There are utility patents (your new engine that runs on goose poop), and there are design patents, like the shape of the iconic Coke bottle.
I presume that the "rounded rectangle" patent is a design patent. Lower bar to get such a patent, lower level of protection.
@MikeSmith2011 Palm had a touch screen even before the iPod let alone any phone from Apple, so no, sorry you are wrong. Sure the iPhone's is better (it is a decade newer design, so you'd expect that), but that is not due to Apple, they simply buy their displays from someone else.
Let's get real here, the design concept of a rectangle with rounded corners has been used for decades. Does anyone remember the Palm Pilot as a PDA? The iPhone UI is preceded by all bank ATM machines which have been using touch screens much earlier than phones. Our patent system is broken when a rectangle can be patented, pure and simple.
There is no question that Apple revolutionized the phone - the simple button-less touch screen interface was never seen before. Subsequently however most smart-phones are based on touch. I can see why Apple would feel "ripped off" when it took them so long to come up with something so innovative.
But the real question is so what? The first person who invented the round wheel could feel cheated that all automobiles now use it but that is the challenge of coming up with something so innovative isn't it. Otherwise the world would only have one company manufacturing and selling wheels!
Perhaps Apple can sue AutoCAD or Solidworks for having a fillet or chamfer function in their software. They could also sue furniture manufacturers for having rounded corners on tables... After all, Apple first thought of rounding off corners.... Wait, perhaps we should go back to the invention of the wheel...
All Mac computers (desktop and laptop) have rounded corners and are rectangular. These pre-date the iPhone too, so this "design" cannot be covered by a design patent if indeed it had already been disclosed in the public domain previously. In my mind it has. Never mind the fact that there is nothing novel about a rectangle with rounded corners (a necessary requirement for a patent). RIM's phones have all had rounded corners for years. Not just a rectangle with rounded corners, then no one has yet copied an iPhone (remember iPhones use their own connector, the position of the speaker, earphone, USB (oh that's right, iPhone does not have one) removable cover, SIM (not present on an iPhone), removable battery (oops, not present on the iPhone), SDcard slot (this is getting boring now ...). Yup, you right, it's a knockoff.
I've always thought that industrial design and user interface design are Apple's greatest advantages. But, really? "patent on the rectangular shape with rounded edges". Pretty much all designs are at least inspired by predecessors. Some are genuinely unique and distinctive enough to deserve patent protection, but a flat rectangle is not. If that's one of the main claims of the patent, it's too obvious which makes it ineligible for a patent.