trade dress. The Federal Circuit justified the disparate outcomes on the grounds that design patent rights expire after a number of years, reducing the concern of granting their owner an unfair perpetual monopoly on useful utilitarian features.

The Federal Circuit also addressed the proper measure of damages in design patent cases. To provide some context to this, it is helpful to understand the origin of design patent damages law (codified at 35 U.S.C. § 289). In the late 1800s, the U.S. Supreme Court heard a series of cases concerning design patents for ornamental patterns on carpets. Unable to conclude that the sales of the infringing carpets were due to customers preferring the designs (as opposed to simply wanting to purchase a carpet for its utility), the Supreme Court awarded only nominal damages to the plaintiff. Congress reacted to this in the drafting of the 1887 Patent Act by allowing design patent owners to recover all profits from infringing sales. There has been significant debate over the years about whether the statute allows any apportionment of profits to reflect only those profits proven to result from customers buying the item because they preferred its ornamental design (rather than just being concerned with its utility). Samsung brought this issue to a head in its appeal, and the Federal Circuit has now provided an answer: infringers must disgorge all profits on sales of the accused product, regardless of whether the ornamental design caused the sales or not. This is now the law absent a future judicial reversal or a rewriting of the statute by Congress.

In the wake of the Apple v. Samsung decision, design patents will likely garner more attention from companies who make products with ornamental aspects. Given that design patents are typically relatively inexpensive to secure and maintain, it is only prudent for product designers to consider all options for procuring design patent protection. For those launching new products with ornamental designs, it will also be more important than ever to consider third-party design patent rights in product clearance efforts.

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