Guest Post by Gary Griswold on Design Patent Damages

Yesterday, the Federal Circuit summarily denied Samsung’s petition for rehearing and rehearing en banc of the high profile Apple v. Samsung decision.  (The denial was per curiam and didn’t appear on the Federal Circuit’s website, so unless you follow this case very closely you may have missed it.)  In light of that development, Samsung will almost certainly file a petition for certiorari.  Below, Gary L. Griswold, former President and Chief Intellectual Property Counsel for 3M Innovative Properties Company, offers his thoughts on design patent damages following Apple v. Samsung. 

35 USC 289 – After Apple v. Samsung, Time for a Better-Crafted Judicial Standard for Awarding “Total Profits”?

Gary L Griswold[i]

In April, I published an article, 35 USC 289 – An Important Feature of U. S. Design Patent Law: An Approach to Its Application,[ii] in the IPO Law journal. A month later, the Federal Circuit handed down its decision in Apple v Samsung. An analysis of the opinion and its ramifications by Professor Rantanen subsequently appeared on Patently-O.[iii]

Rantanen concluded, “The bottom line is that high damage claims for design patent infringement are going to be much more credible in the wake of Apple v Samsung. Under the court’s ruling, it would seem entirely possible, as a hypothetical example, for an automobile manufacture to be liable for its entire profits from a particular car model if that model contained, say, an infringing tail light. Given the publicity surrounding Apple v. Samsung, my expectation is that there will be an explosion of design patent assertions and lawsuits.”[iv]

There are troubling signs that increased assertion activity has already begun. Design patents are nearly ideal assertion vehicles given that they are inexpensive to obtain with no cost to maintain, are not published prior to grant, and have a full term of protection beginning with grant rather than filing—not to mention the § 289 damages opportunity that can include total profits of the infringer.[v]

Given the good in design patents—they operate as effective and important means for protecting innovatively designed products in the marketplace—how can this good be preserved without incurring the bad— as one example, design patents becoming the next business model for patent assertion entities (PAEs)?

In my April article, I offered a proposal for judicial implementation of § 289 that would involve the court determining “if the patented design is substantially the basis for customer demand for the entire article.” If it was, § 289 total profits damages would apply to the article; if not, total profits would not be available.

The determination would involve a binary decision, not an apportionment, in keeping with the apparent Congressional intent when § 289 and its predecessors were enacted. I noted in the April paper that the “customer demand” proposal assumes that there is a presently existing basis in § 289 for the courts to evolve a practical and useful methodology to apply a “total profits” recovery that avoids clearly unreasonable results, but at the same time captures circumstances where it is sound policy to afford a total profits option for recovery.”

The court in Apple v. Samsung,[vi] in applying § 289, apparently believed its options were limited. It stated “In reciting that an ‘infringer shall be liable to the owner to the extent of [the infringer’s] total profit’, Section 289 explicitly authorizes the award of the total profit from the article of manufacture bearing the patented design…..The clear statutory language prevents us from adopting a ‘causation’ rule as Samsung urges.” The court dismissed an early 2nd Circuit decision which limited a design patent damage award to the profits realized from the sale of a piano shell or case where the shell was sold separately from the inner workings of the piano, stating that Samsung’s smartphones were not sold separately from their shells. Id. at 27-28.

If a court were to look to adopt a workable and practical application of § 289 that would work for all types of articles of manufacture, then perhaps the customer demand proposal is a pathway to a more rationally applied § 289. It is not apportionment, so does not run afoul of the Congressional intent surrounding § 289 and its predecessors. It also avoids some clearly ludicrous results. The example of a patented tire design triggering lost profit recovery on a large agricultural combine as set out my April paper would be avoided given the irrelevancy to any likely customer of the tire design as a basis for purchase of the combine.

In this example, the same outcome, of course, could be achieved by using the separate product exception. Either way, the common sense result is preferable to what otherwise would be an overly literal application of the statute.

The separate product exception, however, has serious limitations. For example, it fails to account for a situation where an inconsequential, but patented, graphical user interface design that is not sold separately is included in an electronic device. Most thoughtful commentators would agree that § 289 profits should not normally apply to these types of relatively complex electronic devices where software features of this type are typically incidental and specifically designed for the device and, thus, are integral to it.

The same issue arises for hardware components that are designed for and integrated into a consumer end product. As an example, semiconductor manufacturers are obtaining design patents on a portion of a semiconductor. Will total profits be disgorged on the entire semiconductor? Yet more troublesome, will the electronic device into which the semiconductor is incorporated be the subject of total profits recovery under § 289? Does the outcome change if the semiconductor is an internally supplied component for the electronic device, not sold separately, versus a non-custom semiconductor that is sourced from an outside vendor? By way of comparison, if there was a utility patent on the semiconductor, would it be likely that the entire device would be subject to damages under the entire market value rule?[vii]

Another example of an exception to the literal application of 35 USC § 289 is suggested by Apple in its responsive brief to “Defendant-Appellants’ Petition for Rehearing en banc.” It states: “As the panel correctly recognized, this distinctive design was not severable from the inner workings of Samsung’s smartphones, see Op. 27-28, in the way that a cupholder is analytically distinct from the overall look-and-feel of a car.”[viii] This exception could be generalized to the situation where the design-patented element is analytically distinct from the overall look-and-feel of the device for which total profits are claimed.

