Design Patents: Corporate Parts Buyer as Ordinary Observer

PatentLawPic036Arminak v. Saint-Gobain Calmer (Fed. Cir. 2007).

In yet another serious blow to design patent protection the Federal Circuit has affirmed a lower court ruling that Arminak’s spray nozzle design is not infringed by Calmer.

Design patent infringement is defined both in 35 U.S.C. 271 and 289.  According to Section 289, a design patent is infringed by unauthorized commercial manufacture, use, or sale of the design or a “colorable imitation.”

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties. 35 U.S.C. 289.

Infringement: Overshadowing the statutory guidelines is the CAFC’s judicially created infringement jurisprudence. According to the CAFC, infringement requires satisfaction of two distinct tests: First, in the eyes of an “ordinary observer,” the accused design as a whole must be deceivingly similar to the patented design. Second, the accused design must appropriate one or more points-of-novelty that distinguish the design from the prior art.

Ordinary Observer: Like the PHOSITA in utility patent cases, the ordinary observer is a mythical being. However, instead of being ‘skilled in the art,’ the ordinary observer is aware of the patented design, but is not an expert in the art.

Arminak manufactures and sells spray nozzles. However, Arminak does not sell on a retail level.  Rather, the nozzles are purchased by other manufacturers who join them with bottles full of product.

The corporate nozzle buyers can distinguish between Arminak & Calmer nozzles without much trouble. Once assembled, retail customers have difficulty in distinguishing between the nozzles once assembled.  The case then turns on whether the ordinary observer is defined as the corporate buyer of the nozzle or a retail customer of the fully assembled product.

Sitting by designation, Judge Holderman determined that the ordinary observer should be defined by the patentee’s corporate structure. Because Arminak’s products pass through a middle-man for further processing, it cannot count the downstream retail purchasers as ordinary observers who “buy and use” the sprayer. Rather, the ordinary observer is the corporate nozzle buyer.  (Thus, eventual customer confusion regarding the final product makes no difference).

It was undisputed that a corporate buyer would not be deceived by overall similarities between the accused and patented designs — thus no infringement.

Point of Novelty: The panel also found that the accused design did not appropriate any “points of novelty” of the patented invention. In doing so, the court found that a side-by-side detailed comparison between the accused product and the patent design drawings was appropriate.

To establish infringement in a design patent case, the district court is required to compare the patented design with the accused design. Without comparing the patented design with the accused design, there was no way for the district court to determine whether an ordinary observer would find the accused design deceptively similar and whether the accused design appropriated points of novelty.

For utility patent experts, this type of analysis is second nature. However, for over 100 years prior to founding the CAFC, the rule has been that design patent infringement jurisprudence does not allow for such “side by side” examination. See Gorham Manufacturing Co. v. White, 81 U.S. 511 (1871) (rejecting a side-by-side comparison as leading to an ‘expert’ result rather than that of an ‘ordinary observer’).

17 thoughts on “Design Patents: Corporate Parts Buyer as Ordinary Observer

  1. 17

    Corporate law in UK depends on the position of the emerging organization. The existence of a corporate law helps in UK maintaining the corporate environment inside and outside of the corporation. Corporate law applies for corporate group concepts as holding, subsidiary and related companies.

    link to lawyersindemand.com

  2. 16

    Posted by: steven fox | Sep 15, 2007 at 07:30 AM

    Can anybody point to where the PON test has its roots…

    “According to Swisa, the point of novelty test was adopted by the Supreme Court in Smith v. Whitman Saddle Co., 148 U.S. 674, 13 S.Ct. 768, 37 L.Ed. 606 (1893).”

  3. 15

    Mr. Carani’s analysis is spot on. It is so frequently true, especially today, that many design patents claim only portions of products, not the entire product. Look back at the 1980 In re Zahn case, the first case in which broken lines were officially sanctioned by the CCPA, in which the claimed design was only a portion of a drill bit, the spiral business end that did the drilling. Nobody sells that portion by itself; it is integrally attached to the other end (that fits into the drill). Who is the Arminak ordinary observer in that case? Nobody? There are huge numbers of design patents that claim only portions of products. The Federal Circuit has further muddied the waters, as is their wont.

