General Motors Co. (NYSE:GM) has experienced a setback in its legal battle against aftermarket auto parts provider LKQ Corp. (NASDAQ:LKQ) regarding fender designs.
The U.S. Court of Appeals for the Federal Circuit overturned a previous decision favoring GM, marking a huge shift in design-patent law with a rare full-court decision.
Reuters reported that the Federal Circuit Court discarded a long-standing test for determining the validity of a design patent and remanded the case to the U.S. Patent Office for further review.
Meanwhile, LKQ's attorney, Mark Lemley, described the ruling as vital to providing consumers with safer, quality repair options.
Design patents safeguard the unique visual features of manufactured items. In 2022, LKQ requested the USPTO's Patent Trial and Appeal Board to invalidate a GM design patent for a front vehicle fender after their licensing agreement lapsed, and GM threatened legal action.
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LKQ contended that GM's patent was obvious by comparing it to two earlier designs, but the board ruled in GM's favor. A three-judge panel at the Federal Circuit later upheld this decision.
The full Federal Circuit agreed last June to revisit the case, marking its first full-court rehearing in a patent case since 2018.
LKQ argued that the Supreme Court's 2007 decision, which rejected rigid and mandatory formulas for utility patents, should apply to design patents as well.
Several auto parts companies supported LKQ, claiming that maintaining the current test would increase the cost and reduce the availability of replacement parts.
Conversely, companies like Apple Inc. (NASDAQ:AAPL) and Ford Motor Co. (NYSE:F) advocated for retaining the existing test to ensure a predictable patent landscape.
The Federal Circuit sided with LKQ, deeming the current test as improperly rigid and suggesting a more flexible approach akin to the utility-patent obviousness test.
Price Action: At the last check on Wednesday, GM shares were trading lower by 1.54% at $44.24.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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