Reddy v. Lowe’s Companies, Inc. – “As Shown and Described” means “As Shown”

In December, 2013, the Ordinary Observer initially reported on Reddy v. Lowe's Companies, Inc., (1:13-cv-13016), a case filed in the District of Massachusetts on November 25, 2013, concerning U.S. Design Patent No D677,423.  This week, Judge Young issued a memorandum in that case construing the claim of the D'423 Patent.  Judge Young's construction raises some questions as to the court's treatment of narrative elements of the claimed design which warrant further discussion.

The D'423 Patent is entitled "bathroom vanity light shade."  The left-hand image below shows two figures excerpted from the patent, Figures 1 and 2, which are fairly representative.  The right-hand image is a screen shot of what may be an accused device produced by the Defendants.

The claim of this patent is directed to "[t]he ornamental design for a bathroom vanity light shade, as shown and described."  The Court's present memorandum has little to say about what is shown.  It principally concerns what is described.

The specification of the D'423 Patent includes a brief narrative:

The bathroom vanity light shade is an ornamental fixture consisting of a rectangular, metal rod skeleton, wrapped in fabric on three sides (front side, left side, right side), with a stationary acrylic diffuser bottom. The bathroom vanity light shade mounts on the wall with top/back exposed mounting rod.

Virtually nothing recited in the narrative can be visually seen in the patent figures.  The shading applied to four of the sides indicates those surfaces are intended to be transparent, but there is no visible evidence of the so-called rod skeleton, or specific imagery distinguishing fabric and acrylic sides.

This sort of narrative description is unusual but generally not impermissible.  Patent & Trademark Office regulations state, "No description, other than a reference to the drawing, is ordinarily required."  (37 C.F.R. § 1.153(a)).  "However, while not required, such a description is not prohibited and may be incorporated, at applicant’s option, into the specification or may be provided in a separate paper." (M.P.E.P. § 1503.01).   An examiner can object to the inclusion of descriptive statements which are unclear or inaccurate, but absent a proper objection, the PTO will generally permit an applicant to incorporate descriptive statements into the claim by adding the words "and described" after "shown" in the traditional claim language, “The ornamental design for (the article which embodies the design or to which it is applied) as shown.”  (Id.).  The patent in this case claims "[t]he ornamental design for a bathroom vanity light shade, as shown and described."

Judge Young's approach represents a substantial diversion from PTO practices.  He concludes that design patents operate under a "figure-only" framework, where:

any written description that goes beyond the scope of the figures would be unprotected by the patent, and thus ought not be part of the construed claim.  Thus, the references to "wrapped in fabric" and an "acrylic diffuser bottom," since they are not shown in the figures, would stretch beyond the patent.

Judge Young proposes that regulations allow only "written descriptions that clarify features on an existing drawn figure" and not "written descriptions that add new features not present on the figure."  Because "fabric side" and "acrylic diffuser bottom" may be viewed as added features, Judge Young contends these statements are best viewed as a "preferred embodiment," though he admits, "they probably ought not have been included when the patent was issued."

The defendants also argued that the patentee was estopped from arguing the acrylic diffuser and fabric sides were not limitations on the claims based on statements made by the patentee during the prosecution of the patent.  Judge Young rejected this argument, finding the prosecution history subject to multiple interpretations and therefore not a clear disavowal of claim scope.

Judge Young's construction in this case is difficult to square with PTO regulations allowing descriptive  statements in the specification of design patents to "supplement the drawing disclosure to define the scope of protection sought by the claim."  (M.P.E.P. § 1504.04).  While the Judge correctly places a strong emphasis on the figures as the best description of the claimed invention, effectively ignoring narrative statements in the written description of a design patent is relatively unprecedented.  The court draws a distinction between narrative statements that clarify, such as those that disclaim broken lines appearing in the drawings, and those that add new features, but the line between the two is muddy.  If a patentee may use words to disclaim broken lines, why then, can a patentee not use descriptive statements to disclaim materials which do not form part of the claimed invention (i.e., materials except acrylic and fabric)? 

This is not likely a case where claim construction is effectively determinant.  Judge Young's construction is expressly without prejudice to future jury instructions or other grounds of invalidity and non-enforceability.  Furthermore, while the patentee has obtained a construction which likely help their arguments in favor of infringement, for the purpose of invalidity, the plaintiff faces the prospect of defending as novel and non-obvious a light shade in the shape of a rectangular box having four sides and two open sides.

