Design Flaw? The Federal Circuit Keeps the Separate Test For Obviousness of Design Patents, For Now

patents_dburtonIn a recent decision, LKQ Corp. v. GM Global Tech. Operations LLC, No. 2021-2348, 2023 U.S. App. LEXIS 1412 (Fed. Cir. Jan. 20, 2023), the Federal Circuit declined to change its test for obviousness of design patents, saying it was bound to apply "existing law." 2023 U.S. App. LEXIS 1412, at *16. The LKQ decision, though, if reviewed by the Supreme Court, could lead to a change in the law, since the Supreme Court has, on several occasions, struck down tests applied by the Federal Circuit where the tests were not tethered to statutory language, which is arguably true of the judicially-created test for the obviousness of design patents at issue in LKQ.

For a patent to issue, the claimed invention must meet the statutory requirement of non-obviousness. Pursuant to 35 U.S.C. § 103, the court must consider three factors: the level of ordinary skill in the art of someone working in the field at the time the invention was made; the scope and content of the prior art; and the differences, if any, between the claimed invention and the prior art. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966).

In KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Supreme Court re-affirmed the Graham factors (id. at 427), but rejected the Federal Circuit's additional, so-called "teaching, suggesting, and motivation" test for obviousness, and admonished the lower courts that "[t]he obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents" (id. at 419). Similarly, the Court stated that "the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ." Id. at 418.

As to design patents, i.e., that special class of patents granted on an "ornamental design for an article of manufacture" (35 U.S.C. § 171), the Federal Circuit has not followed KSR – which did not involve a design patent -- but rather has applied a narrower (and, thus, in theory, harder to meet), two-step test for obviousness, known as the Durling test:

"When assessing the potential obviousness of a design patent, a finder of fact employs two distinct steps: first, 'one must find a single reference, a something in existence, the design characteristics of which are basically the same as the claimed design'; second, '[o]nce this primary reference is found, other references may be used to modify it to create a design that has the same overall visual appearance as the claimed design.' Durling v. Spectrum Furniture Co., 101 F.3d 100, 103 (Fed. Cir. 1996)."

High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301, 1311 (Fed. Cir. 2013).

The two contrasting tests for obviousness created an issue in LKQ. The case concerned an appeal to the Federal Circuit from a decision of the United States Patent & Trademark Office Patent Trial & Appeal Board ("PTAB") rejecting an obviousness challenge by LKQ to a design patent previously issued to GM. LKQ argued that the general test for determining obviousness set forth in KSR was meant to apply to utility and design patents alike, and that, therefore, KSR overruled the line of cases applying the narrower Durling obviousness test to challenges to design patents. However, in a per curiam, non-precedential opinion affirming the PTAB's decision, the panel said it could not overrule Federal precedent "without a clear directive from the Supreme Court" (2023 U.S. App. LEXIS 1412, at *15) and that KSR was not such a "clear directive."

A member of the panel, Judge Lourie, wrote a separate opinion of "additional views" (id. at *18), in which he defended using a different approach for design patents, asserting that "the considerations involved in determining obviousness are different in design patents" (id. at *21). Judge Stark, another member of the panel, concurring in part, also wrote separately, stating that "one might persuasively argue that design patents are so fundamentally different than utility patents that they warrant their own test for obviousness" (id. at **37-38); however, he also conceded that there is "substantial tension between the Supreme Court's holding in KSR and our Durling test" (id. at *35).

The issue is ripe for determination by the Supreme Court. Supposing certiorari were granted on the issue, how should the Court rule? Judge Lourie's opinion is correct in the sense that, in some areas, design patents are treated differently. The fundamental difference is that a design patent may be granted on an "ornamental" aspect of a product (35 U.S.C. § 171), while a grant of an ordinary, "utility" patent requires that the claimed invention be "useful." 35 U.S.C. § 101. In addition, utility patents have a term of 20 years after their application date (35 U.S.C. § 154(a)(2)), while design patents expire 15 years after they are granted (35 U.S.C. § 173). Moreover, where there is a finding of infringement of a design patent, the owner of the design patent has the option of obtaining the infringer's profits in lieu of compensatory damages (35 U.S.C. § 289); since 1946, that option has not existed for infringement of utility patents.

However, all of the above-listed differences are expressly created by statutory language. As Judge Lourie concedes, "35 U.S.C. § 103, which deals with obviousness, does not differentiate between types of inventions, and hence applies to all types of patents." 2023 U.S. App. LEXIS, at *21.

Also, while Judge Lourie asserts, in support of his argument, that, "[i]n any obviousness analysis, the question is whether the claimed invention was obvious, but obvious over 'what.' One has to start from somewhere" (id. at *23), in fact, that statement identifies the inconsistency between the design patent test and KSR. The task that is set for the court by Durling, of first identifying a primary reference and then modifying it "to create a design," is arguably the type of "rigid and mandatory formula[]" and "rigid rule that limits the obviousness inquiry" that was rejected by the Supreme Court in KSR. 550 U.S. at 419. Accord: 550 U.S. at 428 (the Federal Circuit had "analyzed the [obviousness] issue in a narrow, rigid manner inconsistent with § 103 and our precedents.").

More generally, the Supreme Court, for approximately the last decade, has been critical of the Federal Circuit for crafting multi-part tests that are not based on language in the underlying statute. For example, in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), the Supreme Court overturned the Federal Circuit's test for determining whether a patent case is "exceptional" for purposes of an award of attorney's fees under 35 U.S.C. § 285, characterizing the Federal Circuit's adoption of a three-part test for a fee award as "abandon[ing]" its earlier "holistic, equitable approach in favor of a more rigid and mechanical formulation." Id. at 550. The Federal Circuit's approach was "unduly rigid," id. at 553, and "overly rigid," id. at 554, and "superimpos[ed] an inflexible framework onto a statutory text that is inherently flexible," id. at 555. The determination rather must be made on a "case-by-case" basis, "considering the totality of the circumstances." Id. at 554.

Similarly, in Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93 (2016), the Supreme Court rejected the Federal Circuit's two-part test for determining willful infringement as "unduly rigid," in favor of an approach that "take[s] into account the particular circumstances of each case." Id. at 106.

Going back to 2010, in Bilski v. Kappos, 561 U.S. 593 (2010), the Supreme Court said it "once again declines to impose limitations on the Patent Act that are inconsistent with the Act's text," id. at 612, ruling that the Federal Circuit's "machine-or-transformation" test for a "process" eligible for patent protection under 35 U.S.C. § 101 was not the exclusive test, id. at 603-04.

In sum, the Durling test seems vulnerable to the same criticisms as the tests that the Supreme Court rejected in KSR, Bilski, Halo, and Octane. Nonetheless, the Supreme Court may agree with Judge Lourie that the unique aspects of design patents require a unique obviousness test. Either way, it would be good to get closure from the Supreme Court on an important question that lacks an "obvious" answer.

About The Author

Don Burton | Faruki Attorney