These are just a few of the examples which have and will surface that argue against a literal application of 35 USC § 289. What can be done?

The court in Apple v. Samsung said “policy arguments that should be directed to Congress. We are bound by what the statute says, irrespective of policy arguments that may be made against it.”[ix] Ct. Opinion at 27, fn. 1. But courts have acted or provided guidance in other instances where easily foreseeable outcomes of literal application of a statute would be unreasonable. The entire market value rule is a prime example where a literal approach could have been surfaced as a reason to deny damages for activity beyond the patent scope but within the patented invention’s influence.

Unfortunately, without a course correction we are likely headed for the explosion Professor Rantanen predicts. As noted, for example, we can expect PAE business models to adapt to new opportunities presented by the courts. The result could take design patents way beyond their intended purpose of stimulating invention. In the end, this will likely bring forward efforts to repeal § 289. This would deny a fair and reasonable remedy for those who invent new designs that are substantially the basis of customer demand. Hopefully, a judicial framework will be developed that strikes the right balance and further secures § 289 as a distinguishing feature of U.S. design patent law.

[i] Mr. Griswold is a Consultant residing in Hudson, WI and was formerly President and Chief Intellectual Property Counsel for 3M Innovative Properties Company. The paper reflects the views of the author. He wishes to thank Bob Armitage and Mike Kirk for their excellent contributions to the paper.

[ii] Gary L. Griswold, 35 USC § 289 – An Important Feature of U.S. Design Patent Law: An Approach to Its Application. IPO Law Journal, (April 6, 2015). http://www.ipo.org/wp-content/uploads/2015/04/griswold_an-approach.pdf

[iii] Rantanen, Jason, “Apple v. Samsung: Design Patents Win.” Patently-O. (May 18, 2015) http://patentlyo.com/patent/2015/05/samsung-design-patents.html

[iv] Id.

[v] Marcus, David and Shawn Leppo, “Welcome Fallout from the Smartphone Wars: Federal Circuit embraces strong protection of design patents.” Metropolitan Corporate Counsel. (July 17, 2015). http://www.metrocorpcounsel.com/articles/32603/welcome-fallout-smartphone-wars-federal-circuit-embraces-strong-protection-design-pat?utm_source=mccreview+Upload+20150106&utm_campaign=58fe4b6614-MCC_Review_07_22_20157_21_2015&utm_medium=email&utm_term=0_4624ea9f3a-58fe4b6614-236350701

[vi] Apple v. Samsung, Case No. 2014-1335; 2015-1029 (Fed. Cir. May 18, 2015). http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1335.Opinion.5-14-2015.1.PDF

[vii] The impact on suppliers, manufacturers and retailers will be significant. Who will take the risk of this exposure, the supplier through an indemnity agreement who did not receive the profit on the article, the manufacturer who will need to assess the exposure for each component, or the retailer (for its profit) who sells the final product?

[viii] See Brief in Opp’n to Rhg, Apple v. Samsung, Case No. 2014-1335; 2015-1029 at 27-28 (Fed. Cir. July 20, 2015)

[ix] Apple v. Samsung, Ct. Opinion at 27, fn. 1.

82 thoughts on “Guest Post by Gary Griswold on Design Patent Damages

  1. The scaremongers predict an “explosion” in PAEs for design patents. This is absurd. First, there is not one reported instance, not even anecdotally, of a design patent troll. Second, it is illogical for a troll/NPE to buy a portfolio of design patents since manufacturing companies get design patents to protect the appearance of products that they design and put on the market – most often, the patents are applied for before product introduction. How is a third party supposed to guess what someone else’s new product will look like? Moreover, companies who obtain design patents never license or sell them – the design patents often represent the goodwill of the company and as such are precious assets of the company, akin to trademarks. Companies hang on to them for dear life. Any design patent asserted by an NPE against another company’s product would likely be found invalid on its face – not invented by the NPE or by anyone who conveyed the patent to an NPE – if there was any design patent to be conveyed, which there won’t be. If an NPE is foolish enough to assert a design patent against a legit product manufacturer, a motion for summary judgment of invalidity will easily take care of it. Not to mention bad faith, exceptional case, attorney fees, etc. There may be reasons for changing 289 (and I’m not saying that there are), but worries about NPEs, trolls, or PAEs ain’t one of them.

    1. Perry: How is a third party supposed to guess what someone else’s new product will look like?

      They just use reason and common sense.

      What makes you think it would hard to guess what some portion of some company’s sooper techno eyeglasses or sooper techno watch or sooper techno dashboard is going to look like?

      Imagine that you’ve got a few hundred grand to burn. You’re familiar with the system and how it operates so there’s no learning curve. You keep up with trends in designs. You are engaged in litigation with the company and you are clever (and aggressive) with your discovery requests and scrutinize everything carefully for what is revealed. And the reward for guessing correctly is half a billion dollars or maybe a “mere” 40 million if you choose to settle.

      Still having difficulty imagining how one so inclined to “guess” would go about doing so?

