BREAKING NEWS! ROSEN SURVIVES! FEDERAL CIRCUIT DECLINES TO APPLY SUPREME COURT’S KSR OBVIOUSNESS STANDARD TO DESIGN PATENTS

In a pair of very significant decisions - LKQ Corp. et al. v. GM Global Technology Operations LLC, (Nos 2021-2348 and 2022-1253, decided January 20, 2023 –) - the U.S. Court of Appeals for the Federal Circuit considered whether the U.S. Supreme Court’s KSR v. Teleflex decision of 2007 involving the obviousness standard (35 USC 103) for utility patents, should apply to design patents.  The oral argument in this case was discussed in last month’s post (Dec. 18, 2022).

Of particular interest is that the main opinion, filed per curiam, was accompanied by two additional opinions, both having extensive discussions of the KSR issue.   

Here’s the background.  For many years, the design patent test for obviousness has been as stated in the seminal In re Rosen case (673 F.2d 388 (CCPA 1982)) as follows:

“[T]here must be a reference, a something in existence, the design characteristics of which are basically the same as the claimed design in order to support a holding of obviousness. Such a reference is necessary whether the holding is based on the basic reference alone or on the basic reference in view of modifications suggested by secondary references.”

The Rosen case was followed by Durling v. Spectrum Furniture, 101 F.3d 100 (Fed. Cir. 1996) which added the condition of whether you could combine secondary references with a proper primary reference, stating:

“[S]econdary references may only be used to modify the primary reference if they are “so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other.”

LKQ had challenged the validity before the USPTO’s Patent Trial and Appeal Board (PTAB) of two design patents owned by GM that covered car body replacement parts (US Pat. Nos. D797,625 and D855,508).  On appeal, in addition to challenging the PTAB’s holdings that the patents were neither anticipated nor obvious over the prior art, LKQ asserted before the Federal Circuit that the Rosen test on which the PTAB relied in its obviousness analysis has been implicitly overruled by the Supreme Court’s KSR case of 2007.  Rather than discussing the substantive holdings regarding anticipation and obviousness of GM’s design patents, this post focuses on the more interesting, and very significant, KSR/Rosen/Durling issue.   

In short, the court (in curiously non-precedential opinions) concluded that the panel (Judges Lourie, Clevenger and Stark) cannot overrule its prior Rosen decision without a “clear directive from the Supreme Court” since panels “are bound by prior panel decisions until they are overruled by the court en banc [Ed. note: sitting as a whole] or the Supreme Court.”   [Ed. note: this “rule” has been honored more in the breach, e.g., the court’s 2009 International Seaway decision ignored its earlier precedent of Lewmar v. Barient (1987) that clearly modified and updated the anticipation/infringement “maxim” of the 1889 Peters v. Active case upon which Seaway relied].

The LKQ holding, while not surprising, was made much more interesting by those two separate appended opinions of Judge Lourie (writing with “additional views”) and Judge Stark (“concurring in part and concurring in judgment”), both of which were focused on the KSR/Rosen/Durling brouhaha.

LOURIE, Circuit Judge, additional views.

Judge Lourie disagreed with LKQ’s position that KSR “overruled an almost forty-year-old design patent decision that this court has been bound to follow and has continued to follow in the decade since KSR was decided.”  First, he noted the obvious fact (excuse the pun) that KSR involved utility patents, not design patents, and that those two types of grants are distinct.  He also noted that while 35 USC 103, dealing with the requirement of non-obviousness, does not differentiate between design and utility patents, the latter requires considerations such as unexpected properties, utility, and function, while the former focuses on overall appearance, visual impression, artistry, and style, saying “Ornament is in the eyes of the beholder; functional utility is objective.”

He asked the pertinent questions:  “what is the utility or function of something that’s ornamental? ... and “what is an unexpected property in the context of design patents … [since] function is not to be considered in evaluating obviousness of a design?”

He concluded that obviousness of designs “requires different considerations from those of a utility invention”, and that KSR did not address, or even mention, design patents:

“[The Supreme Court] cannot reasonably be held to have overruled a precedent of one of our predecessor courts [i.e., the CCPA] involving a type of patent it never mentioned.”

Second, he noted that while Rosen may have overstated its point in adding to the 1950 precedent In re Jennings, it “hardly reflects the rigidity the Court was condemning in KSR.” [Ed. note:  Rosen added the requirement of identifying “a single primary reference” to Jennings’ earlier finding (1950) that “the appearance of the design must be viewed as a whole and compared with something in existence — not with something that might be brought into existence by selecting individual features from prior art and combining them.”].

Finally, Judge Lourie said that “Rosen was not essentially incorrect.”  It simply stated that one challenging a design patent under Sec. 103 “has to start from somewhere” (i.e., a piece of prior art – “something in existence”).

STARK, Circuit Judge, concurring in part and concurring in judgment.

Judge Stark, in his opinion, criticized the per curiam opinion of the court on the issue of forfeiture, where the court had concluded that LKQ did not forfeit its argument that KSR overruled Rosen.  He posited that LKQ was being very unfair to the PTAB, since its only argument there “plainly and unambiguously challenged the post-KSR vitality of the Durling test’s “so related” second step. Judge Stark said that LKQ in the appeal to the Federal Circuit had “completely shift[ed] its focus to the first step” of the Rosen/Durling test, i.e., the notion that a single primary reference first needs to be identified that is “basically the same” as the claimed design as held in Rosen.  The Board, he said, should not “face the potential of being reversed on an issue no party asked it to address”, characterizing such behavior as “sandbagging”. 

Judge Stark also posited that the current situation is “not so exceptional that we should exercise our discretion to address it”, reviewing the court’s law regarding discretion to hear “exceptional” issues.

Finally, Judge Stark quite significantly gave LKQ a leg to stand on if it appeals to the Supreme Court.  The judge said that there is “substantial tension between … KSR and Durling”, noting that in KSR the Supreme Court explained that “when a court transforms [a] general principle into a rigid rule that limits the obviousness inquiry . . . it errs.”

Judge Stark then said:  “A strong case can be made that the step one Rosen reference requirement is precisely the type of limiting, rigid rule KSR faulted; if a design patent examiner fails to identify a Rosen reference, the obviousness analysis stops.  In this way, the Durling test can prevent the consideration of a combination of prior art references.”

He posited that the requirement to identify a Rosen reference “can prevent consideration of the ordinary designer’s creativity” and that the Durling test provides additional rigidity “which limits consideration solely to prior art references that are ‘so related’ to the identified Rosen reference’ that ‘the appearance of certain ornamental features in one would suggest the application of those features to the other.’”

In an attempt to keep it even-handed, he summarized: “I can see how one might conclude that KSR implicitly overrules the Durling test. Alternatively, I can also see how one might persuasively argue that design patents are so fundamentally different than utility patents that they warrant their own test for obviousness, a test that the  Supreme Court would likely  allow to coexist alongside the KSR test we apply to utility patents.”

LKQ’s lead counsel, Professor Mark Lemley (who represented Samsung in the Supreme Court case against Apple involving total profit damages) must now decide, with his client, whether to file a cert. petition at the Supreme Court on the KSR/Rosen/Durling issue.  If he does, the design patent bar needs to sharpen its pens by filing amicus briefs, since a decision from SCOTUS overruling Rosen/Durling would wreak havoc with the thousands of design patents issued since Rosen was decided in 1982, and plunge design patent obviousness inquiries into unchartered, murky waters.