Samsung Appeals to the Supreme Court! ... (but probably won't get there)

It's not every day that the New York Times reports on design patent news.  But when it does, it usually has something to do with smartphones.  

The big news in design patent law today is Samsung's inevitable appeal to the Supreme Court from its August loss (mostly) at the Federal Circuit.  Just last week, Apple and Samsung appeared to finally be putting this lawsuit behind them, when it was announced that Samsung had agreed to pay Apple $548,176,477 to satisfy the judgment entered by Judge Koh and affirmed by the Federal Circuit.  However, in the agreement, Samsung had reserved its right to "reimbursement" if the judgment is reversed.  

In its petition for writ of certiorari, Samsung points out two alleged errors by the Federal Circuit - 1) whether the Federal Circuit should have "factored out" the allegedly functional aspects of Apple's design patents, and 2) whether the Federal Circuit erred by not apportioning Samsung's profits between the profits attributable to the infringing design and the profits resulting from other aspects of the infringing products. 

Of course, Samsung worded the questions presented somewhat differently:

The questions presented are:

1. Where a design patent includes unprotected non-ornamental features, should a district court be required to limit that patent to its protected ornamental scope?

2. Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

Regardless of how Samsung chooses to articulate the issues, however, a Supreme Court hearing seems unlikely, in the opinion of this author.  

With respect to the first issue, the Federal Circuit did an excellent job of clarifying its own, somewhat confusing precedent from cases like Richardson v. Stanley Works.  In Apple v. Samsung, the court explained that that the functional aspect of a claim may be conceptually factored out as part of claim construction without literally "exclud[ing] those components in their entirety."  See our earlier post on this topic here.  This pronouncement of the law will help simplify design patent claim construction, while emphasizing to juries and judges that designs do not protect functional concepts, only the appearance of an article of manufacture. 

With respect to the third issue, it is highly unlikely that the Supreme Court would attempt to blatantly overrule the clear, expressed wishes of Congress.  Samsung seems to argue that § 289 is just "really old."  But it's unclear why the Supreme Court's analysis of this argument would be any different from the Federal Circuit's:

In reciting that an infringer “shall be liable to the owner to the extent of [the infringer’s] total profit,” Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design. Several other courts also concluded that Section 289 authorizes such award of total profit. ... The clear statutory language prevents us from adopting a “causation” rule as Samsung urges.

So while its exciting to see design patents in the news, don't hold your breath for the first Supreme Court design patent case in 100+ years.  Of course, we could be wrong and, if we are, we will be the first to celebrate. 

Is Design Patent Functionality a Proper Jury Question?

Last week, Judge Sheri Polster Chappell of the Middle District of Florida entered an interesting order regarding design patent functionality in Chico's FAS, Inc. v. Wink Intimates et al., No. 2-13-cv-00792  (M.D. Fla.).  In this case, Chico’s sued Wink for declaratory judgment of design patent invalidity and Wink counter-sued Chico’s, claiming infringement of U.S. Patent No. 622,478 which relates to a design for a camisole.  Chico's argument for functionalty (and Judge Chappell's decision) demonstrate some common misconceptions about design patent functionality.  Continue reading after the jump to see what Judge Chappell got right and also what she got wrong...

After Apple v. Samsung, What is left of Richardson v. Stanley Works?

At long last, the Federal Circuit has handed down its decision in Samsung's appeal from the district court's $930 Million judgment in favor of Apple in the Apple v. Samsung case.  While the decision focuses on both trade dress and design patent issues, this post will focus on the design patent aspects of the decision. With respect to design patents, the Federal Circuit addressed two very important questions: 1) whether Judge Koh improperly failed to instruct the jury to disregard functional aspects of Apple's design patents, and 2) whether Judge Koh erred by allowing the jury to award Apple, Samsung's "total profits" from the accused smart phones.  We summarize these two aspects of the decision, below.

