Wednesday, November 27, 2013

Design Patent Apportionment – “The Turducken Problem”

Everyone knows that the turkey makes Turducken look good, but it’s the duck that actually makes Turducken valuable … or is it the chicken? In any event, Turducken demonstrates a classic problem in design patent remedies – how do we disgorge “total profits” of the infringer when the profits are not necessarily attributable to the infringing design? For example, if I held a design patent on a Thanksgiving turkey, why should I be entitled to the total profits for the sale of a turducken if the infringer’s profits are, at least in part, attributable to the hidden duck and chicken? My turducken premise is running as thin as my mother-in-law’s gravy (sorry mom), but you get the point. 

This question of design patent law is more than a thanksgiving novelty. At the design patent conference at Suffolk Law School last Friday, Samsung’s attorney, Michael Geller, raised this issue in the context of the Apple v. Samsung case. From Samsung’s perspective, its accused Galaxy devices were profitable, at least in part, because of their functionality and software, not Apple’s patented designs which it was found to have infringed. 

There is some support in older design patent cases for the idea that disgorged profits should be apportioned between profits attributable to the infringing design and profits attributable to other, separable, aspects of the accused product. In Bush & Lane Piano Co. v. Becker Bros., 222 F. 902, 903-904 (2d Cir. 1915), the Second Circuit held that the infringer’s profits attributable to the infringing piano case was separable from the profits attributable to the internal mechanisms of the piano. See Bush at 903 (apportioning profits between “the structure which incloses and holds in position the piano proper, viz., the part which produces the music. The former appeals to the eye, the latter to the ear.”). According to the Second Circuit “[w]hen the patent owner is awarded the profits due to his design he receives all he is entitled to. If ... a design [patent] for a case enables the owner to collect damages for  ... the contents of the case as well, it will lead to results which shock the conscience. A design for a watch case will include the watch itself. A design for a gun case will include the gun, a design for a hat case will include the hat and so on.” Id. at 905.

The decision in Bush appears to contrast with the modern understanding of the disgorgement remedy, however. In Nike Inc. v. Wal-Mart Stores, 138 F.3d 1437, 1442 (Fed. Cir. 1998), the Federal Circuit stated that one of the key differences between the 1946 Act and the design patent statute, “as enacted in 1887, was the removal of the need to apportion the infringer's profits between the patented design and the article bearing the design.” Id. While this comment was not central to the court’s decision, Nike is viewed as a watershed decision on the nature and history of the disgorgement remedy for design patent infringement. 

Yet, Samsung’s position is not without hope.  Both the 1887 Act and the 1946 Act simply codified what had always been an equitable remedy for design patent infringement. This remedy was based on a theory of unjust enrichment or accounting which was never intended to be punitive. See SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978) (“Disgorgement is remedial and not punitive. The court's power to order disgorgement extends only to the amount with interest by which the defendant profited from his wrongdoing. Any further sum would constitute a penalty assessment.”); Restatement (Third) of Restitution and Unjust Enrichment § 51 cmt. e.4 (Tentative Draft No. 5, 2007) (“Disgorgement does not impose a general forfeiture: defendant's liability in restitution is not the whole of the gain from a tainted transaction, but the amount of the gain that is attributable to the underlying wrong.”). 

Perhaps the solution to the turducken problem lies in the equitable roots of the disgorgement remedy. It is said that "equity abhors a forfeiture,” and so perhaps courts should have enough equitable discretion, even under 35 U.S.C. § 289, to apportion an infringer’s profits in a manner that reflects the profits fairly attributable to the infringing design. 

Whichever way you slice it, the turducken problem will likely play a major role in any appeal from the damages award in  Apple v. Samsung. The parties have already briefed this issue before Judg Koh. I suspect that the Federal Circuit may use this as an opportunity to refine its comments about apportionment in the Nike case. 

Happy Thanksgiving everyone!

Monday, November 25, 2013

Design Patent Links – Nov. 25, 2013

It was a fairly slow week in design patent law. Aside from Suffolk Law School’s design patent conference, all eyes were on Apple v. Samsung and the Federal Circuit’s third decision in the ongoing worldwide litigation between the two technology giants. As for the design patent conference, I think it is safe to declare it a great success. Several guest speakers, including design patent giants Chris Carani, Perry Saidman, and Michael Zeller presented on everything from the “matter of concern doctrine” to the damages issues being raised in Apple v. Samsung. For full coverage see our live

blog of the A.M. session and the P.M. session.

In other news, the analysis of the Federal Circuit’s decision in Apple v. Samsung III continues to pop up across the Internet. Prof. Sarah Burstein’s piece on Patently-O is a good summary of the court’s decision and potential ramifications.

Law 360 had a short explanation of the facts relating to the latest design patented fashion fight in Hanesbrands v. Lululemon, which was filed last week. This should be another interesting design patent grudge match in the fashion world.

As always, if you have any design patent news you would like to see on the Ordinary Observer, please do not hesitate to contact me. Thanks!

