1.0 law & legal cle credit a/v approval #1095606– a designer of ordinary skill who designs...
TRANSCRIPT
1.0 Law & Legal CLE Credit – A/V Approval #1095606 Recording Date - January 3, 2019 Recording Availability – January 11, 2019
Meeting Location Date Time Topic
King County Bar Association 1200 Fifth Avenue - Suite 700
Seattle, WA
Thursday, January 3, 2019
12:00 PM to 1:15 PM
Design Patent Liability and Damages
AGENDA 12:00 PM Introduction 12:10 PM Presentation: ‘Design Patent Liability and Damages’, by Robert Lee, Dorsey & Whitney
An overview of design patent law fundamentals, from claim construction to remedies
1:15 PM Adjourn
SPEAKER BIOGRAPHY Robert Lee, Dorsey & Whitney - Robert focuses on patent litigation, patent opinion work, licensing, and advising on IP matters such as open source software licensing. He has experience in working with a range of technologies, including small molecules, chemical compositions and manufacturing processes, consumer electronics, video games, social networking, and mechanical inventions. Before joining Dorsey, Robert spent over eight years with University of Washington CoMotion, the university’s tech transfer office, in the office’s IP Management group. In addition, Robert guest lectures on IP law and policy to classes at the University of Washington and other local groups. He recently completed his M.S. in Pharmaceutical Bioengineering at the University of Washington. Robert speaks Japanese.
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DESIGN PATENT BASICS
Design Patent Basics
1
Paul MeiklejohnPartner, [email protected] +1-206-903-8746
Robert JM LeeAssociate, [email protected] +1-206-903-8839
DESIGN PATENT BASICS
Topics
• Comparison with Other Forms of IP
• Infringement
• Validity
• Enforceability
• Remedies
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DESIGN PATENT BASICS
Comparison with Other Forms of
IP
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DESIGN PATENT BASICS
Comparison with Other IP
Design
Patent
Copyright Trade Dress Utility Patent
Scope of
Protection
Ornamental
aspects of
article of
manufacture
Expression Product
packaging and
product
configuration
Functional
aspects
Infringement Substantially
same to
ordinary
observer
Access and
substantial
similarity
Likelihood of
confusion and,
if product
configuration,
secondary
meaning
Practices every
element of
claim
Test for
Functionality
5 factor test Conceptual
separability
4 factor test n/a
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DESIGN PATENT BASICS
Comparison with Other IP
Design
Patent
Copyright Trade Dress Utility Patent
Formalities Examination Registration
before suit
Examination,
but only for
procedural
benefits
Examination
Usual
measure of
damages
Compensatory
or infringer’s
profits
Compensatory
and infringer’s
profits, or
statutory
damages
Compensatory
damages,
infringer’s
profits, and
costs
Compensatory
damages
Duration 15 years from
grant
Life plus 70
years, or earlier
of 95 years
from publication
or 120 years
from creation
Indefinite 20 years from
filing
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DESIGN PATENT BASICS
Design Patent Infringement
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DESIGN PATENT BASICS
Infringement - Step One:
Claim Construction
• Courts often do not engage in lengthy verbal construction - the figures are the protectable scope– “The claim at bar, as in all design cases, is limited to what is shown in the
application drawings.” In re Mann (Fed. Cir. 1988) (Rich, J.)
• Verbal construction may assist the jury– E.g., explaining conventions used in design patent drafting, describing the
effect of representations made during prosecution, and distinguishing between ornamental and purely functional features
• Claim construction may focus on separating the design’s ornamental features from its functional features– However, the construction must not eliminate structural elements due to
functionality: a design patent covers overall ornamentation, not individual elements. Sport Dimensions v. Coleman Co. (Fed. Cir. 2016)
• Intrinsic, and sometimes extrinsic, evidence may be used in construing claims– Example of extrinsic evidence: documents or testimony touting functionality
of design elements
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DESIGN PATENT BASICS
Infringement - Step Two:
Ordinary Observer Test
• Courts today continue to repeat the formulation of the test for infringement from a very old Supreme Court case which created the rule, Gorham Mfg. Co. v. White (1871):
• “If, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase [the accused product] supposing it to be the [patented design]”
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DESIGN PATENT BASICS
Infringement – Doctrine of Equivalents?
