With legislation passed in the House, the U.S. Senate is set to move forward on multiple bills to combat the costly problem of patent trolls. While current proposals address issues with transparency, patent quality and litigation procedure, they do little to address growing problems with “design patents.”
What most people imagine when they think of patents are “utility patents,” which offer protection for new technologies as a way to foster innovation. But intellectual property law also extends protection to the non-functional elements of a product's design. This can include the shape of a camisole or generic-looking fuzzy slippers. In practice, an item’s shape and ornamentation often is patented to restrict competition, rather than to protect genuine innovation.
Where the terms of utility patents are dated to the day the application was filed, design patents are dated to the day they are issued. This quirk creates a loophole that allows a design patent applicant to enjoy perpetual protection by simply filing a series of "continuations" in conjunction with the patent application.
Design patents once were considered fairly unimportant, but circumstances have changed. In addition to the Hague agreement that took effect last year, the 2008 decision in Egyptian Goddess vs. Swisa did a lot to strengthen design patents. That decision made design patent infringement much easier to prove by replacing the “point of novelty” test with a test that finds, if an ordinary observer would find the designs of two products to be substantially the same, then the patent is infringed. Design patents also are cheap, easy to procure and, unlike utility patents, require no maintenance fees, making them attractive to firms who wish to bolster their patent portfolios.
Under current infringement standards, if your fuzzy slippers, your camisole or – more crucially — the rounded edges on your smartphone are substantially similar to some patented competitor, you can be held liable for potentially hundreds of millions in damages. This is particularly problematic when there is no effective process to raise the objection that certain patented designs are not novel, and may have already existed for decades.
These differences also pose a problem for Congress as it drafts patent reform legislation. At The Faculty Lounge, professor Sarah Burstein highlights some unintended consequences of current patent reform proposals, which overlook how design patents work. The House’s patent bill, for instance, requires putative patent trolls to do things that either aren’t possible or don’t make sense in design patent cases.
Bringing design patent applications out into the open, like their utility patent cousins, would do a lot of good. It would bring down the number of lawsuits by exposing frivolous patent applications. In turn, this would enable more businesses to invest in jobs and development, rather than being forced to pay settlements for infringement.
Congress should look to address these problems as it moves forward with efforts to reform the patent system. To help organize these efforts, my colleagues at the R Street Institute have launched a new coalition called Unfair by Design. Check it out at unfairbydesign.com.
Kolassa is associate policy analyst for R Street Institute, a contributor for R Street's Word on the Street blog and assistant editor of UnitedLiberty.org