By Sarah Burstein, Professor of Law at the University of Oklahoma College of Law
As previously covered here on Patently-O, a new design patent bill has been introduced in Congress. The so-called “Counterfeit Goods Seizure Act of 2019” would allow Customs and Border Patrol (CBP) to seize goods accused of design patent infringement.
This is a bad idea.
This bill is not reasonably tailored to address its purported goal of “stem[ming] the flow of counterfeit goods.” Instead, it will allow design patent owners to foist their private enforcement costs onto taxpayers, under circumstances that are unlikely to result in accurate determinations of infringement. Moreover, this type of ex parte, non-public system of adjudication is ripe for abuse.
I have three major groups of concerns about this bill: substantive, procedural, and rhetorical. This post will address them in turn.
Substantive concerns
First, CBP will not be in a position to make accurate determinations of design patent infringement.
The test for design patent infringement, as set forth by the en banc Federal Circuit in Egyptian Goddess v. Swisa, involves two steps. (For more on the Egyptian Goddess test, see this short essay.)
The first step requires a comparison of the claimed design (i.e., what’s illustrated in the patent) and the accused product. If those designs look plainly dissimilar, the test is over; there is no infringement. If the designs look like they might be the same, then the factfinder must consider the designs in light of the closest prior art.
This second step is important. Often, two designs that look similar in the abstract look much less so when considered in light of the prior art. Consider this recently-litigated example. The patented design is shown below on the left; the accused design is below on the right:
These two designs might not look plainly dissimilar in the abstract. But when viewed in light of the prior art, a number of visual differences become apparent:
Ultimately, the judge correctly concluded that the patent owner was not likely to prove infringement (though the path to that decision was a bit more circuitous).
How would this have turned out under the design-seizure bill? Who would have collected the closest prior art? There are many things to like about the Egyptian Goddess test, but one downside is that step two requires an informed and motivated defendant to work well. In an ex parte CBP proceeding, there is no one to play that role. CPB officials are not trained (and one assumes, lack the resources) to conduct their own prior art searches. And patent owners have zero incentives to provide any—let alone the closest—prior art when they record their patents or when they give CBP information about “suspect inbound shipments.” See generally 5 McCarthy on Trademarks § 29:37 (“Trademark owners that see a higher success rate in Customs seizures are typically the ones that continuously and vigilantly provide Customs with information to use in identifying suspect inbound shipments. Such information could include the names of known foreign counterfeiters, countries of origin, suspect importers, and the like.”)
If CBP skips (or lacks sufficient information to properly conduct) Egyptian Goddess step two, competing products could seized even when they don’t infringe. CBP could seize products that merely practice the prior art or that resemble the claimed design solely in functional aspects (for all but the most pioneering products, one would expect to find any truly functional elements in the prior art).
Thus, ex parte assessments of design patent infringement are likely to lead to significant over-enforcement. At least one other commentator has voiced similar concerns. Over-enforcement would chill legitimate competition and ultimately raise prices for consumers—the very consumers who would be footing the bill through their tax dollars.
In any case, it is simply not correct—as some proponents of this bill have asserted—that all CBP would have to do is look at the design patent and the accused product and see if they look the same.
Some might argue that CBP could review the prior art cited on a particular design patent. But that’s by no means guaranteed to be the closest prior art. Some of it may not even be available at the time of enforcement; USPTO examiners often cite web pages using basic URLs and link rot is a very real concern.
One proponent of this bill has asserted that “Customs officers have already effectively demonstrated the ability to determine whether imported goods infringe a design patent, through its ongoing enforcement of design-patent exclusion orders.” But how do we know that is true? What kinds of orders are being issued by the ITC? How broad (or narrow) are they? How can we know whether CBP is enforcing them well? While we can assume CBP does the best it can in the restraints under which it operates, any assertion about what that actually looks like in practice requires something more that ipse dixit before it can have any persuasive weight.
Procedural concerns
This bill raises also raises serious due process concerns. What recourse is there for competitors whose goods are improperly seized? What accountability is there for design patent owners who direct CBP officials to competing products that don’t actually infringe? Based on my experience reviewing design patent complaints, it appears that many attorneys are under the mistaken impression that design patents cover design concepts, when they really only cover the specifically-claimed designs. I call this “the concept fallacy.” It’s remarkably common in federal court filings. If members of the bar feel comfortable making such allegations in federal court, where they are subject to both judicial sanctions and public scrutiny, what allegations will they feel comfortable making to the CBP?
