Insights

Designing for Damages

Firm Thought Leadership

Design patents are an often-overlooked method for protecting the value of your products. Under 35 U.S.C. § 289, patent owners can potentially recover the “total profit” made by sales of an infringing product. A properly developed design patent portfolio can also be used to control the market for replacement parts for a product.1  However, the tests for determining whether an infringer’s “total profit” should be calculated based on the end product sold or some smaller element of that end product potentially forces manufacturers to choose between exclusivity in the repair market and the potential of large infringement awards. This article reviews recent case law relevant to design patent damages and provides practical tips for developing a portfolio that best aligns with your business model. 

Overview of Design Patents

Design patents protect the ornamental design of an article of manufacture.2  This includes “ornamental designs of all kinds including surface ornamentations as well as configurations of goods.”3  A design may be embodied in portions of an article or in the entire article. Design patents may not be directed to a design dictated by function. “If the particular design is essential to the use of the article, it cannot be the subject of a design patent.”5  However, courts take a flexible approach to determining whether a design is dictated by function because a design patent protecting an article of manufacture will necessarily serve some utilitarian purpose.

 While the rules relating to applications for utility patents are generally applicable to applications for design patents,7  there are several notable differences. The term of a design patent is limited to 15 years from the date of grant.8  The potential tradeoff in term length is cushioned by the fact that design patents are cheaper and easier to obtain than utility patents. Unlike utility patents, maintenance fees are not required for design patents.9  The fees for filing a design patent are also lower.10  Preparation time can be significantly shorter because design patents include only a single claim that usually adopts the formal terms “The ornamental design for (the article which embodies the design or to which it is applied) as shown.”11

Claim scope also differs slightly for design patents. The accompanying drawings constitute the entire visual disclosure of the claim.12  The claimed design is depicted using solid lines, but broken lines may be used to depict structure that is not claimed but is necessary to show the environment in which the design is associated.13  

Special Damages Provisions for Design Patents

 One consideration when developing a portfolio of design patents is how to maximize potential damages in the event a competitor infringes. Although the scope of a design patent is narrower than that of a utility patent, design patents can be a potent asset because of the special damages provision in 35 U.S.C. § 289. Under this provision, anyone who “(1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.” In Samsung v. Apple, the Supreme Court explained that “article of manufacture” in this context “encompasses both a product sold to a consumer and a component of that product.”14  Unfortunately, the Court declined to set out a test for determining what the relevant “article of manufacture” is in a case of infringement.

Following Samsung, most courts have applied a four-factor test proposed by the United States as amicus curiae in Samsung to determine the relevant “article of manufacture.”15  The factors are, “(1) the scope of the design claimed in the patent, including the drawing and written description; (2) the relative prominence of the design within the product as a whole; (3) whether the design is conceptually distinct from the product as a whole; and (4) the physical relationship between the patented design and the rest of the product.”16  While trial courts appear ready to adopt this test, they are not foreclosing the possibility that other factors may be relevant. 

For example, one trial court held that the four-factor test should apply but that “each design patent must be considered in context and ‘considered from all viewpoints, technical, mechanical, popular, and commercial.’”17  That court also held that “how a product is manufactured merits explicit consideration as a factor when attempting to determine what is the relevant article of manufacture.”18  While a finished product might appear to be a single structure, it might be recognized as a collection of components after considering the manufacturing process.19 

Exhaustion in the Context of Design Patents

When developing a portfolio that maximizes potential damages under 35 U.S.C. § 289, positive factors from the test enumerated above must be balanced against the effects they might have in the exhaustion context. In Automotive Body Parts Association v. Ford Global Technologies, the appellant argued that because “article of manufacture” is broad enough to include both a product and a component of that product, sale of either the component or the product exhausts the design patent and permits repair.20  The Federal Circuit rejected this argument and held that the right of repair does not permit a purchaser to infringe other patents by manufacturing separately patented components of the purchased article.21  Repair rights are determined based on what the patentee claims.22  Because the appellee in Automotive Body Parts Association chose to claim designs as applied to particular components of a truck rather than to a design as applied to the whole truck, the appellant could not make and use the designs for the components covered by distinct design patents without authorization from the patentee.23   