We will be on the look out for future developments in this case.

Guest Post - In Apportionment Debate, Design Patents Should Be Distinct

Editor's Note:  The below guest post was authored by Brice Beckwith, a law student at Oklahoma University College of Law.  Brice presented at last month's ABA Design Committee meeting on the subject of apportionment and was kind enough to write up his presentation for the Ordinary Observer.  The ABA Design Committee holds monthly meetings (via conference call) where the members discuss current events in design law and noteworthy decisions.  So sign up and join the conversation!

When I began to look through the Apple v. Samsung briefs concerning disgorgement of total profits under § 289 a few weeks ago, it occurred to me that in many ways the briefs illustrate everything I have come to expect from this area of law. The arguments proceed despite a noticeable lack of recent or direct case law, there is admixture of copyright and trademark policy rationales throughout, and (my favorite) a dependence on late 19th century legislative history as applied to modern smartphones. In my view, the characteristics of these arguments lend credence to the belief that the state of design patent law loosely holds shape as some sort of intellectual property hodgepodge. Nowhere is this more apparent than when reading the arguments that make comparisons between design patent law and other intellectual property regimes. For example, many arguments against § 289’s disgorgement of total profits were similar to calls for a causation/nexus requirement between the infringer’s profit and the infringement. By looking at these arguments we can get some idea as to what makes this area so amorphous, and how that may cause a few pitfalls. 

In its Appellant Brief, Samsung argued for a causation requirement for § 289 based on two premises. First, Samsung, as best it could, stayed within the realm of patent law by arguing that patent infringement is essentially a tort, and that as a tort it requires a proof of causation. To make this claim, Samsung needed both a utility patent case, Carbice Corp. v. Am. Patents Dev. Corp., 283 U.S. 27, 33 (2002), and a copyright case, Mackie v. Rieser, 296 F.3d 909, 915 (9th Cir. 2002). Later, in its Reply Brief, Samsung clarified that this causation requirement would not violate the Congressional intent to abolish apportionment because the requirement would be separate from and precede any apportionment inquiry. See Samsung Reply Brief at 14.  Second, in its appellant brief, Samsung argued for an interpretation of § 289 that would treat an award of profits as a ceiling and emphasized that a causation requirement may already exist in § 289’s language, which states that a patent holder “shall not twice recover the profit made from the infringement.” Relying on another utility patent case, Samsung attempted to bolster this interpretation by tying a lack of causation requirement to constitutional concerns over inappropriately enlarging the patent monopoly raised in Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5-6, 86 (1966). 

In some contrast, Professor Mark Lemley’s arguments in “Brief Amici Curiae of 27 Law Professors In Support of Appellant Samsung,” took a different road to the same conclusion. Professor Lemely set up trademark law as a close analogue to design patent law in order to show the court a more familiar route it could take when resolving the disgorgement issue. Among several other trademark rules that were offered, was a trademark requirement that a court could award profits only on sales that were attributable to the infringement. See id. at 7. Although Professor Lemley made this point more in passing, it demonstrates a reality in design law that often advocates must reach beyond design patent law for answers.

In that same vein, in a post written on this blog back in August by William Seymour, we can see a similar argument for a causation/nexus requirement stemming from a third body of law. Whereas Samsung chose patent law, and Professor Lemley looked to trademark, Mr. Seymour provided a solution through Copyright law. From his perspective, the copyright disgorgement remedy found in 17 U.S.C. § 504b offers a better analogue to § 289. After comparing the history of the two statutes, Mr. Seymour came to the conclusion that the differences between the two statutes provides strong evidence that the court should not interpret § 289 to allow apportionment. Despite this, Mr. Seymour offered another out for Samsung by pointing to the judicially created nexus requirement for § 504. Under this nexus test the copyright owner must show a legally significant relationship between the infringer’s gross profits and the infringement. Furthermore, the nexus inquiry acts as a threshold requirement before the disgorgement of the infringer’s profits even comes into question. In many ways this solution mirrors what both Samsung and Professor Lemley offered in their respective briefs, and therefore is yet another example of how, in design patent law, the same destination can be reached by taking different paths. 