The non-public nature of these seizures is also a concern. How can we know how well the system is (or is not) working? Based on the information Professor Rebecca Tushnet has been able to gather about trademark seizures, it appears that the agency does not keep good records and its substantive determinations are guided by materials provided by trademark owners. One would assume that if the design-seizure bill were passed, groups like INTA, AIPLA, and/or IPO would be happy to provide their own guidelines for CBP. If that happens, any such materials should be made public, to ensure accuracy. (Hopefully, it won’t take a FOIA lawsuit like the one Professor Tushnet had to file.)
Rhetorical concerns
Finally, the entire framing of this bill is based on conflating design patent infringement with “counterfeiting.” Those two things are not the same.
“Counterfeiting” is a term of art in U.S. IP law. The Lanham Act defines a “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.
Actual counterfeiting (i.e., as that term is defined in the Lanham Act) is arguably the worst type of IP infringement. But it’s already illegal. Indeed, it’s subject to criminal penalties.
If Congress thinks those remedies are not severe enough, it is free to increase them. But Congress should narrowly tailor any such efforts to acts that actually constitute counterfeiting. That’s not what’s going on here.
Proponents of this bill like to talk about “counterfeits without labels” (a strange concept in light of the relevant statutory definitions, but that’s an issue for another day) but the bill goes beyond anything that would seem to fall into that category.
Most design patents can be infringed by products that don’t replicate the entire appearance of the patent owner’s own product—if any. (Design patent owners, like other patent owners, aren’t required to produce products embodying their designs.) Even in the rare case where a design patent claims the entire shape and surface design of a product, that patent will still be infringed by a competitor who makes a product in that shape even if the color or material or some other non-shape attribute is so different that no one would mistake it for the original item.
Many (perhaps most) design patents claim just a small part of a larger design; the whole point of such patents is to capture competing products that don’t look the same overall. When an applicant claims a small part of a design, there is no requirement that it be an important or valuable part—let alone a part that would lead to serious consumer deception. (If you’re interested, I wrote more about these claiming techniques here and here.)
Over the years, I’ve heard many design patent attorneys say they want border enforcement. But it’s not because they’re worried about counterfeiting. They want it because it will make design patents more valuable—or at least seem more valuable—to their clients, which in turn makes it easier to sell their design patent prosecution services. (It’s perhaps not surprising that the push for CBP enforcement became more organized after the Supreme Court’s decision in Samsung v. Apple which, in the eyes of many, made design patents less valuable. The ultimate impact of that case, however, remains to be seen. For more on that case, see here; for more on the developments since then, see here.) While some proponents of this bill may truly, in their hearts of hearts, be worried about actual counterfeiting, the fact remains that many design patent attorneys want border enforcement for these other reasons.
We’ve seen this rhetorical technique before—in the past, proponents of broader copyright laws have used the word “counterfeiting” to conjure the specter of medicines laced with poisons and other horrors to scare legislators into enriching private rights holders. I hope Congress doesn’t fall for it.
Is it not so, that the sponsors of this Bill are simply jealous of the provisions (border seizures, registered design rights, unregistered design rights) that the EU has had in place since 1986 and which have been running smoothly ever since, as far as I know, balancing the legitimate interests of all the players.
Professor Burstein, Perry Saidman, do us a favour will you. Critique the EU legal structure, so we know whether you are for or against this Bill in particular, or border seizures in design right cases in principle, under any circumstances.
It is hard to know where to begin to address all of the inaccuracies and ill-founded assumptions in Sarah Burstein’s rant.
First, there is this silliness of design patent owners “foisting enforcement costs upon taxpayers”. Is this not already true of trademark and copyright owners who avail themselves of long-standing CBP enforcement? Why are design patent owners being singled out here? Is it because Burstein is anti-design patent? Perish the thought.
Second, her so-called substantive concerns totally miss the point. When it comes to importation of goods, a vast majority of design patent owners care only about identical knock-offs. They do not want, or expect, CBP to decide the sorts of cases that wind up in the federal courts, where several features of the accused design differ from the patented design. Indeed, cases where the accused design is an identical knock-off of a patented design are those that do not get litigated, because an infringer has to be off their rocker to spend money defending an open and shut case (one might conclude that Samsung was off its rocker in Apple v. Samsung where Samsung was caught literally copying Apple’s patented designs).
For CBP to be faced with an incoming product that is an identical knock-off does not require either rocket science or consideration of prior art. No prior art can be closer to a patented design than the infringing identical knock-off. After all, if Egyptian Goddess does not require consideration of prior art if the accused product is “plainly dissimilar” from the patented design, then it should not require consideration of prior art if the accused product is plainly identical to the patented design.
