Federal Circuit Finds District Court Correctly Applied Ordinary Observer Test

By Rebecca Tapscott
May 19, 2020

“The CAFC explained that the ‘ordinary observer’ test is not an element-by-element comparison but recognizes that designs often include both functional and ornamental elements. Thus, according to the CAFC, the test requires the fact finder to ‘compare similarities in overall designs, not similarities of ornamental features in isolation.’”

Last week, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the U.S. District Court for the Middle District of Florida in Lanard Toys Limited v. Dolgencorp LLC, Ja-Ru, Inc., Toys “R” Us-Delaware, Inc. The district court granted summary judgment in favor of Dolgencorp LLC, Ja-Ru, Inc., Toys “R” Us-Delaware, Inc. (the Appellees) on Lanard’s claims of design patent infringement, copyright infringement, trade dress infringement, and statutory and common law unfair competition. The CAFC, in an opinion authored by Judge Lourie, affirmed on all four claims.

Background and District Court Proceedings

Lanard owned Design Patent D671,167 (D167 patent) and copyright Reg. VA 1-794-458 (458 copyright), which were directed to a toy chalk pencil that looked like a No.2 pencil. Lanard also made and sold the “Lanard Chalk Pencil” to Dolgencorp and Toys-R-Us (TRU) during 2011 and 2012.

Ordinary Observer Test - Lanard Chalk Pencils

Beginning in 2013, Dolgencorp and TRU stopped ordering the “Lanard Chalk Pencil” and instead began ordering and selling a toy chalk pencil designed by Ja-Ru, which was undisputedly designed using the Lanard Chalk Pencil as a reference.

In 2014, Lanard filed suit against Dolgencorp, TRU and Ja-Ru, asserting copyright infringement, design patent infringement, trade dress infringement, and statutory and common law unfair competition. Dolgencorp, TRU, and Ja-Ru filed cross-motions for summary judgment.  The district court granted the motion for all claims, holding that Ja-Ru’s product did not infringe the D167 patent, the ’458 copyright was invalid and not infringed, Ja-Ru’s product did not infringe Lanard’s trade dress, and Lanard’s unfair competition claims failed because the other claims failed.

Federal Circuit Review

The CAFC initially cited Elmer v. ICC Fabricating, Inc. in explaining that a two-part test is used to determine design patent infringement: “(1) the court first construes the claim to determine its meaning and scope; (2) the fact finder then compares the properly construed claim to the accused design.” The CAFC further noted that the “ordinary observer” test is used in comparing the patented and accused design, which according to Egyptian Goddess, Inc. v. Swisa, Inc., states that infringement is found if “in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other.”

Despite Lanard’s arguments to the contrary, the CAFC explained that the district court properly construed the claims by relying on the drawings and considering the novel and ornamental aspects of the design. Again citing Egyptian Goddess, the CAFC noted that it is clear that when a design includes both functional and ornamental elements “the scope of the claim must be construed in order to identify the non-functional aspects of the design as shown in the patent.” The CAFC found that the district court “meticulously acknowledged the ornamental aspects of each functional element, including ‘the columnar shape of the eraser, the specific grooved appearance of the ferrule, the smooth surface and straight taper of the conical piece, and the specific proportional size of these elements in relation to each other.’”

The CAFC also saw no error in the district court’s consideration of the prior art in finding that the overall appearance of Lanard’s design is only distinct from the prior art in the precise proportions of the various elements. The CAFC also agreed with the district court’s rejection of Lanard’s attempt to distinguish the prior art by importing functional elements of the design into the claim construction.

With respect to infringement, the CAFC noted that the district court properly applied the “ordinary observer” test to compare the overall patented design with the Ja-Ru product by beginning with a side-by-side comparison. According to the CAFC, the district court “importantly … noted that ‘[t]he problem for Lanard… is that the design similarities stem from aspects of the design that are either functional or well-established in the prior art.’” Citing Egyptian Goddess, the CAFC also noted that “the attention of the ordinary observer ‘will be drawn to those aspects of the claimed design that differ from the prior art,’ which would cause “the distinctions between the patented and accused designs [to be] readily apparent”.

The CAFC disagreed with Lanard’s contentions that the district court erred in its infringement analysis. The CAFC noted that the District court properly balanced the consideration of the ornamental aspects of the design while focusing on how an ordinary observer would view the overall design. The CAFC explained that the “ordinary observer” test is not an element-by-element comparison but recognizes that designs often include both functional and ornamental elements. Thus, according to the CAFC, the test requires the fact finder to “compare similarities in overall designs, not similarities of ornamental features in isolation.” The CAFC also noted that the district court properly considered and analyzed how the ornamental features impacted the overall design.