• Function-way-result test does not apply in the design patent context
• The ordinary observer test already accounts for equivalency
• Courts do not perform a separate doctrine of equivalents analysis for design patent infringement– “For design patents, the concepts of literal infringement and equivalents
infringement are intertwined. Unlike the provisions defining infringement of a utility patent, the statutory provision on design patent infringement does not require literal identity. . . .” Pacific Coast Marine Windshields Ltd. v. Malibu Boats LLC (Fed. Cir. 2014)
– “While the way/function/result test of [Graver Tank] is not directly transferable to design patents, it has long been recognized that the principles of equivalency are applicable under Gorham.” Lee v. Dayton-Hudson Corp. (Fed. Cir. 1998)
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DESIGN PATENT BASICS
Infringement – Apple Inc. v. Samsung Elecs.
Co., Ltd. (N.D. Cal. 2012; Fed. Cir. 2015)
• Infringement
• 2 step analysis
– (1) “The D′305 Patent claims the ornamental design for a graphical user interface for a display screen or portion thereof, as shown in Figures 1–2. The broken line showing of a display screen in both views forms no part of the claimed design.”
– (2) Substantial evidence by which jury could find that overall visual impression of accused products was similar enough to patented design as to deceive an ordinary observer
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DESIGN PATENT BASICS
Infringement – Crocs, Inc. v. Int’l Trade
Comm’n (Fed. Cir. 2010)
• ITC Holding: noninfringement
• Federal Circuit reversed ITC because Administrative Law Judge concentrated on a detailed verbal construction of the design, when instead ALJ should have considered how an ordinary observer would view the similarities and differences between the accused product and patented design
• 2 step infringement analysis by Federal Circuit:
– (1) Claim construction: “the design shown in Figures 1–7”
– (2) Claim infringed because of the overall similarity when considered side-by-side with patented design, particularly the heel strap
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DESIGN PATENT BASICS
Infringement – Harel v. K.K. Intern. Trading
Corp. (E.D. N.Y. 2014)
• No infringement
• 2 step analysis:
– (1) Claim construction: “the ornamental design of a lighter shown in Figures 1 to 7”
– (2) Claim not infringed because accused product’s windguard had eight “dimples” instead of five vertical lines
• No appeal taken
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8 dimples5 vertical lines
DESIGN PATENT BASICS
Design Patent Validity
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DESIGN PATENT BASICS
Validity - Overview
• Design patent validity shares many of utility patent’s requirements
– Novelty
– Nonobviousness
– Written description, etc.
• Likewise, issued design patents enjoy the same presumption of validity
– Clear and convincing proof is required to invalidate a design patent
• Design patent uniquely requires that the claimed design be ornamental (functional features not considered)
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DESIGN PATENT BASICS
Validity - Novelty
• Anticipation: a single prior art reference must be “substantially the same”
– Same “ordinary observer” test as for infringement, but backward-looking
– “That which infringes, if later, would anticipate, if earlier.”
