Judges: Bryson, Clevenger (dissenting-in-part), Dyk (author) [Appealed from S.D. Fla., Senior Judge Ryskamp]

In International Seaway Trading Corp. v. Walgreens Corp., No. 09-1237 (Fed. Cir. Dec. 17, 2009), the Federal Circuit affirmed the district court’s holding that the ordinary observer test is the sole test of invalidity of a design patent. The Federal Circuit, however, vacated and remanded the district court’s holding that the asserted claims were invalid.

International Seaway Trading Corporation (“Seaway”) owns U.S. Design Patent Nos. D529,263 (“the ’263 patent”), D545,032 (“the ’032 patent”), and D545,033 (“the ’033 patent”) (collectively “the Seaway patents”). The Seaway patents claim designs for footwear known as “clogs.”

Seaway asserted that Walgreens Corporation (“Walgreens”) and Touchsport Footwear USA, Inc. (“Touchsport”) infringed the Seaway patents. Walgreens and Touchsport filed a motion for SJ contending that the Seaway patents were invalid as anticipated under 35 U.S.C. § 102(a) and (e) or as obvious under 35 U.S.C. § 103. The district court applied the ordinary observer test and issued SJ that the Seaway patents were invalid as anticipated by a patent assigned to Crocs, Inc. (“Crocs”), namely, U.S. Design Patent No. D517,789 (“the Crocs ’789 patent”). The district court did not address obviousness. Seaway appealed.

On appeal, the Federal Circuit first affirmed the district court’s exclusive application of the ordinary observer test to the question of invalidity. The Court observed that it had previously abandoned the point of novelty test for design patent infringement, and held that the ordinary observer test should serve as the sole test for design patent infringement. Slip op. at 5 (citing Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 678 (Fed. Cir. 2008) (en banc)). Recognizing that the point of novelty test for anticipation was not mandated by precedent, and that with limited exception the same test must be used for both infringement and anticipation, the Court extended Egyptian Goddess to conclude that “the ordinary observer test must logically be the sole test for anticipation as well.” Id. at 10.

“[T]he ordinary observer test must logically be the sole test for anticipation . . . .” Slip op. at 10.

The Federal Circuit noted that its decision would prevent an inconsistency from developing between the infringement and anticipation analyses. The Court also noted problems inherent in the now-discarded point of novelty test. First, the point of novelty test was difficult to apply and encouraged the focus on minor differences between the prior art reference and the patented design. Second, the point of novelty test created the need to canvass the entire prior art to identify the points of novelty. Third, eliminating the point of novelty test avoids the debate over the extent to which a combination of old design features could serve as a point of novelty.

Rejecting Seaway’s arguments against the ordinary observer test, the Court held that there is no potential for jury confusion regarding the distinctions between the ordinary observer tests for obviousness and anticipation. According to the Court, the role of one of ordinary skill in the art in the obviousness context ends with the determination whether to combine earlier references to arrive at a single piece of art or modify a single prior art reference for comparison. Once that comparable piece of prior art has been constructed, the Court held, obviousness (like anticipation) requires application of the ordinary observer test with a focus on the overall designs. Id. at 11.

The Federal Circuit then considered Seaway’s contention that even under the ordinary observer test, the district court erroneously failed to compare the entirety of the patented designs, including the clogs’ insoles, with the Crocs ’789 patent. The Federal Circuit vacated the district court’s decision not to consider the clogs’ insoles and remanded for a determination in light of its holding. According to the Court, the design patent anticipation inquiry must encompass those features visible at any time in the “normal use” lifetime of the accused product—i.e., after it has been manufactured and before it is ultimately destroyed. In the Court’s view, the clogs’ insoles would be visible at various points during their normal use lifetime.

Walgreens and Touchport failed to present any evidence that the insole contributes little to the overall appearance of the shoe to an ordinary observer with knowledge of the prior art. Moreover, the Federal Circuit found the insole pattern for the Seaway patents to differ distinctly from the Crocs insole pattern. Thus, the Court held that a genuine issue of material fact existed as to whether the insole designs would be viewed as substantially similar in the eyes of the ordinary observer armed with the knowledge of the prior art.

The Federal Circuit agreed with the district court that no genuine issue of material fact existed with respect to the features of the clogs beyond the insole, i.e., features of the clogs’ uppers, toes, and outsoles. According to the Court, these minor variations were insufficient to preclude a finding of anticipation because they do not change the overall visual impression of the shoe.

Although the district court declined to address obviousness, the Federal Circuit addressed the issue on appeal because it had been raised by Walgreens and Touchsport below. The Federal Circuit held that the district court’s failure to compare the clogs’ insoles precluded a finding of obviousness.

Judge Clevenger dissented-in-part with respect to the majority’s holding that the insole designs of the Seaway patents and the Crocs ’789 patent differed sufficiently by themselves to preclude anticipation as a matter of law. Noting that the ordinary observer test requires assessment of the designs as a whole, Judge Clevenger viewed the majority’s conclusion as impermissibly carving out the insole design from the overall design for purposes of the remanded anticipation and obviousness determinations. According to the dissent, the district court should be directed on remand to evaluate the differences in the designs as a whole—not just the insoles.