RICHARD F. BOULWARE, II, District Judge.
Before the Court is Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction (ECF No. 10). The Court has reviewed the parties' papers and heard oral argument. The Court previously announced its ruling orally in which it granted Plaintiff's Motion in part. This written order memorializes and elaborates this oral ruling.
Plaintiffs Equalia, LLC, and Hoverboard Technologies Corporation filed a Complaint on Dec. 9, 2016 against Defendants Kushgo LLC, Halo Board LLC, Arthur Andreasyan and Shenzhen Windgoo Intelligent Technology Co. Ltd. ECF No. 1. (Only the first three defendants have appeared in this case.) The complaint asserts two count: (1) Infringement of Plaintiff's design patent under 35 U.S.C. § 271, and (2) Unfair and Deceptive Trade Practices under 15 U.S.C. § 45.
Plaintiffs filed the instant Emergency Motion for TRO and Preliminary Injunction on Dec. 28, 2016. ECF No 10. Defendants filed a Response on Dec. 29, 2016. ECF No. 17. Equalia seeks an injunction based on alleged infringement of its design patent. The patent issued as United States Design Patent No. D768,252 on October 4, 2016, and is titled Pitch-Propelled Vehicle. Mot for TRO, Bigler Decl. at ¶4.
The patent claims the ornamental design as depicted in five figures. The Court bases its conclusions on the images as depicted in the patent. The Court finds that the patent depicts the following distinct features,
Equalia seeks the following injunctive relief: (1) An order restraining Defendants from offering the "Halo Board" products for sale in the United States; (2) A seizure order for all of Defendants' infringing products, including the "Halo Board" from CES and Defendants' United States warehouse. (3) An order to show cause regarding the issuance of a preliminary injunction based on the ruling for a TRO.
The Court held an evidentiary hearing with expert testimony on January 3, 2016. The Court incorporates by reference its statements and findings made on the record at this hearing (and previous hearings). At the January 3 hearing, the Court heard expert testimony from Plaintiff's expert Robert Bigler and Defendants' expert Brian Sanderson, as to the functionality of the design features and overall design of the board. Mr. Bigler testified that he is the owner and CEO of Plaintiff Equalia LLC, that he designed the design patent, that he has a degree in mechanical engineering from San Jose state university, and that he has been involved in the creation and testing of the product bearing the design patent. Mr. Sanderson testified that he is trained as an industrial designer, that he has degrees in industrial design and visual art and oil painting from Brigham Young University, and that since acquiring his degrees he has worked in industrial design, including projects related to board sports.
The Court first notes that it finds Defendants' argument as to a
The testimony of both witnesses focused on the functionality of the various features and of the design of the boards, including whether or not alternative designs could achieve the same or similar function. Upon observation, the Court generally credits and accepts Mr. Bigler's testimony, and does not credit or accept Mr. Sanderson's testimony. Sanderson's opinion was significantly less persuasive because he lacked sufficient knowledge of prior art related to the boards and knowledge of the actual operation and internal construction of the boards. The Court finds that Sanderson did not credibly establish the existence of relevant prior art. He was not familiar with the various patents submitted by Defendants as possible relevant prior art for Plaintiff's design.
Plaintiffs admitted exhibits including but not limited to art in the form of design patent No. D769,997 S, a single-wheeled board that the plaintiff testified is self-propelled, art in the form of a utility patent, No. 4,824,139, depicting a speaker on the bottom of a skateboard, a trademark application by Defendants showing a prior version of the Halo Board, and an image of the inside of a Halo Board, showing that only one of the spaces underneath a speaker feature contains an actual speaker.
Defendants admitted exhibits including but not limited to an advertising video clip of the Plaintiff's board being used, as well as prior art in the form of utility patent No. 4,991,066, showing lights on the side of a board, design patent No. 7,811,217 B2, depicting a board with a center wheel and bumpers entitled "Motorized Apparatus and Method for Dynamic Balancing Exercise," and design patent No. D505,469 S, depicting a board with two wheels that are covered on the top side of the board.
A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief."
To prove a likelihood of success on the merits in a case alleging patent infringement, the plaintiff "must show that, in light of the presumptions and burdens that will inhere at trial on the merits, (1) it will likely prove that [the Defendants infringe on the Plaintiffs'] patent and (2) its infringement claim will likely withstand [Defendants'] challenges to the validity and enforceability of the . . . patent."
The Ninth Circuit has also held that a preliminary injunction may issue under the "serious questions" test.
In considering a preliminary injunction alleging patent infringement, the precedent of the Federal Circuit applies to substantive issues within the domain of patent law.
