FAREWELL TO THE POINT OF NOVELTY TEST: EGYPTIAN GODDESS, INC. v. SWISA, INC. THE EN BANC FEDERAL CIRCUIT SCRAPS ONE OF THE TWO TESTS FOR DESIGN PATENT INFRINGEMENT AND TRANSFORMS THE OTHER
Presented by: Frederick L. Medlin, Counsel K&L Gates 1717 Main Street, Suite 2800 Dallas, Texas 75201 212.939.4911 Andrew L. Reibman, Partner K&L Gates 599 Lexington Avenue New York, New York 10022 212.536.4074 andrew.reibman@klgates.com October 29, 2008
The nature of design patents requires a different infringement analysis than that for utility patents. Unlike utility patents, which protect inventions that serve a function, design patents protect the ornamental aspects of a product s design. They do not have the kind of claims that utility patents do, with written claims limitations. Instead, they have a single claim, consisting of drawings for the design. So infringement must be determined in a different manner than for utility patents. 3
The Ordinary Observer Test. We hold... that 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 one supposing it to be the other, the first one patented is infringed by the other. Gorham v. White, 81 U.S. 511, 528 (1871). 4
The Ordinary Observer Test is a Substantial Similarity Test. By itself it is like a substantial similarity analysis under the doctrine of equivalents, but one not restrained by individual claim limitations because, again, design patents have no such limitations. Standing alone, the traditional ordinary observer test could lead to a finding of liability where the accused design was only practicing the prior art. 5
The Point of Novelty Test For a design to be infringed, however, no matter how similar two items look, the accused device must appropriate the novelty in the patented device which distinguishes it from the prior art. Litton Sys., Inc. v. Whirlpool Corp., 728 F.2d 1423 (Fed. Cir. 1984). In Egyptian Goddess, Swisa argued that the Litton test had its origins in Smith v. Whitman Saddle, 148 U.S 674 (1893), where the Court seemed to isolate the inventive aspect of the plaintiff s patented design, determined that it was not present in the accused design, and held that therefore there was no infringement. 6
The point of novelty test was a check on the equivalence analysis inherent in the ordinary observer test. The ordinary observer test subsumes an equivalence analysis, so that even when conducting a literal infringement analysis, you are in effect conducting an equivalence analysis. The point of novelty test could be seen as constraining this equivalence analysis in the same way that the claims of a utility patent limit an application of the doctrine of equivalents. 7
In Egyptian Goddess, the en banc Federal Circuit dramatically altered this two test framework for determining infringement, all in the context of... Fingernail Buffers! 8
Starting with the 4-way buffer block invented by in 1987 by Michael Falley 9
Elements of the Falley Buffer 4-way Buffer Block: A solid foam block, with the foam absorbing the heat from the buffing process. Four long sides, with a different abrasive surfaces attached to each long side, for a four step buffing process. Along the sides, a gap between the abrasive surfaces: a cuticle protection edge. 10
Michael Falley s company, Realys, Inc., also made the Tammy Taylor Buffer, which had three different abrasive surfaces on three of the block s long sides, with one side bare. This was a 3-way buffer for a three step buffing process. 11
The Falley Buffer Block and imitations were widely available. By November, 2006, Realys Inc. had sold over 1,500,000 4-way and 3-way buffer blocks. In addition, numerous foreign and domestic manufacturers were making 3-way and 4-way buffer blocks that were imitations of the Falley Buffer Block 12
In 1998 Nailco, Inc. asked Falley to make a threesided hollow buffer with triangular ends. A hollow plastic tube instead of the foam block Raised foam pads to absorb the heat of the buffing process Different abrasive surfaces on all three sides, for a three step buffing process. The cuticle protection edges gaps between abrasive surfaces - retained. 13
THE NAILCO DESIGN PATENT In August, 1998, Anne Letherby and Lawrence Gaynor, who was Nailco s owner, applied for what became United States Design Patent D416, 648 (the Nailco Patent ). 14
Michael Falley s company, Realys, Inc., makes Nailco Buffers, some with the words Egyptian Goddess printed on them, and sells them to Nailco, Inc.-- Nailco, Inc., then resells the buffers marked Egyptian Goddess to--- Adi Torkiya s Company, Egyptian Goddess, Inc. which resells them. 15
THE SWISA 4-WAY BUFFER At a Fort Worth trade show in the summer of 2001, Falley proposed to make a hollow, 4-way buffer for Dror Swisa. The new buffer would have every feature of the Nailco Buffer, but would add a fourth side with a pad, resulting in square ends like the Falley Buffer Block. 16