      For additional fun, imagine how the game would be played if you can file a bunch of dotted lines and then “convert” some of those dotted lines to solid lines years later. That was a real possibility until quite recently. Probably there’s some true believers out there who still think that’s a real possibility “if you make the right argument.”

      Never ever underestimate what entitled folks with tons of money and power will do and say to earn more of it, Perry. Just look around here for cripesake. Folks here still refuse to admit or discuss the fact that a utility patent reciting an old data gathering step — practiced by the public — and a “new” mental step relating to the data is a de facto patent on the “new” mental step. That kindergarten level issue went all the way up the Supreme Court and the PTO — the PTO!!! — took the side of the patentee.

      That’s the world we live in, Perry.

      1. MM,

        Most companies active in designs either employ industrial designers or contract outside design firms. They want them to design the next best thing, very different from what’s out there. They file early, before product introduction. It’s hard for me to imagine, even with your aggressive troll, that they could design and obtain design patents that would look substantially the same as the company’s new design, even portions thereof. They’d have to be really, really lucky. If this actually becomes a problem, the legit company will file earlier and earlier, disclosing all possible portions of their new design. This is quite different from the utility patent troll, who can reasonably guess/buy/obtain patents on portions of technology.

        Besides, if your scenario is at all realistic, why hasn’t it happened yet? The total profits rule has been around forever, and if your good guessers with tons of money are as sharp as you hypothesize, where are they?

        1. PS: Most companies active in designs either employ industrial designers or contract outside design firms. They want them to design the next best thing, very different from what’s out there.

          Was a curved rectangle a “very different” ornamental design from “what was out there”? Of course it wasn’t.

          If this actually becomes a problem, the legit company will file earlier and earlier, disclosing all possible portions of their new design.

          ROTFLMAO. Defensive design patenting. What a wonderful world! Gee, it sounds so familiar …

          This is quite different from the utility patent troll, who can reasonably guess/buy/obtain patents on portions of technology.

          No, it’s not “quite different” at all. Geebus, Perry. C’mon.

          if your scenario is at all realistic, why hasn’t it happened yet

          The scenario is completely realistic. Asking “why hasn’t it happened yet” suggests that you’ve been living in a cave for the past quarter century. What took utility patent trolling “so long” to become a way of life for the worst patent attorneys ever, Perry? Why did patent trolling take so long to become a major portion of all patent litigation cases that are filed? Any ideas? Have you ever thought about this? I hope so.

          1. How is that Obama response coming along to that overblown “Tr011” thing?

            You know Malcolm – the overblown thing like your Dudas patent cliff of “Quality.”

            You really should get into a line of work for which you can believe in the work product.

            1. You really should get into a line of work for which you can believe in the work product.

              You really should see a psychiatrist for your various mental illnesses, “anon.”

              [shrugs]

                1. you are the one so distressed by what patents are.

                  LOL

                  Remember when you thought they were protecting new thoughts as long as there was some old data collection step preceding the new mental step?

                  Fun, fun times, “anon.” Please keep the laughs coming.

                2. Nice strawman – and entirely false.

                  I was the one chiding you to return to discussions of things NOT entirely in the mind.

                  Remember when you “celebrated” early and posted the link to the Office takeaway – the takeaway that stressed “integration”…?

                  The one that did NOT play to your b@nal pet theory – which at the most generous is nothing more than the “no aggregation” doctrine already in the Claim as a Whole doctrine?

                  You keep on laughing when you have nothing to laugh about. Leastwise anything remotely resembling a cognitive legal position.

        2. Perry, your comments on this blog, when you make them, are invariably appreciated. It also appears that despite the infrequency of those comments, you have appreciated that “never argue with a fool” applies to MM, as evidenced by your choice not respond to his inanities a second time.

          1. Spot on, Ugh, and thanks. At the risk of drawing another inanity, I note that the most vitriolic posters on this blog hide behind the anonymity of a screen name, which affords them the opportunity to spew inanities without risking their real life reputation.

            1. Oh please – enough with the “real name” C R P.

              Even on that point, I will support Malcolm. It is but laziness to criticize the ability to post in anonymous or pseudonymous manner.

              I think too that Publicus too would shudder at the thoughts so bandied about.

              link to en.wikipedia.org

              One can be both anonymous AND “disruptive” and yet be calling for a dialogue of a higher order – one involving critical thinking.

              And it can be one who posts in his real name that yet remains deceptive and dissembling.

              The surest way to corrupt a youth is to instruct him to hold in higher esteem those who think alike than those who think differently. – Friedrich Nietzsche (1844 – 1900)

              Restriction of free thought and free speech is the most dangerous of all subversions. It is the one un-American act that could most easily defeat us. – Justice William O. Douglas

          2. “Ugh” Perry, your comments on this blog, when you make them, are invariably appreciated.

            Fyi, “Ugh”, I appreciate Perry’s comments, too — even if I disagree with them. I’m also quite certain that I’m not the only one who disagrees with Perry about the likelihood of design patent tr0lling.

            Perry: note that the most vitriolic posters on this blog hide behind the anonymity of a screen name

            Right — like this guy named “ugh” who just called me a f 00l.