• Claim construction required in validity analysis
• District court should do side-by-side comparison of patented design with prior art reference
• On-sale bar and public-use bar apply to design patents
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DESIGN PATENT BASICS
Validity - Nonobviousness
• Two-part test:
(1) Discern the correct visual impression created by the patented design as a whole, and determine whether there is a primary reference that creates “basically the same visual impression”, and
(2) Determine whether the primary reference, modified by one or more secondary references, provides a design with the same overall visual appearance as the claimed design
Durling v. Spectrum Furniture Co. (Fed. Cir. 1996)
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DESIGN PATENT BASICS
Validity - Nonobviousness
• From the perspective of an ordinary designer
– Similar to utility patent concept of person having ordinary skill in the art
– A designer of ordinary skill who designs articles of the type involved
• Must have a motivation to combine prior art
• Graham factors apply to design patent cases
– (1) The scope and content of the prior art
– (2) The differences between the claim and the prior art
– (3) The level of ordinary skill in the pertinent art
– (4) Secondary considerations of non-obviousness
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DESIGN PATENT BASICS
Validity - High Point Design LLC v. Buyer’s
Direct, Inc. (Fed. Cir. 2015)
• District court: invalid
• Federal Circuit reverses
• District court did not do a side-by-side comparison with primary prior art references, thereby raising fact issues whether these were proper primary references
– A “primary reference” is one which creates basically the same visual impression (although it need not be anticipatory)
– “Secondary references” can be used with a primary reference to render the patented design obvious
• Claim construction was too abstract and generalized, failing to focus on design’s distinctive visual appearance
– “slippers with an opening for a foot that contain a fuzzy (fleece) lining and have a smooth outer surface” is too broad
– Ignored the sole
• Impermissibly did not discuss secondary considerations of nonobviousness when there was evidence of such on record
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DESIGN PATENT BASICS
Validity – Ornamental
• To be valid, design must be primarily ornamental
• Invalid if design, as a whole, is dictated by its function
• Functionality considerations:
– (1) whether patented design is the best design
– (2) would alternative designs adversely impact utility
– (3) existence of utility patents
– (4) whether advertising touts the particular features as utilitarian
– (5) whether any elements clearly not dictated by function
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DESIGN PATENT BASICS
Validity – Ethicon Endo-Surgery, Inc. v.
Covidien, Inc. (Fed. Cir. 2015)
• Ethicon owns utility and design patents directed to ultrasonic medical devices, and sued Covidien for infringement
• District court granted summary judgment of invalidity of design patents
– Design’s contoured handle and knobs were dictated by function
• Federal Circuit reversed: the district court gave insufficient weight to evidence of alternative designs
• A functionality analysis “should begin” with an inquiry of available alternative designs
• The more possible designs with the same or similar function, the more likely the chosen design is ornamental
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DESIGN PATENT BASICS
Validity – Other Requirements
• § 112 requirements still generally apply to design patents
• Limited to a single claim and single design, which may be shown through multiple embodiments if patentably indistinct
• Because the claim is the design as shown in the figures, written description requirement is automatically met
• Written description is generally only a problem when claiming the benefit of an earlier application
• But claim may be held invalid for indefiniteness under §112(b)
– Nautilus “reasonable certainty” standard applies to design patents
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DESIGN PATENT BASICS
Validity – In re Salmon (Fed. Cir. 1983)
• Patentee filed first application for a stool with a square seat
• Then filed second application for a stool with a round seat
• Abandoned first application, and second application issues
• Later, patentee learned of prior art design for a stool with a square seat
• Filed for reissue of second application to add that it is a continuation-in-part of the first application
– Reason: to claim the benefit of the earlier filing date, which predates the prior art reference that patentee believed to render its patented design obvious
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DESIGN PATENT BASICS
Validity – In re Salmon (Fed. Cir. 1983)
• Examiner: allowed reference to the first application, but denied the reissue because it was not entitled to the first application’s filing date
• BPAI affirmed: not entitled to the earlier filing date because the first and second applications were directed to different designs– Reissue design is obvious in light of the intervening prior art reference
because the only difference between prior art and the applied-for reissue design is the shape of the seat
• Federal Circuit affirmed BPAI: the first application did not disclose a round seat– The disclosure of a square seat does not inherently disclose a round
seat, even though a stool with a square seat would render a design with a round seat obvious
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DESIGN PATENT BASICS
Validity – Eclectic Products, Inc. v. Painters
Products, Inc. (D. Or. 2015)
• Painters owned a design patent directed to an applicator cap on a spackling paste-dispensing tube
• Eclectic sued Painters for a declaratory judgment of invalidity and noninfringement of the design patent
• District court held design patent claim was indefinite because the verbal description in the patent itself stated that it was directed to an applicator cap on a tube dispenser, while the drawings showed only the tube dispenser but no applicator cap
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DESIGN PATENT BASICS
Validity – In re Maatita (Fed. Cir. 2018)
• Application claiming ornamental design of part of underside of shoe with a single figure
– Shoe underside is three-dimensional (i.e., not flat), but the single figure was merely a planar view and did not show contours of claimed features
• Examiner rejected claim for indefiniteness; PTAB affirmed
• Federal Circuit reversed because “[a] potential infringer is not left in doubt as to how to determine infringement”
– Indefiniteness is viewed from perspective of a designer of ordinary skill who in turn views from the perspective of an ordinary observer
– Applicant chose to broadly claim design, including all possible depth choices of features
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DESIGN PATENT BASICS
Design Patent Enforceability
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DESIGN PATENT BASICS
Enforceability
• Inequitable conduct may render a design patent unenforceable
• Standard: whether the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information (2) with intent to deceive the PTO
• In practice, this defense appears to rarely come up in the design patent context, with just a handful of cases discussing the issue in recent history– See Unique Industries, Inc. v. 965207 Alberta Ltd. (D.D.C. 2009)
(granting motion to dismiss inequitable conduct counterclaim)
• Found only one Federal Circuit case affirming finding of unenforceability
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DESIGN PATENT BASICS
Enforceability – General Electro Music Corp.
