In one of two concurrent opinions concerning the same design patent case, the US Court of Appeals for the Federal Circuit vacated a district court’s entry of a preliminary injunction after concluding that the court had failed to properly consider the accused products separately and in view of the prior art when determining the plaintiffs’ likelihood of success. ABC Corp. I v. P’ship & Unincorporated Ass’ns Identified on Schedule “A”, Case No. 22-1071 (Fed. Cir. Oct. 28, 2022) (Dyk, Taranto, Stoll, JJ.)
Hangzhou Chic Intelligent Technology and Unicorn Global (collectively, the plaintiffs) own four patents claiming designs for handle-less, two-wheeled, motorized, stand-on vehicles commonly referred to as “hoverboards.” Urbanmax, GaodeshangUS, Gyroor-US, Fengchi-US, Jiangyou-US, Gyroshoes and HGSM (collectively, the appellants) sell Gyroor-branded hoverboards. In 2020, the plaintiffs sued the appellants for patent infringement and sought a temporary restraining order and a preliminary injunction. As explained here, the district court granted the preliminary injunction in 2020, but thereafter invited the plaintiffs to file a second motion for a preliminary injunction in light of unsuccessful motions by Fengchi-US, Urbanmax and Gyroor-US to dissolve the 2020 preliminary injunction for lack of notice under Fed. R. Civ. P. 65(a). Heeding the court’s advice, the plaintiffs filed a motion for a second preliminary injunction on August 24, 2021.
The primary issue before the district court concerning the 2021 preliminary injunction was whether the plaintiffs had demonstrated a likelihood of success on the merits that the accused products infringed the plaintiffs’ patents in light of certain prior art hoverboards. The prior art included a hoverboard with an hourglass-shaped body, which was a significant feature of the patented designs and the majority of the accused products. Despite the similarities between the prior art board and the claimed designs, the plaintiffs generally disregarded the prior art in their analysis. After comparing the four accused products as a group to the claimed designs, the plaintiffs’ expert opined that the accused products infringed the asserted patents based in large part on their similar hourglass bodies, in addition to other features.
The appellants’ expert countered that “the attention of the hypothetical ordinary observer will be drawn to those aspects of the claimed design that differ from the prior art,” rather than the hourglass shape, and that the additional ornamental features of the accused products were not substantially similar to the claimed designs. While the district court acknowledged that “resolving this expert dispute will likely require a trial,” it nonetheless concluded that the plaintiffs had demonstrated likelihood of success and entered the preliminary injunction order. The appellants filed a notice of appeal.
On appeal, the Federal Circuit concluded that the lower court had erred in four material respects:
- Applying the wrong legal standard
- Failing to conduct the ordinary observer analysis in view of the prior art
- Failing to apply the ordinary observer analysis on a product-by-product basis
- Crafting an overbroad injunction.
First, the Federal Circuit took issue with the district court’s entry of a preliminary injunction despite its observation that “an expert dispute will likely require a trial” and that the claimed and accused designs were “not sufficiently dissimilar, or plainly dissimilar.” The Court noted that a preliminary injunction should not issue “if the defendant raises a substantial question concerning infringement,” as it had done in this case.
Second, the Federal Circuit objected to the lower court’s ordinary observer analysis, which failed to account for the hourglass-shaped prior art hoverboard. Citing Egyptian Goddess, the Federal Circuit emphasized that the district court must compare the accused product, the patented design and the prior art because “where a dominant feature of the patented design and the accused products . . . appears in the prior art, the focus of the infringement substantial similarity analysis in most cases will be on other features of the design.” In this case, the Court noted that the hourglass body shape was insufficient on its own to support a finding of substantial similarity.
Third, the Federal Circuit determined that the district court had failed to “state the reasons why [the preliminary injunction] issued” because it did not conduct a product-by-product analysis. By grouping all the accused products together, the lower court failed to recognize differences among the accused products and the claimed designs, such as angular edges, a boxy appearance and smaller wheel caps.
Finally, the Federal Circuit found the injunction to be overbroad. The Court stressed that preliminary injunctions that merely “prohibit future infringement of a patent are overbroad,” and that the preliminary injunction “must be limited to those products actually found to infringe and those not more than colorably different.” As the Federal Circuit observed, the 2021 preliminary injunction prohibited infringing conduct and was not tailored to the accused products. For the above reasons, the Court reversed and remanded for further proceedings.