by Dennis Crouch
Hall v. Bed, Bath & Beyond, Inc. and Nachemin, __ F.3d __ (Fed. Cir. 2013)
This design patent decision is interesting and important on several levels and so I have divided the post into two sections. This section focuses on the district court's clear error in dismissing the infringement lawsuit on the pleadings. The second section will focus on the Federal Circuit's dismissal of the charges filed personally against the employees who caused the allegedly infringement.
The set-up here is interesting. Mr. R.J. Hall designed a new product known as a “Towel Tote” that is basically an absorbent scarf with pockets on the ends. [Buy one here.] After filing his design patent application, Hall sat down with Mr. Farley Nachemin at Bed Bath & Beyond (BB&B) to see whether the company would retail his product. Instead of moving forward with Hall, BB&B mailed Hall's product to Pakistan and had it copied and manufactured for retail distribution back in the US.
When his patent issued, Hall sued BB&B as well as Nachemin and other executives for design patent infringement and a number of state-law business claims such as, false advertising, misappropriation, and unfair competition. U.S. Design Patent No. D596,439. The district court then dismissed the case on the pleadings – finding that the complaint did not particularly identify the “new, original, and ornamental” features of the design patent. On appeal, the Federal Circuit rejects that decision and instead holds that, even under Iqbal and Twombly, a pleading does not require this level of information. Rather, following the law of utility patents, the court holds here that a proper design patent infringement complaint only requires the following five elements:
- An allegation of ownership of the patent;
- The name of the defendant;
- The patent number;
- A statement of the means by which the defendant allegedly infringes; and
- Relevant sections of the patent laws.
Citing Phonometrics, Inc. v. Hospitality Franchise Systems, Inc., 203 F.3d 790 (Fed. Cir. 2000). In this case, the district court's ruling was well off-base because the design patentee need not prove the design's points of novelty even at trial since validity is presumed and infringement no longer relies on the points-of-novelty test.
In the litigation, BB&B had filed a counterclaim alleging that that Mr. Hall himself had violated the Lanham Act by telling the company his product was “protected by patent” even before the patent issued. BB&B also alleged that the Hall committed false marking by continuing to mark his product “patent pending” even several months after the patent had issued. On appeal, the Federal Circuit holds that these statements “cannot be viewed as even plausibly misleading.” With regard to the the false marking claim, the court also adds that the defendant had failed to plead competitive harm, which is now a core element of false marking under the Leahy-Smith America Invents Act of 2011.
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Judge Newman wrote the majority opinion that was joined by Judge Linn.
Judge Lourie wrote in dissent – basically arguing that more deference should have been given to the district court's role of ensuring that the pleadings are clear enough. Judge Lourie acknowledged legal mistakes of the district court, but also directed attention to a separate aspect of the district court decision. The district court wrote: “Rather than plead in a coherent fashion, making clear how the facts support a particular theory of infringement as to a given Defendant, Plaintiff has conflated all his facts, pleading without making any distinctions of any kind. This ambiguity in pleading is unacceptable.”
- As with most design patents, this one issued without substantive examination on the merits. The application was filed in November 2008 and the first correspondence from the USPTO was a notice of allowance mailed in May 2009. The patent issued shortly thereafter.
- Professor Tushnet has more on her site with more focus on the Lanham Act claims: http://tushnet.blogspot.com/2013/01/do-you-know-where-your-towel-is-and.html.