I.  Whether Judge Koh Improperly Failed to Instruct the Jury to Disregard Functional Aspects of Apple's Design Patents

On appeal, Samsung argued that the district court either incorrectly construed the design patent or failed to properly instruct the jury.  Specifically, Samsung argued that in either the claim construction or the jury instructions, the district court should have informed the jury as to which design elements of Apple's phones were functional, and instruct the jury to disregard them.  Samsung pointed to the rounded corners and rectangular screen of the Iphone as being allegedly functional.  

Samsung based its argument on the Federal Circuit's prior decision in Richardson v. Stanley Works, where the Federal Circuit endorsed the idea of "filtering out" the functional limitations from a design patent through claim construction:

The district court here properly factored out the functional aspects of Richardson's design as part of its claim construction. By definition, the patented design is for a multi-function tool that has several functional components, and we have made clear that a design patent, unlike a utility patent, limits protection to the ornamental design of the article. ... If the patented design is primarily functional rather than ornamental, the patent is invalid. ... However, when the design also contains ornamental aspects, it is entitled to a design patent whose scope is limited to those aspects alone and does not extend to any functional elements of the claimed article. 

Richardson v. Stanley Works, Inc., 597 F. 3d 1288, 1293-94 (Fed. Cir. 2010) (citations omitted).

It seems like the Federal Circuit could have simply distinguished Apple's design patents as not including functional design elements.  But, instead, the Federal Circuit attempted to distinguish Richardson in a way that leaves one wondering when Richardson applies, if ever:

Our case law does not support Samsung’s position. In Richardson, the design patent at issue depicted a multifunction tool with numerous components that were “dictated by their functional purpose.” ... But the claim construction in Richardson did not exclude those components in their entirety. Rather, the claim construction included the ornamental aspects of those components: “the standard shape of the hammer-head, the diamond-shaped flare of the crow-bar and the top of the jaw, the rounded neck, the orientation of the crow-bar relative to the head of the tool, and the plain, undecorated handle.” ... As such, the language “dictated by their functional purpose” in Richardson was only a description of the facts there; it did not establish a rule to eliminate entire elements from the claim scope as Samsung argues.

Apple v. Samsung, Slip Op. at 20 (emphasis added).  Based on the Federal Circuit's decision, it is very unclear when, if ever, Richardson now applies.  If the words "factored out the functional aspects of Richardson's design" do not mean "exclude those components in their entirety," then what do they mean?  Furthermore, if the claim construction in Richardson was intended to allow the design patent claim to "include[] the ornamental aspects of those components," then what is the point of "factor[ing] out" functional limitations at all?  

This portion of the court's decision probably creates more questions than answers, and doesn't seem to be necessary, based on the nature of Apple's design patents.  Given the confusing nature of the court's decision, and the apparent conflict with Richardson, Samsung likely has strong grounds for an en banc appeal on this point. 

II.  Whether Judge Koh Erred by Allowing the Jury to Award Apple, Samsung's "Total Profits" from the Accused Smart Phones

Many commentators predicted that the Federal Circuit would take this opportunity to revise the law regarding apportionment of an infringer's profits.  Several law school professors even filed an amicus brief, arguing that § 289 of the Patent Act should be interpreted to require some form of apportionment.  However, the Federal Circuit's analysis on this point was short and sweet:

In reciting that an infringer “shall be liable to the owner to the extent of [the infringer’s] total profit,” Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design. Several other courts also concluded that Section 289 authorizes such award of total profit. ... The clear statutory language prevents us from adopting a “causation” rule as Samsung urges.

Apple v. Samsung, Slip Op. at 26-27.  With regard to the law professors' amicus arguments, the court dismissed them in a footnote as "policy arguments that should be directed to Congress. We are bound by what the statute says, irrespective of policy arguments that may be made against it."  Id. n. 1.

