Appeals court rules in favor of LKQ in patent dispute with GM (NASDAQ:LKQ)

A federal appeals court overturned a previous court decision that ruled in favor of General Motors (New York Stock Exchange: General Motors(in its patent dispute with LKQ)Nasdaq:LKQ), and recommending that the case be returned to the US Patent Office For further review.

The case arose when General Motors (GM) sued LKQ Corporation (LKQ) for using its patented designs to make replacement parts for crash cars. General Motors (GM) claimed that its front-end design for the Chevy Equinox was patentable under “essentially the same” patent law, while LKQ (LKQ) claimed that the patent law that applied should be reconsidered because GM's designs It was “clear” that the GM patent does not protect original or unique designs. By applying this standard, General Motors (GM)'s patents would be invalid and LKQ (LKQ) would be free to use the same fender design used on the Chevy for the Hyundai LKQ (LKQ) front fender it had manufactured.

In its attempt to invalidate GM's design patents, LKQ (LKQ) was repeatedly denied, sending its appeal to successively higher courts. However, LKQ (LKQ) may have finally departed from a decision by the Court of Appeals for the Federal Circuit that found the premise of GM's patent to be “improperly stringent” and recommended that the case be returned to the patent office for further review.

While the decision is positive for LKQ (LKQ) shares, they barely rose from their intraday lows and remained slightly in the red. GM ( GM ) shares also settled at session lows, down 1.8% at midday.