By Dennis Crouch
Nordock v. Systems Inc (PowerAmp) (Fed. Cir. 2015)
Nordock’s asserted design patent covers the ornamental design of a lip and hinge plate for a dock leveler. (U.S. Patent No. D579,754). The lever is designed to be attached to a truck loading and can then be adjusted to provide a smoother linkage between the dock and the truck being loaded/unloaded. As a design patent, the patentee does not claim a new and useful invention, but rather the “ornamental design” as shown in the figure below.
Disgorging all of the infringer’s profits: A jury sided with the patentee on infringement and validity, but awarded only $46,000 in reasonable royalty damages. On appeal, the Federal Circuit vacated – finding that the district court had improperly calculated the profit-disgorgement damages.
A design patent holder may seek damages under the standard patent damages statute 35 U.S.C. 284 that sets a floor for damages as “a reasonable royalty for the use made of the invention by the infringer.” As an alternative, the patentee can collect damages under the design-patent-damages provision codified in 35 U.S.C. 289. Under Section 289, an infringer is “be liable to the owner to the extent of his total profit, but not less than $250.” To be clear, when the statute speaks of “his total profits” – that refers to the total profits of the infringer. Opining on the statute, the Federal Circuit has written that § 289 requires “the disgorgement of the infringers’ profits to the patent holder, such that the infringers retain no profit from their wrong.” Nike Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437 (Fed. Cir. 1998). The Federal Circuit has ruled that a patentee can collect either of these damages theories, but not both. Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277 (Fed. Cir. 2002). That result is also demanded by the statutory language that “[n]othing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.”
At trial, the district court forced an apportionment of profits – requiring a calculation the infringer’s profits associated with the lip and hinge plate even though the infringer sold the dock leveler with the plate as an entire unit. As it recently did in Apple, the Federal Circuit here rejects that approach:
[W]e recently reiterated that apportioning profits in the context of design patent infringement is not appropriate, and that “Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.” Apple Inc. v. Samsung Elecs. Co., 786 F.3d 983 (Fed. Cir. 2015) (rejecting Samsung’s attempt to limit the profits awarded to the “portion of the product as sold that incorporates or embodies the subject matter of the patent”); see also Nike, (discussing the legislative history of § 289 and Congress’s decision to remove “the need to apportion the infringer’s profits between the patented design and the article bearing the design”).
Here, the dock is welded-to and sold as a unit with the dock leveler and – as such – the calculated profits must be associated with the entire dock leveler being sold. This result should boost the patentee’s damages up to at least $600,000, which represents the infringer’s total profits associated with the infringing sales.
Based upon this error, the Federal Circuit ordered a new trial on damages.
Is it Functional? Preserving the Appeal: There is no question that the design patent here covers a functional invention. The question raised by the infringer’s cross-appeal is whether it is impermissibly functional such that the design patent is invalid. However, in the appeal, the Federal Circuit ruled that argument to be waived because Systems’ counsel “failed to renew the motion for JMOL as to validity with sufficient particularity.” Here, defendant’s counsel gave a general motion following the verdict stating that “as a routine matter whatever motions we made during the trial, JMOL and so forth, we would renew those motions to the extent that they are necessary. . . . Everything we made we renew. I’m not sure what that is, but just for the record whatever we said before.” The patentee did not file any further particular post-verdict motions with respect to validity and – as such – the Federal Circuit ruled that the general post-verdict motion was insufficient to preserve the infringer’s rights.
Is it Functional? The Test: As an alternative judgment, the court also ruled the jury had been presented with sufficient evidence to support a not-impermissibly-functional verdict.
A design patent will be deemed invalid if the claimed design “as a whole, is dictated by functionality.” Factors often considered in the functionality analysis include:
- Whether the protected design represents the best design;
- Whether alternative designs would adversely affect the utility of the specified article;
- Whether there are any concomitant utility patents;
- Whether the advertising touts particular features of the design as having specific utility; and
- Whether there are any elements in the design or an overall appearance clearly not dictated by function.
High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301 (Fed. Cir. 2013) (these factors “may help”). At trial, the jury heard testimony from the patentee indicating that the design was intended to be distinctive and ornamental, that the claimed plate is not necessary to perform the dock leveling function, and that other designs are available to achieve the same utilitarian purpose. “On this record, there was substantial evidence from which a jury could conclude that the claimed design is not dictated by function.”
= = = = =
There has been some outcry regarding the relatively large disgorgement profits without any proof of an innovative leap or a business impact of the design. However, up to now there have been no congressional proposals on point. In 1946, Congress eliminated equitable disgorgement from utility patent doctrine. (as interpreted by Aro II (1964)).
