Detroit, U.S.A.

In a significant legal shift, the U.S. Court of Appeals for the Federal Circuit has overturned a previous win for General Motors (GM) in a patent dispute with aftermarket auto-parts provider LKQ Corporation. This landmark decision redefines a critical aspect of design-patent law, setting a new precedent for future cases.

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On Tuesday, the Federal Circuit Court nullified a long-standing test used to determine the validity of design patents. The case has been sent back to the U.S. Patent Office tribunal for reconsideration. This decision marks a pivotal moment, especially considering it was the court’s first full-court rehearing in a patent case since 2018.

The dispute over fender designs

The dispute began when LKQ challenged the validity of a GM design patent for a front vehicle fender. After their licensing agreement with GM expired, LKQ faced potential litigation for patent infringement. LKQ argued that GM's design patent was obvious and thus invalid, citing two earlier designs that, in their view, created the same visual impression. Initially, the U.S. Patent Trial and Appeal Board ruled in favour of GM, a decision that was upheld by a three-judge panel at the Federal Circuit last year.

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A call for flexibility in patent law

In June, the Federal Circuit agreed to rehear the case, influenced by LKQ's argument that the current test for design patent obviousness was too rigid. They cited a 2007 Supreme Court decision that rejected rigid formulas for obviousness in utility patents, which cover inventions. This led to a broader debate on whether the same flexible approach should apply to design patents.

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Auto-parts companies supported LKQ's stance, arguing that maintaining the current test would increase the cost and reduce the availability of replacement parts. Conversely, Apple and several car manufacturers, including Ford, urged the court to retain the existing test to ensure a predictable patent landscape for design innovators.

New legal precedent

The Federal Circuit sided with LKQ, stating that the existing test was "improperly rigid." The court proposed adopting a more flexible approach similar to the one used for utility patents. "This test has proven workable for utility patents, and we see no reason why it would not be similarly workable for design patents," wrote U.S. Circuit Judge Kara Stoll.

Industry implications

This decision could have widespread implications for the auto-parts industry and beyond. For consumers, it potentially means more affordable and accessible replacement parts. For manufacturers, it introduces a new level of uncertainty and flexibility in defending design patents.

Reactions and future steps

Representatives for GM did not immediately comment on the court's decision. However, LKQ’s attorney, Mark Lemley of Lex Lumina, hailed the ruling as a critical step towards ensuring consumers have access to a range of safe, quality options for vehicle repairs.

The Federal Circuit's decision to adopt a more flexible test for design patent obviousness represents a major shift in patent law. This could reshape the landscape for manufacturers and consumers alike, influencing how design patents are evaluated and enforced in the future. As the case returns to the U.S. Patent Office tribunal for further consideration, the automotive industry and other sectors will be closely watching the developments and potential ripple effects of this landmark ruling.

(Inputs from Reuters)