Monday, January 28, 2013

Federal Circuit Alert – Hall, et al. v. Bed Bath & Beyond, Inc., No. 2011-1165, -1235

On Friday, January 25, the Federal Circuit issued its decision in Hall, et al. v. Bed Bath & Beyond, Inc., --- F.3d ----, 2013 WL 276080 (Fed. Cir. 2013), reversing the decision of the Southern District of New York, dismissing the case.  In this case, Hall is asserting its Design Patent No. 596,439 for a “Tote Towel.”  Below is a figure from the ‘439 Patent alongside a comparison provided in Hall’s complaint:

Interestingly, Hall appealed the decision of the district court despite the fact that Judge Hellerstein granted Hall leave to amend.   Judge Lourie’s dissenting opinion focuses on that fact and proposes penalizing Hall for declining the opportunity to amend.  Nevertheless, the Federal Circuit’s decision to reverse appears to be the correct decision.  
At the district court, Bed Bath & Beyond argued that Hall’s complaint failed to include factual allegations plausibly suggesting that the accused products infringed the ‘439 Patent under the Supreme Court’s decisions in Ashcroft v. Iqbal and Bell Atl. Corp. v. Twombley.  Specifically, the defendants argued that the complaint was insufficient because it failed to include any allegations relating to how the ‘439 Patent should be construed.  Evidently, Judge Hellerstein agreed and held that the complaint should have included answers to questions such as: “What is it  about Plaintiff’s towel that he claims is ‘new, original and ornamental,’ meriting the protection of a design patent?”    

The Federal Circuit began its analysis by citing its pre-Iqbal and Twombley decision regarding the pleading requirements in a design patent case - Phonometrics, Inc. v. Hospitality Franchise Systems, Inc.,  203 F.3d 790 (Fed. Cir. 2000).  There, the Federal Circuit held that the pleading requirement in design patent cases is no different than in a utility patent case.  All that is required are the basic elements of Form 18 – “(i) allege ownership of the patent, (ii) name each defendant, (iii) cite the patent that is allegedly infringed, (iv) state the means by which the defendant allegedly infringes, and (v) point to the sections of the patent law invoked.”  As with complaints in utility patent cases, Iqbal and Twombley did not alter this basic requirement. 

The Court then went on to explain that Hall’s complaint was adequate.  The Court reasoned that “Hall’s  complaint identified the patent, showed the patented design, and described the accused towel as follows: ‘¶27.  The Counterfeit Towel is virtually identical in design to the Tote Towel.  It  [has]  the same shape and almost the same dimensions -- 50” x 9.”  The Counterfeit Towel also features the Tote Towel’s unique zippered compartments and hanging loop.  In fact, the inseam of the Counterfeit Towel, from one pocket to the other, is exactly the same length as that of the Tote Towel.”  Notably, the images in Hall’s Complaint also appear to support a plausible claim of infringement at first blush. 

While Hall v. Bed Bath & Beyond, is not a watershed decision, it may be interpreted by some as altering the pleading requirements for an allegation of design patent infringement or as holding that Iqbal and Twombley had no impact on the pleading requirements for design patent infringement.  However, in the author’s opinion, Hall should be understood as an isolated situation where the complaint clearly made a plausible allegation and should not have been dismissed.  However, this case should not be construed as precluding a Rule 12(b)(6) dismissal, where the design at issue and the accused product (if shown in the complaint), clearly show an implausible (or frivolous) claim for design patent infringement. 

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