Designing Minds

Lisa Shuchman

Corporate Counsel

10-01-2012

In the high-stakes battle between Apple Inc. and Samsung Electronics Ltd. that took place in federal court in San Jose last summer, the money and the possible economic consequences garnered much of the attention. But the case highlighted a significant change during the last quarter-century in the world of intellectual property law: the steep rise in importance of the design patent.

Back in 1988, Apple sued Microsoft Corporation, alleging that the company had infringed its copyright on the "look and feel" of the Apple Macintosh's graphical user interface. That suit, which Apple ultimately lost, was a copyright case in which Apple had to show that Microsoft had actually copied the design and appearance of Apple's computer. In 1994 the U.S. Court of Appeals for the Ninth Circuit ruled that under copyright law, "Apple cannot get patent-like protection for the idea of a graphical user interface."

Fast-forward to Apple's lawsuit against Samsung, and the focus was once again on design. Specifically, the battle was over the design of Apple's iPhone and iPad and Samsung's Android phones and tablets. But this time, Apple was alleging patent infringement—not copyright. And while some of the case dealt with utility patents—those that focus on how something works—much of it revolved around design patents, which center on how something looks. In fact, Judge Lucy Koh, who presided, noted in a ruling: "It is the design patents that are at the core of this preliminary injunction motion."

Her assessment was borne out by the jury's verdict in August, when it found that Samsung had infringed on three of the four design patents in the case. The role of the design patents had not been lost on the IP community. As Christopher Carani, a partner at McAndrews, Held & Malloy, said weeks before the case went to the jury: "With this case, design rights have taken center stage in the world of patent law."

In the 1980s and early 1990s, patents weren't as much of a focus in technology as they are today, according to Ron Epstein, chief executive officer of Epicenter IP Group, specialists in IP law. "But patents today play a more important role in protecting innovation," he says.

Design patents in particular seem ready for their close-up. In 1994, for example, 11,000 design patents were issued in the United States, according to the Patent and Trademark Office's database. In 2011 the PTO issued almost double that number: 21,356. "Until recently, utility patents received most of the attention," says McAndrews's Ca­rani. "This case is causing corporations to take a second, hard look at design patent rights—not only to secure them for themselves, but also to make sure they are not infringing design patent rights of others."

The verdict will likely result in even more emphasis on design patents, as Apple competitors strive to create products that are distinct. "Simply put," says Carani, "looks matter."

Big technology companies like Apple and Samsung have caught on. In 2001 Apple was issued 10 design patents, and Samsung was issued eight. In 2011 Apple was issued 123 and Samsung was issued 333. And in 2012, projections show that Apple is on track to be issued about 160 design patents, and Samsung (which makes many more products than Apple) about 500.

The potential for huge damages awards is one reason for the new focus. Design patents have a unique remedy. Infringement of a utility patent allows a patentee to recoup only profits associated with the patented feature. Infringement of a design patent allows the patentee to recoup the total profit.

"The provision has largely been a sleeper for 125 years," says Carani, noting that this language was inserted into the Patent Act in 1887 in response to a U.S. Supreme Court case regarding infringement of a design patent on a carpet design. "Now it has surfaced in a big way—to the tune of $2 billion."

Indeed, $2 billion of the $2.5 billion damages award Apple was seeking came from its design patents; the other $500 million was attributable to Apple's utility patents. The jury awarded the company "only" $1.05 billion.

Samsung may be hamstrung in appealing the large award, Carani says, because the design patent damages provision is codified in the statute. But in Apple's victory, Samsung may benefit in another way, he adds: "Samsung may be in a position to assert its own huge design patents portfolio."