On January 20, 2023, the Federal Circuit similarly affirmed appeals of two final written decisions on Inter Partes Review (IPR) and Post Grant Review (PGR) upholding design patent validity over anticipation and obviousness challenges.

Noted recently in our report Fielding and Labelling Designs, under 35 U.S.C. §171, whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, and identifying the article of manufacture for design patents has taken on more significance following recent case decisions and might now more explicitly impact (i) prior art analysis for anticipation and obviousness, (ii) infringement scope and comparison prior art, and (iii) damages in the form of infringer’s profit.

This latest decision from the Federal Circuit highlights another aspect of how identifying the relevant article of manufacture can affect design patent infringement and validity, by impacting identification of the ordinary observer. The “ordinary observer” test is applied for infringement, anticipation and obviousness. Int’l Seaway Trading Corp. v. Walgreens Corp., 589 F.3d 1233 (Fed. Cir. 2009).

The Ordinary Observer for Car Parts is the Parts Purchaser, not Car Purchaser

GM’s design patents are directed to the ornamental appearance for a vehicle front skid bar and for a vehicle front fender. LKQ petitioned both design patents for validity review based on prior art references. The USPTO Patent Trial and Appeal Board (PTAB) instituted the proceedings, conducted trial and issued final written decisions concluding that LKQ had not demonstrated by a preponderance of the evidence that either was anticipated or would have been obvious before effective filing date.

LKQ argued that replacement parts are a downstream consequence of prior whole vehicle sales and that the PTAB put undue emphasis on allegedly trivial difference that would not have mattered to the correct ordinary observer.

The PTAB determined that the “ordinary observer” would include both retail consumers who purchased replacement skid bars and front fenders, emphasizing that the design patent claimed specific components or articles, not a vehicle in total.

The Federal Circuit agreed that the PTAB’s finding that the ordinary observer would include both retail consumers purchasing replacement parts and commercial replacement part buyers was supported by substantial evidence, noting that LKQ itself is in the business of selling individual replacement parts, the patented designs are to specific vehicle parts, not the design of a whole vehicle, and that LKQ has sometimes been an authorized licensee of GM design patents directed to auto parts.

Design Patent Anticipation – Not Without Views Enabling Complete Comparison

Applying that understanding of the ordinary observer, the PTAB concluded in the PGR that although there were some similarities, the references did not show certain aspects of the claimed design (e.g., bottom or sides) and what was visible from the provided images created a different overall impression. The PTAB noted that LKQ did not produce images of the alleged primary reference that would enable a persuasive comparison with the corresponding views of the invention; the provided views do not show a sufficient bottom view to allow comparison and show obscured sides. The Board was not persuaded that an ordinary observer would be deceived into purchasing the cited reference, supposing it to be the patented design and so, declined anticipation.

Design Patent Obviousness – Not Without a Primary Reference in Existence

Applying design patent obviousness jurisprudence, the PTAB found that LKQ failed to identify a primary reference with basically the same design characteristics as the claimed design, therefore it didn’t consider secondary prior art references, and for both the IPR and PGR, the PTAB pointed to several differences between the claimed designs and asserted primary references.

The Federal Circuit concluded that LKQ preserved for appeal the issue of whether the Supreme Court’s KSR decision bears on design patent obviousness but declined to overrule design patent obviousness jurisprudence as a panel.

Design patent obviousness involves a two-step analysis: first, is there a primary “Rosen” reference already in existence with “basically the same” design characteristics as the claimed design, discerning its visual impression as a whole, and second, would a designer of ordinary skill modify the primary reference to create a design with the same overall impression as the claimed design as a whole. Durling v Spectrum Furniture Co., Inc., 101 F.3d 100 (Fed. Cir. 1996); In re Rosen, 673 F.2d 388 (C.C.P.A. 1982).

In KSR International Co. v. Teleflex, Inc., 550 U.S. 298, 419 (2007) the Court stated that “obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion and motivation…”

LKQ argued that in view of KSR, the PTAB improperly failed to consider all of the prior art references when it skipped the second Durling step after determining that the alleged primary reference was not “basically the same.”

Analyzing the parties’ positions and the PTAB decisions, the Federal Circuit noted that KSR did not involve or discuss design patents, and in more than fifteen years since it was decided, KSR has only been raised in two cases from over 50 appeals involving design patents, and has not been addressed in its decisions. Despite great doubt about Rosen in view of KSR expressed by panel members during oral argument, the Federal Circuit opinion, per curiam (unsigned) concluded that it could not overrule Rosen or Durling without a clear directive from the Supreme Court, which it did not find in KSR.

Proceeding to evaluate obviousness under Rosen and Durling, the Federal Circuit noted that for each design patent, the PTAB had noted multiple differences between the primary reference and the claimed design which in the aggregate created overall ornamental designs that are not basically the same and found the PTAB conclusion to be supported by substantial evidence.

Continuing the Challenge

LKQ is actively litigating design patent disputes in district court against GM, Hyundai, Kia Motors, and against Kia and Hyundai at the ITC and the parts and insurance industries have advocated for and repeatedly introduced legislation which seeks exceptions to design patent infringement for auto repair parts, for example, H.R.3664 from the 117th Congress (2021-2022), the Save Money on Auto Repair Transportation Act” or the “SMART Act” which proposes limiting enforcement from the standard 15 year design patent term measured from issue date to just 30 months (2.5 years) from first public sale.

Should LKQ decide to challenge these Federal Circuit decisions further, stay tuned for the possibility of petitions for panel rehearing and/or en banc review within 14 days from judgement, i.e., by February 3, 2023. or on writ of certiorari to the Supreme Court, within 90 days, by April 20, 2023.

The Federal Circuit cases are:

LKQ v. GM 22-1253 (PGR 2020-00055 of D855508)

LKQ v. GM 21-2348 (IPR 2020-00534 of D797625)

For more information, contact the author below:

George Raynal, Principal

george.raynal@designlawgroup.com

© 2023 Saidman DesignLaw Group, LLC