Wednesday, October 6, 2010

International Seaway Trading Corp. v. Walgreens Corp

In a recent opinion, the Court of Appeals for the Federal Circuit has clarified the standard for determining validity of a design patent. In International Seaway Trading Corp. v. Walgreens Corp., the court eliminated the “point of novelty” test in the validity analysis of a design patent.

Until recently, courts applied two distinct tests in determining design patent infringement. The first test, dating back to the nineteenth century, required courts to determine, through the eyes of an “ordinary observer,” whether the patented design and the accused design were substantially the same. The second test, the “point of novelty” test, required courts to first identify the novel features of the patented design, and then determine whether the accused design appropriates those novel features. The “point of novelty” test was deemed to be a separate and distinct inquiry from the “ordinary observer” test.

In last year’s landmark decision in Egyptian Goddess v. Swisa, Inc., 543 F. 3d 665 (Fed. Cir. 2008), the Federal Circuit discarded the “point of novelty” test for infringement analyses, holding that this test is inconsistent with the “ordinary observer” test. In doing so, the court left the “ordinary observer” test as the sole test for determining whether a design patent has been infringed. Nonetheless, although this decision clarified the standard for infringement analysis, the court left open the issue of whether the same standard applies to a patentability analysis.

This question was answered in the International Seaway case. The three patents at issue were directed towards designs for casual footwear. The defendants contended that International Seaway’s patents were invalid over a prior art patent to Crocs, Inc.

Relying on Egyptian Goddess, the U.S. District Court for the Southern District of Florida held that the ordinary observer test was the sole test for design patent validity. The district court held that International Seaway’s patents were anticipated by the Crocs patent, and granted summary judgment to the defendants.

On appeal, the Federal Circuit agreed that the “ordinary observer” test used by the district court was the sole test to be applied. For purposes of analyzing anticipation, the court reasoned that the abandonment of the point of novelty test logically followed from its earlier Egyptian Goddess decision:

"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."

The court further held that this rule also applies when analyzing obviousness:

"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."

The Federal Circuit affirmed the validity test applied by the district court, and remanded for the district court to apply the proper test.

The International Seaway decision left some questions open. For instance, the court stated that it’s holding “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.” The Federal Circuit then reiterated that only “significant differences,” not minor differences, should be taken into account when comparing two designs in assessing validity. The court did not, however, elaborate on how one might distinguish minor differences from significant differences.

Nevertheless, the International Seaway decision has clarified the law in one significant respect. Through its extension of Egyptian Goddess, the court has unequivocally discarded the “point of novelty” test in favor of the ordinary observer test as the sole test of design patent validity.

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