IP Law Daily Patent exhaustion and aesthetic functionality cannot invalidate design patents covering truck component parts
Tuesday, July 23, 2019

Patent exhaustion and aesthetic functionality cannot invalidate design patents covering truck component parts

By Cheryl Beise, J.D.

The Federal Circuit declined to apply the patent exhaustion to design patents covering Ford F-150 truck parts or to extend the trademark doctrine of aesthetic functionality to the patents.

The federal district court in Detroit did not err in dismissing a lawsuit filed by the Automotive Body Parts Association seeking a declaration that two design patents covering the hood and headlamp designs used in Ford’s F-150 trucks are unenforceable due to patent exhaustion and aesthetic functionality, the U.S. Court of Appeals for the Federal Circuit has held. Summary judgment in favor of Ford was warranted because Ford’s patent rights in the component designs were not exhausted when Ford sold F-150 trucks; the defendants’ right to repair the patented items did not extend to "a complete reconstruction of a patented device or component"; and the aesthetic appeal of the designs claimed in the patents did not invalidate the designs as primarily functional (Automotive Body Parts Association v. Ford Global Technologies, LLC, July 11, 2019, unsealed July 23, 2019, Stoll, K.).

The two patents at issue in this case, owned by Ford Global Technologies, LLC ("Ford"), cover designs used in certain models of Ford’s F-150 trucks. U.S. Patent No. D489,299 (the D’299 patent), titled "Exterior of Vehicle Hood," claims "[t]he ornamental design for exterior of vehicle hood." U.S. Patent No. D501,685 (the D’685 patent), titled "Vehicle Head Lamp," claims "[t]he ornamental design for a vehicle head lamp."

The Automobile Body Parts Association (ABPA) is an association that represents companies that manufacture and distribute automotive parts. The dispute arose when Ford filed a petition with the International Trade Commission, accusing several ABPA members of importing automotive parts that infringed the D’299 and D’685 patents. That investigation settled after the ITC rejected the respondents’ argument that the patents were unenforceable due to the patent exhaustion or permissible repair doctrines. ABPA then filed suit against Ford, seeking a declaration that both patents are invalid and unenforceable. ABPA argued that the designs claimed by the D’299 and D’685 patents are not eligible for protection because the designs are aesthetically functional and because the patent rights were exhausted upon the first authorized sale of the vehicle incorporating the patented designs. The district court rejected ABPA’s arguments and sua spontegranted summary judgment to Ford. ABPA appealed.

Ornamental design. The Federal Circuit first addressed ABPA’s argument that the D’299 and D’685 patents are invalid because they claim a functional, rather than ornamental, design. Section 171 authorizes patents claiming "new, original and ornamental design[s] for an article of manufacture." 35 U.S.C. § 171(a). The court noted that while a valid design may contain some functional elements, a design patent may not claim a "primarily functional" design.

ABPA asserted that because consumers prefer replacement parts that restore the original appearance of their vehicles, there is a functional benefit to designs that are aesthetically compatible with those vehicles. The Federal Circuit noted that ABPA was not asserting that Ford’s designs were functional because they achieved a mechanical or utilitarian purpose, but rather because they aesthetically matched the F-150 truck. The court was aware of no design patent case ruling that the aesthetic appeal of a design to consumers was adequate to render that design functional.

As it had below, ABPA asked the Federal Circuit to import into patent law the trademark law principle of "aesthetic functionality." The court declined, emphasizing that trademarks and design patents "serve different purposes and have different governing law." Trademarks promote competition by permitting a perpetual monopoly over symbols that that distinguish and identify source, whereas design patents grant exclusive rights to a particular aesthetic for a limited period of time. "The considerations that drive the aesthetic functionality doctrine of trademark law simply do not apply to design patents," the court said.

The court also rejected ABPA’s attempt to ground its argument in prior Federal Circuit decisions. In Best Lock Corp. v. Ilco Unican Corp., 94 F.3d 1563 (Fed. Cir. 1996), the court invalidated a design patent for a key blade as functional because no alternative blank key blade would fit the corresponding lock. This case was distinguishable from Best Lock because Ford introduced abundant evidence of alternative headlamp and hood designs that physically fit its trucks. In other cases, the Federal Circuit has explained that a design is generally not a "matter of concern," and lacks ornamentality, if it may not be observed or if it is assessed only for functionality. See In re Webb, 916 F.2d 1553, 1557–58 (Fed. Cir. 1990). The court rejected ABPA’s argument that Ford’s designs are not a "matter of concern" to consumers. This argument was undermined by ABPA’s own admission that customers select replacement parts based on their preferred aesthetic.

Finally, ABPA asked the Federal Circuit to rule, as a matter of policy, that Ford’s design patents may be enforced only in the initial market for sale of F-150 trucks, and not in the market for replacement components. However, ABPA was unable to support its assertion that customers care about design in the initial sales market, but not when they select replacement parts. The court noted that a bill seeking to create a market-based analysis specifically for auto-body design patents was introduced in a previous Congress but had failed to become law. The court affirmed the district court’s judgment that ABPA failed, as a matter of law, to prove that Ford’s designs were functional by clear and convincing evidence.

Patent exhaustion and repair. The court next addressed ABPA’s contention that Ford’s patents are unenforceable under the related doctrines of exhaustion and repair. The patent exhaustion doctrine grants the purchaser (or any subsequent owner) of a patented item the right to use the purchased item and the right to repair it.

Ford conceded that when it sells an F-150 truck, its patents are exhausted as to the patented components actually sold as part of that truck. ABPA argued that exhaustion extends to any design patents embodied in the truck. The court disagreed with ABPA, First, exhaustion attaches only to items sold by, or with the authorization of, the patentee. Second, exhaustion does not allow buyers of the truck to make new copies of the patented item. It was undisputed that ABPA’s members’ sales were not authorized by Ford.

ABPA also argued that purchasers of Ford’s F-150 trucks are licensed to repair those trucks using replacement parts that embody Ford’s hood and headlamp design patents. However, the right to repair a patented item does not extend to "a complete reconstruction of a patented device or component," the court said. "And it does not permit a purchaser to infringe other patents by manufacturing separately patented components of the purchased article."

ABPA then urged the court to create a new rule for exhaustion based on the "unique nature" of design patents. ABPA argued that because the term "article of manufacture" in Section 117 is broad enough to include both a product component and the product itself, the sale of either the component (i.e., the hood or headlamp) or the whole product (i.e., the F-150) totally exhausts a design patent and permits unlimited repair. The court again declined ABPA’s invitation to develop design patent-specific exhaustion and repair rules. Ford was allowed to claim designs in particular components rather than the entire truck. "[T]he designs for Ford’s hood and headlamp are covered by distinct patents, and to make and use those designs without Ford’s authorization is to infringe," the court said.

In sum, the Federal Circuit rejected ABPA’s theories inviting the court "to rewrite established law to permit ABPA to evade Ford Global Technologies, LLC’s patent rights." The district court’s judgment was affirmed.

The case is No. 2018-1613.

Attorneys: Robert Glenn Oake (Cardelli Lanfear P.C.) for Automotive Body Parts Association. Jessica Lynn Ellsworth (Hogan Lovells US LLP) for Ford Global Technologies, LLC.

Companies: Automotive Body Parts Association; Ford Global Technologies, LLC

MainStory: TopStory Patent FedCirNews

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