Federal Circuit Dismantles “Rigid” Rosen-Durling Test for Design Patent Obviousness in Light of KSR; USPTO Promptly Issues New Guidance

On February 5, 2024, the Federal Circuit sat en banc to hear oral arguments in a closely watched case concerning design patent obviousness standards in a dispute between LKQ (an aftermarket auto-parts provider), and General Motors (an auto manufacturer). The challenged framework, derived from In re Rosen, 673 F.2d 388 (CCPA 1982) and Durling v. Spectrum Furniture Co., 101 F.3d 100 (Fed. Cir. 1996), was deemed “improperly rigid” and overruled in favor of the more flexible Graham factors applied to utility patents in KSR International v. Teleflex Inc., 550 US 398 (2007).

In its decision, the panel overruled the 40-year-old Rosen-Durling test for determining whether a design patent is obvious in view of prior art; instead adopting “an approach consistent with Congress’s statutory scheme for design patents, which provides that the same conditions for patentability that apply to utility patents apply to design patents.” Circuit Judge Alan Lourie, while concurring in the judgement, wrote separately to express his opinion that the Rosen-Durling Test should be “modified, not overruled.” LKQ Corp. v. GM Glob. Tech. Operations LLC, No. 2021-2348 (Fed. Cir. May 21, 2024) (LKQ).

Under the Rosen-Durling obviousness standard for design patents, a patent challenger is first required to provide a single primary reference to show that the design characteristics “are basically the same as the claimed design in order to support a holding of obviousness.” Once a primary reference has been identified, the patent challenger may use other secondary references to modify the primary reference “to create a design that has the same overall visual appearance as the claimed design.”  However, those secondary references must be “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” to give the “same overall visual appearance” as the claimed design. In re Rosen, 673 F.2d 388 (C.C.P.A. 1982); Durling v. Spectrum Furniture Co., 101 F.3d 100 (Fed. Cir. 1996).

Ultimately, the Federal Circuit found the Rosen-Durling test to be overly rigid and inconsistent with the Supreme Courts guidance in KSR International Co. v. Teleflex Inc., which requires a flexible approach to obviousness for utility patents. KSR Int’l Co. v. Teleflex Inc., 550 US 398 (2007).

Background

Previously, GM licensed LKQ as an approved repair part provider.  But after negotiations fell through to renew LKQ’s license, GM informed LKQ that they were no longer authorized to sell GM replacement parts and asserted that LKQ infringed GM’s design patents.  LKQ responded by attempting to invalidate a GM fender design patent, US797,625 (“the ‘625 patent”) at the U.S. Patent and Trademark Office in an Inter Partes Review.  In particular, LKQ argued that the ‘625 patent was obvious in view of US773,340 over the 2010 Hyundai Tucson, as illustrated below.

The PTAB held that LKQ did not show the ‘625 patent to be unpatentable because LKQ failed to identify a sufficient primary reference that was “basically the same” as the claimed design under the Rosen-Durling test.

LKQ appealed this decision to the Federal Circuit arguing that the standard for reviewing design patents is inconsistent with Supreme Court and Federal Circuit precedent, and the standard must be adjusted to more closely follow utility patent standards for obviousness. The three-judge panel’s decision at the Federal Circuit authored by Judge Stoll disagreed and affirmed the PTAB’s decision that LKQ did not show the GM ‘625 patent, which pertains to an “ornamental design for a vehicle front fender,” to be unpatentable.

Specifically, the CAFC articulated that, “applying the tests established in Rosen and Durling, the PTAB found that LKQ failed to identify a sufficient primary reference, and therefore failed to prove obviousness by a preponderance of the evidence.” The court ultimately stated, “[w]e, as a panel, cannot overrule Rosen or Durling without a clear directive from the Supreme Court.”

But, in June 2023, the court granted an increasingly rare en banc review following a petition in which LKQ argued that the CAFC and the PTO have been applying a “rigid approach” to determining obviousness of design patents for 40 years, and the Supreme Court’s 2007 holding in KSR International v. Teleflex, Inc. expressly overruled such an approach. KSR Int’l Co. v. Teleflex Inc., 550 US 398 (2007).

The Oral Arguments

Mark Lemley began the oral arguments for LKQ, arguing that it’s too difficult to find design patents obvious and advocated for a less rigorous test. He claimed that Rosen and Durling are inconsistent with KSR, stating that these tests restrict the use of outside references not basically the same as the claimed design in the way required by KSR. Lemly argued this inconsistency but did not propose an alternative test. The panel was concerned that KSR might not apply well to designs, noting various rationales that might support a finding of obviousness under KSR including a reasonable expectation of success in combining prior art, simple substitution of one component for another, and addressing technical problems associated with utility patents. Notably, during Lemley’s rebuttal, one panel member, Judge Lourie, expressed opposition to overruling Darling and Rosen.