Taken as a whole, these arguments echo in practice what many commentators propose in design patent scholarship, which is to replace design patent law (either wholly or partly) with copyright, trademark, or some type of sui generis scheme. There is an argument that the very nature of industrial art dictates that the law governing design patents must exist in a space that blurs the lines between other intellectual property regimes. However, these blurred lines may just as likely not be caused by the nature of the thing being protected, but instead by the, long-standing and recently changing, unpopularity of the law. A risk in substituting legal tools from trademark and copyright law is that any independent purpose that design patents once had may be lost somewhere in the mix. Maybe we forget the very reason that design patents were created as a separate entity and, in that forgetting, the replacement of the design patents with other schemes becomes all that more preferable. 

These arguments may also reveal an implicit unease that exists in allowing design patents to be independent from other intellectual property regimes. When faced with rebutting the proposition of a causation requirement, Apple and its amici struggled to find policy rationales that solely belonged to design patents. For instance, in its Appellee brief, Apple rejected any call for a causation requirement on the premise that causation would violate Congressional intent because it essentially equated to apportionment. However, in doing so, Apple avoided making any policy arguments beyond Congressional intent to justify a remedy as severe as § 289. 

In his amicus brief, Perry Saidman made the very same argument that any question of causation equates to a question of apportionment; however, unlike Apple, Mr. Saidman did offer a justification for § 289. Mr. Saidman claimed that one reason design patents require § 289 is because when an infringer appropriates a design patent they are appropriating the “very face of the company.” Id. at 19. Mr. Saidman further noted that when a design patent is infringed the infringers often take more than just product design, rather the infringers in effect misappropriate the very brand of the patent holder. See id. This concern for the protection of brand demonstrates just how blurry the lines in design patent law can be. It is an argument that design patents are unique and therefore deserve a special tool in § 289, but what makes design patents unique in this case is a shared purpose with unfair competition law. In some ways this argument resembles that of Samsung, Mr. Lemley, and Mr. Seymour because it demonstrates the need to incorporate tools and policy from other intellectual property regimes when an immediate answer is not available. 

With these arguments the Federal Circuit has a chance, through its interpretation of § 289, to add some clarity to the amorphous subject of design law. Although the Court must make a skin deep choice regarding apportionment, the more interesting decision may be whether the Court decides to justify its holding uniquely from a design patent perspective or from some other intellectual property regime.

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?

Isolite Systems v. Zirc Dental Products - Arguing Invalidity in a Motion to Dismiss

On Tuesday, September 2nd, Judge David O. Carter in the Central District of California issued an interesting order on a Motion to Dismiss in Innerlite, Inc. d/b/a/ Isolite Sys. v. Zirc Dental Prods., Inc., et al., (No. 13-cv-7501-DOC). The relevant discussion concerns the Defendants' allegations that the asserted design patent is invalid.

The case concerns U.S. Design Patent No. D615,203.  The patent is assigned to Plaintiff Isolite Systems, and claims the ornamental features of a device for use by dental professionals to isolate the work area of a patient's mouth, retract the tongue and cheek, evacuate fluids and oral debris, and prevent inadvertent aspiration of material.  Defendant Zirc Dental Products manufactures and distributes "Mr. Thirsty," which Isolite alleges infringes the D'203 Patent.  A figure derived from the D'203 Patent is shown above, along side an image of the "Mr. Thirsty" product from Zirc Dental.

The bulk of the Court's order relates to issues that are germane to motions to dismiss in patent litigation.  In addition to the claims against Zirc Dental, Isolite's complaint recited claims of direct and indirect infringement of the D'203 Patent against Defendants Dr. Brian P. Black, the alleged designer of the product that Zirc Dental markets as the "Mr. Thirsty,"  as well as claims against two companies allegedly owned by Dr. Black, Brian P. Black DDS, Inc. and Joogatech, Inc. These Defendants filed the instant motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that the complaint fails to state its claim for direct infringement against Joogatech, and its claims of induced infringement against all three of the so-called "Dr. Black Defendants."  The court agreed, and dismissed these claims without prejudice to Isolite.

The Defendants threw one additional argument into the mix: that the D'203 Patent infringement claims should be dismissed because the patent is invalid for being primarily functional, not ornamental. 

A patent can rarely be invalidated in a motion to dismiss.  At that stage in the litigation, the court's review is limited to the contents of the complaint and the material submitted with the complaint, although the court may still take judicial notice of outside facts which are generally known or whose accuracy is unquestioned.  Furthermore, all of the Plaintiff's factual allegations are assumed to be true for the purpose of this motion, and under these facts the Defendant must prove invalidity by clear and convincing evidence.  It is a very difficult case to make.

