Aesthetic Appeal of a Patent’s Claimed Design Is Inadequate to Render It Functional

By R. David Donoghue on Posted in Uncategorized

My partners Steve Jedlinski and Anthony Fuga recently wrote a valuable article about a new Federal Circuit decision dealing with functionality and exhaustion issues for design patents. It is republished below with permission.

In a relatively rare opinion regarding design patents, the U.S. Court of Appeals for the Federal Circuit weighed in recently on the requirements for design patents in its Automotive Body Parts Association v. Ford Global Technologies, LLC, No. 2018-1613 (Fed. Cir. 2019) decision.

The U.S. Patent and Trademark Office (USPTO) grants design patents to inventors with a “new, original, and ornamental design for an article of manufacture.” Automotive Body Parts Association (ABPA), an association of companies that distribute replacement auto parts, sued Ford seeking a declaratory judgment of invalidity and unenforceability on two of Ford’s design patents – one directed to the design of a vehicle’s hood and the other directed to the design of a vehicle’s head lamp. These designs were incorporated into Ford’s F-150 truck.

The U.S. District Court for the Eastern District of Michigan in Detroit entered summary judgment in favor of Ford, and ABPA appealed to the Federal Circuit again arguing that both design patents are invalid due to functionality or unenforceable under patent exhaustion/repair doctrines. For the reasons discussed in this Holland & Knight client alert, the Federal Circuit affirmed the lower court’s decision upholding Ford’s design patents.

The Federal Circuit first looked at ABPA’s invalidity arguments directed to lack of ornamentality under Section 171 of the Patent Act. Design patents must claim an “ornamental” design, not one “dictated by function.” Though a valid design may contain some functional elements, the design may not be “primarily functional.” There is no mandated test regarding the functionality of design patents, but the Federal Circuit has “often emphasized the presence or absence of alternative designs, noting that the existence of ‘several ways to achieve the function of an article of manufacture,’ though not dispositive, increases the likelihood that the design serves a primarily ornamental purpose.”

ABPA argued that consumers seeking replacement parts prefer vehicle hoods and headlamps that “restore the original appearance of their vehicles” and conclude that this preference equates to an aesthetic functional benefit to the designs.

The Federal Circuit disagreed: “the aesthetic appeal of a design to consumers is inadequate to render that design functional” and, therefore, invalid. The court went on, noting that the peculiar or distinctive appearance is the very thing for which the patent is given. “If customers prefer the ‘peculiar or distinctive appearance’ of Ford’s designs over that of other designs that perform the same mechanical or utilitarian functions, that is exactly the type of market advantage . . . contemplated by Congress in the laws authorizing design patents.” The Federal Circuit also noted that there are many alternative designs already existing that could fit the Ford truck and perform the same functions.

ABPA attempted to borrow the principle of “aesthetic functionality” from trademark law, but the court noted that trademarks and design patents serve different purposes and have different governing law: “trademarks promote competition by permitting a perpetual monopoly over symbols that ‘distinguish a firm’s goods and identify their source,’ ” while design patents “expressly grant to their owners exclusive rights to a particular aesthetic for a limited period of time.”

ABPA also asked the court to rule, as a matter of policy, that Ford’s design patents may only be enforced in the initial market for the sale of Ford’s trucks, and not the market for replacement parts. The court, however, noted that this would sidestep precedent, which asks “whether at some point in the life of the article an occasion arises when the appearance of the article becomes a ‘matter of concern.’ ” Accordingly, the court affirmed the district court’s determination that ABPA failed to prove Ford’s designs were functional.

The Federal Circuit also rejected ABPA’s argument that Ford’s authorized sale of its F-150 trucks exhaust Ford’s patent rights and allows the use of Ford’s designs on replacement parts. The court disagreed, and found that ABPA was attempting to establish special rules for design patents. The court, instead, looked to its Quanta Computer exhaustion decision related to the sale of microprocessors that embody a patented method. While the sale of that microprocessor embodying the method exhausts the patent, purchasers of those microprocessors could not make their own new microprocessors using the patent invention.