IN OCTOBER, 2001, ADI TORKIYA APPLIED FOR A PATENT. Torkiya, who again was selling the Nailco Buffer, applied for a design patent for a 3-way buffer that had every feature of the Nailco design, but added a fourth side without an abrasive pad, resulting in square ends like the Falley Buffer Block. He was issued United States Patent No. D467,389 (the D 389 Patent ). 17
In 2003, Torkiya s company, Egyptian Goddess, Inc. sued Dror Swisa and Swisa Inc. for patent infringement. After Markman claim construction briefing, the district court out a detailed verbal description of the patented design: A hollow tubular frame of generally square cross section, where the square has sides of length S, the frame has a length of approximately 3S, and the frame has a thickness of approximately 1.25T, and the inner corner of the cross section rounded on a 90 degree radius of approximately 0.25T; and the rectangular abrasive pads of thickness T affixed to three of the sides of the frame, covering the flat portion of the sides while leaving the curved radius uncovered, with the fourth side of the frame bare. (emphasis added). 18
Swisa moved for Summary Judgment on the grounds that it could not infringe under either the ordinary observer test or the point of novelty test. Only possible point of novelty: 4 th side without a pad Swisa argued that the Swisa Buffer could not infringe under the point of novelty test because the only possible point of novelty in the D 389 design, the addition of a fourth side without an abrasive pad, was not present in the Swisa Buffer. 19
Egyptian Goddess argued that its point of novelty was not the addition of a fourth side without a pad, but a combination point of novelty consisting of four prior art elements: 1. Open and hollow body 2. Square cross section 3. Raised rectangular pads 4. exposed corners. 20
The District Court granted summary judgment that there could be no infringement under the point of novelty test. [The Nailco Patent] discloses a nail buffer with an open and hollow body, raised rectangular pads, and open corners... EGI cannot claim the combination of those three elements in the D 389 Patent as novel when they were already combined in the Nailco Patent. The only point of novelty in the D 389 Patent over the Nailco Patent is the addition of the fourth side without a pad, thereby transforming the equilateral triangular cross-section into a square. (emphasis added). 21
Egyptian Goddess appealed, still claiming the same combination point of novelty. Swisa again argued that a combination point of novelty at most consists of the difference between the claimed design and the nearest prior art. The Nailco Patent already combined the open and hollow frame, the raised pads, and the exposed corners, so none of these elements could be part of Egyptian Goddess combination point of novelty. That left the addition of the fourth side without a pad, and the resulting square ends, as the point of novelty. 22
Swisa also argued in both its brief and oral argument that the panel could affirm the summary judgment on the grounds that there could be no infringement under the Ordinary Observer test. A purchaser of buffers for a multi-step buffing process would not buy a 4-way buffer mistaking it for a 3-way buffer. 23
During oral argument before the panel, Judge Kimberly Moore, then new to the Federal Circuit from being a law professor, asked: Why do we even need a point of novelty test? 24
In a split decision, the majority of the Federal Circuit panel affirmed, but in doing so introduced the non-trivial advance test. For a combination of individually known design elements to constitute a point of novelty, the combination must be a non-trivial advance over the prior art. Smith v. Whitman Saddle... In light of the prior art, no reasonable juror could conclude that EGI s asserted point of novelty constituted a non-trivial advance over the prior art. 25
The Federal Circuit granted rehearing en banc and vacated the panel decision. The Federal Circuit ordered the parties to brief a series of questions going to the basic nature of design patent infringement, starting with: 1. Should point of novelty be a test for infringement of a design patent? 26
The En Banc Court further inquired: 2. If [the point of novelty test is retained]: (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one point of novelty in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? See Lawman Armor Corp. v. Winner Int l, LLC, 449 F.3d 1190 (Fed. Cir. 2006). 27
And finally: 3. Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1577 (Fed. Cir. 1995). 28
27 Amici Filed 16 Amicus Briefs: 1. American Intellectual Property Law Association 2. Apple, Inc. 3. Bar Association of the District of Columbia Patent, Trademark & Copyright Section 4. Daisy Manufacturing Company 5. Electrolux Home Products, Inc. and Nike, Inc. 6. Elite Group, Inc. and Sensio, Inc. 7. Ford Global Technologies, LLC 8. Houston Intellectual Property Law Association 9. Industrial Designers Society of America 10. Federal Circuit Bar Association 29