The Court finds that the Plaintiff has demonstrated a likelihood of success on the merits of it claim of patent infringement as to its design patent
The Court finds the Plaintiff has established a likelihood of success on the merits against Defendants' argument that Plaintiff's patent is invalid. Defendants argue that the Court should reject the Plaintiff's Motion because the Plaintiff's design patent is invalid due to it not being new or ornamental. Defendants argue that prior art illustrates the obviousness of the design and that expert testimony demonstrates the non-ornamental nature of the distinguishing features of the design patent. The Court finds, however, that the overall combination of features in the design is not obvious based on the prior art submitted by the Defendants and that design features which the Court considers for its analysis of the patent are not primarily functional.
A defendant may attack validity on the grounds that the patent has not met "the criteria of being new, original, and ornamental."
"[A]n issued patent comes with a statutory presumption of validity under 35 U.S.C. § 282."
A patent may be invalidated for "for obviousness under § 103" or "for anticipation [or lack of novelty] under § 102."
"A person shall be entitled to a patent unless—(1) the claimed invention was patented, 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[.]" 35 U.S.C. § 102(a)(1). "Because there are many ways in which a reference may be disseminated to the interested public, public accessibility has been called the touchstone in determining whether a reference constitutes a printed publication bar" under the statute.
As noted above, "[t]he design must also be non-obvious."
"Once the primary reference is found, other `secondary' references may be used to modify it to create a design that has the same overall visual appearance as the claimed design. These 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."
Importantly, "if no prior art creates basically the same visual impression as does [the] claimed design" then "it is improper to invalidate a design patent on grounds of obviousness."
Plaintiff has established a likelihood of success on the merits regarding the challenge to the novelty and obviousness of the patented design at this stage of the litigation and only in reference to the CES trade show. The Court has considered prior art submitted in the record and admitted at the hearing on January 3, 2017.
The Court finds that only one of the cited examples of prior art might possibly be considered as a primary reference under the "basically the same" test. Exhibit C to Defendants' Supplementary Memorandum, Patent No. US 7,811,217 B2, for "motorized apparatus and method for dynamic balancing exercise" depicts a center wheel, with two square bumpers on either side, on a board with upturned ends. However, the Court finds that this "balance board" does not create the same "visual impression created by the patented design as a whole."
Reviewing the features in the other patents identified in the Memorandum, as well as those admitted at the hearing, the Court with respect to obviousness also does not find that the ornamental features depicted "would suggest [their] application" to, or combination with the basically similar design of Patent No. 7,811,217 B2. The combination of features in Plaintiff's design patent would not have been obvious to a designer of ordinary skill who designs articles of the type involved. As already noted above (and discussed below), the patent contains a unique combination of features constituting a design that is primarily aesthetic. The non-obvious, aesthetic choices within that design include, but are not limited to, the following: a plastic cover of the slender center wheel following the contours of the wheel; fully rounded ends of the board; a chamfered top edge of the board necessitating recessed screw holes; a crescent-shaped LED display at the end of the board; and speakers on the underside of the ends of the board. Together with the rest of the board, these features constitute an overall design that would not have been obvious to a designer of ordinary skill.
Importantly, the Court finds that the defense expert Sanderson did not offer credible testimony that the patented design would be obvious to a designer of ordinary skill who designs objects in this area. He did not provide a credible basis for his general and conclusory statements about the patented design. He did not cite to features of prior art that would suggest the overall patented design.
The remaining question is whether an ordinary observer would confuse the patented design with those depicted in prior art (or a combined design of features depicted in prior art). The Court finds that she would not. The closest of the proffered prior art is the "motorized apparatus" discussed above. The patent design is readily distinguishable to an ordinary observer because of its shape, wheel cover, and numerous other features not depicted in that art. Even if various features of prior art were to be combined in a constructed comparison design of prior art, the Court would still find that such a construction of different features of prior art would not be confused with the patented design by an ordinary observer. That is because the prior art does not contain all of the features of the patented design such as the dual underneath speakers and slender domed wheel. The Court finds that neither that art, nor any of the others in the record would confuse an ordinary observer.
"[The Federal Circuit] has described as "stringent" this standard as it applies to invalidating design patents on grounds of functionality."
"[T]he overall appearance of the article—the claimed design viewed in its entirety—is the basis of the relevant inquiry, not the functionality of elements of the claimed design viewed in isolation."
The Federal Circuit "has not mandated applying any particular test for determining whether a claimed design is dictated by its function and therefore impermissibly functional."