  2. Griswold: The result could take design patents way beyond their intended purpose of stimulating invention.

    This is what I don’t get. Design patents don’t stimulate invention. They merely do what copyright does: protect expressions of one’s imagination.

    It’s probably a point that has been raised and discussed countless times by the patent wizards and wonks on this blog when I wasn’t looking. If so, please bring me up to date, but no cases any farther back than the Edsel, please.

    I get the quid pro quo of utility patents and plant patents. Show us what you got and how you got it and we’ll give you a temporary monopoly. That promise of a monopoly encourages: 1) people to invent things, and 2) those same people to disclose to the world what they invented and how it works. I get that – I understand that the alternative is trade secrets bunging up the overall system of innovation. Curses on the house of Coke. Who knows how many millions of dollars they cheated the patent lawyers out of?

    But I don’t get how the quid pro quo meme relates to design patents. Stimulating innovation? I don’t think so. A design is, by its very nature, a public disclosure. One doesn’t stimulate invention of what something looks like by rewarding disclosure of that which has to be disclosed anyway to have any value. What? – was Ford going to keep the Edsel’s taillights a secret if they couldn’t get a design patent? And there is no disclosure of how anything works or is made in a design patent, so the public doesn’t get any quo in that respect, either.

    So fitting the whole design patent thing into the patent side of the Constitutional mandate to promote science and the arts has never really made sense to me. Seems like the way a thing looks should be copyrighted. Period.

    1. Babelboy – It’s not about cases, but about competition. Your focus on “public disclosure” ignores the role of design in, and the reality of, the marketplace. If you’ve ever spent time in a design/UX consultancy or in-house market research department or the like you would understand how the role of design patents diverges from that of copyright law.

      The role of design patents is to protect often significant ($millions$) of dollars of training, research, testing, and sunk costs (the 99% that did not work in the marketplace) that a company may spend to create a commercially successful innovative design. It’s not to protect expression per se, because the design must appeal to the prospective purchaser, not the designer’s soul. You must not be aware of how important design is to a business’s bottom line – one empirical study found that design was the leading factor in car choice. Read Tversky et al to get up to speed on cognitive science and the newest neuroscience-design research papers. The design patent typically is the only “fence” that protects that investment from lazy competitors. Creating a commercially successful design is HARD and it will be copied. As the regulars on this blog know, I obtained a design patent on one of my scores of products – a patent that was knocked off for 14 years; all I had to do to get the retailers to stop selling it or to license it was fax or mail the patent – much easier than pursuing an unfair competition claim. I would not have pursued the design patent were the item for my personal use; it was purely commercial. I don’t think my experience was atypical.

      A great place to watch the commercial application of design patents is in the cleaning section of the supermarket or the mouthwash section at the drugstore. Watch P&G come out with a truly innovative design, which visually leaps off the shelves. Then watch the copycat products appear on the shelves soon thereafter. P&G’s research supports their approach, since the costs of the molds alone of the arguably risky new designs run in the millions. There’s lots of info out there on P&G and how design under Lafley created huge growth. Research IDEO, the design consultancy.

      What company would spend all that money on innovative design research, implementation and risk if there were no means to protect that investment?

      1. Great post Flann – nice to see some real world input here (contrasts sharply with the typical anti-patent “folks” and “ordinary people don’t want patents” propaganda).

      2. Here comes Flann, defender of the broken design patent system and the incoming wave of trolls ready to abuse it! Yippee! You can smell the kool-aid.

        You must not be aware of how important design is to a business’s bottom line

        That depends critically on the business. For nearly all businesses, designs are pretty much irrelevant to their bottom line.

        one empirical study found that design was the leading factor in car choice,

        LOL. And from that data point we get to patenting designs on portions of … semiconductors? And using the price of the car to determine damages for “infringing” the ornamental curve of a wiper blade? Funny stuff.

        The role of design patents is to protect often significant ($millions$) of dollars of training, research, testing, and sunk costs (the 99% that did not work in the marketplace) that a company may spend to create a commercially successful innovative design.

        Most design patents protect “innovations” that cost pretty much nothing to design (more specifically, nearly all design patents granted today are invalid and don’t protect any innovation whatsoever). Just as with the typical junky utility patents that are out there, the “commercial success” of nearly all objects bearing designs depends far more on marketing and the pre-existing success of the company than it does on the “innovative design”.

        A great place to watch the commercial application of design patents is in the cleaning section of the supermarket or the mouthwash section at the drugstore. Watch P&G come out with a truly innovative design, which visually leaps off the shelves.

        Watch me pick the cheaper product that I’ve been buying for years.

        Lastly, if you brush your teeth regularly you don’t need to use mouthwash.

        What company would spend all that money on innovative design research, implementation and risk if there were no means to protect that investment?

        What “risk” was Apple taking when it designed the curved rectangular “ornamentation” for the facing surface of its smartphone housing? How much extra cost was involved in “implementing” that ornamentation versus any of the many equally obvious alternatives? Does that cruved rectangle “ornamentation” “leap off the shelf”? How much “research” was required to draw the curved rectangle design?

        Like nearly everyone else who sells stuff, I design ornamentation all the time. Like nearly everyone else, it never occurs to me to abuse the broken patent system to extort millions out of companies just because the PTO is clueless and judges can’t come to terms with the basic facts.

