The Unappreciated Value of Design Patents
By: Dr. Dariush Adli
Design patents are often treated as the forgotten sibling of their better known and more popular utility patents. That is unfortunate because it fails to give proper recognition to the tremendous potential of design patents to add value to a business’s bottom line. Relative to utility patents, design patents are inexpensive to obtain, fast to issue, easy to enforce in court against infringers, and enjoy preferential treatment for damages recovery. Developments in the legal and enforcement fronts over the past decade have made design patents even more valuable. Over the past decade, the potential value of design patents has been the focus of intense media focus starting with the high-profile legal dispute between Apple and Samsung in 2012, which led to a jury award of $400 Million in favor or Apple, and continuing with subsequent court cases since then.
Design patents protect non-functional decorative and aesthetic aspects of the items they cover, including products, computer generated imagery, and even animated icons. In contrast, utility patents protect structure, use, operation, and function of products and processes. Over the past two decades, with the development of computer-generated imagery (CGI) and animation, design patents have spread their wings and have rapidly gained recognition as a key intellectual property asset for businesses of all sizes and types. As evidence of its growing recognition and value, the number of design patent applications filed in the U.S. has increased by 250%, from 18,000 in 2000 to around 47,000 I 2019.
As noted, design patents are easier and less expensive to obtain than their utility counterparts. Whereas a utility patent can take 3 years or more from filing to issue, the corresponding time span for a design patent is a year or less. On the cost front, design patents face much less scrutiny by USPTO examiners during the examination phase and have no maintenance fees after issue. As a result, they cost much less to obtain and maintain than utility patents.
On the marketing side, as with utility patents, design patents provide their owner with the ability to promote and market the covered items with the coveted “patent pending” designation, which immediately provides the item with a marketing advantage over its competition. Another factor in the growing recognition of the value of design patents, is the emergence of online platforms such as Amazon, Ebay and Facebook, where a design patent owner can exclude infringing competitors from the platforms.
On the legal front, a 2008 change in law by the Federal Circuit court of appeal, which has plenary jurisdiction over all patent appeals in the country, re-defined the standard for proving design patent infringement from a cumbersome two-step process, which focused on the design patent’s “point of novelty” to a simpler one-step standard based on substantial similarity. This development made it easier to prove infringement, which, in turn, contributed to the enhanced value of design patents.
As with utility patents, available remedies for design patent infringement include injunctions, monetary damages, and potential attorneys’ fees. An additional damages remedy, further discussed below, that is available to design patents, but not for utility patents, is the infringer’s total profit on the accused product.
As with utility patents, design patent applications are subject to examination by the U.S. Patent and Trademark Office (USPTO), which examines the applications for the three basic criteria of utility, novelty and non-obviousness. Unlike utility patents, however, design patents do not include a written description but are defined by the drawings. As a result, design patent applications should contain a sufficient number of views from different angles to fully cover the inventive design.
On the international front, a U.S. design patent applicant can expand the reach of its patent by filing for international protection, which may be achieved by direct filing in a foreign country or by single filing of an international application under the “Hague System for the International Registration of Industrial Designs”, which now has over 90 member countries. To benefit from U.S. filing date, any foreign filing needs to be done within six months of any earlier U.S. filing date. In addition, to maintain eligibility for patent protection, any application in the U.S. or abroad needs to be made prior to public disclosure or commercial use of the inventive design.
Because design patents are defined by their drawings, proving infringement is easier compared to utility patents were the claims must first be interpreted by the court in an often elaborate “claim construction” proceeding. For infringement determination, the test for design patent infringement is known as the “ordinary observer” test. Under this test, if the ordinary observer, giving the attention a purchaser would usually give, concludes that the patented design and the infringing design are substantially the same, then there is infringement.
Another advantage enjoyed by design patents over utility patents is in the area of damages recovery in infringement litigation. Both utility and design patents are eligible for lost profits or reasonable royalty as a measure of damages. However, damages for design patents can additionally include total profits of the infringer on the infringing product. A famous example of a high design patent damages recovery is Apple v. Samsung. The dispute in that case involved design patents Apple had obtained for the icons on its iphones. Apple contended that Samsung smart phones at the time were using icons substantially similar to the iphone icons. The jury agreed and awarded Apple the entire profits Samsung made on its smart phones, totaling $400 Million. The court rejected Samsung’s argument that it should only have to pay a portion of its phone profits corresponding to the icons and not the entire phones.
When a component is an inseparable part of a product, the “total damages” standard available to design patents, enables a design patent holder, whose patent is infringed by the component, to recover profits on the entire product, not just the infringing component. For e.g., in the case of a automobile hood that is an integral part of the automobile, an infringing hood would expose the infringer to profits on the entire automobile and not just the hood. For e.g., in Pacific Coast Marine Windshields v. Malibu Boats, the court awarded the holder of a boat windshield design patent all of the profits from the entire boat.
Conclusion:
A combination of legal and market developments over the past decade have brought the value of design patents into renewed focus. Compared to utility patents, design patents are less expensive, faster to issue, easier to enforce, and eligible for higher damages recovery in infringement lawsuits.