Federal Circuit Court of Appeals Completely Removes "Point of Novelty" from Design Patent Analysis

In 2008, the Federal Circuit's decision in Egyptian Goddess, Inc. v. Swisa, Inc. significantly altered the infringement analysis in design patent cases by determining that the "ordinary observer test" was the sole test that should be applied by the finder of fact. In reaching this decision, the "points of novelty" test, which had previously been applied in conjunction with the "ordinary observer" test, became a thing of the past. The "ordinary observer" test is a plain comparison of the patented design with the accused design. The "points of novelty" test focused on identifying the points of novelty in the patented design and determining if the accused product appropriated those points of novelty. The Egyptian Goddess decision did not mandate a similar change in analysis of "anticipation" issues, i.e., all elements of the applied-for design found in the prior art, during prosecution of design patent applications or challenges to validity of issued design patents. In International Seaway Trading Corp. v. Walgreens Corp. and Touchsport Footwear USA, Inc., the Federal Circuit addressed the issues left open in Egyptian Goddess.

At the heart of the Seaway dispute were the plaintiff's patents covering designs for casual, lightweight footwear, typically referred to as "clogs." During examination of the patents-in-suit, the patent examiner considered prior art consisting of various models of Crocs clogs from the Crocs website and determined the applied-for designs to be patentable over this prior art. In February, 2008, Seaway filed a complaint alleging infringement of its design patents by Walgreens and Touchsport, where Touchsport imported the accused product and Walgreens sold the accused product in its stores. Walgreens and Touchsport filed a motion for summary judgment of invalidity of the patents-in-suit in view of the Crocs prior art, which was granted by the district court upon application of the "ordinary observer" test. In granting the summary judgment motion and finding that the patents-in-suit were "anticipated" by the prior art, the district court compared the exterior portions of the prior art clogs to the exterior of the patented designs, but did not compare the insoles of the prior art clogs and the patented designs. Seaway appealed the district court decision, contending that district court failed to properly apply the "points of novelty" test to the invalidity analysis and failed to properly consider both the interior and exterior design elements of the prior art and patented clog designs.

After addressing the history of application of the "ordinary observer" and "points of novelty" tests, the Seaway court continued its analysis by recognizing the longstanding general rule that the same test be used in both the infringement and anticipation contexts. This general rule is derived from the Supreme Court's 120-year-old proclamation in the context of utility patents "[t]hat which infringes, if later, would anticipate, if earlier." In light of Supreme Court precedent, Federal Circuit precedent holding that the same tests must be applied for infringement and anticipation, and the Egyptian Goddess decision dismissing the "points of novelty" test from infringement consideration, the Seaway court determined that the "ordinary observer" test was the logical, sole test for anticipation analysis. Relying solely on the "ordinary observer" test would prevent inconsistency from developing between infringement and anticipation analyses and continues the established practice of maintaining identical tests for infringement and anticipation.

In supporting its decision, the court noted the problems inherent in the "points of novelty" test in the infringement context were present in the anticipation context. The test was difficult to apply as it encouraged focus on minor differences between the prior art reference and the patented design and created the need to canvass the entire body of prior art to identify points of novelty. Eliminating the "points of novelty" test for anticipation also "has the advantage of avoiding the debate over the extent to which a combination of old design features can serve as a point of novelty under the ‘points of novelty' test."

In Seaway the Federal Circuit finished what it had started in Egyptian Goddess by dismissing the "points of novelty" analysis from all design patent analysis. The case was remanded to the district court for further consideration of the interior design features of the prior art Crocs clogs as they compared with the interiors of the patented designs.

continue reading »

Big Problem, Small Package: A Summary of the Opel/Autec Decision Regarding Use of an Auto Manufacturer's Trademark on Third-party Toy Cars

On January 14, 2010, the German Federal Supreme Court (Bundesgerichtshof) ruled that Autec's toy cars did not infringe auto manufacturer Adam Opel GmbH's trademark rights, despite the appearance of Opel's trademark on Autec's toy car's grill.

The claimant, Adam Opel GmbH (Opel), a German automobile company which is now a wholly-owned subsidiary of General Motors, was the proprietor of the device mark referred to as the "Opel-Blitz" (pictured below) which covered both motor vehicles and toys.

