The Differences Between Design Patents and Trade Dress

I often get asked by clients to discuss the differences between design patents and trade dress.  Both are intellectual property protections that protect similar aspects of a product—the appearance and aesthetic features. Last year, I described the differences between the various types of intellectual property in the article, Understanding the Different Rights and Remedies Under U.S. IP Law, which appeared in the World Economics Journal, Special Edition in the Spring of 2015.

Design patents cover visual, nonfunctional characteristics embodied in, or applied to, an article of manufacture. They may relate to the configuration or shape of an article, the surface ornamentation applied to an article, or to a combination of the two. Ultimately, a design patent protects only the appearance of the article and not its structure or functionality.  To determine if a design is ornamental, and not functional, courts and the U.S. Patent and Trademark Office look to whether there are multiple design alternatives.  If a particular design is essential to the use of the article, it can not be the subject of a design patent. When there are several ways to achieve the function of an article of manufacture, the design of the article is more likely to serve a primarily ornamental purpose.  A design is considered functional if it is dictated by the way it works or operates.   Factors considered by the Federal Circuit when determining functionality include whether the protected design represents the best design, whether alternative designs would adversely affect the utility of the article, whether there are any utility patents covering the product, advertising discussing features of the design as having a specific utility, and whether an overall appearance or elements in the design are clearly not dictated by function.  If the design includes elements dictated by function, they are not excluded from the infringement analysis and the ornamental aspects of the functional elements becomes the focus.  To be protectable by a design patent, the design must be an article of manufacture, be ornamental, new, and not obvious over existing prior art designs.

Trade dress is a type of trademark that refers to the image and overall appearance of a product.  Trademarks protect brands and the goodwill associated with the brand.  A trademark is used to identify the source of goods or services and is used to distinguish the goods and services of one seller or provider from another.  Trade dress can include customized boxes for your brand, product shape and color, and the look and feel of a restaurant or retail store.  Trade dress, to be registrable, must serve as a source identifier, be distinctive in the marketplace, be used in commerce, and must be primarily nonfunctional.  A functional feature is one that is likely to be shared by different producers of the same product and therefore, can not identify a particular producer.   Factors considered when determining functionality include whether the design yields a utilitarian advantage, whether alternative designs are available, whether advertising discusses the utilitarian advantages of the design, and whether the design results from a comparatively simple or inexpensive method of manufacture.  For trade dress to be distinctive, it must have acquired secondary meaning.  This means that over time and with advertising and exposure, consumers associate the design with the source of the product.

The nonfunctionality requirement for trade dress is more strictly applied by the courts than for design patents because trade dress protection exists for as long as the trade dress is being used in commerce. Conversely, in design patents there is no existing obligation that the holder even be practicing the patent in any past or present product.  Trade dress functionality is defined more broadly due to the perpetual aspect of the protection.  In comparison, design patent terms are limited in duration to 15 years.  However, it is possible for extended protection for designs through the process of evergreening.  The design patent term is calculated from the date of issuance of the application.  Continuation design applications can be filed prior to the issuance of the initial design patent or during the review of a previous co-pending application.  The continuation applications cover related aspects of the original design. These subsequent applications will issue after the co-pending application issues, extending the period of enforcement of the design beyond the initial 15 years. This begs the question whether nonfunctionality in design patents should be an easier standard to prove than nonfunctionality in trade dress.  Under the current standard outlined by the Federal Circuit above, ultimately, it is extremely hard to invalidate a design patent based on functionality.  Whereas, it is much easier to invalidate trade dress for being functional.