Takeaways

The Automotive Body Parts Association decision is powerful for the patentee who deals in products that are likely to be repaired by purchasers. A portfolio of design patents on the product parts most likely to need repair can exclude third-parties from producing cheap replication parts that undercut the patentee’s  revenue from repair parts. However, such a portfolio may lead to reduced damages if the patentee  tries to recover “total profits” for an end product that incorporates the replacement parts that are protected with individual design patents. For example, a large portfolio of patents on individual elements of a product provides infringers with arguments that the relevant “article of manufacture” under 35 U.S.C. § 289 should be limited to those smaller portions of the end product because the individual patents show that each element is “conceptually distinct from the product as a whole.” Focusing a patent portfolio on repair parts also arms infringers with the argument that the end product sold to consumers is just a collection of components such that the proper “article of manufacture” is something less than the valuable end product.   

When balancing these factors to build an effective portfolio of design patents, patent owners should evaluate the life span of their products, the market for repair parts, and the manufacturing process used for the products. Products with short life spans—for example, consumer electronics where upgraded versions are introduced in a 12-18 month cycle—do not create a valuable market for third-party repair parts. Because consumers are more likely to purchase a new device than repair a damaged one, manufacturers should focus on building their design patent portfolio with the goal of maximizing a potential recovery under 35 U.S.C. § 289. To accomplish this, design patents should  focus on integral features that are unlikely to be considered as conceptually distinct features. 

For products that consumers are likely to use for several years—e.g., automobiles and industrial machinery—design patent strategy should account for the business outlook for repair parts and the product manufacturing process. The greater need for replacement parts means that it may be more valuable to use a portfolio of design patents to protect all the common replacement parts rather than focus on protecting designs as applied to the end product, even though each part’s value is insignificant compared to the end product sold to consumers. Because of the reduced costs involved with securing design patents, the number of individual patents required for this strategy should not be prohibitive.

 

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See Auto. Body Parts Ass’n v. Ford Global Techs., LLC, 930 F.3d 1314 (Fed. Cir. 2019).
2 35 U.S.C. § 171.
3 In re Zahn, 617 F.2d 261, 268 (C.C.P.A. 1980).
4 Auto. Body Parts Ass’n, 930 F.3d at 1318.
5 L.A. Gear, Inc. v. Thom Mcan Shoe Co., 988 F.2d 1117, 1123 (Fed. Cir. 1993).
6 See Auto. Body Parts Ass’n, 930 F.3d at 1318.
7 37 C.F.R. § 1.151.
8 See Manual of Patent Examination Procedure (“MPEP”) § 1502.01.
9 Id.
10 See USPTO Fee Schedule, available at https://www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule#Patent%20Fees.
11 37 C.F.R. § 1.153.
12 37 C.F.R. § 1.152.
13 See MPEP § 1503.02.
14 Samsung Elecs. Co., Ltd v. Apple Inc., 137 S.Ct. 429, 434 (2016).
15 See. e.g., Apple Inc. v. Samsung Elecs. Co. Ltd., No. 11-CV-01846-LHK, 2017 WL 4776443, at *15 (N.D. Cal. Oct. 22, 2017); Nordock, Inc. v. Systems, Inc., No. 11–CV–118, 2017 WL 5633114, at *6-7 (E.D. Wis. Nov. 21, 2017).
16 Nordock, 2017 WL 5633114, at *4.
17 Id. at *6 (quoting Bush & Lane Piano Co. v. Becker Bros., 243 F. 79, 81 (2d Cir. 1916)).
18 Id. at *7.
19 Id. at *6.
20 Auto. Body Parts Ass’n, 930 F.3d 1314, 1324 (Fed. Cir. 2019).
21 Id. at 1323.
22 Id. at 1324.
23 Id. at 1325.

 

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