Apple v. Samsung Oral Arguments, Part I - Functionality and Markman

If you haven't had time to listen to the Federal Circuit arguments in the Apple v. Samsung case last week, don't worry.  The Ordinary Observer has you covered.  We will be examining the arguments in two parts.  Part I will take a look at the functionality discussion that dominated the hearing.  Part II will examine the arguments relating to apportionment.

Samsung began its presentation last Thursday by focusing on functionality, in the context of design patent infringement, and whether the district court was justified in providing the following jury instruction:

If you find by a preponderance of the evidence that the overall appearance of an accused Samsung design is substantially the same as the overall appearance of the claimed Apple design patent, and that the accused design was made, used, sold, offered for sale, or imported within the United States, you must find that the accused design infringed the claimed design.

Samsung complains that Judge Koh failed to "filter out" the allegedly functional elements of Apple's design patents for the jury and failed to offer a jury instruction directing the jury's attention to the "ornamental" aspects of the claim as opposed to the "overall appearance of the claimed Apple design patent":

Kathleen Sullivan (counsel for Samsung): ... As given, the infringement instruction ... instructs the jury to compare the overall appearance of the Samsung and Apple Designs.  Your Honor, crucially, what's missing there is the word "ornamental." You're right that earlier in the invalidity instructions she refers to the term "ornamental."  But the invalidity instructions can't cure the problem with the infringement innstruction.  ... Your honor, we're not saying that there should have been exact, magic words.  We gave her multiple choices, we said "please define the difference between functional and ornamental."  We said "please district court, take out these few things that Apple has admitted are functional..."  As Egyptian Goddess says, the district court has discretion how to distinguish functional from ornamental, but it does not have discretion whether to distinguish functional from ornamental... 

The Court:  What do we do about about the case law that says that your'e supposed to look at the overall design and you're not supposed to just take ornamental features in isolation? 

Sullivan: Your Honor, what you do is say "overall ornamental appearance."  The crucial problem here is that the jury was not instructed to, nor was there any claim construction limiting it to comparing the overall ornamental appearance. 

The problem with Samsung's argument is that it urges the court to turn the question of functionality, for purposes of infringement (i.e. claim construction), over to the jury.  Obviously, that approach would conflict with the Supreme Court's Markman decision, holding that claim construction is exclusively the province of the court and cannot be handed over to the jury.  

As a reminder, functionality can come up in design patent litigation in two contexts: invalidity and infringement.  In the invalidity context, the question for the jury is whether the design is functional as opposed to ornamental.  If the design is dictated solely by function, as opposed to ornamentation, it is invalid for failing to meet the ornamental requirement of § 171.  In the infringement context, courts sometimes seek to "filter out" functional aspects of the claim as a matter of claim construction.  See, e.g., Richardson v. Stanley Works, Inc., 597 F.3d 1288 (Fed. Cir. 2010).  While some have questioned the wisdom of this approach as improperly dissecting the claim, it remains a contentious issue in design patent law. 

Samsung argues that Judge Koh's instructions were improper because they failed to instruct the jury to consider only the ornamental aspects of the claim and failed to "define the difference between functional and ornamental" in the infringement context.  But such an instruction would have been tantamount to charging the jury with claim construction - here, selecting which design elements were functional and filtering them out of the claim.  In the utility patent context this would be like reading the Phillips case to a jury and then instructing them to evaluate infringement "applying the proper claim scope."  That would be reversible error.

If there was any error in the jury charge, it would have been in Judge Koh's decision not to construe the functional limitations of the claim, at all.  To the extent functionality was really at issue in the infringement context, it was Judge Koh's job to construe the patent, not he jury's.

The Federal Circuit has given conflicting guidance on a trial court's "discretion" in construing "functional and non-functional elements."  In Egyptian Goddess, a case we have addressed several times, the court stated that "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."  Yet, in the next paragraph, the court also said "[w]e therefore leave the question of verbal characterization of the claimed designs to the discretion of trial judges..."  It is curious that Judge Koh would send the question of design patent functionality (in the validity context) to the jury but simultaneously decline to construe any functional elements of the claim.  If there was a question of material fact as to whether any of the design patents were functional, as a whole, isn't there necessarily a question of fact as to whether individual design elements are functional?