USPTO acting Solicitor Farheena Rasheed urged the court to set a new test and remand the case, resisting LKQ’s reading of KSR, but suggesting a “softening” of “basically the same test” that the PTO has been using, without specific details. Additionally, she urged the Federal Circuit to not replace one rigid test with another.

Joe Herriges, representing GM, defended the current test, arguing that LKQ overstates the Rosen-Durling tests rigidity and that analogous art for obviousness needs to be the same article of manufacture, or something sufficiently similar. Notably, during Herriges argument, the judges grappled with the fact that obviousness is viewed by an ordinary designer (with a more discerning perspective) whereas infringement is determined by an ordinary observer (with a less discerning perspective) meaning that the standards could be different for patentability and infringement, and one could easily obtain a design patent and successfully assert it. The oral arguments did not articulate a new test to replace Rosen-Durling, leaving the Federal Circuit to decide whether to affirm, revise, or overrule the current standards in their en banc decision.

The New Test for Design Patent Obviousness

Judge Stoll, for the court, concluded that Rosen-Durling is “out of keeping with the Supreme Court’s general articulation of the principles underlying obviousness,” and “improperly rigid.” The Court held that “[i]nvalidity based on obviousness of a patented design is determined [based] on factual criteria similar to those that have been developed as analytical tools for reviewing the validity of a utility patent under § 103, that is, on application of the Graham factors.” The Court noted that the Graham test “has proven workable for utility patents,” and the Court saw “no reason why it would not be similarly workable for design patents.”

The Court held that “[w]here a primary reference alone does not render the claimed design obvious, secondary references may be considered. The primary and secondary references need not be ‘so related’ such that features in one would suggest application of those features in the other but they must both be analogous art to the patented design.” The Court did not “delineate the full and precise contours of the analogous art test for design patents. Prior art designs for the same field of endeavor as the article of manufacture will be analogous, and [the Court] [did] not foreclose that other art could also be analogous.”

The four Graham factors teach that when assessing obviousness one must consider: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; (3) the level of ordinary skill in the art; and (4) secondary considerations of nonobviousness, such as commercial success, industry praise, and copying by competitors.

The court highlighted that the Graham test necessitates that a fact finder evaluates the differences between the scope and content of prior art known to an ordinary designer and the claimed design to determine obviousness. The court clarified that the primary prior art reference will likely be the design most visually similar to the claimed one. If the primary references alone do not render the design obvious, secondary references may be considered. Both primary and secondary references must be “analogous art,” which includes art from the same field of endeavor as the claimed design. The court noted that other art could also be analogous, making it a factual, case-by-case determination.

Furthermore, the court emphasized the need for a record-supported reason, without hindsight, for why an ordinary designer would be motivated to modify the primary and secondary references to achieve the claimed design’s overall appearance. This requires a thorough analysis to determine if an ordinary designer would find it obvious to combine features from prior art references to create the same overall appearance as the claimed design. The court found the Rosen-Durling test’s strict requirements for identifying an earlier design that is “basically the same: and references that are “so related” to be inconsistent with the flexible approach mandated by the Supreme Court. The court did not further define the scope of “analogous art” beyond confirming it includes art from the same field of endeavor as the claimed design.

USPTO Guidance on the Graham Factors

On May 22, 2024, USPTO Director Kathi Vidal issued a memo to patent examiners and the PTAB following the recent decision. The memo outlined four factual inquiries based on the Graham factors for assessing design obviousness.

Director Vidal provided additional guidance, emphasizing that examiners and adjudicators must determine if the claimed design would have been obvious to an ordinary designer in the field. This involves evaluating whether there would be a motivation to modify the prior art to achieve the claimed design, considering the overall visual impression rather than individual features. Both primary and secondary references must be analogous art, with a reasoned, hindsight-free basis for an ordinary designer to modify the primary reference using secondary references.

Per the memo, additional guidance and training will be provided to ensure the new standard’s effective implementation.

Practical Considerations

The Federal Circuit’s decision has led to a major shift in how the USPTO examines design patent applications for obviousness. Examiners have started issuing rejections based on the new criteria. With new tools like image recognition technology, obviousness rejections and challenges are expected to rise significantly. Design patent challengers may now have better success in invalidating patents and may be more inclined to pursue inter partes reviews or declaratory judgments. To counter obviousness challenges, design patent applicants should consider conducting patentability searches to assess prior art before filing, collecting evidence of secondary considerations, and including descriptions to argue that certain prior art references are not analogous. However, the full impact of this decision will become clearer as the USPTO and courts address validity challenges to design patents issued under both the old and new standards.

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Ronnie L Capaldi, the author of this post, will lead a discussion of these issues at our weekly SoCal IP Institute Meeting on June 10, 2024, which will qualify for 1 hour of MCLE for the State Bar of California and is available via the internet for those who would like to participate.