11. Federation Internationale Des Conseil s En Propriete Industrielle ( FICPI ) 12. Intellectual Property Law Association of America 13. Intellectual Property Owners Association 14. Monster Cable Products, Inc. 15. LKQ Corp.; Keystone Automotive Industries, Inc.; U.S. Auto Parts Networks, Inc.; Gordon Auto Body Parts Co., Ltd.; Depo Auto Parts Ind. Co., Ltd.; Automotive Aftermarket Industry Association; Coalition for Auto Repair Equality; Auto Body Parts Association; Automotive Parts Remanufacturers Association; and Property Casualty Insurer s Association of America 16. Professor William T. Fryer, III 30
THE BIG QUESTION: Should the point of novelty test even exist? EGYPTIAN GODDESS AND MANY AMICI ARGUED THAT: The Point of Novelty Test was unworkable, and The Ordinary Observer Test could be performed in such a way as to render the point of novelty test unnecessary. 31
TWO PROPOSED NEW ORDINARY OBSERVER TESTS: THE 3-WAY TEST: The fact finder, putting himself in the place of the ordinary observer, would compare the accused design to both the claimed design and the prior art, and if the accused design was closer to the claimed design than to the prior art, then it infringed. If the accused design were closer to the prior art, it did not infringe. THE CONTEXTUAL OR FAMILIAR OBSERVER TEST: The fact finder compares the accused and claimed designs in the context of the prior art, or put differently, the ordinary observer is someone familiar with the prior art. 32
According to Egyptian Goddess and some amici, until Litton the ordinary observer test had always been conducted in light of the prior art. The need for the point of novelty test has been founded upon the false notion that the prior art is not considered when conducting the ordinary observer test. Simply put, the Gorham ordinary observer test is not applied in a vacuum. Rather, the Gorham test [takes] into account (1) accused design, (2) claimed design, and (3) prior art. AIPLA Amicus Brief at p. 4 (emphasis added). 33
Swisa argued that precedent and policy both required the point of novelty test. Swisa argued that the Supreme Court had adopted the essence of the point of novelty test in Smith v. Whitman Saddle in 1893. There was insufficient reason to overturn the Federal Circuit s own precedent employing the point of novelty test. The test was needed to prevent findings of infringement where the accused design was simply practicing the prior art or what was obvious over the prior art. The proposed three-way test was unworkable. 34
The buffers at issue showed why the 3-way version of the ordinary observer test would lead to improper findings of infringement. Nearest prior art Accused Design Claimed Design Here, the accused design looks closer to the claimed design than to the nearest prior art, but: Nothing inventive has been appropriated, and An ordinary observer familiar with the prior art and giving such attention as a purchaser usually gives would not buy a 4-way buffer mistaking it for a 3-way buffer. 35
Even if you compare the accused design to both the Falley Buffer Block and Nailco Patent on the one hand, and the Claimed D 389 on the other: the Swisa Buffer still looks closer to the D 389. 36
The En Banc Oral Argument Before 12 Judges Other K & L Gates Lawyers at the en banc argument: Jeff Snow. He generously lent assistance on the case from the early days on, and assisted at the appellate arguments before both the panel and the en banc hearing Linda Moore. Dror Swisa and Swisa Inc. were her clients, and she was active throughout the case. 37
THE COURT DECIDED: WHITMAN SADDLE DID NOT REQUIRE RETAINING THE POINT OF NOVELTY TEST. Unanimous En Banc Opinion: Nothing in the [Whitman Saddle] opinion suggested that it was fashioning a separate point of novelty test for infringement. COMPARE Robert Oake at oral argument:... this Whitman Saddle case... does not use or express a point of novelty test. Judge Lourie: Well, it doesn t use those words but it certainly applies the concept. It talks about what was new and material and said lacking that there was no infringement. (emphasis added). 38
BUT WHAT ABOUT LITTON? Chief Judge Michel had noted at oral argument that the Federal Circuit didn t normally overrule a precedent of a decade or more standing, like Litton, unless there was some intervening event like a new Supreme Court case or, rarely, when the practical application had proved to be a disaster. 39
LITTON DID NOT HAVE TO BE OVERRULED, BUT JUST MORE PROPERLY READ. THE EN BANC COURT: We think, however, that Litton and the predecessor cases on which it relied are more properly read as applying a version of the ordinary observer test in which the ordinary observer is deemed to view the differences between the patented design and the accused product in the context of the prior art. 40
The En Banc Court thus SCRAPPED THE POINT OF NOVELTY TEST, and adopted the CONTEXTUAL or FAMILIAR OBSERVER version of the ordinary observer test. 41
