Casino Enterprise Management

The gaming industry has not utilized design patent protection as an avenue for protecting novel aesthetic features of its new products to the fullest extent possible—if it has done so at all. Without this protection, companies that manufacture and sell gaming equipment that incorporates novel aesthetic features cannot easily preclude slavish copying by their competitors. With a recent change in the law expanding the scope of design patent protection, designers and manufacturers of gaming equipment should revaluate their use of this form of intellectual property or risk losing the exclusivity such protection affords.

For more than two decades, courts have afforded design patents little to no scope. This led many product designers to conclude that this form of intellectual property provided limited rights and had only marginal value, particularly when compared to the broad protection provided by utility patents. Despite their limited breadth, many product designers nevertheless successfully utilize design patents to protect aesthetic features of their new products. Other product designers utilize design patents far more sparingly due to the narrow rights they provide. Even more troubling, in view of their limited reach, some product designers do not even consider design patents a viable way to protect a product’s appearance. Designers of gaming equipment appear to fall into these latter two categories, as they avail themselves of design patent protection less frequently than designers in other industries.

The change in the law that expanded the scope of design patent protection modified the test for measuring infringement of a design patent. This significant change will likely increase the filings and enforcement of design patents, as they will again become an integral part of a company’s intellectual property policy for protecting the appearance of its new products.

Broadly, design patents protect the novel look or appearance of a product, and the monopoly they afford includes the exclusive right to use the patented design. Given the increasing emphasis on product marketing and branding, this can yield a significant competitive advantage, as a product’s appearance is in many instances as important as its function—if not more important. Indeed, many product designers select and implement aesthetic features in an effort to attract consumers to their products. In the gaming industry, manufacturers employ distinctive appearances or looks for their gaming equipment in an effort to grab potential users’ attention and entice them to play their games over those of a competitor. Successful product designs can thus result in increased revenue and profitability. The price commonly paid in the marketplace for such product success is that competitors are more likely to exploit the inventor’s efforts by introducing similar-looking products, if not exact replicas.

In these instances, many design patent owners have attempted to forestall such misappropriation of their product designs by attempting to enforce their design patents against these similar-looking products. However, the majority of these companies have historically experienced little success without virtual identicality between the accused product and the patented design. This has rendered attempts to protect the appearance of a product relatively unsuccessful and has turned product designers away from design patents as a viable way to protect their unique product appearances.

Until recently, proof of design patent infringement required the satisfaction of a two-part test. First, the patent owner had to prove that the accused product was substantially the same as the patented design in the eyes of an ordinary observer (the ordinary observer test). Second, the patent owner had to prove that the accused design incorporated the novel features of the patented design that made it unique over prior designs (the point of novelty test). The second part of this test often proved difficult for design patent owners to overcome. For example, if a unique patented design had multiple points of novelty, an alleged infringer could often avoid infringement by arguing that its product only incorporated some, but not all, of the points of novelty, even if the products otherwise had the same overall appearance.

This narrow treatment of design patents changed in the recent Egyptian Goddess v. Swisa Inc.¹ decision handed down by the Federal Circuit Court of Appeals. The Egyptian Goddess case eliminated the point of novelty test as a separate requirement for establishing design patent infringement. It also eliminated any requirement for courts to translate the design shown in the patent drawings into a verbal description as part of their analysis. These changes have significantly enhanced the protection afforded by and the value of design patents.

The Egyptian Goddess case has the potential for wide-reaching effects on the gaming industry, where product appearance is extremely important (i.e. video gaming machines). As the gaming industry has continued to grow, more and more companies have introduced products in an effort to gain entry into the market. While many companies promote the unique appearance and look of their products, they typically do not utilize all available avenues to protect intellectual property that may exist in this look or appearance. Instead, they often only obtain utility patents, which protect the product’s function but not its appearance. This inaction has the effect of discouraging product innovation, while at the same time encouraging competitors to imitate a designer’s unique aesthetic creations.

In view of this expansion of design patent rights, gaming equipment manufacturers have a significant opportunity to capitalize on any investment they have made or will make in the future on unique product designs. The ability to exclusively use and broadly protect a unique product design is a significant advantage for any gaming manufacturer. While companies have long invested in the appearance of a product, the ability to keep others from closely mimicking distinctive looks by way of a design patent appears to be more readily available and enforceable in view of this change in the law. Companies should thus re-evaluate their intellectual property policies and ascertain whether the utilization of design patents makes more sense. For example, a company that currently owns design patents may find that the value of these assets has significantly increased, as their scope has broadened. Further, a company that does not currently utilize this form of intellectual property to protect its new product appearances may find increased success by using design patents to protect them.

¹ 545 F.3d 665 (Fed. Cir. 2008).

John S. Artz is a member of Dickinson Wright PLLC and also a member of the Dickinson Wright Gaming Law Group. He can be reached at jsartz@dickinsonwright.com.