ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A"

District Court, N.D. Illinois·Decided December 12, 2022·No. 1:20-cv-04806·Unknown

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION HANGZHOU CHIC INTELLIGENT TECHNOLOGY Co.; and UNICORN GLOBAL, INC., No. 20 C 4806 Plaintiffs, Judge Thomas M. Durkin V. GYROOR; GYROOR-US; URBANMAX; FENGCHI-US; HGSM; GAODESHANG- US; and GYROSHOES, Defendants. MEMORANDUM OPINION AND ORDER Plaintiffs allege that Defendants’ “hoverboard” products infringe Plaintiffs’ design patents. The Court issued a preliminary injunction prohibiting sale of the products. See R. 456; R. 147; R. 113. The Federal Circuit vacated that injunction. See R. 587; R. 590. Plaintiffs filed a renewed motion for a preliminary injunction. R. 592. After a one-day hearing, the Court denied the motion. R. 619. This opinion and order explains the reasons for that decision. Background Plaintiffs own design patents D737,723 and D738,256:

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See R. 609 at 3-4; see also R. 598 at 7-11. Plaintiffs seek a preliminary injunction of Defendants’ sales of three products: (1) Gyroor T581 series and variants, referred to as “Gyroor A”; (2) Gyroor T580 series and variants, referred to as “Gyroor C”; and (3) Gyroor G11 series and variants, referred to as “Gyroor E.”

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See R. 609 at 7-9. The most relevant prior art in this case is the patent D739,906: D906 Patent - Top View (JN AT “~

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Legal Standards “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of

preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The “estimated likelihood of success in establishing infringement is governed by Federal Circuit law.” Revision Mil., Inc. v. Balboa Mfg. Co., 700 F.3d 524, 526 (Fed. Cir. 2012). Seventh Circuit law governs the other factors. See Koninklijke Philips N.V. v. Thales DIS AIS USA LLC, 39 F.4th 1377, 1379 (Fed. Cir. 2022).

“To show a likelihood of success on the merits, a patentee must show that it will likely prove infringement of the asserted claims.” ABC Corp. I v. P’ships & Unincorporated Assocs. Id’d on Schedule “A”, 52 F.4th 934, 942 (Fed. Cir. 2022). This means that the plaintiff must demonstrate that any defense raised “lacks substantial merit.” Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350-51 (Fed. Cir. 2001). “To show infringement under the proper test,” a plaintiff must demonstrate

that “an ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design.” Crocs v. Int’l Trade Comm’n, 598 F.3d 1294, 1303 (Fed. Cir. 2010); see also Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 676, 678. (Fed. Cir. 2008). “Where a patented design and an accused product are not ‘plainly dissimilar,’ the court must conduct a three-way analysis comparing the accused product, the patented design, and the prior art.” ABC Corp, 52 F.4th at 942 (citing Egyptian Goddess, 543 F.3d at 677-78. Analysis

In its opinion reversing this Court’s prior issuance of a preliminary injunction, the Federal Circuit noted that an “hourglass shape” was the “dominant feature of the patented design and the accused products,” and also “appears in the prior art.” ABC Corp., 52 F.4th at 942. The court explained that where there is a “dominant feature” across the prior art, the patents in suit, and the accused products, “the focus of the infringement substantial similarity analysis in most cases will be on other features

of the design.” Id. In other words, the “shared dominant feature from the prior art will be no more than a background feature of the design, necessary for a finding of substantial similarity but insufficient by itself to support a finding of substantial similarity.” Id. A. Plaintiffs’ Expert Paul Hatch The Federal Circuit criticized Plaintiffs’ expert, Paul Hatch, because his analysis violated this legal standard.1 In the Federal Circuit’s view, instead of

treating the dominant hourglass shape as background, Hatch improperly “relied on” the hourglass shape “of the accused products to show substantial similarity [to the patents in suit].” Id. at 938-39. The Federal Circuit understood Hatch’s opinion to be

1 Hatch is a professional product designer and inventor. See R. 594 at 2-3. Defendants did not challenge his qualifications. The Court finds no reason to question them and finds Hatch to be qualified to offer testimony pursuant to Federal Rule of Civil Procedure 702. that the accused products are substantially similar to the patents in suit because they create the visual impression of an “integrated hourglass body,” thereby implying that he believed the prior art did not create such an impression. See id. at 938 (“Hatch did

not explain why having an ‘hourglass body’ was ‘unlike’ the prior art.”). One of the primary reasons the Federal Circuit vacated the preliminary injunction was because this Court relied on Hatch’s report, which, “far from recognizing that the hourglass figure of the asserted patents could not be relied on the establish substantial similarity, improperly relied on that feature to show substantial similarity.” Id. at 943.

On this renewed motion for preliminary injunction, Hatch has clarified that he understands that the D’906 prior art also obviously shows an hourglass shape. But he believes that against the common backdrop of an hourglass body, the D’906’s “uncluttered, rounded, smooth body” when compared with the patents in suit and accused products and their “pronounced footing areas and [open] fender skirts,” demonstrates that the accused products are substantially similar to the patents in suit. See R. 594 at 29-30 (Hatch’s report stating that “the design [of the D’906 prior

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ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A", (N.D. Ill. 2022).

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