The purpose of the point of novelty test had been to focus on those aspects of a design which render the design different from prior art designs. That purpose can be equally served... by applying the ordinary observer test through the eyes of an observer familiar with the prior art. If the accused design has copied a particular feature of the claimed design that departs conspicuously from the prior art, the accused design is naturally more likely to be regarded as deceptively similar to the claimed design, and thus infringing. (emphasis added). 42
But query to what extent this new test, by whatever name, conflicts with Gorham s conclusion that the test is not whether an expert would be deceived: Such a test would destroy all the protection which the act of Congress intended to give. There never could be piracy of a patented design, for human ingenuity has never yet produced a design, in all its details, exactly like another, so like, that an expert could not distinguish them... Experts, therefore, are not the persons to be deceived. 43
The Court affirmed Swisa s summary judgment on the ground that there could be no infringement under this new Ordinary Observer Test. [A]n ordinary observer, familiar with the prior art Falley and Nailco designs, would not be deceived into believing the Swisa buffer is the same as the patented buffer. Or put differently In light of the similarity of the prior art buffers to the accused buffer, we conclude that no reasonable factfinder could find that EGI met its burden of showing, by a preponderance of the evidence, that an ordinary observer, taking into account the prior art, would believe the accused design to be the same as the patented design. 44
EGYPTIAN GODDESS PLANS TO FILE A PETITION FOR WRIT OF CERTIORARI Egyptian Goddess argues that the Federal Circuit has misapplied the Gorham test, because it took individual features from prior art designs into account rather than just comparing overall designs. Note that comparing only to individual overall designs from prior art, rather than to features in a collection of prior art designs, would have the same effect as just using a 3-way comparison with the closest piece of prior art. 45
Egyptian Goddess argues that the Swisa Buffer s overall design still looks closer the overall design of the D 389 Design than to the overall designs either the Falley Buffer Block or the Nailco Patent. 46
A Ghost of the Three-Way Test Although the En Banc Court embraced the familiar observer or contextual test, a trace remained of the 3-way test for which Egyptian Goddess had argued: Nothing about Ms. Eaton s declaration explains why an ordinary observer would regard the accused design as being closer to the claimed design than to the Nailco prior art patent. 47
So what will courts call the new test? Some Possibilities: The familiar ordinary observer test:... The ordinary observer test through the eyes of an observer familiar with the prior art. The contextual ordinary observer test. [T]he ordinary observer is deemed to view the differences between the patented design and the accused product in the context of the prior art. The knowledgeable ordinary observer test. [A] test that asks how an ordinary observer with knowledge of the prior art designs would view the differences between the claimed and accused designs is likely to produce results more in line with the purposes of design patent protection. 48
Another major issue before the En Banc Court: 3. Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1577 (Fed. Cir. 1995). 49
THE EN BANC COURT DECIDED: Ordinarily, no verbal description of the design as part of Claim Construction. [T]he preferable course ordinarily will be for a district court not to attempt to construe a design patent claim by providing a detailed verbal description of the claimed design. With that said, it is important to emphasize that a district court s decision regarding the level of detail to be used in describing the claimed design is a matter within the court s discretion, and absent as showing of prejudice, the court s decision to issue a relatively detailed claim construction will not be reversible error. 50
As part of claim construction the court can or must identify the non-functional aspects of the design. A trial court can usefully guide the finder of fact by addressing such matters as distinguishing between those features of the claimed design that are ornamental and those that are purely functional, see Oddzon Prods., Inc. v. Just Toys, Inc. 122 F.3d 1396, 1405 (Fed.Cir. 1997) ( Where a design contains both functional and non-functional elements, the scope of the claim must be construed in order to identify the non-functional aspects of the design as shown in the patent. ) (emphasis added) 51