        We’ve seen this game before, Flann. “You don’t understand designs!” Please give everybody a break already.

        1. MM –

          “Like nearly everyone else who sells stuff, I design ornamentation all the time.”

          Please do share your ornamental “stuff” with us, since you’ve put it out there . . .

          1. Please do share your ornamental “stuff” with us,

            Here’s something I just came up with:

            xxxxxxxxxx
            xxxxxxxxxy
            xxxxxxxxyx
            xxxxyxxxxx

            Enjoy.

      3. Well now, geez, there’s a passionate response. Thank you, Mr. Lippincott. But the passion of the response obfuscates its irrelevance. The cost and effort that goes into a design have nothing to do with my comment. And I am not suggesting designs should not be protected in some way. I’m suggesting that patents ain’t that way, the newest neuroscience-design research papers notwithstanding.

        Utility patents reward the cost and effort of invention because – and only because – the invention does something the public wants done and the inventor has otherwise secret information about how it gets done that the public is willing to pay for by the promise of a monopoly. The utility of the invention has value to the public, IOW.

        But there is, by law, no utility in a design — not even the wildly successful but crappy 5th Ave. schtick you use as examples. The lack of utility is also known as “being useless.” As I point out and as you adroitly ignore, there is nothing in a design for a designer to keep secret absent if he/she is refused a design patent. There is no point — personal or commercial — in keeping a design secret. There is no secret utility analogous to the inventor’s bargaining chip. No quid.

        I’m not suggesting that design is not worthy of protection. I’m suggesting that patents are not a proper source of that protection. Trademarks and copyrights seem to be to be a much better legal paradigm for protecting designs, brands, useless but commercially valuable schtick — call it what you will.

        Troubled, at 9.2, has also misinterpreted my comment. I’m afraid it wasn’t well put. I did not express a concern about the lack of balance between the quid and the quo; my concern is that there is no quid, and, hence, the patent-paradigm quo is not appropriate.

        As for the discrepancy in lengths of the monopolies given by copyright vs. patent, also raised by Troubled, I’m OK with protecting designs for decades. Because a design has no utility, a CW or TM monopoly would not deprive the public of anything useful in the way a patent monopoly does.

        I mean, Troubled is telling me that, assuming the Shelby Cobra design was protected by a design patent, that patent is long dead and I can now produce cars with the Cobra design and team up with Elon Musk to breathe life into them again. Seems to me that design protection should last at least as long as the designer or the product, whichever time is longer.

        Design obviously has elements of both copyright and trade dress. I don’t see any elements that are even vaguely related to patents. Maybe our in-house historian, Ned, could tell us whether this is another Giles Rich/ Pasquale Federico f’up from 1952.

        1. Babel, re ’52, the requirement of knowledge of infringement was dropped.

          It is argued that the 1887 Act required the patentee to show that the infringer had knowledge of the infringement, and that when this requirement was deleted in the 1952 codification, Section 289 was thrown out of balance—justifying judicial intervention adding an apportionment requirement.

          Du Mont, Jason J. and Janis, Mark D., Brief of Amici Curiae Jason J. Du Mont and Mark D. Janis in Support of Appellee Apple Inc. (August 4, 2014). Available at SSRN: link to ssrn.com or link to dx.doi.org at 22

          The apportionment Du Mont is talking about is the value of the design to the article. But this still begs the question as to what is the “article” that forms the basis for total profits. Now if the design is for the car, as in the case of the Mustang, the total profits on the car should be awarded. But if the design is for a door latch, a satellite antenna, a steering wheel?

          The intent of congress seemed clear that one does not have to show how much value the design gave to the article sold. But the question of what the article is, the latch or the refrigerator, is the question on the table.

          Prior to ’52, two circuits held that when a design is applied to components sold as part of or with a larger apparatus, then the profits have to be apportioned with an attempt to find out how much profit was associated with the article to which the design was applied. If they cannot be so apportioned, then they are divided equally among them.

          Bush & Lane Piano, the 2nd Circuit case, also distinguished the book from its cover — as do most people. This very much applies to Apple v. Samsung.

          Finally, congress amended the statute in ’52 when the only circuit court cases interpreting the prior statute had limited profits to the “component.” This seems to be an endorsement of those cases.

          1. also distinguished the book from its cover — as do most people

            You still have not responded to the points about that case…

            More “La la la la (fingers in the ears)

          2. At least you took your fingers out long enough to realize that your citations were errant – even as you attempt to spin (badly) that the 1952 Act “endorsed” those cases.

            Clearly, that is not so.
            Clearly, you are being unreasonable in your attempts to redefine the actual words used by Congress.

          3. I give you the Beatles White Album.

            Assume a design patent covering a plain album cover.

            Can we separate the cover from the record and award total profits on the sale of the cover?

            1. Ned, you might want to confirm first that “anon” knows about The Beatles and their self-titled double LP colloquially know as “the white album.”

          4. You never fail to amaze me, Ned. Do you dig this stuff out of your cerebral memory circuits, or out of Lexis? I am beginning to suspect you are a HAL2000.

    2. BabelBoy,

      If you are worried about the balance between the quid and the quo, copyright might be the wrong way to go. For works for hire (e.g., Apple’s design), the term is 95 years from first appearance vs. 14 from issuance for a design patents.

