Thursday, April 7, 2011

Why Advocacy Matters

The role of an advocate in any legal proceeding includes educating the court so that it can make a just and fair decision. While many judges usually arrive in the courtroom well-versed in the law relevant to the case, at times they may need assistance from the advocate to understand nuances or marshal complex facts. Some cases are resolved incorrectly or incompletely because the court did not adequately understand the facts and/or the law. There may also be instances where a “correct” result was reached, but under a flawed analysis. While I am not sure whether the following story falls under the former or latter, it may still stand as a cautionary tale for the importance of advocacy in any patent dispute.

In 1993, Ann McAlear developed a product called the Seat Sack®, which simply stated is a pouch that attaches to the back of a chair. It may be used, for example, by students to store their belongings while at school.

Ms. McAlear later received U.S. Design Patent D358,731 for a “Sack for Hanging on the Back of a Chair.”

In 2000, McAlear entered into an agreement with Childcraft Education Corp. that gave Childcraft the exclusive right to resell Seat Sacks® that it purchased from McAlear. For a number of years, Childcraft sold the Seat Sack®. In 2003, Childcraft began selling a similar, but not identical, product called the Seat Pocket™ that it developed itself. You should now have an idea of where this is going.

In 2007, McAlear’s company Seat Sack Inc. sued Childcraft (and others) alleging, among other things, trademark infringement, false advertising and unfair competition. See SEAT SACK, INC. v. CHILDCRAFT EDUCATION CORP. and SCHOOL SPECIALTY, INC., No. 07 Civ. 3344 (JLC), United States District Court, S.D. New York., May 7, 2010. While the original complaint does not specifically assert patent infringement, McAlear’s design patent is specifically mentioned several times in support of other claims, including one alleging “unlawful use of Plaintiff’s patented product.” Nonetheless, the issue of patent infringement was ultimately considered by the court. The District Court granted summary judgment in favor of the defendants on most of the plaintiff’s claims, including the patent infringement claim. Here are a few reasons why this may have happened:

1. There was no evidence that McAlear had ever assigned her patent to her company, therefore the plaintiff had no enforceable rights in it. Presumably, if the lawsuit had named McAlear individually as one of the plaintiffs, this issue could have been better dealt with. 35 U.S.C. § 261 states that patents “shall be assignable in law by an instrument in writing.” Although this has been interpreted to require that all assignments be in writing, the Federal Circuit has also concluded that title in a patent can be transferred in ways other than by assignment, such as by operation of law (see, e.g., Akira Akazawa v. Link New Tech, 520 F.3d 1354 (Fed. Cir. 2008) (patent ownership may be transferred by the law of intestacy)). However, McAlear’s testimony that she gave Seat Sack rights in her patent was deemed insufficient to establish that a proper transfer of ownership had occurred.

2. As the court stated, “The '731 Patent claims an ‘ornamental design for sack for hanging on the back of a chair, as shown.’ The black and white drawings and figures in the patent depict an unadorned pouch from various angles. No other ornamentation is shown.” Unadorned? No other ornamentation? Someone apparently didn’t explain this concept to the judge. I see ornamentation aplenty. Now, whether or not any of that would have helped in this case, I don’t know, but there was clearly a complete failure by the plaintiff to argue this point.

Consider the above photographs of the two pouches, and the patent drawings. Overall, the two products appear to be almost identical in shape and size. The most obvious difference (other than the prominent names printed on them) is that the Seat Pocket™ includes several additional, smaller pouches on the outside for holding things like pens and pencils that neither the Seat Sack® nor the patent has. Also, the nametags are on different portions of the pouch, and are not shown in the patent illustrations.

Would you say that the design in the patent includes ornamental features that are not dictated by function alone? I would say “yes” at least for the shape of the pouch opening and the angled top corners.