The court also noted that the right of use transferred to a purchaser by an authorized sale includes the right to repair the patented article. That right to repair, however, does not permit a complete reconstruction of a patented device or component. “The decisions of this Court require the conclusion that reconstruction of a patented entity, comprised of unpatented elements, is limited to such a true reconstruction of the entity as to ‘in fact make a new article.’ ”

Furthermore, though the sale of the Ford truck permits the purchaser (and downstream customers) to repair the designs as applied to the specific hood and headlamps sold on the truck, “the purchaser may not create new hoods and headlamps using Ford’s designs.” The Federal Circuit, accordingly, affirmed the district court’s ruling that ABPA failed to show that Ford’s designs are exhausted. Not surprisingly, this decision reaffirms that design patents do not have distinct exhaustion/repair guidelines but instead, follow the same rules as utility patents.

Client seeking more information may contact the authors or another member of Holland & Knight’s Intellectual Property Group.

 

CLE: “Thou Shalt Not Steal” Includes Moral Rights

By R. David Donoghue on Posted in Legal News

The John Marshall Law School’s Center for Intellectual Property, Information & Privacy Law is hosting a lecture on Thursday, September 12, 2019, from 11:00 am – 12:30 pm CT (1.5 hours CLE credit pending) by DePaul Law Professor Roberta Rosenthal Kwall titled “Thou Shalt Not Steal” Includes Moral Rights. Here is a description of the program:

Normally when we think of the Eighth Commandment we do not contemplate theft of authors’ works or stealing their meanings or messages. Drawing from creativity theory as well as the rich Jewish legal tradition, Professor Kwall’s talk illustrates why violating an author’s moral rights comes within the scope of this Commandment. Her discussion will also touch upon why the Visual Artist’s Rights Act provides insufficient protection for moral rights in this country.

Register here.

RPX: The Berkheimer/Aatrix Effect is Real

By R. David Donoghue on Posted in Legal News

My partner Anthony Fuga is providing excellent analysis on the latest Section 101 cases and issues at the Holland & Knight Section 101 Blog, which he edits and does a substantial amount of the writing for. His latest post provides valuable insight into how district courts are approaching Section 101 cases since the Federal Circuit’s Berkheimer and Aatrix decisions based upon a recent RPX study. It is reposted below, with permission and cross-posted on my Retail Patent Litigation blog:

RPX’s latest quarterly review provides a deep dive on the effects of Berkheimer and Aatrix. If you forget, the Federal Circuit found in those two 2018 cases that Section 101 motions – at the Rule 56 and Rule 12 stages, respectively – should not be granted if the plaintiff properly raised a factual dispute regarding whether the asserted patent contains an inventive concept. Now, more than a year later, we have the data to see the impact of those cases.

According to RPX’s analysis, “district courts have as a whole become less likely to grant Alice challenges: Since the Federal Circuit issued its opinion in Berkheimer, courts have invalidated at least some claims from around 46 percent of patents challenged and adjudicated under Alice, a significant drop—roughly 23 percent [down] from the pre-Berkheimer nationwide invalidation rate of 69 percent.”

RPX also provides a breakdown of those decisions by the procedural stage, looking at both motions to dismiss and motions for summary judgment. At the Rule 12 stage, “the invalidation rate for patents challenged and adjudicated under Rule 12 – where a court has invalidated at least some claims – has dropped from around 70 percent to 45 percent.”

RPX provides further analysis and helpful charts to dig deeper into the Berkheimer/Aatrix effect, along with discussing the uptick in non-practicing entity activity, a PTAB update, the patent marketplace and more.

The entire review is worth reading and can be found here.

Judge Lindberg Memorial Service

By R. David Donoghue on Posted in Legal News

The Northern District of Illinois is holding a memorial service in remembrance of the Honorable George W. Lindberg on Thursday, June 20, 2019, beginning at 3:00 p.m.

The service is being held in the James Benton Parsons Memorial Courtroom on the 29th floor of the Everett McKinley Dirksen Courthouse. The service will be followed by a reception on the 21st floor south alcove and an open house of the Court History Museum featuring an exhibit dedicated to Judge Lindberg.

Court Denies Leave to Add Substantively Identical Patent Claims to Suit

By R. David Donoghue on Posted in Pleading Requirements

Fellowes, Inc. v. Acco Brands Corp., No. 10 C 7587 & 11 C 8148, Slip Op. (N.D. Ill. Apr. 22, 2019) (Leinenweber, J.).

Judge Leinenweber granted in part plaintiff Fellowes’ motion to amend its complaint adding a new patent and addressing the results of Patent Office proceedings in this patent case involving improved paper shredding technology.

