by Robert Ambrogi - Editor
BullsEye Newsletter: January 2007
Expert opinion proved to be the key to vacating a preliminary injunction
in a design-patent case recently decided by the Federal Circuit
Court of Appeals.
The expert's affidavit raised a substantial question as to the validity of the
patents, the Federal Circuit found, ruling that the district court erred in finding
that plaintiff was likely to succeed on the merits of the case and in issuing
the injunction.
At issue in the case were two design patents owned by PHG Technologies, a company
that sells medical-patient identification labels. The patents covered the "ornamental
design" of a medical label sheet sold by PHG. The sheet included 11 rows
of three labels each. The top nine rows contained labels of equal size; the bottom
two had unequal-sized labels corresponding to the sizes of pediatric and adult
medical wristbands.
In August 2005, PHG sued its competitor, St. John Companies Inc., contending
that the design of St. John's medical-label sheet infringed PHG's patents. PHG
asked the court to issue a preliminary injunction halting St. John's continued
sales of the sheet.
At a district court hearing on the request, St. John argued that the sheets were
primarily functional, not ornamental, and therefore not entitled to design-patent
protection. In support of its position, it presented evidence from the prosecution
history of a related PHG utility-patent application and an affidavit with the
expert opinion of Adam Press, who was also St. John's chief executive officer.
PHG countered with the testimony of one of the inventors, Brian Moyer, who said
that he chose the design because it was the "most aesthetically pleasing."
The district court issued the injunction, finding that function did not dictate
the sheet's design and that the sizes and arrangement of the labels were primarily
ornamental because there were other ways to arrange the labels on the sheet.
Affidavit Raises Question
On appeal, St. John challenged the district court's finding that PHG was likely
to succeed on the merits of the case – an essential element of its decision
to issue the injunction. In upholding St. John's challenge, the Federal Circuit
found its expert's affidavit to be critical.
"Mr. Press’s affidavit constitutes evidence that alternative designs … would
adversely affect the utility of the medical label sheet," Circuit Judge
Sharon Prost wrote for the three-judge panel. "It articulates a clear functional
reason why the use and purpose of the article of manufacture dictated that the
'wristband' labels be located at the bottom of the sheet."
A design patent is invalid, the court noted, if the design is primarily functional
rather than ornamental. The design is deemed to be functional when "the
appearance of the claimed design is 'dictated by' the use or purpose of the article."
The mere presence of alternative designs does not decide the issue. Rather, the
question is whether the alternatives would adversely affect the utility of the
article "such that they are not truly 'alternatives' within the meaning
of our case law."
Here, the district court relied exclusively on its finding of a multitude of
alternative designs, while making no finding as to whether they would adversely
affect the utility of the medical label sheet.
"The district court makes no reference to St. John's evidence that the overall
arrangement of the labels on the medical label sheet was dictated by the use
and purpose of the medical label sheet and that alternative designs lacking that
arrangement would adversely affect the utility of the sheet," the court
said.
The expert's affidavit, the court continued, "was sufficient to raise a
substantial question of invalidity," and PHG offered no evidence refuting
the affidavit.
"Because we find that St. John has raised a substantial question of the
validity of the two patents at issue, the district court abused its discretion
by granting PHG's motion for a preliminary injunction," the court concluded. "Therefore,
we vacate the preliminary injunction."
The case is PHG Technologies LLC v. St. John Companies Inc., Case No.
06-1169 (Fed. Cir., Nov. 17, 2006).
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