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On October 23, 2018, the Patent Trial and Appeal Board (the “PTAB”) invalidated a design patent over the shape of an aircraft lavatory, because it had been on-sale prior to the filing date. U.S. Design Patent No. D764,031 S (“the ‘031 patent”) concerned the ornamental design of an aircraft lavatory where the walls were slightly recessed.

Whereas a utility patent covers the way an invention is used and how it works, a design patent solely protects the ornamental appearance of an invention.

The On-Sale Bar
Under 35 U.S.C.A. § 102(a)(1), an inventor is not entitled to a patent if the claimed invention was “described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” This is known as the “on-sale bar.” Here, the PTAB invalidated the ‘031 patent because the patent holder B/E Aerospace, Inc. (the “Patent Owner”) was selling the design prior to the filing date of the patent.

The patent challenger, C & D Zodiac, Inc., specifically pointed to a slide show presentation created by the Patent Owner, as evidence that the lavatory design was on sale and in public use prior to the date of filing. The Patent Owner’s presentation noted that it had received an $800 million contract to sell its lavatory design to Boeing. Photographic evidence showed the lavatory which was being sold to Boeing was virtually identical in design to the ‘031 patent.

Thus, the PTAB found, based on preponderance of the evidence, that the design claimed by the ‘031 patent was embodied by the product that the Patent Owner was already selling, prior to the filing date of the patent. Accordingly, the ‘031 patent was invalidated pursuant to the on-sale bar of 35 U.S.C.A. § 102(a)(1).

 

This article was originally published in the New York City Bar Association’s Aeronautics Committee Newsletter. The views expressed herein are those of the author and not necessarily of the City Bar.

The decision of the PTAB is available at: C&D Zodiac Inc. v. B/E Aerospace, Inc., No. PGR2017-00019, 2018 WL 5298631 (P.T.A.B. Oct. 23, 2018).

Aereo, Inc. thought it had found a legal and clever way to deliver broadcast television programming to its subscribers inexpensively via the Internet.  Aereo “rented” equipment to its subscribers that captured and streamed broadcast programming at about the same time the programs broadcast over the air.

Aereo had designed its business model to take advantage of certain court decisions on copyright law involving Cloud-based services that permitted users to store and time-shift programming.  In a 6-3 opinion, however, American Broadcasting Cos. v. Aereo, Inc., the Supreme Court ruled that Aereo, Inc. infringed television broadcasters’ copyrights.

Under the Copyright Act of 1976, a copyright owner has the exclusive right to “perform the copyrighted work publicly.”  A person who publicly performs a copyrighted work may be found to have infringed upon the copyright.  As a result, the Court focused on the question of whether Aereo “performed” the copyrighted television programming “publicly” by streaming, or retransmitting it, to its subscribers at about the same time it was broadcast.

Aereo argued it only supplied equipment to its subscribers and did not “perform” the copyrighted television programs.  Aereo further asserted that its service was not “public” because the streams were transmitted to individual subscribers privately.  While noting that Aereo uses unique technical equipment for its services, the Court found that Aereo bears an “overwhelming likeness” to the cable companies specifically targeted by amendments to the Copyright Act in 1976.  The Court ultimately held that Aereo’s service is equivalent to a performance under the statute and that Aereo is not simply an equipment supplier.  The Court also held that Aereo performs publicly because “the subscribers to whom Aereo transmits television programs constitute ‘the public.’”

Yesterday’s decision exemplifies the courts’ ongoing struggle to adapt existing principles of intellectual property law to evolving technologies.  The decision has immediately raised concerns about the propriety of other Cloud-based services that permit consumers to store content of their choosing and watch at a later time – the updated version of the legally-approved practice of allowing an individual to record broadcast at home and watch it later.  Certainly, evolving technology will continue to present difficult line-drawing questions for the courts.

The United States Supreme Court affirmed the application of the clear and convincing standard for proving a patent invalid, holding that the standard of proof applies regardless of whether the US Patent and Trademark Office considered the relevant evidence during prosecution of the patent.  The decision in Microsoft Corp. v. i4i Limited Partnership has a broad reach in patent litigation, where prior art validity challenges are virtually always made. 

Section 282 of the Patent Act states that a “patent shall be presumed valid” and the “burden of establishing invalidity of a patent . . . shall rest on the party asserting such invalidity.” The Federal Circuit has long read the Patent Act to require a party seeking to overcome a patent’s presumption of validity to prove its case by clear and convincing evidence.

Microsoft’s challenge sought to lower Section 282’s standard to a preponderance of the evidence.  Microsoft argued that the statutory presumption of validity should not apply when an issued patent’s validity is challenged, especially when the challenge is based on prior art that was not disclosed to the PTO during the examination period. The underlying theory for this argument is that the presumption of validity – premised on the notion that a government agency is presumed to perform its function – is faulty where the PTO did not actually consider the allegedly invalidating material in deciding to allow an invention to issue as a patent.

The Supreme Court was unconvinced.  The Court explained that in asserting an invalidity defense, the accused infringer “must contend with the first paragraph of Section 282, which provides that ‘[a] patent shall be presumed valid’ and ‘[t]he burden of establishing invalidity . . . rest[s] on the party asserting such invalidity.’” Congress, in choosing Section 282’s phrase “presumed valid,” used a term with a settled meaning.  According to that meaning, a defendant raising an invalidity defense bears a heavy burden of persuasion, requiring proof of the defense by clear and convincing evidence.  The Court also noted that courts have interpreted Section 282 the same way for decades and that “during this period, Congress has often amended the patent law, but apparently never considered any proposal to lower the standard of proof.” 

Although the Court recognized that courts of appeals have “observed that the presumption of validity is ‘weakened’ or ‘dissipated’ in the circumstance that the evidence in an infringement action was never considered by the PTO,” it rejected the notion that such cases indicated a lowered standard of proof.  Instead the Court interpreted such statements as indicating how newly considered evidence may carry more weight.  Thus, while it may be easier for a patent challenger to meet its burden of proof with newly considered evidence, the height of its burden remains the same.

Had the Court sided with Microsoft, the lower standard of proof could have created uncertainty as to the stability of patent rights and caused a significant shift in patent-infringement litigation.  In the end, the Court preserved the status quo.