ATTENTION CORPORATE AMERICA! IT’S TIME TO ADOPT A U.S. DESIGN REGISTRATION SYSTEM

We’ve all had a chance to absorb, and perhaps wretch over, the LKQ v. GM decision wherein the Federal Circuit last month jettisoned the venerable Rosen/Durling tests for determining whether a claimed design is non-obvious.  See my earlier blog where I attempted to deconstruct the opinion. 

The LKQ case leaves a whole lot to be desired.  In overturning Rosen and Durling, which were used over 40 years to analyze Sec. 103 for designs, the Court basically adopted the utility patent test for determining design patent obviousness.  Forty years of development of design patent case law have been wiped out.  We are back to 1952, when Sec. 103 was first enacted, and the subsequent Graham v. John Deere case from the Supreme Court in 1964 setting forth a 4-part inquiry for determining obviousness of a utility patent.  This was all done in the name of the Supreme Court’s KSR decision of 2007 in which the Court required that Sec. 103 analysis be performed with “flexibility” – again, in a utility patent case. 

The LKQ case leaves design patents in limbo.  It will create lots of work for design patent lawyers and litigators, to be sure, but will also give their clients grave anxieties.  The result, no doubt, will be fewer design patents being found valid and even fewer being applied for.  Combined with the recent steep increase in USPTO fees for design patent applications (from the current $1,760 to $2,600), even the large corporate rights-holders are likely reevaluating whether design patents are worth it.  In the absence of an alternative, many will continue down the design patent path.

Is there an alternative?  Yes.  It’s in the form of a new law, a system for registering (not examining) designs.  But without you, Corporate America, it won’t happen.

As background to this post, I suggest that you review my August 1, 2023 post: AN OBVIOUS WAY TO RESOLVE THE DESIGN PATENT NON-OBVIOUSNESS PROBLEM. In that post, I explained in detail the history of how non-obviousness for designs has always been problematic.  The venerated CCPA Judge Hon. Giles Rich spoke out often about the subject.  As one example, he wrote a concurring opinion in In re Nalbandian 661 F.2d 1214 (C.C.P.A. 1981) wherein he said:

“It is time to pass [a design registration system] and get the impossible issue of obviousness in design patentability cases off the backs of the courts and the Patent and Trademark Office, giving some sense of certainty to the business world of what designs can be protected and how. (emphasis added).” 

Now, in the wake of LKQ, this makes more sense than ever.  Nobody knows how LKQ will be applied.  The USPTO doesn’t know.  Applicants for design patents don’t know.  Their clients don’t know.  The PTAB doesn’t know.  The federal district courts don’t know.  Corporate America doesn’t know. And the Federal Circuit left so many questions open in LKQ, they don’t know either.  Nobody knows what LKQ hath wrought.

Webinars will be given that purport to predict what will happen, and to give advice to design patent applicants about how best to navigate design patent non-obviousness in the post-LKQ world.  But although well-intentioned, it will be somewhat speculative advice, because, like the stock market,  no one knows what will happen.

In 2007, I gave a speech before the AIPLA Industrial Designs Committee advocating the adoption of a sui generis design registration system much like that advocated by Judge Rich.  At the time, there were some troublesome things happening to design patents (see my article The Crisis in the Law of Designs).  But some design patent practitioners who heard the speech could see only the downside.  As I recall, the main objection was something like “I’d rather deal with the devil we know [i.e., design patents] than the devil we don’t know [i.e., design registrations]”.

Following the AIPLA speech, my good friend, the late Theresa Esquerra and I wrote an article (“A Manifesto on Industrial Design Protection: Resurrecting the Design Registration League”, 55 Journal of the Copyright Society of the USA 2-3, Winter-Spring, 2008).  We called on design rights-holders to form a coalition, which we dubbed The Design Registration League (DRL) based on the name of the original group advocating such legislation in the 1910s.  Here’s an article on the DRL from the New York Times in 1922.   Nothing much happened.

