Wednesday, August 13, 2014

Poly-America, L.P. v. API Industries, Inc., - Identifying the Ordinary Observer

Here at the Ordinary Observer (the blog), one of the things we enjoy discussing most is the Ordinary Observer (the legal fiction).  Today, that discussion is facilitated by an August 6, 2014 Order on a Motion for Reconsideration issued in Poly-America, L.P. v. API Industries, Inc. (No. 13-cv-693-SLR) by Judge Sue L. Robinson from the United States District Court for the District of Delaware.

The Order on a Motion for Reconsideration follows an earlier denial of a motion for judgment on the pleadings, issued on April 10, 2014. There, Judge Robinson declined to find, as a matter of law, that API's design for a cardboard box and Poly-America's patented box design were plainly dissimilar.  In reaching her decision, the judge found that the ordinary observer would be a person who sees the box when it is merchandised in a store, and not one who views the box in a manufacturing facility.  Judge Robinson's Order on the Motion for Reconsideration is a great review of how the ordinary observer is defined, and why it matter so much in design patent litigation.

API sought reconsideration of that order under the belief that the Court had erred as a matter of law in identifying the ordinary observer.  It argued, "the 'ordinary observer' for the design component of product packaging is the industrial purchaser that uses that packaging component to assemble a finished retail product with content."

The ordinary observer of a patented design has been held to be "the principle purchasers of the articles to which designs have given novel appearances."  Gorham Mfg. Co. v. White, 81 U.S. 511 (1871).  The Supreme Court's reasoning for this statement was that it did not want to confine the comparison between patented and accused designs to the perspective of experts or skilled artists who might be able to find small differences that an average purchaser would tend to overlook.

While the Supreme Court's precedent generally means that the ordinary observer must at least encompass the retail purchaser, that isn't always the case.  The test specifically excludes experts, but in certain circumstances it can include commercial or industrial buyers who are normally considered more sophisticated, and better able to notice small differences between a patented and accused design.  The ordinary observer for the lingerie hangers should include garment manufacturers, who resell garments on the hangers to retail stores.  For a sprayer shroud which is combined with other parts to form a spray bottle, the ordinary observer should include the spray bottle manufacturer.

This is the crux of API's argument in this case.  Much like patented lingerie hangers which are combined with garments for resale, or like a patented spray bottle shroud that is combined with several other components to create a spray bottle sold in stores, API believed the manufacturer who purchases cardboard boxes before filling them with a product is the true ordinary observer under the law.

The Court disagreed.  While the box is part of a larger retail product, it is the part of the product that is presented to consumers in the store, and ultimately used by end-purchasers when they open the box to retrieve the product.

Judge Robinson recognized a degree of tension in the law.  Where the accused design is an integral part of a retail product itself, the retail consumer is the ordinary observer.  Where the accused design is only one of several component parts of the packaging of a retail product, the commercial or industrial buyer may be the proper observer.  Between those two guideposts, there is no bright line rule.  The stakes in deciding this question one way or another can be significant, as in this case the court found several distinguishing tabs and slots were not relevant to the issue of non-infringement because the retail customer would never see them in the course of normal use.

Notably, Judge Robinson's order reads a bit like a claim construction decision and one wonders whether "the ordinary observer" ought to be defined during the claim construction process, as is often the case with the "person of ordinary skill in the art" in utility patent cases. 

1 comment :

  1. "Unlike the sprayer shroud in Arminak, which admittedly would not be noticed by most retail consumers . . . "
    A few moments spent observing products in the cleaning aisle at the supermarket contradicts the judge's dismissive and uninformed statement. Consumer product components are not designed in a vacuum, and commercially successful products aren't created by picking random components out of a bin as this quote suggests. Thousands of drawings, hundreds of designs, scores of prototypes, and deep psychological and neurological research inform every millimeter of consumer product design at this level. (Although perhaps not that much for the product at suit here, very much so for sprayer shrouds).

    The laser focus of product design, which by definition is going to have "components," is whether it appeals to the final purchaser or end-user. If consumers don't purchase the product, wholesale buyers won't either because they'd lose their job if they did. The best wholesale buyers know the consumer in their market niche, and will choose the product that is positioned correctly for their customer, which is based on brand and price plus design. If the price of the copycat product is a little cheaper, and the designs are similar, the cheaper one may pass through the buyer's gate.

    Rarely is the copycat the better design because copycats don't hire the best designers. There is a direct correlation between talent and cost. The business problem here is that the copycat's sunk costs in design are much less, and their lower price will beat out the more innovative company that takes design risks, such as P&G in the cleaning products aisle.

    As a designer and manufacturer of consumer products who sold both wholesale and retail, I never considered the wholesale buyer's perspective when designing a component because buyers aren't demand drivers. The first question I had to answer was, does the component work with the product as a whole? The second question was, does the component make the product more attractive to the consumer than that of my competitors? Well, I got a design patent on that component, and I can proudly say that the product design was so successful, it's been knocked off continuously by different manufacturers for the entire life of the patent, which expires in two months.

    Flann Lippincott, esq.