However, because invalidating a patent on a motion to dismiss is rare does not mean it is impossible.  In 2013, the Federal Circuit left this door open where "the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility."  Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1339 (Fed. Cir. 2013).  This may be particularly useful design patent patent defendants, because, as we discussed in greater detail earlier this year, design patents claim individual ornamental designs rather than a "range" of inventions.  Therefore in many cases, the only plausible reading of the design patent will be apparent at the time the complaint is filed.  This could put defendants in a better position to raise clear invalidity issues early, before the burden of litigation becomes too great.

Unfortunately for the Defendants in this case, Judge Carter found this was not the "rare" instances where invalidity could be determined from the facts pled in the complaint.  The Defendants argued that Isolite failed to identify anything non-functional in the D'203 patent.  But the burden was on the Defendants, not Isolite, to affirmatively prove invalidity by clear and convincing evidence.

While the Defendants could not prove invalidity here, this case still demonstrates that a motion to dismiss can pose a tangible threat to design patent plaintiffs.  Invalidation may be rare, defendants should not overlook this device where other defenses, including non-infringement, may be proven on the complaint alone.

Pacific Coast v. Malibu Boats - The Nightmare Apportionment Scenario Realized

Last Friday we commented on Professor Lemley's amicus brief in the Apple v. Samsung case, which addresses the issue of apportionment in design patent law.   Apparently,  Judge John Antoon II of the Middle District of Florida was working on his own "post" on design patent apportionment at the same time.  Last Friday, Judge Antoon issued a decision denying Malibu's motions for summary judgment, including a motion to limit potential damages to the profits for the accused windshields in the case of Pacific Coast Marine Windshields, Ltd. v. Malibu Boats, LLC.  As a result of Judge Antoon's decision Malibu's total profits for the sale of its speedboats will be at risk if they are found to have infringed Pacific Coast's design patent on a boat windshield.  

Here's a graphic to help explain the decision:

You might recall this case from its previous trip to the Federal Circuit, where the court reversed Judge Antoon's decision to apply prosecution history estoppel to limit Pacific Coast's claims against Malibu. While the Federal Circuit held that prosecution history estoppel applies to design patent, the court reversed the district court’s summary judgment of non-infringement because it found that the accused design was not within the scope of the subject matter surrendered during prosecution.

It is unclear why Malibu Boats did not renew its motion for summary judgment on remand.  Although its prosecution history estoppel argument had been defeated, it still had strong non-infringement arguments as a result of the Federal Circuit's decision.  For example, if, as the Federal Circuit says, the accused windshield was not within the scope of the canceled figure,  then how could the accused windshield be within the scope of the remaining figures of the '070 Patent?  The accused design appears to be more similar to the cancelled figure than the asserted design, and that fact might have been enough for Judge Antoon to grant summary judgment. 

Malibu's decision not to renew its motion for summary judgment on non-infringement may cost them. Judge Antoon's decision on Friday was a simple matter of statutory interpretation.  The court found that its hands were tied in light of the statutory history of § 289:

Congress removed the apportionment requirement in 1887, with the enactment of what later became§ 289.  [See Nike. Inc. v. Wal-Mart Stores. Inc., 138 F.3d 1437, 1441 (Fed. Cir. 1998)]. Design patent owners are no longer required “to apportion the infringer's profits between the patented design and the article bearing the design.” Id. at 1442.  The intent of Congress to allow more expansive recovery for design patent owners is exhibited in the plain language of the statute, which allows recovery of "total profit" from anyone who sells “any article of manufacture to which such design or colorable imitation has been applied.” 35 U.S.C. § 289.  In this case, Malibu sells boats, to which patented windshields have been applied. The plain language and intent of the statute support a conclusion that Pacific is entitled to Malibu's profits from the sale of its boats with the windshield.

This reading of § 289 is further supported by Federal Circuit and district court decisions. In Nike, the Federal Circuit referred to the damages as profits from "the infringing shoes" when the patent involved only part of the shoe. 138 F .3d at 144 7. In Apple. Inc. v. Samsung Electronics Co., the plaintiff had several patents pertaining to smartphones and tablet computers that claimed a portion of the design of particular electronic devices but disclaimed other portions. 678 F.3d 1314, 1317 (Fed. Cir. 2012). With respect to damages based on the defendant's profits, the district court ruled that the plaintiff was not required to prove which portions of the profits were earned by the design feature. Apple. Inc. v. Samsung Elecs. Co., 926 F. Supp. 2d 1100, 1111 (N.D. Cal. 2013). "Congress specifically drafted the design patent remedy provisions to remove an apportionment requirement that the Supreme Court had imposed. Thus, there is simply no apportionment requirement for infringer's profits in design patent infringement under § 289." Id.