Of particular note, the Court held as follows:

  • The Court sua sponte lifted the stay pending the Patent Trial & Appeal Board proceedings.
  • The Court granted Fellowes’ leave to amend its complaint removing patents and claims it was no longer pursuing based upon the outcome of Patent Office proceedings. The Court also noted that for each asserted patent, Fellowes was required to identify the asserted claims.
  • As to Fellowes’ allegations regarding its newly issued ‘704 patent, those claims identical to claims already allowed by the Patent Office in the invalidity proceedings could be added to the suit. Similarly, the claims with new language were not made materially different by that new language. So, the Court denied leave to amend adding those claims.

Restriction of Trademark Class of Goods Requires Proof that the Restriction Avoids Confusion

By R. David Donoghue on Posted in Pleading Requirements, Summary Judgment

Easton v. Primal Wear, Inc., No. 17 C 6081, Slip Op. (N.D. Ill. Mar. 29, 2019) (Tharp, J.).

Judge Tharp denied the plaintiffs’ (collectively “Primal Mode”) Fed. R. Civ. P. 56 motion for summary judgment and defendant Primal Wear’s Fed. R. Civ. P. 12(b)(1) & (6) motion to dismiss in this Lanham Act trademark infringement and unfair competition case involving Primal Mode’s PRIMAL MODE marks and Primal Wear’s PRIMAL and PRIMAL WEAR marks.

Of particular note, the Court held as follows:

  • Primal Wear did not meet its burden of proving that Primal Mode abandoned its mark by not having sold shorts or pants for three or more years. The deposition testimony that Primal Wear relied upon was equivocal and Primal Mode’s deponent repeatedly said that his memory was imperfect and that the company’s business records were more reliable. And those business records did not establish a presumption of abandonment as they showed sales of shorts and pants during the prior three years.
  • Primal Wear did not sufficiently support its argument that restricting Primal Wear’s description of goods to exclude cycling wear would avoid likelihood of confusion. Conclusory statements were not sufficient.
  • Primal Wear’s admission before the Trademark Office that there was a likelihood of confusion between the parties’ marks was not case dispositive because: 1) the Court considers whether consumers are likely to be confused, not the parties’ respective belief as to likely confusion; and 2) because the Trademark Office never ruled upon the issue, so Primal Wear is not bound by the alleged admission.
  • Likelihood of confusion is a question of fact typically reserved for juries. As to the likelihood of confusion factors, the Court held as follows:
    1. The similarity of the marks “cut both ways,” but overall add some weight toward likelihood of confusion.
    2. The absence of actual confusion evidence ways in Primal Wear’s favor, but it is not absolute because, as the Seventh Circuit acknowledges, actual confusion is so difficult to identify that its absence only shows that the parties have not found any.
    3. While there are differences in the parties’ apparel bearing their respective marks, the clothing is similar enough to lean toward likelihood of confusion.
    4. Primal Wear’s marks were “quite strong.”
    5. The area and manner of concurrent use weighed against likelihood of confusion. Primal Wear advertised to large retailers and at major cycling events. Primal Mode advertised largely by word of mouth and internet.
  • Taken together, the likelihood of confusion factors were not so one-sided as to warrant summary judgment.
  • While Primal Wear may eventually be able to show that Primal Mode was aware of Primal Wear’s trademark use well before filing suit, warranting a laches finding, the facts were not there for summary judgment on laches.

Copyright First Sale Doctrine & Patent Exhaustion Prevent Equitable Estoppel Defenses

By R. David Donoghue on Posted in Summary Judgment

Quan v. Ty, Inc., No. 17 C 5683, Slip Op. (N.D. Ill. Mar. 20, 2019) (Kennelly, J.).

Judge Kennelly denied defendant Ty’s Fed. R. Civ. P. 56 motion for summary judgment as to equitable estoppel and abandonment regarding plaintiffs’ patent and copyright infringement claims regarding a plush seal that Ty marketed as “Wiggy.”

Of particular note, the Court held as follows:

  • The fact that Ty eventually learned of plaintiffs’ copyrights, at least when the Chinese government seized a shipment of Ty’s goods, does not mean that Ty knew about the alleged rights at the time of manufacture. The Court held that no reasonable jury could have found that Ty knew of plaintiffs’ alleged copyright interests during the relevant period.
  • Plaintiffs had a question of fact as to whether they had knowledge of the infringing conduct, which is required for equitable estoppel, because of the first sale doctrine. During the relevant period, Ty’s sales were protected by plaintiffs’ sale of the accused product to Ty.
  • While manufacturing the toys at issue and placing a tag on them with Ty’s copyright notice was “arguably consistent” with an intent to abandon plaintiffs’ copyrights, it was not the only consistent read. Plaintiffs’ argument that their limited English fluency limited their understanding of the legal implications of the copyright notice, was plausible and consistent with a lack of intent to abandon. Plaintiffs’ explanation that Ty’s copyright notice was added as a concession without any understanding of a loss of plaintiffs’ rights was also plausible.
  • While plaintiffs’ response addressed the equitable estoppel defense as to its patent claim in a single sentence referencing patent exhaustion, that was enough. As with the first sale doctrine, patent exhaustion protected Ty’s sales during the relevant period. As such, there could be no summary judgment of equitable estoppel as to the patent claims.