  4. 14

    Lawman, PHG, Amini, Egyptian Goddess, and now Arminak…

    The Fed. Cir. (and the Dist. Ct.) set up the following test for determining who the ordinary observer is: Who purchases the patented item directly? In other words, if the patent item is on a cell phone, you look to cell phone purchasers as the ordinary observer.(“one-for-one test”)) The Fed. Cir. held that because the end-user purchases the patented item in combination with other components (e.g. bottle, liquid, label, nozzle, trigger, tube), the end-consumer does not purchase the patented item directly, and thus is not the ordinary observer. The “one-for-one test” does not work, not even in Arminak.

    While Perry Saidman’s email above illustrates the flaw in the “one-for-one test”, take a look at the following quotes from the Fed. Cir. in Arminak which highlight the Court’s confusion. In particular, notice the inconsistencies in the Court’s language regarding the item being purchased (e.g. trigger sprayer mechanisms, trigger sprayer devices, stand-alone trigger sprayer device, trigger sprayer shroud, etc.). Remember the patented item was only the shroud, not the entire trigger sprayer mechanism or the entire bottle. Thus, under the one-for-one test, the purchaser should have been a party who purchased the shroud in isolation. The court found that the purchaser of stand-alone trigger sprayer devices, was the ordianry oberver of trigger sprayer shrounds. But under the facts of Arminak, there was no purchaser of the trigger sprayer shroud in isolation! Just as the end-user buys the patented item in combination with other elements (e.g. bottle, fluid, label, tube, trigger, nozzle), so does the purchaser of trigger sprayers purchase the patented item with other elements. (e.g. tube, trigger, nozzle). Neither would qualify under the Court’s “one-for-one test.”

    Here are the quotes:
    ” [1] The district court disagreed with Calmar and found that the ‘ordinary observer’ of trigger sprayer shrouds is not the retail consumer, but the purchaser of trigger sprayer mechanisms for assembly and incorporation into the product that is sold to retail consumers. The record clearly shows that Calmar never sold any of its patented shrouds directly to retail consumers. ” (Fed. Cir., slip op. at 8.))

    ” [2] We agree, therefore, with the district court that the ordinary observer of the sprayer shroud designs at issue in this case is the industrial purchaser or contract buyer of sprayer shrouds for businesses that assemble the retail product from the component parts of the retail product bottle, the cap, the sprayer tube, the liquid, the label, and the trigger sprayer device atop the cap, so as to create a single product sold to the retail consumer. Here, the patented design is only the shroud of the sprayer device. The three physical exhibits submitted for examination on appeal are trigger sprayer devices attached to bottle caps with plastic tubes for insertion into contained liquid, not the bottles, not the liquid into which the sprayer tube is inserted during normal use, and not the label of the retail product. Accordingly, [3] we hold that the ordinary observer of the trigger sprayer shrouds in this case is, as the district court found, the contract or industrial buyer for companies that purchase the stand-alone trigger sprayer devices, not the retail purchasers of the finished product. ” (Fed.Cir., slip op. at 13.)

    Notice the differences in these three statements, which I have annotated ([1], [2], [3]):

    [1] To begin, the Federal Circuit states that the district court held that the ordinary observer of “trigger sprayer shrouds” was a purchaser of “trigger sprayer mechanisms.”

    [2] Next, the Federal Circuit states that it “agrees” with the district court but then rephrases by stating that the ordinary observer of “sprayer shroud designs” is the industrial purchaser or contract buyer of “sprayer shrouds.” (i.e. the “one-for-one test”)

    [3] A few sentences later, however, the Federal Circuit then holds that the ordinary observer of “trigger sprayer shrouds” is the industrial purchaser or contract buyer of “stand-alone trigger sprayer devices.”

    Confused? (Don’t fret this is par for the course in design jurisprudence.) The ordinary observer should be any purchaser of the patented design, whether the design is purchased alone or in combination with other elements. Thus, there may be multiple parties along the stream of commerce that satisfy this test. This should not be cause for concern, for as the Supreme Court emphasized in Gorham, if an ordinary observer is “misled, and induced to purchase what is not the article they supposed it to be . . . the patentees are injured, and that advantage of a market which the patent was granted to secure is destroyed.” Thus, the harm to the patentee could come from several points along the stream of commerce. In other words, the question should be “who is an ordinary observer?,” rather than “who is the ordinary observer?”

