The Diminshing Value of “Small” Improvements

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U.S. Patent No. 7,469,381

In a previous post I discussed the problems with the Supreme Court’s Ebay v. Mercantile Exchange decision in the context of the denial of Apple’s preliminary injunction motion (Apple II), and namely my assertion that the nexus test between the claimed invention and sales based upon the inventive attribute should not be strictly applied.

Since then, the district court presiding over the Apple v. Samsung litigation also denied Apple’s request for a permanent injunction, which included additional patents that were deemed to be infringed by Samsung and lead to the 1 billion (yes, billion, with a “b”) dollar verdict.  As part of the court’s analysis, Judge Koh poured cold water on Apple’s claims that sales of iPhones were driven heavily by its design, stating:

But even if design was clearly a driving factor, it would not establish the required nexus.The design of the phones includes elements of all three design patents, as well as a whole host of unprotectable, unpatented features. Apple makes no attempt to prove that any more specific element of the iPhone’s design, let alone one covered by one of Apple’s design patents, actually drives consumer demand. The Federal Circuit made clear in  Apple II that customer demand for a general feature of the type covered by a patent was not sufficient; Apple must instead show that consumers buy the infringing product specifically because it is equipped with the patented feature.695 F.3d at 1376.

Apple v. Samsung, Order Denying Motion for Preliminary Injunction at page 8 (emphasis added).  There is no doubt that the district court’s analysis hues very closely to the intent of the Federal Circuit; however, what is also pronounced in the district court’s analysis is how inappropriate this standard is.  Under the rubric, almost any design patent that is component part of a larger system would not be entitled to an injunction without extraordinary evidence that it is the solely the patented feature that is driving consumer demand.  Consider where this may be a problem for design patent owners:

  • If the product is not being produced (Note: there are caveats in the caselaw for this situation, but their foundation may be shifting];
  • If the product has multiple patented design features that collectively define a design (as proffered by Apple);
  • If the product has a single design element, but that design element is amassed with one or more other unpatented design features;
  • If the design element is contained in a single device (think automobile headlight cover), but the device is contained in a larger product (e.g., car).

In each of the instances presented above, injunctive relief is difficult, if not impossible, to receive and the patentee would have to settle for monetary damages.  Admittedly, monetary damages, such as those granted in Apple’s case, may be sufficient (obviously Apple didn’t think so…); yet, it is bizarre that the courts (and the Supreme Court specifically) has essentially codified corporate march-in rights for patented technologies unless it can be shown that the patented concept has such “power” that it drives consumption of the product.  In the instant case, the district court has determined the license fee due to Apple and by not putting in place a permanent injunction, it has essentially dictated the terms of an agreement between the companies.

Interestingly, if Samsung were to continue to infringe, there would be a very strong argument that the case be deemed exceptional and that treble damages would be awarded.  Of course, this only increases the licensing fee and if Samsung finds it reasonable it will continue to infringe and just incorporate the cost into the device.

The rubric followed by the district court is even more problematic for utility patents.  Specifically, the district court stated that in order to receive an injunction, Apple would need to established that it’s ’381 patent was “necessary for the product to function, or a core technology of the product.”  This statement presents real problems for patentees: rarely, if ever, is a claimed invention “necessary for a product to function.”  Moreover, this presents some puzzling questions:

  1. What is the product? Is it the apparatus defined by the claims? Does it include those non-binding limitations presented in the preamble of a claim? If the novel feature is part of a larger system, is the product the entire system or merely the novel feature?
  2. What level of functionality is required? If the claimed invention is directed to a phone’s wireless connection, but the phone can still transmit data over its cellular connection, is the wireless connection necessary?  It is to certain wireless communications, but not to the phone as a whole.

These issues will likely be ferreted out in future decisions, but for now, this leaves patent practitioners and patentees in the dark as to how to draft claims to novel features of existing devices that would warrant injunctive relief.

Duty of Disclosure: Apple and the USPTO

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Apple has been active in the last few years attempting to protect a design, under the patent and trademark laws, that includes a pair of eighth notes. Notably, Apple has received some feedback from USPTO regarding both–it being granted a design patent to the musical notes (left image below), but being rebuffed by the Trademark Trial and Appeal Board (TTAB) as it attempted to register a similar trademark (right image below).


There is little doubt that you can obtain both a design patent and a trademark to the same ornamental design.  As the Federal Circuit has opined:

The underlying purpose and the essence of patent rights are separate and distinct from those appertaining to trademarks. No right accruing from the one is dependent upon or conditioned by any right concomitant to the other. The longevity of the exclusivity of one is limited by law while the other may be extended in perpetuity. . . .trademark rights, or rights under the law of unfair competition, which happen to continue beyond the expiration of a design patent, do not ‘extend’ the patent monopoly. They exist independently of it, under different law and for different reasons.

In fact, there are reasons to apply for both a design patent and a trademark as it may provide protection for an important design that is (or will become) an important brand for your company or assist in the prevention of copying.

However, whether or not Apple should be entitled to both the design patent and the trademark is not the topic of this post – what is worth discussing is that the TTAB found that Apple’s potential trademark was confusingly similar to the iLike trademark (right), yet neither the iLike trademark (registered in 2008 well prior to Apple’s patent issuance) nor the analysis of the examining attorney at the USPTO was submitted to the examiner reviewing Apple’s design patent application.

Under the patent laws, all printed publications may be used as references, the date to be cited being the publication date. (Manual of Patent Examining Procedure (MPEP 901.06)).  Additionally, applicants (and their attorney) owe a duty of candor to the USPTO and a duty to disclose information that would be material to the patentability of the invention.  37 CFR §1.56. The term “information” as used in 37 CFR 1.56 includes any information which is “material to patentability.” “Information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.” 37 CFR §1.56(b).

Based on the broad scope of “information” should Apple have provided the USPTO patent examiner with the iLike trademark and the prosecution history of Apple’s trademark application?  Given the TTAB’s findings and the broad definition of “information”, it seems as though there is a strong argument they should have.  The argument for submission is buttressed when one considers the similarities between the tests for trademark registration and design patent infringement/allowance.

Both trademarks and design patents have similar tests for infringement and allowances—a mark infringes a registered trademark if the mark is confusingly similar to the trademark, such that a consumer would be deceived as to origin of similar products, and similarly a design patent is infringed if in the eye of an ordinary observer, situated as a typical purchaser of the item, the two designs are substantially the same such that observer would be deceived into consummating the purchase, the patent is infringed.  In determining whether or not a trademark should be registered in view of other existing marks or whether a design patent should be allowed over existing prior art, the USPTO uses similar guidelines as are used to determine infringement (based on old rule that what is infringed is necessarily anticipating prior art).

Given the apparent similarity between Apple’s design patent and trademark designs and the similarities between how the designs would be evaluated in view of prior art designs and registrations, it seems clear that Apple should have submitted the iLike trademark as prior art and also submitted the analysis and prosecuting history of the examining attorney at the USPTO who was evaluating the trademark application.  Apple may have believed that the iLike trademark was cumulative of the volume of prior art patents and patent applications it submitted to the USPTO, but certainly the examining attorney’s remarks (and Apple’s responses) would not have been.  Ultimately, Apple’s omission may leave its design patent vulnerable to an invalidity challenge.