Preliminary Injunction for Design Patent Infringement is overturned by the Federal Circuit
In PHG Technologies, LLC, v. St. John Companies, Case No. 06-1169 (Fed. Cir., Nov. 17, 2006), the Federal Circuit vacated the United States District Court for the Middle District of Tennessee’s preliminary injunction in favor of Plaintiff-Appellee, PHG Technologies, L.L.C. (“PHG”). The court relied on the finding that Defendant-Appellant, St. John Companies, Inc. (“St. John”) raised a substantial question of the validity of the two patents at issue, and as so, the district court abused its discretion by granting PHG’s motion for preliminary injunction.
PHG, seller of certain medical patient identification labels, owns design patents D496,405 and D503,197. Both designs include eleven rows of labels, with each row containing three labels. The first nine rows contain three labels of equal size, the size being consistent with a standard medical chart label. The tenth and eleventh row each contain differently-sized labels which correspond to the size of a pediatric and adult patient wristband respectively. St. John also sells medical patient identification labels in the United States in competition with PHG. Pertinently, St. John sells medical label sheets that PHG alleges infringe its design patents, which was the focus of the action. The district court granted PHG’s preliminary injunction, concluding that all four factors in deciding to grant or deny a preliminary injunction were met. Namely, the factors considered were: “(1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.” On appeal, St. John Challenged the district court’s findings with respect to only the first preliminary injunction factor—the likelihood of success on the merits.
The Federal Circuit determined that the evidence presented by St. John was sufficient to raise a substantial question of invalidity of PHG’s patent, thereby nulling the district court’s finding and rendering the preliminary injunction inappropriate. In analysis, the Federal Circuit reexamined whether the patented design is primarily functional rather than ornamental. In particular, the court focused on whether alternative designs would adversely affect the utility of the specified article. As so, the court found that the affidavit of Mr. Press presented by St. John constitutes evidence that alternative designs, which do not include the “novel feature” of PHG’s design—the placement of various sizes of medical labels at the bottom of the sheet—would adversely affect the utility of the medical label sheet. Accordingly, it articulates a clear functional reason why the use and purpose of the article of manufacture dictated that the “wristband” labels be located at the bottom of the sheet. Additionally, PHG’s statement during prosecution of a different utility patent application indicated that there were functional reasons for each of the other features of the medical label sheet, including: for creating one sheet containing labels of different sizes; for the particular sizes of each differently-sized label; for the size of the sheet itself; and for including holes along the side and top of the sheet.
In view of the foregoing, the Federal Circuit reasoned that the district court erred in granting PHG’s preliminary injunction based on the finding of likelihood of success on the merits.
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