Later I also spoke at the USPTO’s annual Design Day advocating the same thing.  The USPTO design patent examiners and officials in attendance were somewhat in shock, feeling that their very livelihoods were at stake, despite a provision in the bill that actually preserved the design patent system.  Nothing much happened.

In retrospect, I feel that the main reason nothing happened was that Corporate America did not get behind it.  Without serious support and lobbying, nothing happened, and nothing was going to happen. 

In an attempt to create more momentum, Theresa and I actually drafted a Design Registration Bill.  It wasn’t as hard as it sounds.  We simply started with the Vessel Hull Act, a law already on the books that is part of the Copyright Act (17 U.S.C. 1301 et seq.).  The Vessel Hull Act, in turn, was patterned after previous unsuccessful design registration bills including those advocated by Judge Rich.  We changed the class of designs to be protected, i.e., vessel hulls, to “designs”.  We consulted with officials at the Copyright Office to garner their support, to elicit their views on various terms in the draft and amended it accordingly.  We also looked at the highly successful Registered Community Design (RCD) system in Europe, and solicitated input from European practitioners.  Finally, we inserted and deleted some provisions that we had been deemed problematic in the design patent system. 

The bill we drafted is far, far from perfect, but we thought it would make a good starting point, with the the eventual terms being negotiated by rights holders and other interested parties.

It is clear that after LKQ, the time has come for Corporate America – the rights-holders with the greatest influence in Congress - to take a hard look at the uncertainties surrounding design patents and give serious consideration to adopting a design registration system.   

As stated by Judge Rich, it is high time to get the intractable issue of non-obviousness out of the design protection system.  Post-LKQ, it could not be more clear.

Personally, I would much rather have a system where design rights could be obtained inexpensively and quickly.  In my 40+ years of experience, most design patents are tucked away by my clients, to be pulled out only if there’s an infringement problem.  And the percentage of design patents that have an infringement problem is probably far fewer than 1%.  Why invest so much resources into a non-appreciating asset having such little use?

In the EU, design registrations can be obtained quickly and cheaply, especially considering that a registration covers all 27 EU countries.  Also, up to 100 designs can be registered in the same application.  Currently, it takes the USPTO ~17 months to issue a first Office action, while in Europe you can get a registration in as little as one week.

I am attaching the bill that Theresa and I drafted that was distributed at my 2007 speech.

One of the notable provisions of the bill is that within two years of a registration, the owner can file a design patent application and claim priority to its earlier design registration.  This would effectively result in a two-tier system, which has already been used to good effect in other countries, e.g., Australia.

An infringement occurs when someone copies the protected design.  While protection is limited to copies, that is by far and away exactly how design patents are effectively used today - to stop copycats. In the draft bill, a design is not deemed copied if it is original and not substantially similar in appearance to the protected design.  The word “ornamental” is not in the bill, and “functionality” is clearly defined as a design for which there are no alternative designs that will perform substantially the same function.

A unique provision – suggested by the Copyright Office – is to establish staggered terms of protection based on the type of design.  Designs having relatively short lifetimes such as clothing and apparel would have a short term, while designs that have long lifetimes such as musical instruments and heavy machinery, would be given a long term. 

Another provision is that attorney’s fees shall be awarded to the prevailing party in an action for infringement.  This is an important bulwark against baseless claims by those who obtain weak or falsely obtained registrations and assert them against legitimate companies.

Statutory damages up to $250,000 or $5 per copy can be awarded, or the infringer’s profits.

Of course, other provisions could be added to the bill, such as: opposition proceedings; a process to deal effectively with online resellers; and/or using a design registration to stop imports at the border like trademark and copyright registrations are currently used.

Also, rather than the Copyright Office, the system could be administered by the USPTO, which makes sense if the two-tier provision is adopted.

I urge you to review the bill.  Give it to your corporate clients for serious consideration.  Ask your professional organizations (the AIPLA, IPO, INTA, ABA) to get behind it.  Organize. Let’s get the ball rolling.

I’ve had enough of everyone trying to shoehorn design patents into the utility patent system, a gift that keeps on giving - to infringers.

Let’s get the United States into the 21st century and enact design protection legislation that makes sense.