While Judge Antoon's legal analysis is correct, the case of Pacific Coast v. Malibu Boats is a striking example of the sometimes inequitable result of § 289 in the absence of any equitable discretion in the hands of the Court.  Malibu's boats sell for anywhere between $50,000 and nearly $100,000, while the accused windshields cannot possibly cost more than a few hundred dollars, standing alone.  This is precisely the type of inequitable scenario that Professor Lemley highlighted in his amicus brief and is the type of situation that the Federal Circuit must grapple with in the appeal from the Apple v. Samsung case. 

Design Patent Apportionment - The Answer Lies in Copyright Law

On Thanksgiving last year, we wrote about the apportionment problem in design patent cases by analogizing to a thanksgiving favorite, turducken.  The apportionment problem deals with how courts should award "total profits" for design patent infringement under 35 U.S.C. § 289 when the infringing design is only one of many profitable features in the infringing product.  For example, in the Apple v. Samsung case (now on appeal), Samsung maintains that its accused Galaxy devices were profitable, at least in part, because of their functionality and software, not just Apple’s patented designs which it was found to have infringed.

As promised, the issue of design patent apportionment has reared its ugly head in Samsung's appeal to the Federal Circuit in the Apple v. Samsung case.  I recently had an opportunity to read the "Brief Amici Curiae of 27 Law Professors In Support of Appellant Samsung," which is available on the AIPLA web page for the industrial design committee.  I found Professor Lemley's brief to be well reasoned and persuasive and I think the Federal Circuit will have some tough decisions to make when it comes to the apportionment issue.  Two things in the Amicus Brief jumped out at me and my take on the apportionment problem differs only slightly from Professor Lemley's.

First, as professor Lemley appears to concede, the statutory history relating to § 289 is not easily ignored.  Congress specifically removed the apportionment requirement from the disgorgement remedy in response to a Supreme Court case that applied apportionment in such a way that it basically declawed the disgorgement remedy.  In Dobson v. Carpet Co., 114 U.S. 439 (1885), the Supreme Court held that a design patent plaintiff must be required to establish the profits attributable to the infringing design and, because there was no evidence the patented designs at issue had contributed to the profits of the infringing carpets, the Supreme Court reversed and awarded only nominal damages. See id. Congress then passed the statute of 1887 in response to the Dobson decision. "The manifest purpose of congress was to enlarge the remedy against infringers of design patents, and to declare that the measure of profits recoverable on account of the infringement should be considered to be the total net profits upon the whole article."  Untermeyer v. Freund, 58 F. 205 (2d Cir. 1893) (emphasis added); see also Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1441 (Fed. Cir. 1998) (“The Act of 1887, specific to design patents, removed the apportionment requirement when recovery of the infringer’s profit was sought….”).  This clear statutory history and legislative intent will be difficult for Samsung to overcome and nearly impossible for the Federal Circuit to ignore.  

While I agree that "awarding a defendant’s entire profits makes no sense in the modern world," the same could be said of the minimum $250 remedy that is also available under § 289.  In the modern world, a design patent holder will spend more in a single billable hour of design patent litigation than it could ever hope to recoup under this provision.  Yet, federal courts are incompetent to update § 289 so as to increase this minimum monetary award to a more modern amount.  Courts are equally incompetent to read apportionment back into § 289 after Congress deliberately removed it. 

Second, the Amicus Brief notes that the "closest analogue" for the disgorgement remedy in § 289 is found in the remedies for trademark infringement.  On this point, I would disagree.  The disgorgement remedy in design patent cases is a close cousin of the disgorgement remedy under copyright law.  See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 399 (1940) ("Prior to the Copyright Act of 1909..., there had been no statutory provision for the recovery of profits, but that recovery had been allowed in equity both in copyright and patent cases as appropriate equitable relief incident to a decree for an injunction."); Braun Inc. v. Dynamics Corp. of Am., 975 F. 2d 815, 824 (Fed. Cir. 1992) ("R]ecovery of an infringer's profits evolved in courts of equity").  Indeed, § 504 of the Copyright Act still uses language that is virtually identical to the disgorgement remedy in design patent law prior to Congress's decision to remove apportionment. See 17 U.S.C. § 504(b) ("The copyright owner is entitled to recover ... any profits of the infringer that are attributable to the infringement") (emphasis added).  Thus, Congress chose to require apportionment under copyright law in 1909, twelve years after deliberately removing the same language from the design patent statute.  This is strong evidence that § 289 and § 504 are intentionally different and the courts should not interpret these statutes as requiring the same things.  