Friday, November 22, 2013

Design Patents: Modernizing an Old Property Interest (P.M. Session Live Blog)

We are back from our lunchtime discussion that was directed by Gary Dewar, Senior IP Counsel of New Balance.  Mr. Dewar lead us on an interesting discussion of design patent practice from the client's perspective.  Most interesting was Mr. Dewar's observation that clients tend to view design patents as a gap filler, used when competitors or counterfeiters seek to copy the appearance of a product, but are incapable of replicating the functionality of the product.  Another helpful observation was that the strength of a design patent was almost secondary to the speed with which it can be awarded by the patent office.  Most of the "businesses" that design patent owners confront have no interest in contesting infringement or validity and will simply cease all operation upon receiving a cease and desist letter.  Practitioners should keep this in mind.

More from the P.M. session after the jump!

Design Patents: Modernizing an Old Property Interest (A.M. Session Live Blog)

In lieu of this week's Design Patent Roundup, we will be live blogging the discussion taking place at today's design patent conference at Suffolk University Law School.  We will be providing highlights through Facebook and Twitter, but you can find more details here on the blog.  People are just beginning to arrive for the conference, so the live blogging will commence soon.  Enjoy!

See all our notes after the jump. 

Wednesday, November 20, 2013

Apple v. Samsung – Part III: Shouldn’t a Different Set of Rules Apply to Design Patent Injunctions?

Apple v. Samsung is truly the design patent case that keeps on giving, and Monday’s Federal Circuit decision is no different. This time, Apple asked the Court to review Judge Koh’s decision denying Apple’s request for a permanent injunction against future infringement of Apple’s patents. In a unanimous decision, Judges Prost, Bryson, and O’Malley affirmed the district court’s decision with respect to Apple’s design patents, but vacated and remanded for further consideration with respect to Apple’s utility patents.

Essentially, the Federal Circuit found that there was no evidence of a “causal nexus” between Samsung’s infringement of Apple’s design patents and Apple’s established loss of market share to Samsung. See Apple v. Samsung III, at 12 (“If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.”). According to the Court, Apple's loss of market share may have occurred because of several unrelated and perfectly legal reasons having nothing to do with Apple’s design patents. As such, the court reasoned that irreparable harm could not be shown as a result of future infringement by Samsung. According to the Federal Circuit, the causal nexus requirement “reflects general tort principles of causation.” Id. at 13 (emphasis added).

However, Apple v. Samsung III may be more noteworthy for what it failed to discuss. For example, it is unclear whether the “causal nexus” requirement makes sense in the context of design patents, where Apple already has an equitable remedy for disgorgement of Samsung’s illicit profits for any ongoing or future design patent infringement. In reality, Apple already has a de facto injunction against further infringement by Samsung because it would be entitled to recoup all of Samsung’s profits for any such design patent infringement, even without proving any actual harm or damage to Apple. Yet, the Federal Circuit never addressed this significant difference between utility and design patents in Apple III. Indeed, the disgorgement remedy for design patent infringement is an exception to the very “tort principles of causation” referenced by the court.

In the author’s opinion, the built-in equitable remedy for disgorgement of profits from design patent infringement should impact the permanent injunction analysis for design patents. The equitable remedy of disgorgement exists because Congress has determined that harm and causation should be presumed when a party infringes a design patent. This equitable principal of design patent law should inform the court’s analysis when considering a permanent injunction against further design patent infringement.

Apple does not appear to have argued that design patents should not be subject to a causal nexus requirement because of the unique disgorgement remedy for design patent infringement. However, the court made one statement that offered a glimpse into its possible position on this line of reasoning. Apple argued that the “causal nexus” requirement should only apply to a motion for a preliminary injunction so as not to vitiate a patent owner’s right to exclude others from practicing the patent. In response the Federal Circuit quoted the Supreme Court’s decision in eBay, reasoning that “the creation of a right is distinct from the provision of remedies for violations of that right.” Id. at 17 (eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392 (2006)). However, this admonishment does not explain the failure to address the impact of the disgorgement remedy on the injunction analysis. Presumably, the creation of an equitable remedy, such as disgorgement, would be highly relevant to the application of another equitable remedy for the same violation, such as an injunction.

Just add this to the growing list of questions for Apple and Samsung’s attorneys during this week’s design patent conference at Suffolk University School of Law.

Tuesday, November 19, 2013

Design Patent Links - Nov. 19, 2013

We start this week’s design patent links with a story from the lighter side of design patent litigation… and shapewear… Jenny B. Davis of the ABA Journal has penned an epic poem about the Spanx v. Yummie Tummie design patent fight. It’s a funny read for anyone interested in design patents, shapewear, or reality TV. For everyone else, it will just be strange and confusing…

Amaya Singh of the Indian IP firm, Lex Orbis, has authored an interesting article on the differences between U.S. design patent law and that of India. One interesting fact about Indian design patent law is that designs are still judged for aesthetic value. Ms. Singh explains that Indian design patents must be “‘Judged solely by the eye’ [which] has been interpreted to mean that every design is to be looked at for an ‘eye appeal’, i.e. the aesthetic value of the design needs to be gauged.”