Third, regarding her statement that CBP could seize products that resemble the claimed design solely in functional aspects, she overlooks settled case law like the Federal Circuit’s Coleman v. Sport Dimension decision which said that functional features should be considered insofar as they contribute to the design’s overall ornamentation.
Her suggestion that CBP enforcement would chill legitimate competition and raise prices for consumers is the familiar screed spouted by anti-protectionists, who fail to acknowledge the Supreme Court’s oft-stated principle that under the Constitution patent rights are a recognized exception to open and free competition.
She also questions whether CBP has already enforced design patents through exclusion orders issued by the ITC, saying: “[H]ow do we know that is true?” It’s true according to the Department of Homeland Security, who responded to a letter from U.S. Senators from last June as follows:
“CBP does … have the authority to enforce, and indeed enforces, exclusion orders issued by the U.S. International Trade Commission (ITC) pursuant to 19 U.S.C. § 1337. Most ITC exclusion orders are issued as a result of violations of patent rights, and some involve design patents. In most instances, CBP excludes rather than seizes merchandise pursuant to its authority under Section 1337. Following an initial exclusion, CBP also has authority to seize merchandise as a result of a Section 1337 violation if the ITC issues a seizure and forfeiture order.”
Burstein’s due-process concern questions whether there is any recourse for competitors whose goods are improperly seized. Short answer: there should and will be. For both trademark and copyright seizures, there are long-standing, defined procedural rights and protocols (including response periods for importers and bond requirements for IP right holders) that provide needed due process. For copyright and trademark situations, these protocols adequately safeguard against so-called “over enforcement.” Since they will likely apply to design patents seizures, they would provide the same deterrent against abuses of the system.
Burstein’s semantical argument about use of the word “counterfeiting” is nit-picking. As noted above, design patent owners are primarily concerned about stitch-for-stitch knock-offs, which are indeed counterfeits but for the absence of the owners’ label/logo on the goods, something that is easily added by the infringer after the goods land. This actually happens.
I hate to stoop to anything that can be regarded as nit-picking, but Burstein seems to question whether a design patent claiming the entire shape of an article can be infringed by a product that copies the identical shape, but uses a different color or material. To suggest that there should be no infringement in such a situation is not only astonishing, but reinforces her well-established bias against design patents.
Under her “rhetorical concerns”, she says that it is a “fact” that design patent attorneys are in favor of border enforcement to feather their bank accounts. I’d appreciate a copy of her research that supports such a “fact”. And, as a practical matter, attorneys will make far less money registering a design patent with Customs than they would filing a Complaint in federal court.
Finally, she notably fails to mention that this legislation would bring design patents into alignment with trademarks (including trade dress) and copyrights where CBP must also make infringement determinations. Is she proposing that those regulations be scrapped? And she also fails to mention that such legislation will bring the U.S. in line with most other industrialized countries who have similar border enforcement of design rights.
That was a nice beginning (on the substantive points).
Thanks!
Comment No. 5 illustrates the value of the relatively few IPL academics, like Dennis and Prof. Burstein here, with the courage to post on this blog, knowing that their post can be subject to substantive rebuttal arguments from specialist practitioner experts like Perry Saidman to additionally consider. [Of course there will also be unhelpful non-substantive comments to be ignored.] More of this public discourse could help bridge what seems to be a serious lack of regular and effective communication between IPL law school and economics departments academic paper authors and experienced practioners. [Major media IPL stories also often exhibit that same absence.]
BTW, in debating import exclusions of “knock offs” there is another difference between trademark and trade dress versus design patent enforcement, namely protecting the public from being mislead as to the source of origin of the goods.
And design patents protect the public from cheap, shoddy knock-offs.
Absolutely, those Samsung phones cost less than Apple phones so they must be “cheap, shoddy knock-offs”. Those rounded corners on the Apple phone were undoubtedly THE reason people bought Apple phones and THE reason people were fooled into buying Samsung phones instead.
One part of comment 5, that: “..CBP has already enforced design patents through exclusion orders issued by the ITC..” does seem to raise a logical question as to why do we need another statute for that?
Because it costs a design patent owner millions of dollars to go through an ITC Sec. 337 proceeding. Neither trademark nor copyright owners have to jump through that hoop, they can go right to Customs. Since design patents are much more like trademarks and copyrights (for designs) than they are like utility patents, it doesn’t seem fair, or right, that design patent owners need to invest so heavily in an ITC proceeding. And recall that design patents are part of 35 U.S.C. through a quirk of history (they were originally slated to be part of the copyright laws).
