The U.S. Court of Appeals for the Federal Circuit vacated a preliminary injunction based on two design patents, finding a lack of a "likelihood of patentee’s success on the merits" due to a concern that the designs were a by-product of functional considerations. PHG Technologies, LLC, v. St. John Companies, Case No. 06-1169 (Fed. Cir., Nov. 17, 2006) (Prost, J.).
PHG obtained two design patents, D496,405 and D503,197, each of which covered the ornamental design for a medical label sheet. Each medical label sheet included eleven rows of labels, with each row having three labels. The tenth and eleventh row contained different size labels to correspond to pediatric and adult sizes. A border on the medical label sheet was part of the ’405 patent, but was not a part of the ’197 patent. In issuing a preliminary injunction, the district court found that all four factors for a preliminary injunction — (1) likelihood of success on the merits; (2) irreparable harm if the injunction is not granted; (3) balance of hardships favoring movant; and (4) public interest — were met.
The Federal Circuit found that under the four-part test, an injunction would be inappropriate. In addressing St. John’s argument that the designs were dictated primarily by functional rather than ornamental considerations, the Court noted that if there are several ways to achieve the function of an article, the design is more likely to achieve an ornamental purpose. While the lower court found alternative designs had been considered by the designers, it did not make any specific findings about whether the alternative designs would adversely affect the utility of the medical label sheet. Further, the Court found that an affidavit presented by St. John’s CEO demonstrated that alternative designs did affect the utility of the medical label sheet, as did the statements that PHG made during the prosecution of its corresponding utility application for a medical label sheet. This evidence was not refuted by PHG on the record before the district court.
Based on this record, the Federal Circuit concluded that the district court erred in holding that PHG met its burden of proving the first factor: likelihood of success on the merits.
Practice Note: When seeking a preliminary injunction, all of the four factors for a preliminary injunction need to be fully addressed by the patentee and sufficient rebuttal evidence needs to marshaled to refute any of the infringer’s contentions that the four factors are not met.
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