February 16, 2018 at 5:00 am ET
From Senator Orrin Hatch’s call for renewed patent reform legislation to the Supreme Court’s landmark ruling on patent litigation venues in TC Heartland v. Kraft Foods, 2017 was full of high-profile intellectual property developments. In fact, during fiscal year 2017, a record number of design patents were issued, according to Patently-O.
In light of this unprecedented proliferation of design patents, Round 1 Million in the court battle between Apple and Samsung garners added significance. Design patents – and infringement awards – were at the heart of the dispute, with the Supreme Court finally deciding that “the relevant ‘article of manufacture’ [. . .] need not be the end product sold to the consumer but may be only a component of that product.” The court, however, declined to establish a test for determining that article of manufacture to which the design is applied, and the case has returned on remand to the Northern District Court of California.
This test was among the primary topics of discussion during last week’s Engine Advocacy panel discussion, “Design Patents and Defining the Article of Manufacture – One Year Later.” The four panelists from the legal, technology, and startup communities shared common concerns for the subjectivity of interpretation and broader downfalls of the test as proposed by Judge Lucy Koh.
And what about the influx of design patent grants in 2017? Just like the design test in its current form, there is reason to question their quality. Take, for example, a patent highlighted in May 2017 by the Electronic Frontier Foundation’s “Stupid Patent of the Month”: Ford Motor Company’s design patent for a windshield. The patent – which only covers the non-functional aspects of a windshield – stretches the limits of the very purpose of design patents, while potentially opening the door for Ford to sue for use of any windshield. Sigh…really Ford? Really? Did we forget that 100 years ago Henry Ford unleashed the automobile industry in the US when he courageously fought off a Patent Troll!
Patents of dubious quality, or filed by holders with dubious intentions, are an acute hazard for entrepreneurs, especially those in the technology industry. Solopreneurs, independent innovators, and inventors often lack the financial means to defend against patent trolls who aim to weaponize patents seeking quick settlements. This can threaten bankruptcy for these smaller entities if they don’t pay to play.
In October, back in California, Koh issued an order calling for a new trial to determine the amount of money Samsung owes Apple for infringement. The retrial serves as a signal that the previous award was calculated based on flawed jury instructions, primarily the assumption that the article of manufacture MUST be the entire phone.
To this end, Koh intends to apply the four-factor test for determining the article of manufacture proposed by the Solicitor General in its Supreme Court brief. This test increases unpredictability for startups for whom uncertainty can be crippling, or worse.
The SG test’s four factors require jurors to determine the “relative prominence of the design” and “whether the design is conceptually distinct from the product.” I’m a former patent examiner and I have no idea what that means – it makes me ask: “How will a jury with no intellectual property expertise navigate this?”
No guidance was offered on the relative weight of each factor, leaving open the possibility that two different juries could reach two vastly different conclusions over the same design patent. These “black box” verdicts suggest that neither side of an infringement suit would know their chances in court.
Certainty and clarity benefit when calculable assessments are made. The retrial presents an opportunity to offer clarity for patent holders and a firmly established way forward in future design patent disputes.
The challenge of finding a universally appropriate test is not insurmountable. The “Entire Market Value Rule” offers an example of a successful test to define the article of manufacture in similar disputes. Assessments of calculable value are far more predictable than the subjective dice roll of the SG test.
The proposed test lacks guidance for future design patent cases, and reverses the progress from the Supreme Court. The SG’s four factors reintroduce complexity and confusion into design patent disputes. Adopting this approach will leave everyone from innovators to jurors scratching their heads.
The implications of this case, however, go far beyond just the two companies. After all, those awarded the 33,000 plus design patents issued this year range from single-person startups to Fortune 100 companies. And in October, the U.S. District Court applied the SG test in the ruling in Columbia v. Seirus – the first design patent decision following the Supreme Court decision in in Samsung v. Apple.
Koh has an opportunity to help clarify design patent case law with the same straightforward approach as the Supreme Court took with the article of manufacture. The future of fostering new innovations from businesses of every size will depend on it.
Nagesh Rao is a former U.S. patent examiner and senior policy adviser with the Department of Commerce-U.S. Patent and Trademark Office and Office of Innovation and Entrepreneurship who represented the United States as a 2016 USA Eisenhower Fellow and adviser to the American Association for the Advancement of Science Lemelson Invention Ambassadors Program.
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