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November 6, 2014

Innovation: The Shape of Things to Come

 

Recently, technology companies often seem more distracted by litigation, or the threat of it, than focused on innovation. This causes them to invest their energy and resources in litigation rather than in the successful commercialization of innovation. 

One big area of contention has been over “design patents,” which cover visual, not functional, characteristics of an item—perhaps a change in looks but not much more. Such patents, and their rapid growth, have been the root cause of much tumult in the patent world. In fact, according to the Patent and Trademark Office, the number of design patent applications jumped by 40 percent since 2009, with the 700,000th design patent issued in March of this year. As these statistics indicate, inventors have been increasingly relying on design patents rather than other, more substantial patents. 

When design patents began they typically covered an entire product and any infringement needed to be intentional, so for infringement to occur the entire product would need to be copied intentionally. Now design patents are granted on small features of a product, such as rounded corners on a phone, increasing the number of possible disputes even while devaluing major innovative advances. The patent system is straining to keep pace with modern technology, such as smartphones which are a complex web of thousands of patents. 

Where design patents are concerned the plaintiffs are awarded all of the profit from sales even if the infringing element had nothing to do with those sales. The total profit award is part of the problem of high stakes infringement lawsuits. So, the perverse incentive is to bring design patent infringement cases even with the weakest merits while defendants are incented to settle to avoid the unbalanced risk if a case resulted in a loss. In other words, the system itself is biased to settlement regardless of the quality of the claim. The unbalanced economics weigh against innovation and invention. 

And the problems with design patents do not end there. This secret system (design patent applications are kept secret hence increasing the chance of unknowing infringement) promotes broad design patents being awarded, perhaps covering a change in color or rounded corners. Even a casual observer can understand how the award or consideration of such applications works against inventors and can unnecessarily complicate innovation. 

Real advances in design deserve to be protected, but not to the exclusion of all else. As currently awarded and enforced, design patents lead companies to litigation instead of to the commercialization of innovation. Broad, ambiguous patents, and the litigation this breeds, cause skepticism of our patent system and weakens the whole. For our innovation economy to flourish, we need a robust, functioning patent system, and ending the litigation treadmill would play a positive role.


 

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