The pending design patent legislation would excuse spare-auto-parts manufacturers and sellers from liability.
Sweet. I’m teaching design patent damages today. Thanks for posting Dennis!
Dennis,
“The Test” for design patent functionality had its origin as dicta at the very end of Berry Sterling. Moreover, those “factors” make no sense in design patent functionality analysis. For example, how is a court supposed to determine whether the claimed design is “the best design”? The best design for what? For performing its function? For its appearance?
Upon close examination, those “factors” mirror those considered during trade dress functionality analysis (see Morton Norwich), and probably slipped into Berry Sterling as a result of poor legal research by the judge’s law clerk.
The only test that makes sense for design patent functionality analysis, IMHO, is whether there are alternate designs (i.e., appearances) that perform substantially the same function as the claimed design. If there are, its proof positive that the design patentee is not monopolizing that function, which is the underlying rationale for the functionality doctrine in the first place (see Chisum).
Good points, PS.
Upon close examination, those “factors” mirror those considered during trade dress functionality analysis (see Morton Norwich), and probably slipped into Berry Sterling as a result of poor legal research by the judge’s law clerk.
The law works (or doesn’t) in mysterious ways!
I’m framing “Good points, PS” 😉
Put it next to the framed “The ends do not justify the means“
PS: those “factors” make no sense in design patent functionality analysis.
Some do, some don’t. The “best design” analysis is ridiculous, I’ll grant you that.
Two frames.
PS: The only test that makes sense for design patent functionality analysis, IMHO, is whether there are alternate designs (i.e., appearances) that perform substantially the same function as the claimed design.
There are pretty much always going to be alternate designs so, by itself, this is a toothless (and therefore worthless) test.
It’s important not to stray too far from the basics here: exactly what are we trying to promote by handing out design patents? There is no way that the system was intended as a “back up” for failed utility applicants to protect others from copying their products, nor was it intended to allow applicants to protect every design that differs from the prior art in some insubstantial non-ornamental manner.
Three frames.
I agree with you, MM, that there are pretty much always going to be alternate designs that perform substantially the same function. Therefore, I posit that there is, and should not be, any design patent that is invalid for functionality (article in progress).
The design patent system is not a back up for utility patents, agreed. But it is effective in preventing knock-offs, in preventing copyists from benefitting from the efforts of the designer to create something new and distinctive, that sells. Go design your own widget, don’t copy mine.
Love the opposite conclusion regarding functionality Perry.
I don’t think though that Malcolm is going to grasp that, as his animus is simply anti-patent (and especially! anti-design-patent)
Dumb statutory provision for damages for design infringement, but CAFC was correct in leaving it to Congress to correct the error. Still, it’s somewhat surprising that it restrained itself since it’s become more activist in recent years.
On apportionment: No — I agree with the Feds here.
But where the unit is sold as a part of a larger apparatus and where the unit has a separate market, even as a replacement market, I think the law is clear that the profits of the smaller unit are what counts.
I haven’t read the case carefully enough to know whether the unit being sold here could be so characterized.
I sped through the decision, but I did not see during claim construction any comparison between the prior art and the claimed invention. There might be distinctive aspects to the design that define over the prior art. These must be found in the infringing device, while the old stuff might be less rigorously found. This is the way we look at file histories in utility cases to determine what in the claim is really important and what is not by the way the applicant distinguished the prior art and characterized his invention. I see no reason not to use this approach even in absence of prosecution history.
My two cents.
Ned, the overwhelming majority of courts find that design patent claim construction consists of “the ornamental design of my [widget] as shown and described”, as advocated by the CAFC in Egyptian Goddess. Comparisons to the prior art are appropriate in the infringement and validity analysis, not claim construction. Moreover, the CAFC did away with the point of novelty test for design patent infringement in Egyptian, advocating the overall appearance approach rather than an element by element comparison.
Perry: “Comparisons to the prior art are appropriate in the infringement and validity analysis, not claim construction.”
Got it, thanks.
“his is the way we look at file histories in utility cases to determine what in the claim is really important and what is not by the way the applicant distinguished the prior art and characterized his invention. I see no reason not to use this approach”
Except for the fact that it has been a good twenty years since this was considered a “best practice.” NO ONE does this any more Ned. And for good reason – your application is your invention (not the rest of the world and the prior art out there; your characterizations of prior art – even if errant – are binding on you; any error of characterizing others’ work is an open invitation for IC; and the list of patent profanity goes on.
You and Paul seriously need to update your active pro-patentee prosecution skill sets.
anon, Huh?
