Impact of Full Federal Circuit’s Design Patent Decision is Far from Obvious

“The ‘more flexible approach’ adopted this week will unquestionably give [design patent] challengers more latitude to argue that prior art warrants a finding of obviousness.”

design patentApplications for design patents have surged in recent years, with the U.S. Patent and Trademark Office (USPTO) reporting a 20% increase in applications over the last five years. Design patents have become an important tool in brands’ intellectual property portfolios – and for good reason: where trade dress protection can take years (and significant resources) to acquire, with the right planning and timing, design patents are easy to obtain and offer strong protections for brands.

The Federal Circuit’s en banc decision in LKQ Corp. v. GM Glob. Tech. Operations LLC, No. 21-2348 (Fed. Cir. May 21, 2024) this past Tuesday calls the strength of those benefits into question. In the much-anticipated decision, the court held that the longstanding and rigid test for assessing “obviousness,” a key element of patent validity, should be replaced with a more “flexible” standard.

The magnitude of this shift will be clear only after courts apply the new standard, but the decision is certain to encourage fresh challenges to the validity of design patents. This could be a welcome opportunity for competitors to more successfully challenge potentially invalid design patents that have monopolized common design features, but if interpreted by courts to be too “flexible,” it also could open the door for third parties to undermine the ability of brands to prevent knockoffs.

Design Patents Can Be Abused for the Same Reasons They Are Popular

Design patents are potent weapons for brands looking to protect unique innovations or flagship products. Design patent applications are easier and less costly to prepare than applications for utility patents. Unlike an application for a utility patent, which requires multiple, detailed claims about the invention it is meant to protect, design patents require only one claim and rely on drawings of the design to convey the scope of protection. The simplicity of design patent applications also enables a faster review by USPTO examiners and makes them less susceptible to rejection. In fact, the USPTO’s most recent statistics show that the design patent allowance is over 81% this year.

Once a design patent issues, it is presumed valid, and gives the owner 15 years of protection for its design. The patentee can enforce these rights through an infringement action in federal court, where the court will look at whether the accused product looks substantially the same as the patented design in the eyes of an ordinary observer.

Plaintiffs have generally had a distinct advantage in design patent litigation. Courts first construe the scope of a design patent’s claims and tend to rely on the application’s illustrations rather than a detailed written description of the design. This allows the patentee to argue that a patent covers a wide range of visually similar products, particularly if its drawings are less than clear. The infringement analysis then asks whether an ordinary observer would find that the patented design and the accused product “are substantially the same.” This is hard to overcome in cases where the defendant is peddling a knockoff or “dupe” of the patentee’s product, even under a different brand name. An alleged infringer at times may be able defend by contending that the patents at issue are invalid, for instance because they lack novelty, are obvious, or are functional, but – due to longstanding court precedent – the standards are high and must be shown by clear and convincing evidence. And if liability for design patent infringement is found, damages awards can be devastating for an infringer, as a prevailing patent owner can seek the infringer’s total profits for the article of manufacture.

For all of these reasons, for many brands, design patents make a lot of sense to obtain. When used right, they are a powerful tool. At the same time, these benefits can be abused by brands that seek to protect common (and not necessarily novel or non-obvious) design features of their products through design patents. Because of the difficulty faced by defendants in design patent litigation and the potential award of damages (to say nothing of litigation costs for these extensive matters), the threat of litigation from a design patent holder may be enough to prevent competition in a product field, even where the design patent seems ripe for invalidity.

The Rosen-Durling Test Bolstered the Strength of Design Patents by Setting a High Bar for Obviousness

A key element of patent validity is nonobviousness, meaning the claimed design cannot be one that “would have been obvious . . . to a person having ordinary skill in the art to which the claimed invention pertains.”  35 U.S.C. § 103. In practice, however, obviousness has been difficult for challengers to prove.

Courts had long assessed obviousness using the two-step Rosen-Durling test—derived from Durling v. Spectrum Furniture Co., Inc., 101 F.3d 100 (Fed. Cir. 1996) and In re Rosen, 673 F.2d 388 (CCPA 1982). Under that test, the challenger was required to find a primary reference that was “‘basically the same’ as the challenged design claim.” After identifying that “primary reference,” it could use “secondary references” to modify the primary reference to create a design that has the same overall visual appearance as the claimed design. However, those “secondary references” were required to be ““so related’ to the primary reference that features in one would suggest application of those features to the other.”

The first step of this test was a frequent hurdle for challengers that could not identify a sufficient primary reference, and this requirement made it rare for courts to reach the second step of the Rosen-Durling inquiry.

While difficult for challengers, the first step nevertheless was regarded by many as an important element of design patent protection. As the earlier panel (which declined to overrule the Rosen-Durling test “without a clear directive from the Supreme Court”) in LKQ Corp. observed: “This test safeguards against a challenger picking and choosing features from multiple references to create something entirely new, fundamentally changing the overall visual impression of the original designs.”

The New Standard Outlined in LKQ Will Surely Encourage More Challenges to Validity on Obviousness Grounds

In its en banc opinion, the Federal Circuit overruled the earlier panel and instructed courts to abandon the Rosen-Durling test for design patent obviousness. Instead, courts should apply the test articulated by the Supreme Court for utility patents in Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), which “explained that the ultimate question of obviousness is one of law based on ‘several basic factual inquiries,’” including “the scope and content of the prior art”; “differences between the prior art and the claims at issue”; and “the level of ordinary skill in the pertinent art.” Graham also requires consideration of certain secondary considerations.

The first Graham factor will now require the fact finder to “consider the ‘scope and content of the prior art’ within the knowledge of an ordinary designer in the field of the design.” Challengers will still be required to identify “a primary reference,” but it “need only be something in existence.” There is no longer a “threshold similarity or ‘basically the same’ requirement to qualify as prior art,” as under Rosen-Durling—instead, “an analogous art requirement applies to each reference.”

The scope of analogous art is, in turn, guided by utility patent precedent, which examines: “(1) whether the art is from the same field of endeavor as the claimed invention; and (2) if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.”  As the Federal Circuit acknowledged, the second prong of this test does not “seem to apply to design patents in the same way” as it applies to utility patents. However, the court declined to “delineate the full and precise contours of the analogous art test for design patents,” leaving the development of this standard to future cases.

The court did explain that a primary reference under this new standard “will likely be the closest prior art, i.e., the prior art design that is most visually similar to the claimed design” and “will typically be in the same field of endeavor as the claimed ornamental design’s article of manufacture, but it need not be, so long as it is analogous art.”

The court further dispensed with the requirement that any secondary references be “‘so related’ such that features in one would suggest application of those features to the other.” Instead, primary and secondary references “must both be analogous art to the patented design,” and, in keeping with the Supreme Court’s decision in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), “the motivation to combine these references need not come from the references themselves.” Rather, “there must be some record-supported reason (without hindsight) that an ordinary designer in the field of the article of manufacture would have modified the primary reference with the feature(s) from the secondary reference(s) to create the same overall appearance as the claimed design.”

The “more flexible approach” adopted this week will unquestionably give challengers more latitude to argue that prior art warrants a finding of obviousness. Whether these arguments are effective depends on how far courts are willing to depart from prior understandings of acceptable primary and secondary references. Only time will tell whether the LKQ decision will result in a fair way to invalidate frivolous design patents that monopolize common designs without undermining the protections that brands rely on to protect their new and innovative products.

Image Source: Deposit Photos
Author: fotoscool
Image ID: 57926613 

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