We should fix that quirk in history…
“Courage” is a rather odd adjective to use in the face of the substantive blasting by probably the best known “design patent” practitioner around, Paul.
“For CBP to be faced with an incoming product that is an identical knock-off does not require either rocket science or consideration of prior art. No prior art can be closer to a patented design than the infringing identical knock-off. After all, if Egyptian Goddess does not require consideration of prior art if the accused product is “plainly dissimilar” from the patented design, then it should not require consideration of prior art if the accused product is plainly identical to the patented design.”
This is extremely unpersausive to me. “Plainly dissimilar” and “Plainly identical” are not equivalent determinations. Two objects that are plainly dissimilar will be differentiated on a number of bases. Even if a particular basis of difference is incorrect, an overall determination of “dissimilar” is likely to be accurate. On the other hand, every basis of similarity must be accurate for the overall determination of “identical” to be accurate.
Your argument is equivalent to saying that because it’s easy to tell a 50 lb dumbbell from a 5 lb dumbbell, we can also conclude that any dumbbell that seems approximately 5 lbs is exactly a 5 lb dumbbell.
Your comparison is fallacious. We’re not talking about functional equivalents, we’re talking about visual equivalents. It doesn’t matter if a 5 lb dumbbell is actually 4.5 lbs or even 1 lb. If it looks just like a patented design, it infringes.
Any 10 year old can look at a knock-off Rubik’s Cube and see that it’s plainly identical to the real thing.
On another note, in federal court, I’ve long been opposed to findings that an accused design is plainly dissimilar to a patented design, which serves as permission for the court to ignore the prior art. A naked man & woman may appear plainly dissimilar, except when compared to a prior art ape. The plainly dissimilar finding on summary judgment is simply a way for a judge to avoid a jury trial, depriving the patentee of the opportunity to present its case to a group of ordinary observer fact finders.
If anything, the plainly dissimilar standard applied by CBP will result in false negatives, not false positives. But any CBP officer will know a Rubik’s Cube – or any other – substantially identical knock-off when she sees it.
“Any 10 year old can look at a knock-off Rubik’s Cube and see that it’s plainly identical to the real thing.”
Arguing in terms of knock-offs is begging the question. The relevant edge case is not actual knock-offs, but carefully designed articles that come close to a patented design. Such cases by definition are difficult to evaluate.
Ben,
I don’t think that you are using the term “begging the question” correctly (as you appear to try to do the very same thing).
Perhaps you mean “more difficult to evaluate than a knock-off “. I do not disagree. But compare trademarks. Trademark owners already have CBP protection. If an incoming product bears the mark NIKE, they seize it. If it bears the mark NIKEY, it’s more difficult to evaluate. Does this mean that CBP should not have the authority to seize trademarked goods?
Also, regarding the suggestion that CBP can’t evaluate the prior art in determining design patent infringement, do they evaluate the Polaroid factors used by all courts in determining likelihood of confusion in trademark infringement? Only one of those factors is similarity of the marks. Others include strength of the mark, similarity of the products, sophistication of the buyers, etc. Does CBP get into that? I doubt it. Yet, no one questions whether CBP should have registered trademark enforcement in its tool kit.
Your Polaroid argument is much more persausive to me. But as an uninvested civilian, it seems like the answer to this disparity is to end the boon to trademarks rather than to allow another type of IP to be enforced without using the proper infringement test.
“as an Efficient Infringer sycophant, it seems like the answer…”
Fixed.
“After all, if Egyptian Goddess does not require consideration of prior art if the accused product is “plainly dissimilar” from the patented design, then it should not require consideration of prior art if the accused product is plainly identical to the patented design. ”
So you’re saying:
~similar –> no need to consider prior art, therefore it follows that
similar –> no need to consider prior art
I recall from a logic class that if
A –> B is true, that says nothing about the truth of
~A –> B.
The only thing we can determine from
A –> B being true is that
~B -> ~A (aka the contrapositive) is also true.
Try again.
I have to say, AM, that although both of your posts on this thread may be considered snarky, each make solid points (and can be contrasted with the typical empty snarkiness of the likes of Malcolm).
All very good except on the Egyptian goddess case. How the test should be is irrelevant only how it is. As I read the case, it does require comparison of prior art even if at first the designs look the same. The example she uses is a good one – as without the prior art I certainly thought the designs looked the same.
