Hoverboard Design Patent Owner Falls Flat at CAFC

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Thursday affirmed a district court’s finding on remand from an earlier CAFC decision that several hoverboard design patents were not infringed by hoverboard products sold online.

The patents at issue are U.S. Patent Nos. D737,723 (“D’723 patent”), D738,256 (“D’256 patent”), D784,195 (“D’195 patent”), and D785,112 (“D’112 patent”). In 2022, in two separate precedential opinions, the Federal Circuit vacated two preliminary injunction orders granted by the U.S. District Court for the Northern District of Illinois against hoverboard products alleged to infringe four of Hangzhou Chic Intelligent Technology Co Ltd’s design patents. The district court entered a preliminary injunction against some of the defendants in 2020 and later granted an amendment to add additional defendants in May of 2021.

In response to a motion to clarify or vacate the 2020 preliminary injunction for lack of notice to the defendants under Federal Rule of Civil Procedure (FRCP) 65(a), ABC was ordered by the district court to seek a new preliminary injunction, which was granted in October 2021.

The CAFC found in 2022 that there that there were “substantive defects” in the court’s reasoning for granting the injunctions. The opinion explained that the district court’s May Order and 2020 Preliminary Injunction violated the requirement of FRCP 65(a)(1) that “[t]he court may issue a preliminary injunction only on notice to the adverse party” because “[b]efore the entry of the 2020 Preliminary Injunction, no advance notice or opportunity to oppose was given even to then-named defendant Gyroor-US, let alone to the other appellants before us.” The CAFC thus ultimately found there was no evidence that the required notice was provided and vacated both the 2020 preliminary injunction and the May 24 order granting ABC’s motion to amend to add additional defendants.

Separately, the CAFC considered whether the 2021 preliminary injunction, which the district court had ordered ABC to seek, met the requirements of FRCP 65(d) and the court’s precedent in its finding that the plaintiffs were likely to succeed on the merits. Because the district court’s analysis was in part “directly counter” to the CAFC’s precedent, the court reversed and remanded the case.

First, the CAFC said the district court did not apply the “appropriate legal standard” in issuing the 2021 injunction. Secondly, the district court failed to conduct the “ordinary observer” test laid out in Egyptian Goddess v. Swisa, which requires the court to conduct a “three-way analysis comparing the accused product, the patented design, and the prior art.” Since the dominant feature of the accused products and the patented design is the hourglass shape, “the focus of the infringement substantial similarity analysis in most cases will be on other features of the design. The shared dominant feature from the prior art will be no more than a background feature of the design, necessary for a finding of substantial similarity but insufficient by itself to support a finding of substantial similarity.” In contrast, the expert report relied on by the district court “far from recognizing that the hourglass figure of the asserted patents could not be relied on to establish substantial similarity, improperly relied on that feature to show substantial similarity,” said the CAFC.

The third legal error made by the district court was that it failed to then apply the ordinary observer test “on a product-by-product basis” as required. This is particularly problematic where the four accused products are significantly distinct from one another, said the CAFC.

On remand, the district court applied the CAFC’s guidance and granted Appellees’ motion for summary judgment of non-infringement because the accused products were not substantially similar to the design patents. “Consistent with our instructions, the district court compared the design patents’ and accused products’ remaining elements, including the fender shape, ‘neck’ structure, foot pad designs, and lights,” wrote the CAFC in today’s opinion.

Because the district court found a number of differences in the elements of the patented versus accused designs on remand, the Federal Circuit agreed with its assessment and found no reversible error in the summary judgment ruling, therefore affirming in favor of the defendants.