Court Strikes Allegations Regarding Previously Dismissed Lanham Act Claims

By R. David Donoghue on Posted in Pleading Requirements

VitalGo, Inc. v. Kreg Therapeutics, Inc., No. 16 C 5577, Slip Op. (N.D. Ill. Mar. 27, 2019) (Dow, J.).

Judge Dow granted in part defendant Kerg’s Fed. R. Civ. P. 12(b)(6) & 12(f) motion to strike portions of plaintiff VitalGo’s Second Amended Complaint (SAC) and to dismiss VitalGo’s claims with prejudice in this Lanham Act and copyright case related to Kreg’s Catalyst Lift Bed products.

Of particular note, the Court held as follows:

  • The Court struck those portions of VitalGo’s SAC that related to the Total Lift Bed, not Kreg’s Catalyst Lift Bed. The Court previously dismissed the claims related to the Total Lift Bed.
  • Res judicata did not bar claims regarding the Catalyst Lift Bed because Kreg did not begin selling that bed until 2014, after the first complaint was filed in 2011. Striking the portions of the SAC addressing the Total Lift Bed resolved any res judicata issues.
  • VitalGo’s 2011 knowledge that Kreg was developing a new bed coupled with VitalGo’s knowledge of Kreg’s marketing of VitalGo’s Total Lift Bed did not create bar claims about how Kreg marketed the new bed beginning in 2014.
  • Judicial estoppel did not bar VitalGo’s claims because VitalGo was not arguing that Kreg could not sell the Total Lift Beds. Instead, VitalGo argued that Kreg could not use VitalGo’s intellectual property to market Kreg’s Catalyst Bed.
  • VitalGo met its Rule 9(b) heightened pleading standard regarding its Lanham Act false designation claim by alleging that Kreg marketed its Catalyst Bed in a way that could lead consumers to believe it was the Total Lift Bed or related to that bed.
  • VitalGo’s fraud claim was insufficiently pled. VitalGo’s allegations that Kreg advertised that its Catalyst Bed had VitalGo’s patented features were “implausible.” Kreg’s Catalyst Bed did not have a required footboard scale or movable foot support, which were required by VitalGo’s patent claims.

Copyright Claims Not Preempted by Related Breach of Contract Claims

By R. David Donoghue on Posted in Uncategorized

Fair Isaac Corp. v. Trans Union, LLC, No. 17 C 8318, Slip Op. (N.D. Ill. Mar. 27, 2019) (Coleman, J.).

Judge Coleman granted in part defendant Trans Union’s Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff FICO’s amended complaint and denied Trans Union’s Fed. R. Civ. P. 12(e) alternative motion for a more definite statement in this antitrust, Lanham Act unfair trade practices and related state law claims involving FICO’s credit score algorithms

Of particular note, the Court held as follows:

  • FICO’s breach of contract claims survived because they identified a purported contractual duty and that Trans Union alleged violated the duty or obligation. And the claims did not require a more definite statement because they put Trans Union on sufficient notice of the allegations.
  • The Court dismissed FICO’s good faith and fair dealing claim to the extent it was based upon Illinois law because Illinois did not recognize the cause of action.
  • FICO’s copyright claim was not preempted by the breach of contract claims. Contracts are private rights, while copyrights are public rights. Furthermore, the Court could find no case law holding that a breach of contract claim could preempt copyright claims, even where the alleged facts were similar.
  • Because FICO did not allege that it had a right to immediate possession of the software, FICO’s conversation claim could not survive.
  • FICO’s unjust enrichment claim was allowed as alternative to its breach of contract claim.
  • The Court dismissed FICO’s false advertising claims to the extent they were based upon statements about the relative quality of credit scores as unactionable “mere puffery.” But the claims were not otherwise preempted by earlier claims FICO brought against Experian as those claims differed in time and the specific statements in the advertising.
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