Using Broad Design to Block Competition

You might think that a fight over smartphones has nothing in common with a spat over stilettos. But in fact, both are about a critical frontier in copying and competition: using design to gain control over function — and thereby gain control over markets.

The two disputes about copying that have dominated the business headlines over the last month are Apple v. Samsung, where Apple accused Samsung of copying the design of its iPhone and iPad; and Christian Louboutin v. Yves Saint Laurent, where Louboutin accused YSL of copying its signature red soles. While some measure of protection for new design features is justified, these cases illustrate the perils of letting our concern over copying override the need for competition.

Consider Apple’s attack on Samsung. Apple claims rights over not only familiar touchscreen features like tap-to-zoom and pinch-to-zoom. It also claims a monopoly in the rectangular shape of its electronic devices. In the courtroom, Apple sought to use its patents on the iPad and iPhone shapes to block Samsung’s growing arsenal of look-alike products.

Is the basic shape of the iPhone and iPad novel or distinctive? No. The rectangle is the shape of the television, the computer monitor, the magazine, the book. Indeed, it is the basic shape that has dominated content consumption since Moses presented the original tablets.

Consequently, there is good reason to question whether a design patent over such a basic shape should ever have been granted in the first place. Especially because Apple is not the first to design a rectangular phone – LG’s Prada used the same basic shape before the iPhone did.

A second problem has to do with the inevitable intertwining of design and function. While shape may seem like a simple matter of aesthetics, it actually has critical functional advantages for users. Can you imagine a smartphone or tablet in any other shape?  Sure, on NBC’s The Office Dunder Mifflin tried to roll out a triangular tablet. But that just proves the point. If Apple can control the rectangle, it can keep a lot of serious tablet and smartphone competition out.

Now, the jury didn’t find Samsung liable for violating Apple’s patent covering the rectangular shape of the iPad. But it did hold Samsung liable for violating several Apple patents covering the rectangular shape of the iPhone. And even with respect to the iPad rectangle patent, the court did not say that Apple’s design patent was invalid.

So Apple is free to go after other manufacturers for making tablets, and phones, that are similar in shape to Apple’s. And we emphasize the word similar. Because Samsung’s phones, while rectangular with similar rounded corners, were not identical to Apple’s. If future courts and juries follow this approach, a lot of other cell phone manufacturers might be in trouble: paging HTC’s lawyers… and Nokia’s… and other competitors.

The Christian Louboutin vs. Yves Saint Laurent battle is not about shape, but color. Louboutin argues that he – and only he – could use bright red soles on women’s shoes. The lower court that first heard the dispute denied this claim, reasoning that in fashion, color isn’t just aesthetic. It is also functional. After all, women don’t buy stilettos to keep their feet warm; they buy them for the looks. Color is an essential part of that look. To give a fashion house control over a color would limit competition in the market too much.

In the decision just handed down this past week, an appeals court in New York didn’t disagree that color could have functional attributes in the fashion context – attributes that might give a firm competitive advantage. But the court ultimately ruled for Yves Saint Laurent, stating that its competing shoe had a red sole AND a red upper, so did not violate Louboutin’s rights. Why? Because Louboutin’s trademark was in contrasting red soles. An all-red shoe, as a result, was just fine.

While the Apple and Louboutin cases are different in many ways, they both illustrate an important point. Intellectual property (IP) rights in product designs can have powerful effects on competition. These cases highlight the pitfalls of IP rights in product designs that are too broad.

And this leads to a bigger point about such rights. They can serve an important, even critical, function in our innovation-based economy. But they can also squelch competition and slow down innovation.

One way IP rights can harm both competition and innovation is by blocking the ability of competitors to refine and improve an existing design. Innovation is often glorified as being about the big “a-ha!” moment or breakthrough, but in many cases it is much more about tweaking a good idea and making it a great one.

The ability to copy is essential to this process. Giving firms broad control over shapes and colors stymies that process – especially if they are permitted to lock up a basic feature that crosses the uncertain boundary between pure design and function.

Apple vs. Samsung and Christian Louboutin vs. Yves Saint Laurent raise a set of tough questions about IP rights and innovation. Do we really think that without a patent on the iPhone’s shape, Apple wouldn’t innovate? And if women prefer their stilettos with red soles, is it right to give Christian Louboutin a monopoly that lasts forever (trademarks never expire) on that style of shoe? We know that doing so limits competition, which means consumers pay more… and what exactly do we gain in return?