Seizing Products for Design Patent Owners Isn’t CBP’s Job

Uh oh, Senators Chris Coons (D-DE) and Thom Tillis (R-NC) have teamed up again to introduce legislation that would promote the interests of patent owners at the public’s expense. This is the same duo that earlier this year sought to dismantle the protections against patents on human genes and abstract ideas that we have thanks to Section 101 of the Patent Act, as the Supreme Court confirmed in 2014’s Alice v. CLS Bank decision. Having failed thus far to muster support for that misguided effort, Senators Coons and Tillis have apparently re-focused their attention on a new effort to service patent owners.

There’s no reason patent owners need more tools to stop infringement at the U.S. border.

This time, along with Senators Cassidy (R-LA) and Hirono (D-HI), they are sponsoring the Counterfeit Goods Seizure Act of 2019 (S. 2987). If enacted, this would for the first time ever empower U.S. Customs and Border Protection (CBP) officers to seize imports at the border based on their own determination of whether they would infringe design patents. All a design patent owner would have to do is record their registered intellectual property with CBP and tell them what to look for.

Until now, CBP has had the power to seize products involved in violations of copyright, trademark, and trade name protection, but not patents. That’s for good reason: determining whether something infringes a patent requires information and time for considerations that officers working under pressure at international borders do not have. Design patents are different from utility patents in that they protect industrial designs that can be illustrated visually. But that doesn’t mean it’s easy—or even possible—to know that a product infringes a design patent by simply comparing them visually.

Importantly, no matter what a product looks like, it cannot infringe a patent that is invalid. But it is rarely possible to determine whether a patent is invalid simply by looking at the granted patent itself or original application. Instead, testing for invalidity requires considering not just the patent and accused product, but also related products that existed before the patent was issued—what is referred to as “prior art.” Prior art is a cornerstone of the invalidity analysis for design and utility patents. While CBP officers may have access to a patent and product accused of infringing it, they will not have access to other products or designs—the prior art on which the invalidity analysis turns. As a result, owners of patents that are likely invalid will benefit from laws that allow them to block products in situations where prior art, and thus invalidity defenses, are not readily available.

But for design patents, prior art designs can also be part of the infringement analysis. As the Federal Circuit held in Egyptian Goddess v. Swisa, “when the claimed and accused designs are not plainly dissimilar, resolution of the question whether the ordinary observer would consider the two designs to be substantially the same will benefit from a comparison of the claimed and accused designs with the prior art.” In other words, in order to tell whether a design patent is infringed, it can be necessary to look at prior art designs—not just the design patent and the product accused of infringing. And prior art is not going to be available at the border or accessible in the way the patent itself is. That means giving CBP the power to seize goods based on design patent infringement inherently benefits patent owners over people who may need access to those goods as part of their daily lives and businesses.

This is not the time to expand the design patent system. We should really be asking what purpose design patent protection serves as a general matter. Non-functional visual works receive copyright protection; functional works receive utility patent protection. That leaves design patent protection for non-functional visual works that are too unoriginal, uncreative, or both to receive copyright protection. We should be asking whether anything merits design patent protection at all.

Besides, most design patents are stupid; they cover basic, obvious, and unimpressive shapes we see in countless products every day. As one scholar has written: “To be patentable, a design is supposed to be novel, nonobvious, and ornamental. But every week, the U.S. Patent and Trademark Office (USPTO) issues patent for designs that seem to be none of the above.” Design patents are granted every week on basic shapes for things like exhaust pipes, fax machines, and sheets of mailing labels. And the allowance rate for design patents is staggeringly high. A 2010 study by Professor Dennis Crouch revealed that “[f]or the past decade, the allowance rate for design patent applications has remained over 90%”—compared to a 44% allowance rate for utility patents during the same period—and “a prior-art-based rejection rate of only 1.2%.” At the very least, design patent applications must get more scrutiny at the Patent Office before Congress gives CBP the power to seize products accused of design patent infringement.

Third, there’s no reason patent owners need more tools to stop infringement at the U.S. border. Patent owners can already stop infringing imports at the border by getting an exclusion order from the International Court of Trade. And those proceedings are required to take place within 18 months to ensure a relatively timely process. There’s no reason to make it any easier for design patent owners to impede the flow of international trade. All that will do is give them more power to bully small companies into paying nuisance settlements and force bigger companies to waste money on litigation instead of research and development. In the end, that will leave consumers with higher prices and less innovative products. We hope the Senate will reject this latest effort to give patent owners a handout they neither need nor deserve.