v. Samick Music Corp. (Fed. Cir. 1994)
• Samick petitioned PTO to make application special because of infringement, including declaration by Samick’s patent attorney that he did a prior art search
– At that time, infringement was grounds to make special and included requirement that prior art search was performed
• In reality, patent attorney asked Samick’s employees only about prior art and searched his own files, but did not search PTO records or commission a search
• Examiner rejected application over four references not cited in declaration, but Samick successfully argued that claimed design was patentable over prior art
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(pre-Therasense decision)
DESIGN PATENT BASICS
Enforceability – General Electro Music Corp.
v. Samick Music Corp. (Fed. Cir. 1994)
• General Electro sued Samick for declaratory judgment of unenforceability, invalidity, and noninfringement
• District court found inequitable conduct: jury found by special verdict that Samick intentionally made material false statement to PTO that its attorney performed a prior art search
• Federal Circuit affirmed
– A prior art search requires searching through PTO records
– The purpose of requiring a prior art search for petition to make special is to assist the examiner in examining the patent
– Samick’s false statement was material to whether the PTO would have granted its petition to make special
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DESIGN PATENT BASICS
Design Patent Remedies
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DESIGN PATENT BASICS
Remedies – Damages
• Three options:– (1) Reasonable royalty
– (2) Lost profits
– (3) Disgorgement of infringer’s profits
• Reasonable royalty requires that damages be apportioned to the value added by the infringing design
• Lost profits requires proof of causation as to the patentee’s lost sales because of the infringing product
• Disgorgement of infringer’s profits contains no causation requirement, but may require apportionment in some instances
• Infringer’s profits are assessed pre-tax – even the infringer’s tax refund is considered part of its profits
• Enhanced damages unavailable for infringer’s profits
31
DESIGN PATENT BASICS
Remedies – Damages
• To obtain lost profits, the patentee must satisfy the Panduitfactors:
– (1) demand for the patented product
– (2) absence of acceptable noninfringing substitutes
– (3) manufacturing and marketing capability to exploit the demand, and
– (4) the amount of profit that would have been made.
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DESIGN PATENT BASICS
Remedies - Injunction
• Injunctive relief is also available to the patentee
• To be entitled to a permanent injunction, the patentee must prove all four eBay factors:
– (1) the patentee suffered an irreparable injury
– (2) remedies at law are inadequate to compensate for the injury
– (3) considering the balance of the hardships between the parties, a remedy in equity is warranted
– (4) the public interest would not be disserved by a permanent injunction
33
DESIGN PATENT BASICS
Remedies – Nordock, Inc. v. Systems Inc.
(Fed. Cir. 2015)
• Nordock holds design patent directed to a dock leveler – the ramp that connects a loading dock with a truck – and sued Systems for infringement
• Jury: found a reasonable royalty but no profits by infringer, despite evidence that Systems made a profit on infringing products
• District court: denied Nordock’s motion for a new trial on damages because jury found a reasonable royalty and did not need to make a finding as to infringer’s profits
• Federal Circuit: reversed
– Patentee is entitled to the higher of compensatory damages or infringer’s profits
– Reasonable royalty finding does not excuse jury from finding infringer’s profits
34
DESIGN PATENT BASICS
Remedies – Mobile Hi-Tech Wheels v. CIA
Wheel Group (C.D. Cal. 2007)
• Mobile Hi-Tech sued CIA for infringement of its design patent on decorative wheels
• Court found design patent claim valid and infringed under the now-abolished point of novelty test
– Under that test, infringement was found by comparing those aspects of the patented design which made it patentable to the accused design
– Abolished by Egyptian Goddess, Inc. v. Swisa, Inc. (Fed. Cir. 2008)
• Jury assessed $300,000 in damages – a royalty of $48.25 per infringing wheel
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DESIGN PATENT BASICS
Remedies – Smith Corona Corp. v. Pelikan,
Inc. (M.D. Tenn. 1992)
• Smith Corona sued Pelikan for, among other claims, infringement of two design patents on cassettes
• Jury awarded Smith Corona’s lost profits of $542,933
• Finding willful infringement, the court trebled lost profits award for design patent infringement - $1,628,799
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DESIGN PATENT BASICS
Remedies – Read Corp. v. Freiday (Fed. Cir.
1995)
• Read Corp. sued two individuals and their company for infringing two utility patents and one design patent
• Bench trial: all patents infringed, but Read entitled to lost profits as to only 20% of infringing sales– Held that Read failed to prove (a) demand for the patented product, and
(b) absence of acceptable noninfringing substitutes
• Federal Circuit vacates and remands– District court had no evidence to support its finding that, but for the
infringement, Read would have made only 20% of the defendants’ sales
– Defendants admitted to two-seller market, so no acceptable non-infringing substitutes
– Read satisfied all four Panduit factors, the burden shifted to the defendants to present evidence as to why some or all sales should have been excluded, and the defendants presented no such evidence
37
DESIGN PATENT BASICS
Remedies – Apple Inc. v. Samsung Elecs.
Co., Ltd. (Fed. Cir. 2015)
• Apple sued Samsung for infringement of design patents covering aspects of its iPhone, among other IP rights
• Jury award for design patent infringement amounted to total amount of Samsung’s infringing smartphone profits
• On appeal to Federal Circuit, Samsung argued that apportionment or causation should apply to infringer’s profits
• Federal Circuit affirmed, holding that statutory language was clear in not including any such causation or apportionment requirement
• Result: Samsung to pay $548 million to Apple, approximately $400 million of which was from design patent infringement
• Samsung filed for, and was granted, certiorari by the Supreme Court
38
DESIGN PATENT BASICS
Remedies – Samsung Elecs. Co., Ltd. v.
Apple Inc. (2016)
• Supreme Court: reversed
• Issue: Whether, where a design patent is applied to only a component of a product, an award of infringer’s profits should be limited to those profits attributable to the component
• The infringer’s profits can sometimes be apportioned
– Two steps to awarding infringer’s profits: (1) identify the “article of manufacture” to which the infringed design has been applied, and (2) calculate the infringer's total profit made on that article of manufacture
– The “article of manufacture” can be the whole product or a component thereof
39
DESIGN PATENT BASICS
Remedies – Samsung Elecs. Co., Ltd. v.
Apple Inc. (2016)
• Supreme Court did not provide a test as to when and how the damages award should be apportioned
– Test to be used was not briefed before the Supreme Court
– Signaled that test was to be determined on remand
• Five-day re-trial on damages
– Trial court adopted a four-factor test from the U.S. government’s amicus brief to determine the relevant article of manufacture
• (1) Scope of the claimed design
• (2) The relative prominence of the design within the product as a whole
• (3) Whether the design is conceptually distinct from the product as a whole
• (4) The physical relationship between the patented design and the rest of the product
– Jury awarded $539 million, approximately $533 million of which was for design patent infringement
40
DESIGN PATENT BASICS
Remedies – Apple, Inc. v. Samsung Elecs.
Co., Ltd. (Fed. Cir. 2013)
41
• No injunction granted on design patent infringement because Apple failed to establish a causal nexus between the infringement and the lost market share
• Samsung enjoined for utility patent infringement
DESIGN PATENT BASICS
Remedies – Victor Stanley, Inc. v. Creative
Pipe, Inc. (D. Md. 2011)
42
• VSI sued Creative Pipe for design patent infringement, among other causes of action, and court found infringement
• Granted permanent injunction
• eBay factors:
– Irreparable harm and inadequate remedies at law: VSI does not license and relies on its designs to distinguish itself and protect its goodwill
– Balance of hardships: no hardship shown by Creative Pipe, while VSI demonstrated reputation and market harm
– Public interest: protecting IP and stopping infringement benefit the public
DESIGN PATENT BASICS
Referenced Cases
• Samsung Elecs. Co., Ltd v. Apple, Inc., 137 S.Ct. 429 (2016)
• Apple, Inc. v. Samsung Elecs. Co., Ltd, 786 F.3d 983 (Fed. Cir. 2015)
• Apple, Inc. v. Samsung Elecs. Co., Ltd., 735 F.3d 1352 (Fed. Cir. 2013)
• Apple, Inc. v. Samsung Elecs. Co., Ltd., No. 11–CV–01846–LHK, 2012 WL 3071477 (N.D. Cal. July 27, 2012)
• Crocs, Inc. v. Int’l Trade Com’n, 598 F.3d 1294 (Fed. Cir. 2010)
• Durling v. Spectrum Furniture Co., Inc., 101 F.3d 100 (Fed. Cir. 1996)
• Eclectic Products, Inc. v. Painters Products, Inc., No. 6:13–CV–02181–AA, 2015 WL 930045 (D. Or. March 2, 2015)
• Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008)
• Ethicon Endo-Surgery, Inc. v. Covidien, Inc., 796 F.3d 1312 (Fed. Cir. 2015)
• General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405 (Fed. Cir. 1994)
• Gorham Mfg. Co. v. White, 81 U.S. 511 (1871)
• Harel v. K.K. Int’l Trading Corp., 994 F.Supp.2d 276 (E.D.N.Y. 2014)
• High Point Design LLC v. Buyer’s Direct, Inc., __ Fed.Appx. ___, 2015 WL 4604995 (Fed. Cir. 2015)
• High Point Design LLC v. Buyer’s Direct, Inc., 730 F.3d 1301 (Fed. Cir. 2013)
• In re Mann, 861 F.2d 1581 (Fed. Cir. 1988)
• In re Maatita, 900 F.3d 1369 (Fed. Cir. 2018)
• In re Salmon, 705 F.2d 1579 (Fed. Cir. 1983)
• Lee v. Dayton-Hudson Corp., 838 F.2d 1186 (Fed. Cir. 1988)
• Mobile Hi-Tech Wheels v. CIA Wheel Group, 514 F.Supp.2d 1172 (C.D. Cal. 2007)
• Nordock, Inc. v. Systems Inc., 803 F.3d 1344 (2015)
• Pacific Coast Marine Windshields Ltd. v. Malibu Boats, LLC, 739 F.3d 694 (Fed. Cir. 2014)
• Read Corp. v. Freiday, 66 F.3d 345 (Fed. Cir. 1995) (unpublished)
• Smith Corona Corp. v. Pelikan, Inc., 784 F.Supp. 452 (M.D. Tenn. 1992)
• Sport Dimensions v. The Coleman Co., Inc., __ F.3d ____, 2016 WL 1567151 (Fed. Cir. 2016)
• Unique Indus., Inc. v. 965207 Alberta Ltd., 722 F.Supp.2d 1 (D.D.C. 2009)
• Victor Stanley, Inc. v. Creative Pipe, Inc., No. MJG–06–2662, 2011 WL 4596043 (D.Md. Sept. 30, 2011)
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DESIGN PATENT BASICS
THANK YOU
44
Paul MeiklejohnPartner, [email protected] +1-206-903-8746
Robert JM LeeAssociate, [email protected] +1-206-903-8839