Despite Lanard’s arguments to the contrary, the CAFC explained that the District court properly construed the claims by relying on the drawings and considering the novel and ornamental aspects of the design. The Court noted that the Federal Circuit has made it clear that when a design includes both functional and ornamental elements “the scope of the claim must be construed in order to identify the non-functional aspects of the design as shown in the patent.” The CAFC found that the district court “meticulously acknowledged the ornamental aspects of each functional element, including ‘the columnar shape of the eraser, the specific grooved appearance of the ferrule, the smooth surface and straight taper of the conical piece, and the specific proportional size of these elements in relation to each other.’”

The CAFC also disagreed with Lanard’s contentions that the district court erred in applying the “point of novelty” test its infringement analysis. The CAFC noted that the District court did not “reinstate” the “point of novelty” test and properly balanced the consideration of the ornamental aspects of the design while focusing on how an ordinary observer would view the overall design. The CAFC reasoned that, while the “point of novelty” test has been rejected as a free-standing test for design patent infringement, the patented design and accused device must be considered in the context of the prior art. In the present case, the CAFC noted that the district court properly placed the “points of novelty in context by considering that those points of novelty would draw ‘the attention of the ordinary observer’” and further noted that the district court properly balanced the points of novelty while focusing on how an ordinary observer would view the overall design. Thus, the CAFC concluded that the district court correctly granted summary judgment with respect to design patent infringement.

CAFC Consideration of Lanard’s Copyright Infringement Claim

Initially, the CAFC noted that in order to establish copyright infringement, Lanard must prove that it owned a valid copyright and prove that Appellees copied original elements of the work. The CAFC agreed with the district court that the pertinent question was whether the copyright incorporated features were separable from the utilitarian aspects of the article. The district court concluded that the features of Lanard’s copyright “are not capable of ‘existing independently’ as a work of art, and therefore, it is not protectable under copyright law”.  The CAFC agreed. Further, the CAFC noted that Lanard was seeking to protect “any and all expressions of the idea of a pencil chalk holder”; however, the Copyright Act makes clear that in “no case does copyright protection for an original work of authorship extend to an idea.” Thus, the CAFC concluded that the district court correctly granted summary judgment with respect to copyright infringement because Lanard did not own a valid copyright for the pencil chalk holder.

CAFC Review of the Trade Dress Claim

Citing John H. Harland Co. v. Clarke Checks, Inc., the CAFC noted that Lanard must prove three things to prevail for trade dress infringement: “(1) that the trade dress of two products is confusingly similar; (2) that the features of the trade dress are primarily non-functional; and (3) that the trade dress has acquired secondary meaning.” The district court concluded that Lanard did not provide sufficient evidence to prove secondary meaning, which requires a showing “that the primary significance of the product in the minds of the consuming public is not the product itself but the producer.” Lanard argued that the district court improperly limited the secondary meaning analysis to end-users of the Lanard Chalk Pencil, rather than considering wholesaler and retail store customers. The CAFC noted Lanard failed to provide any evidence as to how wholesalers and retail stores viewed the “Lanard Chalk Pencil” product. The CAFC explained, Lanard did not provide evidence to satisfy its burden to prove that “when customers see the Lanard Chalk Pencil, their minds jump to the producer of the product rather than the product itself.” Thus, the CAFC concluded that the district court correctly granted summary judgment in favor of Appellees on Lanard’s claim for trade dress infringement.

Analysis of Unfair Competition Claims

With respect to Lanard’s claims for statutory and common law unfair competition under state and federal law, the CAFC noted that the district court found that the unfair competition claims failed because they are based entirely on Lanard’s infringement claims. Thus, since Lanard’s infringement claims were unsuccessful, the CAFC held that the district court correctly granted summary judgment on the unfair competition claims.

Images taken from CAFC opinion

The Author

Rebecca Tapscott

Rebecca Tapscott is an intellectual property attorney who has joined IPWatchdog as our Staff Writer. She received her Bachelor of Science degree in chemistry from the University of Central Florida and received her Juris Doctorate in 2002 from the George Mason School of Law in Arlington, VA.

Prior to joining IPWatchdog, Rebecca has worked as a senior associate attorney for the Bilicki Law Firm and Diederiks & Whitelaw, PLC. Her practice has involved intellectual property litigation, the preparation and prosecution of patent applications in the chemical, mechanical arts, and electrical arts, strategic alliance and development agreements, and trademark prosecution and opposition matters. In addition, she is admitted to the Virginia State Bar and is a registered patent attorney with the United States Patent and Trademark Office. She is also a member of the American Bar Association and the American Intellectual Property Law Association.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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