    Other thoughts….
    Keep in mind that while the entire trigger sprayer device was depicted in the design patent, only the sprayer shroud is claimed. (I also note that the title of the design patent is “Sprayer Shroud.”) From a drafting perspective, this decision makes me (re-)think the significance of dotted lines in design patents. Although they represent unclaimed matter, under the Court’s Arminak opinion dotted lines may speak to the ordinary observer. Perhaps the presence in the drawings of the entire “trigger sprayer device” (albeit in dotted lines) affected the Çourt’s holding that the ordinary observer was the buyer of “stand-alone trigger sprayer devices”. Chi sa?

    Query 1: Would the outcome of the case have been different if the design patent had depicted not only the shroud in solid lines, but also the entire bottle in dotted lines??? Would it have strengthened the argument that the retail consumer of bottles was the ordinary observer (i.e. bottle patent = bottle purchaser?)

    Query 2: What if nothing in the design patent was in dotted lines, and only the shroud was depicted (in solid lines)?? Would (or could) the Federal Circuit still have concluded that the ordinary observer was the purchaser of “stand-alone trigger sprayer devices?”

    Chris….

  5. 13

    Perry,
    I do not know how good of attorney you are but I can tell you that you have a lot to learn about how business is conducted out in the real world.

  6. 12

    Steve,

    Not only did I read the entire case carefully, but I read the lower court’s order, the motions and briefs for both sides, and the voluminous exhibits. Did you?

    Anyone who practices design patent law would disagree, as do I, that the differences were “striking” between the two designs. The differences were in details. A pre-Markman jury would likely find the two designs to be substantially the same, as they did in the 1992 Braun case.

    If Arminak, no small company (~$5 million) could not afford to take this case to the Federal Circuit, I presume it would have settled. And this was a case where the poor little Arminak was indeed knocking off the patented design and selling it to the drugstores and mega-stores who used it on their generic store-brands (e.g., CVS, etc.). You won’t see Arminak trigger sprayers on any of the legitimate companies’ bottles (e.g., P&G, Johnson, etc).

    So, what is your solution to the “conglomerate trying to crush the competing small company”? Declare that patents for all conglomerates are invalid? Pass a law that they cannot assert their valid patents against poor, small companies?

  7. 11

    Calmar was the accused infringer and succeeded in invalidating spray nozzle patents in the companion case to Graham v John Deere, 383 U.S. 1, 148 USPQ 459 (1967).

  8. 9

    Perry,
    I do not think that you read the entire case carefully. This case was never about knock-offs, it was about unfair competition. There was no knock-off, as a matter of fact, even the judge said (and the circuit court agreed) that ‘the differences were striking’ between the two designs. The entire case was about the conglomerate trying to crush the competing small company by forcing it to either give in and stop to compete or incur gigantic attorney fees that it can not afford.

  9. 7

    This is a great victory for people who believe in fair competition as heavy weights with deep pockets try to use their patents as a tool to crush competing small companies.

  10. 6

    The only thing patented here is the sprayer shroud – the little plastic piece that fits over the unpatented trigger sprayer mechanism. Calmar, the manufacturer of the patented sprayer shrouds, itself assembles the shroud with the rest of the trigger sprayer mechanism – the cap, the tube, the spray head, etc. – and then sells the entire trigger sprayer (with the shroud attached) to the middlemen (e.g., P&G), who in turn put the trigger sprayers onto bottles of e.g., Mr. Clean, which are then shipped to supermarkets, drug stores, etc., for resale to the consumer.

    The Federal Circuit in Arminak found that the ordinary observer of the patented sprayer shroud designs is “the industrial purchaser or contract buyer of sprayer shrouds for businesses that assemble the retail product from the component parts…” (Slip Op. 13). Thus, given the court’s holding, there would have been no party that would have qualified as the ordinary observer. Why? No one directly purchased a product that contained only the patented design- a “sprayer shroud.” The court essentially said that if a design patent claims A, the only ordinary observer is the party that purchases A in isolation, not a party who purchases A+B, where B = the unpatented trigger mechanism.