As for trademark and copyright – I would suggest it could be argued that design patents could be different enough that laws/procedures would need to be different.
On the money issue note that she limits her discussion to people prosecuting design patents…these are usually not the same people litigating them.
There is an additional problem with the proposed “Counterfeit Goods Seizure Act of 2019” that would have Customs and Border Patrol (CBP) seize any imported items [which now includes most U.S. consumer products] accused of design patent infringement. Unlike regular (utility) patents [or even U.S. trademark registrations] few design patent applications have been substantively examined before their grant. Especially not for 103 obviousness. The prior study and report by Dennis of design application PTO office actions showed few that had more than mere formalities objections at any stage.
[Besides very limited search and examination times, this may be due in part to an inconsistency in a narrow claim scope view [all solid lines of the drawing] of design patent application examiners, in contrast the the broad claim scope effectively given by the broad infringement scope test noted in this post by Professor Sarah Burstein?]
This article also mentions the Supreme Court’s decision in Samsung v. Apple on design patents. But that decision only required infringement damages apportionment. A design patents customs seizure presumably would allow seizure of the entire product even if only one small part of the product [e.g., a beveled corner] was within the scope of the design patent.
BTW, re the legal propriety of the Fed. Cir. still using the old CCPA test of “..the factfinder must consider the designs in light of [only] the closest prior art” see, e.g., “Design Patents §103 – Obvious to Whom and As Compared to What?” Patently-O, Sept. 17, 2014.”
The bill is S2987.
It has been referred to the Senate Finance Committee, whose chairman is Chuck Grassley (R-IA) and ranking member is Ron Wyden (D-OR). It has not yet received a hearing or markup session.
If you have arguments pro or con, the best forum is to contact your senator or the committee directly and let them know how you feel. I suspect that not many senators will read this webpage.
“Over the years, I’ve heard many design patent attorneys say they want border enforcement. But it’s not because they’re worried about counterfeiting. They want it because it will make design patents more valuable—or at least seem more valuable—to their clients, which in turn makes it easier to sell their design patent prosecution services.”
You must really hate design innovation. /s
My view is that “design innovation” has NO business being attempted to be piggybacked into a system of utility innovation.
It’s really not a matter of disliking “design innovation” per se, but more of a matter of recognizing that the two really are discordant.
In today’s academic culture there is a phenomenon whereby one adopts an agenda (maybe financed by serial copyists, maybe not, who knows, law professors don’t have to report where they get their grants or consulting funds from) and blasts information to no-one in particular as a form of virtue signalling. Reputation points are scored by showing you did so to your like-minded followers on social media.
So this article really isn’t for this blog would be my guess. It’s for academic twitter.
The world is quite different today, friends. It makes my head spin.
Totally correct. There is a tight circle of design patent academics that do exactly what you suggest which leads to all manner of sketchy theory and practice related to actual design patent possible misuses.
One can remember well the famous “coffee cup in the Corvette” example put forth that the above-noted academics in the various amicus briefs they filed in Apple vs. Samsung. This is just another example of such positioning.
Brother anon,
“In today’s academic culture there is…”
That’s not just “today’s” academic culture. As I recall, that aspect of academic culture has been around since at least the early 1950’s (some of the “red scare” McCartheyisms reflected actual cultural idiosyncrasies including the lack of actual meritocracy in academia and instead the influence of a pervasiveness of “virtue signaling.”
I also recall back in the day while studying First Amendment law discussing how it was Academia’s “virtue signaling” on campuses that provided tests on constraints of open expression — when that expression was not of the proper “one bucket” virtues that “those in power” (the upper academia) did not approve of.
Perhaps it is merely the ever increasing polarization that for you makes it seem like “today’s academic culture” is more heavily infected with “virtue signaling.” Perhaps the infection has indeed grown worse. But make no mistake, the infection has been around for decades.
Not that I disagree with the overall thrust of the positions advanced, but I find the following to greatly lower the credibility of the article:
“Finally, the entire framing of this bill is based on conflating design patent infringement with “counterfeiting.” Those two things are not the same.
“Counterfeiting” is a term of art in U.S. IP law. The Lanham Act defines a “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.”
Hint: do NOT make a “you are conflating” argument BY conflating trademark law with design patent law.
Lumping trademark with patent under an umbrella of “IP Law” is NOT good when you are discussing a substantive aspect between two very different domains of law (trademark and patent derive from separate Constitutional provisions).
Comments are closed.