AUTEC AG (Autec), a German toy-car company, produces and manufactures toy cars under the trademark CARTRONIC. Autec had allegedly produced and distributed miniature toy copies of Opel's Astra V8 Coupé (pictured below) all of which featured the Opel-Blitz mark on the miniature's grill.

Both Opel's automobile and Autec's toy car miniature displayed the Opel-Blitz mark in the same location on the respective car and toy.

Opel objected to Autec's manufacture and distribution of the Opel Astra V8 Coupé miniature, based on its existing trademark rights in the Opel-Blitz mark which covered both motor vehicles and toys, fearing confusion would arise among consumers.

Before ruling on the matter, the court of first instance, the Regional Court Nürnberg-Fürth, requested a preliminary ruling from the European Court of Justice (ECJ) on the matter. In decision C-48/05, the ECJ ruled that "affixing by a third party of a sign identical to a trade mark registered for toys to scale models of vehicles cannot be prohibited under Article (5)(1)(a) of the directive unless it affects or is liable to affect the functions of that trade mark." The ECJ also determined that it was the responsibility of the Regional Court Nürnberg-Fürth to determine how the average consumer of toys in Germany would respond to the issue. Namely, would this average consumer view the logo affixed to the toy model car's grill and assume that the toy was either 1) manufactured by Opel, or 2) that Opel and Autec were linked economically by license or other legal design? The Regional Court Nürnberg-Fürth in its May 2007 decision concluded, "No," holding that the average consumer would believe the logo featured on the toy car was simply part of the model, and thus would not assume that this logo signified a link between the toy car company and the automobile company and car upon which the model was based.

In its January 14, 2010 decision, the Bundesgerichtshof affirmed the Regional Court's ruling denying that the Opel-Blitz trademark had been infringed. Even though Bundesgerichtshof noted that the Defendant had affixed an identical mark, Opel's logo, on identical goods, namely, toys, this particular use did not rise to trademark infringement.

The Bundesgerichtshof reasoned that the use did not affect the main function of the logo, namely, to indicate the "trade origin" of the goods (toy cars). The use also failed to garner a negative consumer reaction, as the German toy consumer would only understand the display of Opel's logo on the toy car as an attempt to mirror the original Astra V8 in miniature version as much as possible. The consumer would not see the logo and assume that the toy car was manufactured by Opel.

Finally, Autec's use of the logo on its model Astra V8 toys did not rise to infringement of a mark with a reputation, as the use did not have detrimental effect on the reputation acquired under Opel's mark for motor vehicles. Thus, the Bundesgerichtshof dismissed the case, denying any trademark infringement relief to Opel.

A comment on the ECJ's initial ruling at the outset of the matter with respect to Article 5(1)(a) of the Trade marks Directive: The ECJ's decision is consistent with earlier case law which notes that infringement exists under Article 5(1)(a) only when the use by a third party harms a function of the trade mark, the guarantee of origin function being the most prominent of functions. The ECJ also appears to have widened this exception, insisting that the public must see a commercial link between plaintiff and defendant. Thus, the ECJ may have introduced, albeit indirectly, a "risk of confusion element" under Article 5(1)(a) of the Directive. Additional discussion on this point may be viewed at http://jiplp.oxfordjournals.org/cgi/content/abstract/3/8/507.

continue reading »

Come and Get It! Extra PTA Days, Courtesy of the Federal Circuit

Patent holders Wyeth and Elan Pharma successfully challenged the USPTO's method for calculating patent term adjustments (PTAs) this month, adding about 8-9 months each to the terms of 2 patents covering treatments for Alzheimer's disease. Wyeth and Elan Pharma International Limited v. Kappos, No. 2009-1120 (Fed. Cir. 2010).

The Federal Circuit held that USPTO rules applied 35 U.S.C. §154(b) "overlap" provisions too broadly. Under 35 U.S.C. §154(b)(1) and (2), a patent term may be extended by the number of days lost due to (i) USPTO delays during prosecution, or (ii) prosecution occurring more than 3 years after filing. However, where only one day was lost, a patentee cannot recoup two days, even if the lost day falls under ("overlaps") both criteria. The decade-old USPTO rules started the "overlap" clock 3 years too early, said the Federal Circuit, resulting in calculations according fewer PTA days than allowed under 35 U.S.C. §154(b).

