Patent Law | Expert Legal Commentary

March 15, 2010

Int’l Seaway Trading v. Walgreens: The Ordinary Observer Test Is the Sole Test of Invalidity of a Design Patent

Int’l Seaway Trading Corp. v. Walgreens Corp.

By Tom Zuber of Zuber Lawler & Del Duca and Olivier A. Taillieu of The Taillieu Law Firm

Int’l Seaway Trading v. Walgreens: The Ordinary Observer Test Is the Sole Test of Invalidity of a Design Patent

The U.S. Court of Appeals for the Federal Circuit has extended the holding of Egyptian Goddess v. Swisa, 435 F.3d 665 (Fed. Cir. 2008), and held that the “point of novelty” test should no longer be applied to determine validity of a design patent. In Int’l Seaway Trading Corp. v. Walgreens Corp., 589 F.3d 1233 (Fed. Cir. 2009), the Federal Circuit held that only the “ordinary observer” test should apply to questions of patent invalidity due to anticipation or obviousness.

BACKGROUND

International Seaway Trading Corporation (“Seaway”) owns three U.S. design patents for clog-style casual shoes, referenced as the ‘263 patent, the ‘032 patent, and the ‘033 patent. The ‘032 and ‘033 patents were continuations-in-part of the ‘263 patent. The Patent Examiner had issued Seaway’s ‘263 patent over various web pages and photographs depicting various models of Crocs clogs. Crocs’ design patent no. ‘789 issued during the examination of Seaway’s ‘263 patent; it was not considered in that examination. Seaway’s ‘032 and ‘033 patents issued over the same references as well as Crocs’ ‘789 patent.

Seaway filed suit against Walgreens Corporation (“Walgreens”) and Touchsport Footwear USA Inc. (“Touchsport”), claiming infringement of its three patents referenced above. Seaway alleged that Touchsport imported and continues to import shoes that infringe on the patents, and that Walgreens sold and continues to sell shoes that infringe on the patents.

The defendants filed a motion for summary judgment, claiming that Seaway’s patents were invalid as anticipated under 35 U.S.C. section 102(a) and (e), or obvious under 35 U.S.C. section 103, based on two Crocs’ models and/or Crocs’ ‘789 patent.

The U.S. District Court for the Southern District of Florida granted summary judgment in favor of the defendants, finding that all three of Seaway’s patents were invalid as anticipated by Crocs’ ‘789 patent. Int’l Seaway Trading Corp. v. Walgreens Corp., 599 F. Supp. 2d 1307, 1319 (S.D. Fla. 2009). The District Court did not separately consider obviousness. In reaching this decision, the District Court held that the “ordinary observer” test was the sole test of patent invalidity under 35 U.S.C. section 102. 599 F. Supp. 2d at 1317. Relying on Contessa Food Prods., Inc. v. Conagra, Inc., 282 F.3d 1370 (Fed. Cir. 2002), the District Court also concluded that it only needed to compare the exteriors of the shoes at issue, not the insoles, holding “that the law requires a court to consider only those portions of the product that are visible during normal use, regardless of whether those portions are visible during the point of sale.” Int’l Seaway Trading, 599 F. Supp. 2d at 1315.

Seaway appealed, contending that the district court improperly determined invalidity because it only applied the ordinary observer test and failed to apply the point of novelty test.

The Ordinary Observer Test is the Sole Test for Invalidity

The U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s holding that the ordinary observer test is the sole test of invalidity of a design patent.  In doing so, the Federal Circuit extended the ruling of Egyptian Goddess v. Swisa, 543 F.3d 665 (Fed. Cir. 2008).
(See LawUpdates.com Commentary Egyptian Goddess v. Swisa: No More Point of Novelty Test for Design Patent Infringement)

Prior to Egyptian Goddess, courts applied two tests to determine design patent infringement: the “ordinary observer” test and the “point of novelty” test. The “ordinary observer” test requires courts to determine, through the eyes of an ordinary observer familiar with the prior art, whether the prior art and the accused design are substantially the same.  Gorham v. White, 81 U.S. 511, 528 (1871). The “point of novelty” test requires a court to identify the prior design’s point of novelty, and then determine whether the accused design appropriates those novel features. Litton Systems Inc. v. Whirlpool Corp., 728 F.2d 1423, 1444 (Fed. Cir. 1984). The two tests were deemed separate and distinct from one another.