  3. Lemley all over again. The central problem with this POV is that the courts well never agree on a methodology for determining the contribution that design makes to a given customer purchase decision. This approach will simply become a employment act for marketing experts on both sides. One need look no further than what has happened in utility patent cases where this same concept has been applied…utter chaos.

    1. CM, agreed.

      A demand based approach as articulated here seems to be a non starter as it would deny all damages in the usual case.

      We do have Bush v. Lane Piano that clearly distinguishes between the book and the cover. But Scalia is going to have a field day about “total.” Does that refer to, the “total article” or to “gross vs. net profits?” I think the latter. Which makes Bush v. Lane Piano the way to go.

    2. That type of certainty and bright lines removes the ability of the courts to keep their finger in the Wax Nose of patent law.

      Never mind any sense of certainty for business (and the anti-Tr011 rhetoric), abdicating that (judicial) power just won’t happen. Legislating from the bench is just too add1ctive.

  4. I take it that uncertainty about the scope of the asserted right helps the PAE’s to go about their business. With a utility patent asserted against me, I can make some attempt to take a view, whether the asserted claim covers my product, and whether the asserted claim is, actually, not valid.

    But when it comes to design patents, I suppose I must assume that the wretched thing is not invalid. After that though, who can give me an opinion that I can rely upon, on which I can make business decisions, whether my product falls within the scope of a duly issued US Design Patent now asserted against me?

    No wonder the assessment that design patents will form the next wave. Quick and cheap to obtain, but carrying a p0t 3ncy out of all proportion to the extent to which they do any promoting of the progress of useful arts.

    1. The feeling feels familiar…

      That’s just not fair.

      There ought to be a law.

      Wait there is. Wait it is a law passed by Congress. That law does not make any sense. That law needs to change.

      Can we spin it?
      Can we get a judge to spin it?

      Maybe, just maybe, we can change statutory law through the mechanism of change that applies to statutory law.

      What a concept.

    2. Max, I should worry too much about trolls — unless the Supremes fail to take this case.

      Justice has to weigh in and tell the higher court that once again the Feds got it wrong, and that in this case, there is a split in the circuits.

      Next, Obama needs to send a bill to congress dealing with the Federal Circuit.

        1. how is Obama coming along with the response to Katznelson?

          The White House trash gets shredded pretty regularly. Katznelson might want to deliver a second copy in person. Perhaps he could fly onto the front lawn in a minicopter. That would make a real statement.

  5. I wonder what Judge O’Malley would have to say about this type of call to set aside statutory law and “hope” that judge-made common law take its place…

      1. No Ned – O’Malley – from the citation that you yourself provided (so you might have a difficult time running away from that).

  6. Bush & Lane Piano Co. v. Becker Bros., 234 F. 79, 81-83 (1916). link to law.resource.org :

    As pointed out on the previous appeal, the act of 1887 was intended to mitigate the harsh rule of the Dobson Cases, 118 U. S. 10, 6 Sup. Ct. 946, 30 L. Ed. 63. It is true that in Dunlap v. Schofield, 152 U. S. 244, 14 Sup. Ct. 576, 38 L. Ed. 426, the minimum recovery of $250 was said to be “in the nature of a penalty,” and it has usually been referred to as a penalty since that time. Lichtenstein v. Phipps, 168 Fed. 62, 93 C. C. A. 483; Frank v. Geiger (C. C.) 121 Fed. 126. But when a design patentee seeks to recover more than $250. because either he lost a greater sum by the infringement, or the infringer made a greater profit thereby, no reason is seen for departing from the construction of the statute announced by us in Untermeyer v. Freund, 58 Fed. 212, 7 C. C. A. 190: “Tile manifest purpose of Congress was to enlarge the remedy against Infringers of design putr~nts, and to declare that the measure of profits recoverable on account of the infringement should be the total net profits upon the ‘\Vllole article.”’
    But there is no statutory definition of the phrase “whole article.” Each litigation presents its own problem; it is impossible to define in advance. Probably each solution depends on the relation to the business whole of the part embodying the patent, and that relation must be considered from all viewpoints, technical, mechanical, popular, and commercial. Thus a patented design for a “portable house” would seem to apply to the whole structure; otherwise, if for an “entrance door.” A patent for a “book binding” cannot, either justly or logically, be so identified with the entire book as to give all the profits on a work of literary genius to the patentee of a binding, although the binding was manufactured with and for that one book, and has no separate commercial existence. The binding and the printed record of thought respond to different concepts; they are different articles. Accordingly we held on the former appeal herein that the article to which the patented design had been applied was the piano case, and all the evidence taken since mandate confirms that view. Impediments to recovery of both damages and profits have arisen, not so much from difficulty in ascertaining in what the infringing thing or article consisted, as in assigning to that infringement any particular or specified portion of the gains made or prevented by a defendant’s wrongdoing. The main source of such difficulties has been the narrow field of evidence, suggested by counsel or approved by the courts, in endeavors to precisely assign profits or damages to their source; after the act of infringement, the thing or article containing the infringement and the existence of profits or losses have been amply demonstrated. Great hardship has been wrought by the rule of impossibility enunciated in Garretson v. Clark, 111 U. S. 120, 4 Sup. Ct. 291, 28 L. Ed. 371, concerning the popularity of which case with infringers we entirely agree with the remarks of the court in Yesbera v. Hardesty, 166 Fed. 120, 92 C. C. A. 46. The other extreme is to treat an infringer as a trustee ex maleficio in the manner approved in ‘vVestinghouse, etc., Co. v. ‘vVagner Co., supra. It is not often that giving all the profits to the patentee can be justified, as in \Vales v. vVaterbury Co., supra, on the ground that there would have been no profits, had it not been for the appropriation of the patented idea. The enormous increase in improvement patents and minor inventions has of late greatly accentuated these long-recognized obstacles. Dowagiac v. Smith, supra, related to an assessment of damages and a mechanical patent; but the court pointed out that the introduction of evidence as to what would have been a reasonable royalty should be regarded as a proper method of ascertaining damages, having regard to the nature of the invention, its utility, advantages, and extent of use involved. Such evidence was declared to be “quite as admissible as that of an established royalty.” There is no reason why this view of proper evidence should not be applied to the estimation of profits, as well as the ascertainment of damages. There is here ample proof that profit was derived from the use of plaintiff’s design, which was chosen because it gave to the piano something which the trade demanded, namely, a “massive appearance.” It also appears from the whole testimony (which largely consists of Becker’s admissions and opinions) that there was just as large profit (proportionally) on the ornamented and infringing casing, which attracted the customer’s eye, as upon the piano mechanism, which pleased the ear. The cost of each separate element of the finished product is known, and there is no difference perceivable between admitting expert opinions as to a proper royalty and similar opinions as to the origin’ and expense of the constituent parts of a piano. Indeed, as between expert opinions upon royalties and the statements of expert manufacturers and accountants, we consider the latter rather more reliable and persuasive.

