What do Apple (NSDQ: AAPL) and its elegant iPads have in common with plastic, waterproof clogs that people love to hate? More than you might think. It turns out the two companies don’t just share a business strategy — Apple has also been copying Crocs’ legal strategy to keep competitors out of the market.
Apple and Crocs share a common bond because both rely heavily on industrial design — the look and feel of a product — to distinguish them in the market. And both fight ferociously in court to assert their design patents, a little understood type of intellectual property that is different from regular utility patents.
In recent months, design patents have been front and center in a Silicon Valley drama in which Apple is accusing Samsung of “slavishly copying” its iPad design, and demanding a court forbid the sale of the latter’s Galaxy tablets. Apple suffered a setback in the dispute on Friday when Judge Lucy Koh refused to impose a temporary ban before the case goes to trial.
According to lawyer Christopher Carani, design patents took off a few years ago when a court changed the law to make them more powerful. Soon after, the new rules helped Crocs win a 2010 appeal that allowed it to block other plastic shoes from being imported into the United States.
In the Crocs decision, the court said (loosely) that the test for infringement is whether an experienced shopper would have difficult telling two items apart. This rule hurt imitators who, in the past, could be off the hook by changing a small feature in the item they copied. The experience of Crocs, which first sued in 2006, has also emboldened other companies to use design patents to protect their products. It’s likely Apple had Crocs in mind when it decided to use its design patents to attack Samsung.
Carani, who chairs the American Bar Association’s Design Rights committee, says Apple began to make design patents a core part of its intellectual property strategy in 2008. He says this makes sense, “especially for a company that’s so industrial design heavy.”
While design patents might seem like a fair way to reward innovation, they also raise questions about whether companies have too much intellectual property. Firm like Apple don’t just use design patents but a whole arsenal of other legal tactics — including trademarks, copyright, trade secrets and utility patents — to protect their products. Small companies can’t afford to engage in similar strategies because the legal cost is prohibitive; it costs ten or hundreds of thousands of dollars to get and maintain a single patent.
This intellectual property advantage lets companies like Apple create a legal force-field around their products that, critics say, amounts to an anti-competitive monopoly that hurts innovation. Defenders of the system point to the Crocs case to show why design patents are necessary. At the time Crocs filed its complaint with the International Trade Commission, the popularity of its shoes had resulted in a flood of “croc-off” imitations hitting the markets.
The plastic shoes, which invoke a strong love or hate reaction among many people, have been in the news for other reasons, including a series of mishaps involving children and escalators. The patents protecting them will expire soon because design patents last for only 14 years unlike utility patents which last for 20.