The answer may come down to the extent of Judge Koh's discretion in construing the design patent (or not). Trial judges may have discretion to determine whether the functional limitations, if present, would improperly impact the jury's consideration of the overall ornamental design.  For example, with utility patents, judges are not obliged to construe every conceivably disputed claim term and always have some level of discretion. See U.S. Surgical Corp. v. Ethicon, Inc., 103 F. 3d 1554 (Fed. Cir. 1997) ("Claim construction is ... to clarify and when necessary to explain what the patentee covered by the claims, for use in the determination of infringement. It is not an obligatory exercise in redundancy.").  Judge Koh likely used her discretion to decline to spell out what was ornamental vs. what was functional for the jury if she believed that the allegedly functional elements of the design would not meaningfully impact the jury's determination of infringement.

The Federal Circuit has an opportunity to clarify a district court's discretion in construing a design patent to "filter out" functional limitations.  As with any claim construction issue, district courts ought to be allowed some independence in determining when design patent claim construction is "necessary" or would otherwise be more helpful than harmful for the trier of fact.  This should include the discretion to decline to construe the design at all, even when functionality is at issue in the validity context. 

Chris Carani on Functionality - A Sensible Solution

Design patent all-star Chris Carani recently published a comprehensive review of the functionality issue in design patent law.  The article, titled Design Patent Functionality: A Sensible Solution, has been published in the ABA Section of Intellectual Property Law's periodical, Landslide, and argues for a balanced approach to the functionality issue that honors the statutory requirement for "ornamental" designs under Section 171 of the Patent Act.  You can read the full article here.  With Mr. Carani's blessing, we've highlighted some of the key points, below.

Mr. Carani explains how the functionality doctrine has been expanded in recent years, in part due to a relatively straightforward Federal Circuit decision in 1998 holding that design patents protect designs and do not provide protection for general concepts.  See Lee v. Dayton-Hudson (1998).  We have echoed this same caution here on this blog several times.  The article argues that the modern perspective on functionality has sprung out of a misapplication of this fundamental truth about design patents, but that the functionality doctrine ought to be confined to a inquiry about subject matter eligibility, and should not expand into a piece-by-piece dissection of design patent claims. 

Mr. Carani uses a charming graphic to illustrate his point:

Some courts have interpreted the functionality doctrine to require that any functional elements within the claim be "filtered out" of the claim as part of claim construction or jury instructions.  In the example above, a court might arguably "construe" the key in Example B as having no claim regarding the design of the actual key mechanism.  In other words, the court might construe Example B to be identical to Example A, based on functionality.  However, the statute suggests that the functionality doctrine may be more akin to a subject matter eligibility test, asking whether the claimed design, as a whole, is ornamental or dictated solely by the function of the article.  For example, the design claimed in Example C is arguably dictated by the function of the key (i.e. fitting a lock).  See See Best Lock Corp. v. Ilco Unican Corp., 40 USPQ2d 1048 (Fed. Cir. 1996).  As such, the claim of Example C, as a whole, may be dictated by function and therefore ineligible for design patent protection, whereas Example B, as a whole, is likely eligible.

Mr. Carani argues in favor applying functionality as suggested by the statute and resisting the urge to "filter out" functional limitations within a design patent claim.  The PTAB may be signaling its agreement with this suggested approach in its recent IPR decisions, as we have previously noted. 

Mr. Carani has offered a comprehensive examination of the historical underpinnings of the functionality doctrine and its proper role within modern design patent jurisprudence.  His article is particularly timely as some courts have begun to suggest that there may be some linkage between the functionality doctrine in design patent law and in trademark law, which are distinct doctrines serving different public policy goals. 