In Egyptian Goddess, an en banc decision, the Federal Circuit eliminated the point of novelty test for infringement analyses, finding that it was inconsistent with precedent and “not needed to protect against unduly broad assertions of patent rights.” Egyptian Goddess, 543 F.3d at 672. The Egyptian Goddess decision holds “that the ‘ordinary observer’ test should be the sole test for determining whether a design patent has been infringed.” Id. at 678.

In Int’l Seaway Trading, the Federal Circuit further eliminated the point of novelty test for anticipation and obviousness claims, stating: “In light of Supreme Court precedent and our precedent holding that the same tests must be applied to infringement and anticipation, and our holding in Egyptian Goddess that the ordinary observer test is the sole test for infringement, we now conclude that the ordinary observer test must logically be the sole test for anticipation as well.” Int’l Seaway Trading Corp. v. Walgreens Corp., 589 F.3d 1233, 1240 (Fed. Cir. 2009).

The Federal Circuit noted the problems inherent in the point-of-novelty test, warranting its elimination: 1) it was difficult to apply and encouraged the focus on minor differences between prior art reference and the accused design; 2) it created the need to canvass the entire prior art to identify points of novelty; and 3) elimination of the test avoids the debate over the extent to which a combination of old design features could serve as a point of novelty. Id.

Even though the District Court did not reach the question of obviousness, the Federal Circuit addressed the issue on appeal because the defendants raised it below. The Federal Circuit held that the ordinary observer test is the sole test for obviousness claims as well, stating: “For design patents, the role of one skilled in the art in the obviousness context lies only in determining whether to combine earlier references to arrive a single piece of art for comparison with the potential design or to modify a single prior art reference. Once that piece of prior art has been constructed, obviousness, like anticipation, requires application of the ordinary observer test, not the view of one skilled in the art.” Id.

The District Court Failed to Properly Apply the Ordinary Observer Test

Even though the Federal Circuit affirmed the District Court’s holding that the ordinary observer test was the sole test for design patent validity, the Federal Circuit found that the District Court erred in its application of the ordinary observer test and reversed and remanded the case for consideration under the proper application.

Specifically, the Federal Circuit disagreed with the District Court’s decision not to compare the insoles of the patents-in-suit and the prior art, finding that the District Court misconstrued Contessa by limiting its inquiry to a comparison of features visible while the shoes are worn. Instead, the Federal Circuit Court explained, Contessa requires a comparison of all features “visible at any time in the ‘normal use’ lifetime of the accused product.” Int’l Seaway Trading, 589 F.3d at 1241 (citing Contessa, 282 F.3d at 1379). The Federal Circuit explained that “’normal use’ in the design patent context extends from the completion of manufacture or assembly until the ultimate destruction, loss, or disappearance of the article.” Id. (citing Contessa, at 1379-80).

In this case, the court must compare both the exterior and the insoles of the shoes in order to compare “normal use” because the insole of the clog is visible at the point of sale, as well as anytime the shoe is removed from the wearer’s foot. Id. By deciding not to compare the insoles, the District Court failed to compare the entirety of the patented designs from the perspective of an ordinary observer.

Walgreens and Touchsport acknowledged that the District Court’s interpretation of Contessa was erroneous, but argued that it constituted merely harmless error because the insole contributed little to the overall appearance of the shoe, and the differences in the insoles “were at most slight variations of design elements already present in the Crocs prior art.” Id. at 1242. The Federal Circuit disagreed, finding that Seaway’s insole patterns differed distinctly from the Crocs insole pattern, and that the defendants had failed to provide sufficient evidence that consumers do not consider the insoles of shoes to be significant in their purchasing decisions. Id. at 1242-43.

As a result, the Federal Circuit held that a genuine issue of material fact existed as to whether the insole designs would be viewed as substantially similar in the eyes of an ordinary observer familiar with the prior art. Because the District Court’s anticipation analysis was therefore incomplete, the Federal Circuit could not affirm it in its entirety. This same conclusion would apply to a finding of obviousness.

District Courts Do Have Discretion to Determine Which Features are Significant

Seaway argued that not only did the District Court fail to compare the insoles, it also failed to compare four specific exterior features that differed from the Crocs design. The District Court found that these exterior differences were so minor that “a reasonable jury, or an ordinary observer with knowledge of the prior art” would find that those features were disclosed in the prior art. Int’l Seaway Trading, 599 F. Supp. 2d at 1318.