    Since, therefore, the plaintiff has shown a real profit attributable in some degree tothe infringed design, the ends of justice are best served by apportioning, and thus separating, profits which were derived from the investment in infringment. Exactly’this method was approved in Herman v. Youngstown Car Mfg. Co., 216 Fed. 607, 608, 132 C. C. A. 612; and of it the appellate court for the Sixth circuit remarked that: “Semi-independent parts [of the whole device] may each involve substan·· tially the same cost of material and labor and may each contribute equally to the final marketability. In that event, an 8qual division of the profits among these parts is both arbitrary and reasonable; arbitrary because of its form, but reasonable because obViously fair and just.”

        1. The binding and the printed record of thought respond to different concepts; they are different articles.”

          Notably, it does not say that one is an article and the other is not an article, now does it?

          The better separation of course is based on the Useful Arts, but you tend to disappear during those conversations.

            1. Just like you did not read that one, right?

              Your “selectivity” belies your statement.

              What you are really saying is that you just like to monologue to your position and do not want to engage in anything even remotely “inconvenient” for your windmill chases.

              (It’s not that hard to figure out Ned)

    1. Century Old Supreme Court: the plaintiff has shown a real profit attributable in some degree to the infringed design, the ends of justice are best served by apportioning, and thus separating, profits which were derived from the investment in infringment.

      Anybody have any idea what profits were derived from “investment” in the precise curvature and shape of Samsung’s smartphone (curved corners and a rectangular shape in general being functional and/or obvious as heck, of course)? I don’t think normal people give a hoot about such things. Should we poll some abnormal people?

      1. Well, MM, I expect the Supremes will order a retrial to find out. At the same time, the 9-0 reversal will be in the nature of a message not only to the court that fails to follow the law, but to Congress so that it can do something about this court.

        1. The better question is what to do about this Court who has shown no respect for the constitution, to statutory law, and to the separation of powers.

          That is a much better question.

          A Churchill versus Chamberlain question.

          Tell me Ned, have you found your attorney’s oath yet?

            1. I have no clue – why are you asking me?

              Oh wait – you think anyone for patents must be in “cahoots”….

              You really need to find a profession in which you can believe int he work product produced.

  7. Since this special damages statute for design patent infringement has been around a very long time, with many design patent suits since, it is surprising that it has not been so publicly disputed as unfair before? Is it because previous defendants were too small for anyone else to care even though they took the same big hits as a percentage of their business? Or, has the percentage of design patent suits that have been successful on both infringement and validity been that small? Or were almost all of the suits on products where the ornamental appearance really was important to the sale of the product?

    1. Or is it that the design patent at issue here is widely perceived to be a pile of shirt that should never have been granted?

    2. I think the everyone thought the law was as stated in Bush v. Lane Piano Co.

      There seems to be panic here where no panic is warranted.

      1. But, this means that the Federal Circuit will be reversed. I expect, 9-0. The book binding example is persuasive.

        1. Persuasive…?

          The binding and the printed record of thought respond to different concepts; they are different articles.”

          That one?

  8. Gary,

    Besides there being a statute, how does this differ from the entire market value (or not) rule for utility patents?

    1. Because the entire market value for utility patents only applies where the patented invention feature was the main reason for the product sales.

  9. Gary: how can this good be preserved without incurring the bad— as one example, design patents becoming the next business model for patent assertion entities (PAEs)?

