Apple v. Samsung is obviously about high tech smartphones. Other recent design patent cases have focused on high tech products as well—both the Nikola v. Tesla case Patent Progress covered recently and the Microsoft v. Corel case that Prof. Sarah Burstein described over on Patently-O deal with high tech products.
But the basic issue with the total profits rule, and with current design patent law more generally, isn’t just an issue in areas you’d think of as high tech. Take something as mundane as diapers.1
Insides vs. Outsides
Diaper manufacturers compete on both the technology that goes inside the diaper and the designs that go on the outside.
Your average diaper includes a variety of technologies that help it do that, but fundamentally the keys are a non-woven layer that sits against the skin and allows liquid to pass through and a super-absorbent polymer that soaks up the liquid. Various modifications and advances are made, and patented, with some regularity—based on Google Patents data, nearly one hundred patents related to super-absorbent polymers and diapers have been granted in 2018 in the U.S. alone.2
At the same time, many diaper brands market their products with Sesame Street characters, Pooh, or Disney characters printed on the outside. Or perhaps with a camouflage pattern, as seen in D638535.
And both are important selling tools—an outside that the kid is excited to wear, and an inside that might let the parent wait a little longer between changes. But there’s one big difference between the inside patents and the outside patents.
What’s The Article?
Design patents cover ornamental designs for articles of manufacture. And under § 289, a design patent—unlike a utility patent that covers a technological advance—entitles the patent owner to the total profit on the article of manufacture to which the design was applied.
So the first question to ask is “what’s the article of manufacture?” And in asking that question in a diaper design patent case, you might find a surprising similarity between diapers and smartphones. (At least when it comes to design patents.)
Your first inclination might be to say that the article is the diaper. But in the Apple v. Samsung trial going on this week, there are patents at issue that cover the decorative design of the housing of the phone. Apple claims that those patents entitle them to Samsung’s total profits on the whole phone—including the profits due to the advanced technology on the inside of that housing.
Similarly, in a design patent case involving diapers, you have a printed outside layer—and then all the technology on the inside. Is the article of manufacture the entire diaper, or the printed outside layer? And how do you distinguish that from the Apple v. Samsung case?
And can we do something to make this situation manageable?
We’ve Seen This Before
I’ll quote from a letter written by one Mr. Fish to one Mr. Howson and read into the record by an esteemed Congressman, discussing the state of patent law.
The right to recover profits as well as damages … was finally fixed by statute.
This situation worked well enough under the simple conditions characterizing the administration of the patent law in the old days.
Now however it is a complete and absolute failure.
When the practice was established, patents were almost always on simple things which were made and sold … Now, however, by far the greater number of patents that are in litigation are on special and often relatively insignificant parts of complex structures to which the patented feature is so related that it is absolutely impossible to apportion the profits due to the invention…
The result is that there is a complete failure of justice in almost every case in which supposed profits are recovered or recoverable.
Absolutely artificial and unsound rules have been invented to solve the impossible problem of how to apportion profits.
The only solution of the difficulty is to eliminate the recovery of profits which as [sic] been allowed purely because of a series of historical accidents.
The only sound principle is to have the plaintiff recover the damages he can prove.
That letter was written in 1929, describing the problems with the profits rule that was at that time being used for utility patents.
The Mr. Fish who wrote this letter was Frederick Perry Fish, who was a patent lawyer for Alexander Graham Bell, Thomas Edison, and the Wright Brothers, was the president of AT&T for many years, and likely argued more patent law cases in front of the Supreme Court than any other lawyer of his era. In his spare time, he founded the law firm of Fish & Richardson which is still a major patent law firm. He was writing to Charles Henry Howson, who chaired the Patent, Copyright, and Trademark Section of the American Bar Association.
In other words, the two of them might have known a thing or two about patents.
The letter points to a simple solution to many of the problems discussed this week—eliminate profits as an available measure of damages. And that’s exactly what Congress did with respect to utility patents in 1946.
Now, when the ‘simple conditions characterizing the administration of the [design] patent law in the old days’ have given way to a situation in which ‘the greater number of [design] patents that are in litigation are on special and often relatively insignificant parts of complex structures to which the patented feature is so related that it is absolutely impossible to apportion the profits due to the invention,’ it’s time to think about Mr. Fish’s advice again.
Congress should consider eliminating § 289 and the total profits rule for design patents.
- Diapers actually have a long history in patent law. Kimberly Clark and Procter & Gamble, two of the largest personal hygiene companies, fought each other in a series of patent and antitrust cases in the 1980s. And just last year, the Supreme Court decided SCA Hygiene, which barred laches defenses during the 6 year infringement window. SCA Hygiene’s subject? Diaper patents. ↵
- Interestingly, the same technologies are frequently used in wound dressings and bandages. Both a diaper and a bandage have the same basic purpose of taking a liquid or solid/liquid mixture, moving it away from the skin, and absorbing it so that it stays in one place. And because the ability to go longer between changing a diaper or bandage is desirable, both have an incentive to maximize how much liquid they can trap. ↵