The tests for infringement of trade dress and design patents are distinguishable.  For trade dress, courts look to whether consumers are likely to be confused as to the source of the goods when comparing the designs.  The test for likelihood of confusion includes the weighing of several factors including the similarity of the designs, the similarity of goods, sophistication of consumers, and intent, among other factors.  Design patent infringement, on the other hand, is determined if the defendant’s design is substantially similar to the patented design from the perception of a hypothetical ordinary observer. In trade dress, confusion as to source can be avoided when looking at the product design as a whole.  Placement of trademarks and other insignia can eliminate consumer confusion.  In design patents, this analysis is more difficult and does not take into account consumer or market impact.  For trade dress, the goods must be considered as they would in the market—how they would be encountered on a shelf, for example.  This is not the case for design patents.  The infringing product is compared to the patent itself, not a product in the marketplace.  As aforementioned, a design patent owner is not required to manufacture, or sell a product that integrates the patented design.  For trade dress, the design must be used in connection with a product sold in commerce in order for trade dress rights to attach.

Design patents protect a property right and were created to spur innovation by providing a 15-year term of exclusivity in which to get a jump on competitors.  While trade dress also protects a property right—the goodwill associated with it, trademark law as a whole serves to reduce consumer confusion regarding the source of a product or service.  In contrast, trade dress is protectable, with caveats, for as long as it is being used in commerce by the owner as a source identifier.  Both design patents and trade dress are enforceable against infringers as a reward for the efforts and investment of inventors and owners.

The remedies available for design patent infringement and trade dress infringement are also similar.  Remedies for design patent infringement include injunctions, monetary damages, and in exceptional cases, attorneys’ fees.   There is additional design patent remedy available against infringers of design patents and not available against infringers of utility patents—the infringer’s total profits. 35 U.S.C. 289 states that whoever during the term of a patent for a design, without license of the owner, applies the patented design to any article of manufacture for the purpose of sale, or sells any article of manufacture to which such design has been applied shall be liable to the owner to the extent of his total profit.  The interpretation of this provision has come under intense scrutiny as to how it applies to modern products that may contain any number of design patents.

If trade dress is infringed by another, remedies are statutory and include injunctions, damages and in exceptional cases, reasonable attorneys’ fees.  Owners of trade dress are eligible to recover defendant’s profits, any damages sustained by the plaintiff, and the costs of the action.

While remedies include total profits as a possible damage award for both trade dress and design patent infringement, causation of injury from infringement is only required to be shown in trade dress infringement claims.   Therefore, the damage award of total profits in design patent infringement cases can be easier to prove and can result in higher – and more controversial – awards.  This has been shown to be true in the recent Apple v. Samsung decision.  The jury awarded the total profits from Samsung’s phones for infringement of Apple’s design patents—an award of over $1 billion dollars.  On appeal at the Federal Circuit, Samsung argued that apportionment or a causality analysis relating to the profits should be limited to the infringement or infringing article of manufacture, but the Court upheld the the ruling.  The Court applied a strict reading of 35 U.S.C. §289 that an infringer of a design patent shall be liable to the owner to the extent of his total profit without a showing of causation or apportionment.  Leading intellectual property professors, tech companies and consumer groups all disputed the Court’s interpretation.

On December 15, 2015, Samsung filed a petition for writ of certiorari to the Supreme Court requesting judicial review of these issues, and the Court granted review, with arguments expected during the fall session.  In its appeal to the Supreme Court, Samsung is questioning the disgorgement of their total profits for infringing devices despite these patents only covering specific design features of that product.

As Samsung mentioned in the petition, the Supreme Court has not reviewed a design patent case in more than 120 years.  The cases the Supreme Court heard in the 1800s related to patented designs on spoons and carpets, for example, where the patented design was the essential feature of the product.  But, today, unlike when 35 U.S.C. §289 was written, products including smartphones, computers, and other multifaceted technology-based products that feature many inventions, features, and designs. A design patent might, and often does, only cover one minor design feature.  It is unreasonable in the modern era for a design patent holder to be awarded total profits including profits not attributable to the specific design covered by the patent.  The stakes are high.  The Supreme Court should reverse the lower court’s ruling and set a fair and modern precedent for how design patent infringement awards are determined going forward.