PHG Technologies, LLC v. St. John Companies, Inc., no. 06-1169, 2006 U.S. App. LEXIS 28468, ___ F.3d ___ (Fed. Cir. 2006) involved the question of functionality of a patented design. In this ruling, the Court vacated a preliminary injunction on two design patents for a sheet of medical labels. Both designs include 11 rows of labels, each row having three labels.

The first nine rows have three labels of equal size. That size is consistent with a standard medical chart label. The 10^th row has three smaller labels which correspond to the size of a pediatric waistband, and the 11^th row has labels for an adult patient wristband. The two design patents differ in that the border design is claimed in one patent but not the other. Both patents depend from a utility patent application. At a hearing before the district court, one of the joint inventors testified that they settled upon the patented configuration from among others because this one was the most aesthetically pleasing.

Because there are "a multitude" of ways to arrange different sizes of labels on an 8.5 x 11 inch sheet, the district court rejected St. John's argument that the patented designs were a mere byproduct of functional considerations and were not primarily ornamental.

The Federal Circuit reaffirmed the rule that if a patented design is primarily functional rather than ornamental, the patent is invalid. A design of a useful article is deemed functional when its appearance is dictated by the use or purpose of the article. This determination ultimately rests on analyzing the overall appearance. Among the several factors identified in earlier precedents is the question of whether alternative designs would adversely affect the utility of the specified article. The presence of alternative designs may or may not assist in determining whether the design can overcome a functionality challenge. The Court has held that when there are several ways to achieve the function, then the design of the article is more likely to serve a primarily ornamental purpose. However, if the alternative designs would adversely affect the utility of the article, then they are not really "alternatives" within the meaning of the Court's precedents.

Here, the district court failed to explain whether the alternative designs would adversely affect the utility of the medical label sheet. The evidence in the case explained the functional advantage of the particular arrangement of labels in the design and further explained that alternative designs would indeed adversely affect utility. This evidence was sufficient to raise a substantial question of invalidity according to the Court of Appeals. The patentee offered no evidence refuting the functionality evidence. Accordingly, the evidence indicated clear error by the district court in concluding that the patentee had established likely success on the merits. Hence, the Court vacated the preliminary injunction.

Edward D. Manzo, a member of the N.Y. and Ill. Bars, is a senior partner with COOK ALEX in Chicago. He is the creator and editor-in-chief of Claim Construction in the Federal Circuit (West Legalworks, Nov. 2006) which he co-authors with other members of the Litigation Committee of the Intellectual Property Law Ass'n. of Chicago (IPLAC). He may be contacted at emanzo@cookalex.com or 312-236-8500.

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