Claim construction in court actively looks to the prosecution history, anon.
I was addressing your past proclivities for wanting to insert into the application itself your comment here, and not any sense of court proceedings.
Your “litigator only” bias is showing again.
At trial, the jury heard testimony from the patentee indicating that the design was intended to be distinctive and ornamental
And, amazingly, nobody laughed out loud.
the jury heard testimony from the patentee … that the claimed plate is not necessary to perform the dock leveling function
Right. But that doesn’t mean that this “ornamental” plate (LOL) lacks other desirable functionality. If you were unloading pencils ten at a time from the dock onto the truck, you could use a series of ten thin metal strips each separated by six ten inches instead of a plate. That doesn’t mean the plate isn’t functional.
the jury heard testimony from the patentee … that other designs are available to achieve the same utilitarian purpose
But this lovely and distinctive “ornamental” design is certainly not obvious in view of all those other design choices! Nope!
It’s often difficult to imagine how our design patent system could become even more ridiculous than it already is but never underestimate the ability of the Federal Circuit to rise to the occasion.
It is not surprising that the Fed. Cir. would feel it is up to Congress, not them, to fix the design patents infringement damages statute.
—————–
However, this case raises again a different issue. The handling or misshandling of 103 defenses in design patent cases. The prior art product or publication relevance to a design patent claim is as to its shape, not its functionality. It’s ORNAMENTAL unobviousness to a product designer of ordinary skill in the industrial design arts. See, e.g., “Design Patents §103 – Obvious to Whom and As Compared to What?” Patently-O, Sept. 17, 2014. Design patent prior art is not logically limited to the same or a single functional product line, because product appearance designers work on numerous different products. If the components shown in the design patent drawings are conventional shapes of lugs or cams on a shaft [as they appear] should not such art be usable in a 103 defense? There is no indication in this decision that such prior art was ever presented.
BTW, this decision indicates that the design patent owner DID attempt to get utility patent functional protection, and that patent application was rejected as unpatenable. That could have been a significant factor in the “functionality” defense that the Fed. Cir. held was waived by having “failed to renew the motion for JMOL as to validity with sufficient particularity.”
Note, Paul, that the Federal Circuit doesn’t even give lip service to that fact (nor the existence of the prior art) in its analysis of the “alternative” scenario where Systems’ invalidity arguments weren’t “waived”:
Even if we were to consider Systems’ arguments, however, we would conclude that substantial evidence supports the jury’s finding that Systems failed to prove that the D’754 Patent is invalid. [completely unconvincing ankle-deep analysis omitted]
This decision is just another in a series of ongoing disasters. You can put a fork in design patent law if you like but what you really need is a wide sp00n. Wow.
Reluctant as I am to reply to an MM post (hey, it worked out last time!), it so happens that ALL design patents MUST be for “an article of manufacture” (35 USC 171), and hence have functional characteristics. This does not mean that a claimed design is legally “functional”. If it did, then there would be no design patents, an outcome that MM would likely applaud. And the courts threw out “lovely” as a test for ornamentality a long time ago.
Excellent points in your several points Perry.
Lol, damm autocorrect – in your several posts
PS: the courts threw out “lovely” as a test for ornamentality a long time ago.
No doubt. But “ornamentality” is a bizarre term to use for something that no sane person would ever refer to as ornamental.
When the patentee refers to its lip-and-hinge-plate design as “ornamental and distinctive”, presumably it uses each of those words to mean something.
The frame store is out of frames.
“Ornamentality” gets talked about because it’s in the statute. It’s an archaic term, agreed, that originally referred to two dimensional surface decorations, which were ornamental. When referring to a three dimensional product design, which came into vogue for design patents much later than surface ornaments, it doesn’t fit, but hey, it’s in the statute so everyone’s gotta talk about it. And it’s a shame that the last two overhauls of 35 USC (1952 and the AIA) contained no amendments, none, to the design patent sections.
Perry, you seem to me to be presenting very convincing arguments that the “functionality” defense to a design patent should logically be limited to be more like a 101 “preemption” test – i.e., that a design patent claim cannot cover the only way or all other possible ways to make a product with that function?
Sounds a bit like a certain copyright doctrine…
😉
(Since all patent claims preempt – that is what they do – adding yet another inartful “preemption” thought is decidedly NOT the brightest thing to do)
Yes, and there’s always – always – an alternate design, or many alternate designs, that perform substantially the same function. I will buy dinner for anyone who conceives a novel design that doesn’t have alternative designs that perform substantially the same function.
Comments are closed.