"[I]t is relevant whether functional considerations demand only this particular design or whether other designs could be used, such that the choice of design is made for primarily aesthetic, non-functional purposes."
Plaintiff's design patent is for a "pitch-propelled vehicle." As a preliminary matter, the Court notes that however the function is defined—whether as a self-propelled recreational vehicle, a self-propelled board requiring balance, or a self-propelled board requiring balance with a central wheel, or any of the above along with durability, safety, an LED display, lighting, and audioemission capabilities, the Court finds that the overall design of the board is not dictated by its function. The Court's determination is based upon its review of the evidence submitted in the record and evaluation of the testimony of the experts in this case.
The Court's conclusion regarding the overall ornamental nature of the design is based upon several findings. First, the Court finds that there are alternative designs that would serve similar functions. Specifically, the design is for a self-propelled pitched board could be achieved using multiple configurations of design elements. For example, the board could be propelled by more than one wheel or the board could be propelled by a broad single wheel. Indeed, expert testimony confirmed that using multiple wheels would make the board more stable and easier to ride. Additionally, the speakers for the board could be on top of the board where they would be more functional. The ends of the board could be square and not upturned and achieve similar functionality.
Furthermore, the top design of the board in terms of the screens and diamond-shaped patterns are not primarily functionality in the context of the overall design. The screens could have been placed in different places on the board. Indeed, Bigler noted that the crescent shape of the screens and their placement was more expensive without improving on functionality as opposed to placing the screen(s) in the center area of the board. The diamond-shaped pattern does not serve any particular function other than improving on the aesthetics of the board.
The Court also notes that the dome covering of the wheel to conform with the contour of the shape of the single wheel is primarily ornamental in the overall context of the design. As noted, the wheel did not have to be placed where it is or with the narrow profile that it has. To the extent that the dome itself is functional—and the Court does not find it necessarily to be so—its shape and appearance are not dictated by function. Thus, the dome in the overall design is not primarily functional.
In conclusion, Plaintiff has shown a strong likelihood that it will prove that its design patent contains a new, novel, and non-obvious combination of features that constitute a design that is primarily aesthetic, and that the patent will likely withstand Defendants' challenges to validity. Defendants have failed to raise a substantial question as to the validity of the patent.
In
The Federal Circuit has described the test as "whether an ordinary observer, familiar with prior art, would be deceived into believing that the infringing product is the same as the patented product.
The Court finds that the novel combination of features in Plaintiff's design patent—and thus the focal points for an ordinary observer who is familiar with prior art—include but are not limited to: a narrow central wheel covered by a plastic dome that follows the contours of the wheel; an oblong-shaped board with fully rounded up-turned ends; a crescent-shaped dark display at the either end of the board; and speakers on the underside of the board under the upturned end with a single LED light in a rounded recess between the speakers. Defendants' board includes this combination of features in an extremely similar design. Considering the prior art in the record, including that included in Defendants' supplementary memorandum and that admitted at the January 3, 2017 evidentiary hearing, the Court concludes that Plaintiff has shown a strong likelihood that an ordinary observer familiar with the prior art would be deceived into believing the products are the same.
The Court finds that Plaintiff has demonstrated that (1) it will likely prove that [the Defendants infringe on the Plaintiffs'] patent and (2) its infringement claim will likely withstand [Defendants'] challenges to the validity and enforceability of the . . . patent."
"Evidence of threatened loss of prospective customers or goodwill certainly supports a finding of the possibility of irreparable harm."
While an injunction against Defendants as to the trade show would cause financial harm to defendants, allowing presentation of the infringing product would harm Plaintiff's financially as well as reputationally, and deprive Plaintiff of the full intangible benefit of advertising and promoting its launch without unlawful competition at the trade show. Moreover, as pointed out by Plaintiffs, Defendants market similar products, and would not be shut out of the related business. Defendants do not present other compelling facts showing that if infringement has occurred, the balance would nonetheless tip in their favor. The Court finds that the balance of the equities tips sharply in favor of the Plaintiff.
Although the public has an interest in competition, the patent laws express the preference, in cases of infringement, for temporary preferences in order to spur innovation.
For the reason stated on the record at the hearing on January 3, 2017, the Court ordered the posting of $50,000 bond by the Plaintiff's. Plaintiffs have posted the requisite bond.
Defendants Kushgo, LLC, Halo Board, LLC, and Arthur Andreasyan, as well as their officers, agents, servants, employees, attorneys, and any other persons in active concert or participation with them who receive actual notice of this order are TEMPORARILY RESTRAINED from any of the following:
