Design on a Dime? New Life for Design Patents and a Quick Look at the Real Impact

of Recent Supreme Court Precedent in Patent Cases

Mike AnnisOctober 24, 2008

Design Patents• Directed to protecting any “new,

original and ornamental design for an article of manufacture”

• Protects the ornamental and decorative look of a product, not its utilitarian features

• Can protect any type of product –shoes, clothing, furniture, household goods, toys, machinery, and even business forms

Egyptian Goddess• Alters the standard for design patent

infringement

– Eliminates the “point of novelty” infringement test created by CAFC nearly 25 years ago

– Infringement analysis arguably goes back to USSCT precedent of 135+ years ago – Gorham v. White

• No need to “verbalize” claim construction for a design patent

Pre-Egyptian Goddess:Infringement Standard

• Infringement judged from application of two tests

- Ordinary Observer test of Gorham:•accused devise is “substantially similar” to the

claimed design

– Point of Novelty test:•accused design “must appropriate the novelty

that distinguishes the patented design from the prior art”

Gorham Ordinary Observer Test• “If, in the eye of the 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 one, supposing it to be the other, the first one patented is infringed by the other.”

Pre-Egyptian Goddess:Infringement Analysis

• First, court looks to determine if the accused device was so similar to the patented design that an ordinary observer would purchase one supposing it to be the other

• If so, court then articulates the point of novelty of the patented design and compares to the accused design

• Infringement found only if accused device includes the point(s) of novelty

Impacts of “Point of Novelty” Test

• Required patentee to identify “in words” the new and novel aspects of the patented design and show accused design appropriated those aspects

• Arguably placed the issue of validity squarely in the infringement analysis

• Picked apart patented designs – de-focused the finder of fact from the overall claimed design

• Eliminated the concept of equivalents from design patent infringement

Egyptian Goddess :The Patented Design

• A nail buffer

• Four sided, square cross-section, pads on 3 of the 4 sides and rounded corners without pads

Egyptian Goddess:The line-up -- the usual

suspects?

• Falley Buffer Block – non-patent prior art• Nailco Patent – closest piece of prior art• Swisa Buffer – the accused infringing

device• ‘389 Patent’s point of novelty – “addition

of a fourth side without a pad”

Egyptian Goddess:At the Trial Court

• Arguably applied the Gorham“ordinary observer” test – passed the test

• Identified “point of novelty” in patented design

• Found the “point of novelty” was not present in the accused buffer --granted summary judgment for Swisa

Egyptian Goddess:CAFC Panel Decision

• Added a new element to the then-existing “point of novelty” test – The alleged point of novelty for a combination of

prior-art elements MUST represent something more than a non-trivial advancement over the prior art

– Arguably incorporates the concept of obviousness into the infringement analysis

• Affirmed trial court’s summary judgment• CAFC agreed to rehear case en banc

Egyptian Goddess:CAFC’s en banc decision

• Eliminates “point of novelty” test

– Point of Novelty “as a second and free-standing requirement for … infringement, is inconsistent with the ordinary observer test laid down in Gorham, is not mandated by [precedent] and is not needed to protect against unduly broad assertions of design patent rights”

Egyptian Goddess:A “New” Ordinary Observer Test?

• “Whether an ordinary observer, familiar with the prior art, would be deceived into believing the accused design is the same as the patented design”

• Hypothetical ordinary observer conversant with the prior art

• Somewhat of a three-way visual comparison – the patented design, in light of the prior art, compared to the accused design

Egyptian Goddess:Does “Novelty” Really Go Away?

• Nothing in the Gorham test suggests that the ordinary observer is “versed in” or “familiar with” the prior art– Now viewing the patent “in light of the prior art”– Is point of novelty hidden in this analysis?

• Emphasizes the presumption of validity – Plaintiff does not have to prove validity in

making its prima facie case of infringement– Accused infringer can still challenge validity of

the design patent

Egyptian Goddess:Different Approach, Same Outcome

• CAFC affirmed trial court but on completely different grounds

– Trial Court – accused design did not appropriate the patent’s point of novelty

• Arguably passed the old Gorham “ordinary observer” test

– CAFC – summary judgment appropriate because no reasonable fact-finder could find the patented and accused designs substantially similar if familiar with the prior art

Egyptian Goddess v. Gorham

• In Gorham, the patented design was found to be infringed by BOTH of the accused designs

Egyptian Goddess v. Gorham• In Egyptian Goddess, designs were found

to be not similar as a matter of law

Egyptian Goddess:CAFC’s en banc decision

• Further addressed the issue of claim construction in design patent cases

– Found that the “preferable courseordinarily will be for trial court not to attempt to ‘construe’ a design patent claim by providing a detailed verbal description of the claimed design”

Effects of Egyptian Goddess• Presumption of validity – places all of the burden

relating to prior art on the accused infringer– Eases burden of proof for infringement

• Makes cases more economical to prosecute– No need to define point(s) of novelty or conduct drawn-

out claim construction procedures

• Who is the ordinary observer “conversant with the prior art”?– Will likely see experts becoming a bigger part of design

patent infringement analysis

Recent Supreme Court Patent Law Decisions in Review

• In the past four years, the Supreme Court has heard seven significant patent law cases

• Reversed all seven• Ruled against the patent holder in 6 of the 7

cases – clearly cutting back on the power of patent owners to enforce patents

• Egyptian Goddess decision could be a self-correcting measure by the CAFC in light of these decisions

• No IP cases this term

• KSR Int’l v. Teleflex –– obviousness test revamped– Implications: makes it easier for accused infringer to challenge validity, possibly forces licenses

• eBay v. MercExchange –– Addressed to standard for permanent injunctions in patent infringement matters– Implications: force licenses

• MedImmune v. Genentech –– Addressed to declaratory judgment jurisdiction/standing of licensees to challenge licensed patent– Implications: limits forum selection ability of patent holder

• Ill. Tool Works v. Indep. Ink –– Addressed to presumption of economic power for patentee – tying arrangements– Implications: harmonizes patent and antitrust laws

• Merck v. Integra Lifescience I –– Addressed to safe-harbor provisions of 35 USC § 271(e)– Implications: pre-clinical activities immunity for drug development

• Microsoft v. AT&T –– Addressed to extraterritorial reach of US patents– Implications: limits patentee’s ability to recover damages for overseas infringement

• Quant v. LG Electronics –– Addressed to principals of patent exhaustion or “first sale” doctrine– Implications: limits “down stream” recovery for patentees

KSR v. Teleflex– Obviousness Standard

• Supreme Court loosens legal standard for showing obviousness under §103

• Arguably raises the bar to patentability by eliminating the “rigid application” of the so-called “teaching-suggestion-motivation” or TSM test

• In response, PTO has issued new guidelines for evaluating “obviousness” in pending applications

• Key: “predictability”

KSR: Measurable Impacts One Year Later• Statistics do not show paradigm shift

• KSR addressed by the Federal Circuit just over 20 times

• Overall success rate for plaintiff’s in utility patent cases is about the same for the 12 months before KSR compared to the 12 months after KSR – within tenths of a percentage point

• Summary judgment grants have increased but by less than 10 % -- possibly more defendants taking a run at “obviousness” summary judgment motions

• Dispositions at trial – finding of “obviousness” about 1/3 of the time

eBay v. MercExchange:Post-Judgment Injunctive Remedy

• Tightened equitable standard for injunctions in patent cases

– Old rule• Presumption of irreparable harm -- if there is

infringement, there will be an injunction absent compelling reasons to the contrary

– New rule• Same four-part test used to determine whether

injunction should issue

eBay v. MercExchange:Post-Judgment Injunctive Remedy

• Measurable impacts?– There have been a few denials of permanent

injunctions following infringment findings• Patentee is not a market participant for the patented

technology, particularly where there has been a willingness to license the

– Exceptions:• Patentee is a research entity/university

• Wide-spread use of technology