    But the confused court then said: “We hold that that the ordinary observer … [is] the contract or industrial buyer for companies that purchase the stand-alone trigger sprayer devices, not the retail purchasers of the finished product.” (Id.)

    Well, a “stand-alone trigger sprayer” includes the patented shroud, i.e., A+B. If, as held by the court, the purchaser of A+B could be an ordinary observer, clearly then so could the consumer/purchaser of A+B+C, where C=the bottle of liquid to which A+B is attached.

    The ordinary observer should be any purchaser of the patented design, whether the design is purchased alone or in combination with other elements. Thus, there may be multiple parties along the stream of commerce that satisfy this test. This should not be cause for concern, for as the Supremes emphasized in Gorham, if an ordinary observer is “misled, and induced to purchase what is not the article they supposed it to be . . . the patentees are injured, and that advantage of a market which the patent was granted to secure is destroyed.” Thus, the harm to the patentee could come from several points along the stream of commerce. In other words, the question should be “who is an ordinary observer?,” rather than “who is the ordinary observer?”

    It is bad enough that relatively sophisticated middlemen (e.g., P&G) would never think that two designs are substantially the same (since it takes them several months, and close examination, to decide which trigger sprayers to buy), but to exclude altogether the true ordinary observers, i.e., consumers, who buy the sprayer shroud along with the trigger mechanism and the rest of the bottle of Mr. Clean, is yet another nail in the design patent coffin.

  11. 5

    Steven,

    This might work as a link or cut and paste it into the bar and hit go:

    link to fedcir.gov

    link to fedcir.gov

    or you can google this:
    Arminak and Associates, Inc., et al. v. Saint-Gobain Calmar,

    and click this when it appears:
    Federal Circuit Opinions, Orders & Decisions

  12. 4

    Dennis – Can you post a link to the CAFC decison? I am reluctant to make a comment without first reading the case. However, I will make a comments on the court’s statement as posted above, namely, “[t]o establish infringement in a design patent case, the district court is required to compare the patented design with the accused design. Without comparing the patented design with the accused design, there was no way for the district court to determine whether an ordinary observer would find the accused design deceptively similar and whether the accused design appropriated points of novelty.

    1. Obviously, a side by side comparison is required for the first prong, as in trademark law. However, the ordinary observer must be the end consumer, as in trademark law. If the CAFC held that the corporate buyer is the ordinary consumer than the CAFC made a terrible decision- just as bad as Lawman requiring a Markman hearing type approach. On this point, this case is ripe for review by the Supreme Court. However, this may be a moot point for the Supreme Court if not even one point of novelty is present in the acused device.

    2. On the second PON prong, a side by side comparison is clearly improper. The patented design is compared side by side with the PRIOR ART to determine the various points of novelty, if any, and then a determination is made whether or not the accused design includes one or more of the points of novelty. On a side note, some would say that the the accused device must include ALL of the points of novelty becuase a Markman hearing is required. If Markman is held not applicable to design patents (which I think it should) then I would agree that the accused device need only include one of the points of the novelty. The PON test is simply a check on the ordinary observer test to make sure that infingement exists – a situation can occurr where the patented design and the accused design are confusingly similar in appearance but the patented design is not novel or non-obvious. This is why the PON test has be phrased as “back door” way to invalidate a design patent. Personally, I think the PON is not needed and that this can and should be decided by a validity analysis. Historically, if non-infringement is found then validity need not be decided so maybe this is why the PON test was created I think out of thin air. Can anybody point to where the PON test has its roots.

    Dennis- please post the link to this case if you have it – otherwise I and other who read your GREAT blog can go to the CAFC to obtain the case. Thanks for trying to foster healthy debate on design patent law jurisprudence. Design patents have a very important role in our patent system despite most of the commentary to date on this blog – ask any designer of products whose “design” is knocked off and see how they feel. On this note, the new trade dress registration scheme (3 years), if enacted, would certainly help to protect the designer. Having said this, design patents should be kept in tact as well as a another vehicle to protect new and non-obvious designs.

Comments are closed.