    “Why do you ha te ornamentation, Gary?”

    Just kidding. Great article.

    semiconductor manufacturers are obtaining design patents on a portion of a semiconductor.

    That is beyond insane. What next? Pharma companies obtaining design patents on “ornamental” features of the molecules they synthesize?

    At some point quite some time ago the patent system went off the rails. Apparently as long as some wealthy toxic bottom feeders and their attorneys are raking it in we’re all expected to sit by and cheer. No doubt the wonderful brilliance of handing out design patents on portions of semiconductors will trickle down to the 99% in due course. It always does, or so we’ll be told shortly.

    we can expect PAE business models to adapt to new opportunities presented by the courts. The result could take design patents way beyond their intended purpose of stimulating invention.

    In its present broken state, there is little evidence that our design patent “system” (a generous term) as a whole stimulates anything except legal fees.

    1. If you are so intent on overhauling what you believe is a completely broken patent system, why spend the majority of your (free?) time posting comments on a blog? Why not get spend time lobbying Congress? Why not write some sort of paper and try to get others to sign on in support? Why not do anything else?

      1. Why not do anything else?

        Funny, your last question is the first one that popped into my mind when I saw your whining comment. Learn to use your scroll button.

      2. Why not write some sort of paper and try to get others to sign on in support?

        I just “signed on” to support Gary and un-support design patent trolls and people like David Kappos who’d love to work for them.

        In case you hadn’ t noticed.

  10. 35 USC 289:

    “Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, … shall be liable to the owner to the extent of his total profit …”

    Seems like the focus here is on what is sold.

    Perhaps the courts could limit damages by determining whether the article to which the design is applied has a separate market so that profits can be apportioned. This is consistent with the 2nd Circuit case cited. This approach has the benefit of clearly being a reasonable interpretation of the statute.

    But denying a statutory remedy based on what amount to a sui generis equitable defense seems like a non starter.

    1. Somehow yo have moved from “total profit” to “substantially less than total profit” and claimed it to be a “reasonable interpretation.”

      If Congress wanted something other than total profit, maybe they should have used words like “apportioned profit.”

      Is that not a more reasonable interpretation?

      1. anon, I assume that this post is in jest because you must have just read the except from the Bush v. Lane Piano case I posted above at 5.

        The “total profit” is on the part of the larger apparatus to which the design is applied. Thus the design of a book binding get only the value of the book binding, not the book.

        Apportionment is subject to expert testimony.

        There seems something wrong with the Federal Circuit decision when profits are awarded on the whole phone and not on the value of the casing.

        Expect a 9-0 reversal by the Supreme Court who will follow Bush v. Lane Piano.

        1. 9-0 by following a 100 year old NON-Supreme Court case? If there was some way to raise the subject damages statute issue together with the more appealing to the Sup. Ct. 103 issue in this case at this late date it might have better odds? We know that at least J. Scalia has no sympathy for judicially fixing clear legislation that applies to something that Congress failed to consider when it was enacted, and expects Congress to fix that.

          1. Heck, the Royal Nine expect Congress to clean up after even the mistakes of the Royal Nine – even as they admit that their decision was a mistake (Brulette anyone?)

            Must be “nice” to parade around and have people pretend that you have clothes …

          2. On the contrary, Paul, the Supreme Court has shown very little patience with the Federal Circuit when it ignores established law –as when it overruled centuries of established law in FilmTec — see, Standford v. Roche, or when it overturned Hotel Security in State Street Bank, both without any reasoning or explanation at whatsoever.

            Take it to the bank, 9-0.

            Split of Circuits, and all that.

            1. Fine Ned, but one cannot establish “established law” with citation of only a single 100 year old circuit court decision. It needs citations of other, and preferably more recent, decisions that have also applied some kind of apportionment to design patent infringement damages, especially to product cases or covers, attached ornamentation, small component parts, etc. If these other design patent decisions exist, neither Gary or you have yet cited them here.

              BTW, I do agree with you that the word “total” in this statute should logically read as applying to its immediately following word “profit” and not the well-prior words “article of manufacture.” But of course that does not solve the problem here.

              1. The 6th Circuit joins the 2nd. Two to one. The Federal Circuit stands alone once again.

                Young v. Grand Rapids Refrigerator Co., 268 F. 966 (6th Cir. 1920) the court affirmed a liquidated damages award of $250 in a case involving a design for refrigerator latches. Evidently, the design patent holder had not argued for total profits on the refrigerators. Id. at 974 (“[I]t is not seriously contended that all the profits from the refrigerator belonged to Young.”). Nor was there evidence of the infringer’s profits on the latches, because the infringer had never sold the latches separately of the refrigerators. Id. The court concluded that the statutory minimum was the proper award in such a case.

                Quote from Du Mont, Jason J., and Mark D. Janis. “Brief of Amici Curiae Jason J. Du Mont and Mark D. Janis in Support of Appellee Apple Inc.” Du Mont and Mark D. Janis in Support of Appellee Apple Inc.(August 4, 2014) (2014). at 21.

                1. And yet another case site predating the law under discussion…

                  Ned, are you an attorney? Do you understand statutory law?

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