The Federal Circuit agreed with the District Court on this point, finding “that these minor variations in the shoe are insufficient to preclude a finding of anticipation because they do not change the overall visual impression of the shoe.” Int’l Seaway Trading, 589 F.3d at 1243. The Federal Circuit noted that while the ordinary observer test does require a district court to consider the design as a whole, “this does not prevent the district court on summary judgment from determining that individual features of the design are insignificant from the point of view of the ordinary observer and should not be considered as part of the overall comparison.” Id.

CONCLUSION

In Int’l Seaway Trading, the Federal Circuit has unequivocally eliminated the “point of novelty” test for analysis of anticipation and obviousness claims and, through its extension of Egyptian Goddess, has identified the ordinary observer test as the sole test for design patent validity.

But Int’l Seaway Trading does leave at least one open question. Specifically, the Federal Circuit stated that district courts have discretion in determining which design differences are so minor that they cannot prevent a finding of anticipation, because only “significant differences” should be taken into account when comparing two designs in assessing validity. Int’l Seaway Trading, 589 F.3d at 1243. Yet the Federal Circuit offered no guidelines or method for distinguishing minor differences from significant ones. Indeed, it disagreed with the District Court’s decision to exclude consideration of the insoles, finding significant differences between the insole designs. Future courts will have to find a way to distinguish minor differences from significant ones.

About the Authors

Tom Zuber is a Partner of Zuber Lawler & Del Duca, focusing on intellectual property protection and exploitation.

Olivier Taillieu is the Principal at The Taillieu Law Firm, a litigation boutique firm specializing in complex litigation.

Image Credit: ©iStockphoto.com/julos

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Tom Zuber
Olivier Taillieu

Companies Mentioned

International Seaway Trading Corp.

Touchsport Footwear USA, Inc.

Walgreens Corp.

Also See:

MDS (Canada) Inc. v. RAD Source Technologies: 11th Circuit Finds Federal Circuit Does Not Have Exclusive Jurisdiction When Patents at Issue in Breach of Contract Claim

AMP v. Myriad Genetics, Inc.: Unanimous Supreme Court Limits Patentability of Human Genes

CLS Bank Intl. v. Alice Corp. Pty. Ltd.: En Banc Federal Circuit Cements Confusion Over Patent-Eligibility for Software

Bowman v. Monsanto Co.: Growing Patented Soybeans for Replanting is Infringement

Gunn, et al., v. Minton: Supreme Court Denies Federal Jurisdiction for Patent-Related Malpractice Suit

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Companies Mentioned

Patent Law

The following companies are mentioned in Patent Law Updates:

Boston Scientific Corp.

Microsoft Corp.

Boston Scientific Scimed, Inc.

U.S. Patent and Trademark Office

Samsung Electronics America, Inc.

Stryker Corp.

Cordis Corp.

Ranbaxy, Inc.

Nokia, Inc.

SmithKline Beecham Corp. d.b.a GlaxoSmithKline

SmithKline Beecham PLC

Prometheus Laboratories, Inc.

Sanyo North America Corp.

Glaxo Group Limited d.b.a. GlaxoSmithKline

Mayo Collaborative Services d.b.a. Mayo Medical Laboratories

Scimed Life Systems Inc.

Smithkline Beecham Corp. (d.b.a. GlaxoSmithKline, plc.)

Johnson & Johnson, Inc.

United States Patent and Trademark Office

Honeywell International, Inc.

HT Window Fashion Corp.

Mylan Laboratories, Inc.

Mylan Pharmaceutical, Inc.

Ortho-McNeil Pharmaceutical, Inc.

Acumed, LLC

Stryker Sales Corp.

Teva Pharmaceuticals USA, Inc.

Glamourmom LLC

Audiovox Communications Corp.

Stryker Orthopaedics

Target Corp.

McKesson Information Solutions, Inc.

Howmedica Osteonics Corp.

Kohl’s Department Stores, Inc.

Bridge Medical, Inc.

J.C. Penney Company, Inc.

Smith & Nephew, Inc.

Cohesive Technologies, Inc.

Waters Corp.

Elizabeth Lange LLC d.b.a. Liz Lange Maternity

Association for Molecular Pathology

LG Electronics, Inc.

Quanta Computer, Inc.

Federated Department Stores

Egyptian Goddess, Inc.

Swisa, Inc.

K-Mart Corp.

Motorola, Inc.

Dror Swisa

Sears Holding Corp.

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