Would you say that otherwise the two products appear to be “substantially the same?” One might argue that the addition of the outer pockets and relocation of the nametag are trivial changes, but as we saw in a prior case, simply adding a hole to a credit card warranted a patent. But since the so-called point-of-novelty test was eliminated in Egyptian Goddess, we are also to look to the “sameness of effect upon the eye.” How does the addition of the extra pockets affect this determination? What about the prominently displayed names, which would make clear the source of each pouch? Here is one instance where the lack of advocacy probably worked against the plaintiff.

3. Apparently, the plaintiff’s attorney didn’t originally intend to assert patent infringement because the complaint alleged “unlawful use of Plaintiff’s patented product” without citing the patent infringement statutes at all (as discussed above, this seems like it was primarily a trademark case). Despite this, the defendant observed in its brief that this was probably a claim for infringement of the design patent, and the court agreed. In a related note, on appeal this case was transferred from the Second Circuit to the Federal Circuit because the Federal Circuit has exclusive jurisdiction over patent issues (again, even though this was a trademark case). It is doubtful that this transfer of venue was expected by the plaintiff.

4. The weakness of the plaintiff’s position is reflected in the following portion of the court’s opinion:

Defendants' 1/27/09 memorandum, at pages 36-37, said: "To qualify for design patent protection, a design must have an ornamental appearance that is not dictated by function alone. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 148 (1989). .... Design patents are narrow in scope in that they are strictly limited to what is shown in the drawings and only protect the novel, ornamental aspects of the design as shown in the patent. Metrokane, Inc. v. Wine Enthusiast, 185 F.Supp.2d 321, 326 (S.D.N.Y. 2002) .... (granting summary judgment to accused infringer where design patent drawings did not disclose any ornamental aspects of patented device)."

In Metrokane, at page 327, Judge Conner did indeed grant summary judgment on the first of two design patents, for the simple reason that "this design has no purely ornamental features that merit patent protection." The same is true of Ms. McAlear's design patent. It contains six drawings, which show a very simple, unornamented, functional design.

The defendants' memorandum presented two additional arguments for summary judgment as to design patent infringement. A threshold argument was: Ms. McAlear had presented no evidence that she had assigned or licensed the design patent to Plaintiff (the corporation that she formed in 1999). Even if that defect could be cured, and even if the design merited some protection, the final argument was: Childcraft's Seat Pocket contains two extra pockets, as well as a name tag holder, and thus Plaintiff cannot meet "its burden of proving [that] the two designs would appear `substantially the same' to the ordinary observer." (1/27/09 Memo., pp. 37-38, quoting Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 678 (Fed. Cir. 2008) (en banc, affirming summary judgment), cert. denied, 129 S.Ct. 1917 (2009).)

As to the threshold argument, Ms. McAlear's 2/12/09 affidavit at ¶3 says, "I have always authorized and assigned unto Seat Sack, Inc. the right to utilize this patent ...." However, defendants' reply memorandum at page 19 cites 35 U.S.C. §261 (assignment of a patent must be in writing to be effective) and Bellehumeur v. Bonnet, 127 Fed. Appx. 480, 484-85 (Fed. Cir. 2005) (party claiming oral assignment lacked standing to maintain infringement action).

Most importantly, Plaintiff has utterly failed to show that her design patent contains "novel, ornamental aspects," or that Childcraft's design appears to be "substantially the same."

It appears that the defendants only had to do some basic homework to knock the plaintiff clear out of the courtroom. Assuming that the plaintiff was prepared to argue for patent infringement, how did that effort fall short? The record reveals no rebuttal to the defendants’ assertions. Maybe there simply was none to give (but then, why sue in the first place?) The judge just seemed to accept everything the defendant said at face value.

What is striking here is the court’s casual dismissal of the plaintiff’s infringement claim, an apparent result of the failure to bring any arguments to the table in support of Seat Sack’s position. Although the court did not actually rule that the patent was invalid, the above language did so in effect. How did that happen? I can only surmise: ineffective advocacy. Postscript: the plaintiff appealed, and the Federal Circuit dismissed her trademark claims out of hand for similar shortcomings. The patent was not discussed.

No comments :

Post a Comment