We expect that the term of many issued patents will be extended as a result of this ruling. The USPTO has advised that it is changing its method for calculating PTAs and that it will issue guidance for expediting recalculation requests in the near future.

continue reading »

Undue Pressure or Undue Blame – Foreign Countries React to the Prospects of US-like Copyright Legislation

Reports surfaced this month taking a somewhat accusatory tone against the United States and its alleged tactics for getting other countries to enact copyright legislation similar to its own. Tico Times, a leading weekly paper in Costa Rica reported on January 15, 2010 that the United States is delaying market access to Costa Rican sugar producers until the country's legislators approve the 14th Amendment to the Central America Free Trade Agreement ("CAFTA"), which covers copyright law.

Initially, Costa Rica was the only signatory that did not ratify CAFTA due to strong opposition in the country from various groups, including farmers, students, and trade unions. The legislation was partially pushed through in October 2007, with the section covering several provisions related to intellectual property, Amendment 14, left out and never officially signed into law. Similar to other TRIPS-plus agreements, the provisions go beyond what is required under International agreements. For example, the Agreement requires that member countries develop a uniform domain name dispute resolution policy to assist in settling domain disputes, provide copyright protection for the life of the author plus 70 years, enact provisions on anti-circumvention, under which member countries must prohibit tampering with technology used to protect copyrighted works, and provide for civil and criminal liability.

The country originally faced a December 31, 2009 deadline to approve the controversial portion, but discussions have been delayed, sources cite, due to the Costa Rica's extensive government process and political disagreement. Sources in Costa Rica note that there are currently 121 motions related to the law that need approval. For each motion, there must be a vote in the Commission and up to 45 minutes of debate on the floor of the assembly must be allowed. Moreover, Costa Rica is currently in the middle of a presidential election and Parliament is unlikely to convene before its completion.

Adding to the administrative barriers is the lack of support for the provisions within the region. Costa Rican papers are reporting that the prospect of the copyright provisions being passed is setting off protests by students who are concerned about the effect of proposed changes on their education by way of altering current study and research practices. Health officials in the region are also expressing disdain for the proposed provisions, claiming that they will "bankrupt the public health system" by making it impossible to develop generic low-cost versions of pharmaceuticals without being in contravention of the trademark and patent provisions in the Act.

Currently, a reported 11,880 metric tons of sugar which were ready for export to the United States are on hold, unable to be sold. While this plays well into a powerful-country-threatens-small-lesser-developed-country story, the US Embassy has denied that failure to enact copyright reform is a cause for the delay. Rather, the US indicated that the delay is simply a matter of the fact that the country has already met its allocated sugar export quotas, which were set back in September. The quotas are designed to protect local producers, and to allow countries to export a specified quantity of a product to the US at a low tariff, while subjecting all imports above the pre-determined threshold to a higher tariff.

Costa Rica isn't the only region which the US is accused of bullying into copyright reform. The United States has also received some heat from the Bahamas. According to local reports, the country recently proposed IP enforcement reforms after alleged pressure from the United States Trade Representative, who was reported to have accused the Bahamas of being "lax" in enforcing intellectual property laws. The Chamber of Commerce President has since taken steps to strengthen the country's enforcement regime, but has also placed some of the blame back on the US, arguing that 90-95% of the counterfeit products sold in the Bahamas come from the United States.

continue reading »

WIPO to Discuss Protection of Pharmaceutical Test Data

On February 8, 2010, the World Intellectual Property Organization is holding a Symposium on test data protection in Geneva.

Under Article 39.3 of the WTO TRIPS Agreement, undisclosed test data submitted to gain marketing approval for a new drug is generally considered to be protected information. The US FDA and other nations' drug regulatory bodies keep such data secret for several years. However, generic pharmaceutical companies would like access to such data as early as possible, to facilitate generic drug entry into the marketplace.

The WIPO Symposium is meant to provide a forum for further discussion of this unique form of intellectual property protection.

continue reading »