This opinion editorial orginally ran in the Orlando Sentinelon October 20, 2015.
Florida has always attracted entrepreneurs and creative thinkers. Florida High Tech Corridor research universities ranked within the top 30 universities worldwide that were granted U.S. patents last year.
Many startups rely on both design and utility patents to protect their intellectual property. Design patents cover ornamental designs; utility patents cover function.
Usually, tech entrepreneurs focus on function, but not in the case of some of technology’s biggest names. Since 2011, Apple and Samsung have been engaged in a multimillion-dollar lawsuit over design patents, including a patent covering the iPhone’s rounded rectangle shape.
A federal court recently ruled that Samsung’s products infringed on Apple’s design patents. Samsung owes Apple all of its profits for the infringing devices (damages totaling $548 million and counting). This decision allows for a total profit award based on infringement of an ornamental feature. However, only reasonable royalties may be available for crucial components without which a device wouldn’t function.
Adding to the absurdity of this case, the U.S. Patent and Trademark Office recently determined two of the patents at issue probably shouldn’t have been awarded, and steps are being taken to invalidate them.
Even more troubling, a case like the Apple/Samsung battle could incentivize design-patent trolling because an award of infringers’ profits by its nature does not require the patentee to be a producing entity, and the lure of profits may drive trial lawyers to work on contingency fees in hopes of a large settlement.
Additionally, companies could rush patenting ornamental designs for use as a potential offensive tool against other companies, even if they do not use the patented design themselves. Not succeeding in the marketplace? Just sue your competitor out of business.
Florida enacted anti-patent trolling legislation this year. Congress is currently re-examining patent reform; however, no legislative efforts have addressed design patents.
Legislation may not be needed if the courts take a refined approach on design-patent remedies, interpreting the statute such that form does not trump function. The current interpretation assumes the design is relevant, but requires no proof of such and does not account for the situation in which function actually trumps form.
Innovators want to focus on creating solutions to business and societal challenges using the latest technology. As our tech space grows, Florida should ensure entrepreneurs don’t have to create contingency plans in case of a nonsensical design-patent lawsuit.