However, copyright law may still provide the solution to the problem of apportionment in design patent cases.  The Copyright Act expressly provides for infringer's profits as a remedy for copyright infringement and expressly requires that such profits be apportioned.  However, courts have  uniformly interpreted § 504 as requiring a threshold showing by the plaintiff that there is a nexus between the infringer's gross profits and the infringement.  See, e.g. Polar Bear Productions, Inc. v. Timex Corp., 384 F.3d 700, 711 (9th Cir. 2004) (“Thus, a copyright owner is required to do more initially than toss up an undifferentiated gross revenue number; the revenue stream must bear a legally significant relationship to the infringement.”); Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (“In sum, we conclude that the Defendants could properly be awarded summary judgment...if...there exists no conceivable connection between the infringement and those revenues....”); On Davis v. The Gap, 246 F.3d 152, 160 (2d Cir. 2001) (“[W]e think the term ‘gross revenue’ under the statute means gross revenue reasonably related to the infringement, not unrelated revenues.”); Taylor v. Meirick, 712 F.2d 1112, 1122 (7th Cir. 1983) (“It was not enough to show [Defendant]’s gross revenues from the sale of everything he sold....”).  Indeed, the Federal Circuit, itself, has already applied this rule of law in the copyright context.  See The University of Colorado Foundation, Inc. v. American Cyanamid Co., 196 F.3d 1366, 1375 (Fed. Cir. 1999) ("The University's argument presumes that the sales of reformulated Materna were due to Cyanamid's copyright infringement. The University had the burden to show this connection.").  

The nexus requirement in copyright law is a judicially created, threshold requirement before the infringer's profits become available at all.  It has nothing to do with the statutory apportionment required under § 504 if disgorgement is found to be an appropriate remedy.  See Andreas v. Volkswagen of Am., Inc., 336 F.3d 789, 796 (8th Cir. 2003) (“burden of establishing that profits are attributable to the infringed work often gets confused with the burden of apportioning profits between various factors contributing to the profits”) (emphasis added).  Under copyright law, where the gross profits do not bear "a legally significant relationship to the infringement," the disgorgement remedy is unavailable and apportionment is simply irrelevant. 

There is no good reason why § 289 should not be interpreted as requiring this same threshold showing that the total profits bear "a legally significant relationship to the infringement."  Such an interpretation of § 289 would not impinge on Congress' clear intent that profits not be apportioned under § 289 and would honor the equitable roots of the disgorgement remedy for both design patent infringement and copyright infringement.  Under § 289, upon a threshold showing of a "a legally significant relationship to the infringement," a design patent infringer would be liable to the extent of their total profits, whereas under § 504, the court would then be required to apportion the infringer's profits.  When "a legally significant relationship" between the design patent infringement and the profits cannot be proved, the patent would still be permitted to recover their damages pursuant to § 284.

This interpretation of § 289 would also address the inequitable scenarios cited by Professor Lemley in the Amicus Brief, without improperly re-interpreting § 289 to include the same apportionment requirement that Congress has already deleted.  See Amicus Brief at 12 ("If United Airlines uses a patented part in one of its planes, the patent owner cannot simply point to that infringement and say, “Now I am entitled to the entire profit from all aspects of United Airlines.”).  Under this scenario, the patentee would likely be unable to show "a legally significant relationship" between United Airline's gross profits and its infringement of a single patented part and disgorgement would not be available as a remedy at all.  Samsung's infringement of Apple's Iphone design patents, however, presents a somewhat closer question as to whether there is a threshold nexus between the infringing design and Samsung's gross profits. 

Interpreting § 289 to require a threshold showing of a nexus between the patented design and the infringer's profits would honor the equitable roots of the disgorgement remedy and bring the interpretation of § 289 in line with its equitable cousin, § 504 of the Copyright Act.  This proposed interpretation would also address the sometimes inequitable result of awarding "total profits," where those profits are not reasonably related to the infringing design.  While apportionment should not be permitted in design patent cases, in accordance with congressional intent, the Federal Circuit should use this opportunity to allow for this basic equitable consideration in design patent cases, as a threshold issue.