Chris Carani will be leading a discussion on the topic of functionality during the next ABA Design Committee conference call on December 16. 

Prestige Jewelry v. BK Jewelry - Diamond Cuts are Non-Functional

On Monday, Chief Judge Preska of the Southern District of New York handed down a fascinating summary judgment decision in an epic design patent feud between Prestige Jewelry and BK Jewelry.  The decision covers a great deal of design patent law, which Judge Preska navigates quite nicely.  Students and practitioners of design patent law would be wise to read this decision which provides an excellent overview of design patent law, generally.   

There's too much to comment on in this 52-page decision, but I would like to single out the discussion of functionality.  As we've said before on this blog, true functionality arguments are rare in design patent cases, but for some reason design patent defendants keep gravitating towards functionality like a moth to the flame.  This case is another classic example of a functionality argument that probably never should have been raised.  

BK's U.S. Design Patent No. 618,132 covers a diamond arrangement with a relatively larger "full-cut" diamond in the center, surrounded by 9 smaller single cut diamonds:

Those who have been married in the last five years might recognize this design, as the decision suggests it has been wildly popular.  

Prestige's theory of functionality really had more to do with the design process than the design itself.  Apparently, the inventor, Rocky Wong, testified that "he used a 'light box' to conduct 'refraction tests' and determined that, in his opinion, the 'full-cut center stone' surrounded by nine single-cut stones 'looked the best.'"  "Wong also agreed that the ‘132 Patent arrangement 'performed the best' because 'it had the best refraction.'"

While such testimony would clearly be relevant to the question of functionality in the trade dress context, it doesn't have the same bearing on design patent functionality.  Even assuming that the design of the '132 Patent was perfect (i.e. it provided the most potential refraction), the luster of the gem is not a function in the design patent context, it is an aesthetic effect.  All designs are intended to be as pleasing as possible, using the fundamental elements of human perception - color, brightness, texture, shape, etc.  Perfecting the perception of a design is inherently aesthetic, not functional, and Chief Judge Preska correctly granted summary judgment of non-functionality on this basis:

This argument incorrectly blurs the distinction between ornamental and functional designs. Admittedly, Wong sometimes described the design of the ‘132 Patent in language that superficially might suggest a functional design. He admitted that his design “performed the best” and stated that he used a light box to test various arrangements in search of the “best refraction.” (Wong Dep. Tr., at 74:4-9.) But these statements do not change the fact that the ultimate purpose of the ‘132 Patent design is to have a pleasing appearance—a quintessentially ornamental purpose. Simply because an inventor experiments with alternative designs or uses rudimentary tools and tests does not mean the resulting design is functional. Presumably, most designs are developed not on a whim but rather through some process of trial and error—whether by using a light box, consumer surveys, or simply taking a few steps back and squinting at the design from a distance. The relevant inquiry is the nature of the design, not how the design was developed. Here, the design of the ‘132 Patent is unquestionably ornamental—it is cluster of diamonds arranged solely to be pleasing to the eye.

Prestige Jewelry v. BK Jewelry, No. 1:11-cv-02930, at 32-33 (S.D.N.Y. Sept. 15, 2014).

As Chief Judge Preska reasoned, design patent functionality has nothing to do with a scientific design process.  Functionality depends on whether the article of manufacture has a utilitarian function, and whether the design claimed in the patent is dictated by that utilitarian function.  

There are lots of other great design patent nuggets in Chief Judge Preska's decision, including claim construction, reexamination, obviousness, infringement, and prior art.  It will be interesting to see what happens at the trial in this case.  Non-infringement may depend on how well the jury can distinguish between single-cut and full-cut diamonds so jury selection will be key.  We will keep an eye on this interesting saga, which is drawing to a close, and provide an update after trial. 