Design patents do not and cannot include claims to the structural or functional aspects of the article. Lee v. Dayton Hudson, 838 F.2d 1186, 1188 (Fed. Cir. 1988). Compare with It is not necessary to parse ornamental and functional features during claim construction, since the design patentee has already claimed all features shown in solid lines in the drawings, regardless of whether such features are new, old, ornamental or functional. Functionality is a validity issue, not an infringement issue. Amicus Brief in the Egyptian Goddess case for Apple Inc. at p. 12, n.14 (internal Citations omitted). 52
Swisa had argued during claim construction in the district court and in briefing to the appellate panel that features of the Swisa Buffer were functional. Four-sidedness is functional in a 4-way buffer. Square ends are functional in a 4-way way buffer. The cuticle protection edges are functional. The foam pads are functional in a hollow buffer. 53
What does functional mean in the context of elements of a design patent? Egyptian Goddess argued in the district court that appearance must be dictated solely by functional considerations for the feature to be functional in the claim construction context, and that it did not matter what was the best or most practical design. Swisa argued that the existence of other alternatives did not necessarily mean that a design was not still primarily functional, and that other considerations included whether the protected design represented the best design and whether alternative designs would adversely affect the utility of the article. 54
In support of its argument, Swisa cited to Supreme Court authority in the trademark area. Federal Circuit decisions seemed to go both ways as to what was functional in the design patent arena. Swisa argued that in the related area of the functionality doctrine in the trademark context, the Supreme Court had repeatedly made clear that a product feature was functional not only when it was essential to the use or purpose of the article, but also if it affects the cost or quality of the article. E.g. Inwood Laboratories, Inc. v. Ives Laboratories Inc., 456 U.S. 844, 851 fn. 10 (1982). 55
The District Court accepted the argument of Egyptian Goddess, and in March 2005 ruled that no feature of the D 389 Patent was functional The district court seemed to accept that features were not functional if alternative designs could accomplish the purpose. A year later, the Federal Circuit in a design patent case would adopt the approach urged by Swisa, and quote the Supreme Court decision in Inwood for the proposition that [a]n aspect is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. Amini Innovation Corp. v. Anthony California, Inc., 439 F.3d 1365, 1371 (Fed. Cir. 2006) (emphasis added). 56
Two developments to watch for as courts interpret the Egyptian Goddess case: How exactly will the new ordinary observer test, whatever they call it, work? Just how familiar with the prior art will the non-expert ordinary observer be? Will the language about identifying functional elements in claim construction lead to courts finding features functional, so that they can be deleted from the comparison under the ordinary observer test, and how will that work? 57
Whether the point of novelty test existed for 115 years or only 24, I met it late in its life, in a time when many extremely talented voices cried out for its death. I say with pride that I defended it to its last hours. FAREWELL TO THE POINT OF NOVELTY TEST! 58
Some Thoughts On Design Patent Acquisition Although my partner won the case, the patent holders appear to have won on the rule Stopping exact copies and colorable imitations often has great commercial importance Although prior art still must be considered in infringement case, burden remains on accused infringers to invalidate in the face of presumption of validity Detailed written claim constructions optional 59
Repeat Players Explore What Is Available at the PTO 60
Egyptian Goddess Reminds Us The Prior Art Does Matter so consider doing a search In many consumer product categories design searches are quick and easy much quicker than utility searches. Get samples of what's already out there If you re a regular in a field, collect magazines & catalogs, make shopping trips, and visit the trade shows 61
Use Divisional Practice Related Design Patents For the Same Package: 62
Think About Every Feature -- Delete Whatever You Can Get Away With 63
Consider Being Aggressive In The PTO If you aren't ever fighting rejections and taking appeals you may not be trying hard enough. (This is already an accepted folk wisdom for utility patent applications ) The patent at issue in Egyptian Goddess was allowed on a first office action without objection; so was its parent application. 64
Where the Action Is: Consumer Products Where Look Matters Distinctive Applied or Separable Features Packaging Markets With Private Labels Replacement Parts Instant Trade Dress Molded Copies or Third Shift Products Notably Egyptian Goddess Is Not In Any Of These Categories 65