China IPR is reporting that the Chinese Patent Office is considering draft regulations that would allow for design patent protection for graphical user interfaces. Currently, the Chinese Patent Office does not allow such design patents.

Here in the United States, design patents for graphical user interfaces continues to be a source of debate. This week, PatentlyO published a guest post by Michael Risch, Professor of Law at Villanova University School of Law regarding “Functionality and Graphical User Interface Design Patents.” The post is a preview of Professor Risch’s article in the Stanford Technology Law Review, in which he takes the position that functional elements of GUI’s should be excluded from design patent protection.

Last week, Richmond School of law hosted their seventh Annual Evil Twin Debate in the law school's moot court room. This year’s debate featured Professor Mark Janis of Indiana University's Maurer School of Law and Professor Andrew Torrance of the University of Kansas School of Law. They debated the topic Design Patents: Great Idea, or Greatest Idea? The law school has posted video of the debate in years past, and we will add a link to the debate as soon as it becomes available.

The California Patent Litigation blog discusses Intellectual Property Owner’s Association 2013 IP Record, and its potential implications for design patent litigation. Apparently, there were 658 more design patent applications filed in 2012 than in 2011 and that number is likely to grow again in 2013.

Check back next week for more design patent links! And don’t forget to sign up for Suffolk Law School’s design patent conference this Friday! See you there.

Friday, November 15, 2013

Design Patent Roundup - Nov. 15, 2013

This weeks new U.S. District Court filings come to us from a variety of industries: from heavy metal product manufacturers, to other, softer areas of the design patent world. Several of these cases present interesting facts and questions of law that we will be eager to see develop in greater detail as the cases progress. Follow us past the jump to learn more.

Friday, November 8, 2013

Design Patent Roundup - Nov. 8, 2013

Perhaps as a way of driving home a point made in our post this past Wednesday, more than half of this week’s new cases come to us from the Central District of California, the undisputed hub of design patent litigation in recent times.  Will that prove to be a winning strategy for plaintiffs in the long run?  We can’t say.  We can tell you more about the issues that court will be seeing, such as whether it is a good idea to claim your company logo as part of your design, after the jump.

Wednesday, November 6, 2013

Design Patent Statistics, July 30-Oct. 25, 2013

Because we have been away for a while, this week we thought it might be a good idea to look through the backlog of new design patent case filings we missed over the past few months and see what the cases told us in aggregate, even if we cannot break them down on an individual basis.  The following information is drawn from a sampling of sixty four cases filed in the United States District Courts between July 30 and October 25, 2013, in which the plaintiff or counterclaim defendant alleged infringement of at least one United States Design Patent.  Here is what we observed.

Monday, November 4, 2013

Design Patent Links - Nov. 4, 2013

We are less than three weeks away from the second major design patent conference of 2013! On Friday, November 22, Suffolk Law School will be hosting a design patent conference titled “Design Patents : Modernizing an Old Property Interest.” The conference promises to be an insightful follow-up to the design patent conference hosted by Stanford Law School back in April. You can see the full details for the event here. The topics that will be discussed during the conference include design patent scope, design patent litigation, design patent damages, and Hague Treaty rulemaking. The confirmed speakers and panelists thus far include Chris Carani , Perry Saidman, and David Gerk and Brian Hanlon, both from the U.S. P.T.O. Attorney Michael T. Zeller, who represented Samsung in the Apple v. Samsung case will also be participating.

This conference should be another great opportunity to discuss contemporary issues in design patent law and to hear from some of the preeminent experts in the design patent space. The Ordinary Observer is planning to attend and will provide detailed coverage. If you are interested in attending, please sign up here.

For those interested in discussing the conference on Twitter, the organizers are encouraging the public to use the hash tag #designpatentlaw.

In other design patent news, Fanny Siu and Alison Wong of Bird & Bird have penned an informative article on the ease of seeking design patent protection in China.

Tracy-Gene G. Durkin and David K.S. Cornwell of Sterne Kessler Goldstein & Fox have offered an informative summary of the Federal Circuit’s recent design patent decision in Spencer v. Taco Bell Corp. The decision provides further insights into the Federal Circuit’s thinking on the written description requirement for design patents in the wake of the decision in In re Daniels just a few short months ago.

Over at The Faculty Lounge, Sarah Burstein has posted an article about the double standards for utility patent prosecutors and design patent prosecutors. Did you know that design patent prosecutors can qualify for the position with an art degree?

As always, we will be on the lookout for more design patent news!

Friday, November 1, 2013

Design Patent Roundup - Nov. 1, 2013

This Thursday being Halloween, a holiday dedicated to inventive and novel designs, it seems fitting that this was a particularly active week for design patent filings in the United States District Courts. Unfortunately, this week’s litigants chose to eschew the spirit of the holiday in favor of designs primarily related to industrial and commercial products.