Doorman v. Paccar - For Design Patents, Inter Partes Review is Non-Functional

Sometimes lawyers learn more from their failures than their successes, and this has proven to be true in the context of inter partes review of design patents.  Since the Patent Trial and Appeal Board launched the IPR program in 2012, there have been only a handful of design patent decisions, but with each new decision, we learn a bit more about how the PTAB will approach design patents. 

Last Friday, the PTAB handed down a decision in Doorman Prods., Inc. v. Paccar, Inc., IPR2014-00542, 2014 WL 4444041 (Patent Tr. & App. Bd. Sept. 5, 2014).  In its decision, the Board denied Doorman's Petition to institute an inter partes review, but it is the Board's reasoning that was noteworthy.  Below is an image from Paccar's U.S. Patent No. 525,731, which was the subject of the petition. 

First, the Board categorically rejected Doorman's request to filter out functional elements within the design in the context of claim construction.  The Board curiously found that the "Petitioner conflates invalidity based on functionality under 35 U.S.C. § 171 with invalidity based on obviousness under 35 U.S.C. § 103" and held that the it had no authority to entertain a functionality challenge to the design patent:

Further, a challenge based on functionality under 35 U.S.C. § 171 is not permitted in an inter partes review because it is not based on 35 U.S.C. § 103 nor is it based on prior art that consists of a patent or printed publication. 35 U.S.C. § 311(b); 37 C.F.R. § 42.105(b)(2). Therefore, we agree with Patent Owner that the allegedly functional elements identified by Petitioner (Pet. 12) must be considered in an obviousness analysis of the visual impression created by the patented design as a whole (Prelim. Resp. 26). 

Id. at  *3.

The Board appears to have badly misconstrued the Petitioner's claim construction argument with an invalidity challenge under § 171.  The Board's decision to construe the Petitioner's claim construction argument as a validity argument seems to be out of step with the Board's requirement to apply the "broadest reasonable construction."  Furthermore, it directly contradicts the Federal Circuit's guidance on design patent claim construction.  See OddzOn Prods., Inc. v. Just Toys, Inc., 122 F.3d 1396, 1405 (Fed. Cir. 1997) (if "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.").  Whatever the "broadest reasonable construction" means in design patent cases before the PTAB, it must at least be as broad as the construction that would be provided in the context of a district court litigation.  

The Patent Office's failure to appreciate how design patents are being construed in the district courts has led to a strange double standard wherein design patents are construed much more narrowly at the Patent Office then they are in litigation.  IPR may be an interesting venue for bringing this issue to a head and encouraging the Patent Office and the Board to consider modernizing its view of the broadest reasonable construction for designs, in light of how they are being construed, in practice. 

In Doorman, the Board's failure to consider functionality in the context of claim construction led to disastrous results for the Petitioner.  The Board ultimately concluded that the Petitioner's primary reference, Kobayashi, "does not include a side Lamp D, striations, and a checkered surface pattern as shown in the patented design," id. at *5, and therefore could not serve as a primary reference.    But these were the same features that Doorman argued were functional in claim construction.  Whatever the merits of the Petitioner's functionality argument were, they appeared to be central to its Petition, and the Board's refusal to even consider filtering out functional elements would appear to be a clear error of law.  

Nevertheless, while Doorman remains the law of the PTAB, design patent practitioners would be wise not to rely on PTAB claim construction to filter out functional elements of design patent in IPR Petitions.  

For those who are curious, below is an image of Paccar's '731 Patent alongside the proposed primary reference, U.S. Design Patent No. 498,859 to Kobayashi.  Basically the same?

Design Patent Roundup - Nov. 8, 2013

Perhaps as a way of driving home a point made in our post this past Wednesday, more than half of this week’s new cases come to us from the Central District of California, the undisputed hub of design patent litigation in recent times.  Will that prove to be a winning strategy for plaintiffs in the long run?  We can’t say.  We can tell you more about the issues that court will be seeing, such as whether it is a good idea to claim your company logo as part of your design, after the jump.