Continental Plastic Containers v. Owens Brockway Plastic Products, Inc.

141 F.3d 1073, 1998 WL 142276

• Court: Court of Appeals for the Federal Circuit
• Decided: May 27, 1998
• Docket: 96-1509
• Status: Published

Opinions

Opinion of the court filed by Circuit Judge RICH. Concurring-in-part and dissenting-in-part opinion filed by Circuit Judge PAULINE NEWMAN.

RICH, Circuit Judge.

Continental Plastic Containers, Inc. (Continental) appeals from the judgment of the United States District Court for the Northern District of Illinois, 95-CV-4670, granting a motion for summary judgment in favor of Owens-Brockway Plastic Products, Inc. (Owens) (1) holding that U.S. Design Patent No. Des. 352,905 is invalid because Continental’s product embodying the patented design was “on-sale” within the meaning of 35 U.S.C. § 102(b), and (2) holding that, given the relevant market, Owen’s trade dress did not create a likelihood of confusion as to source under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1994). We affirm.

BACKGROUND

Continental and Owens are both in the business of wholesaling, inter alia, gallon sized containers suitable for juice. Continental is the assignee of record of U.S. Patent No. Des. 352,905 (the ‘905 patent) (issued Nov. 29, 1994), the application for which was filed on 16 February 1993. The ‘905 patent claims: “The ornamental design for an exterior surface of a side wall for a juice container, as shown and described.” Figure 1 is exemplary of the design:

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On 14 August 1995, Continental took steps to enforce the ‘905 patent against Owens, suing it for design patent infringement and trade dress infringement, under both state law and the Lanham Act. After completing a modicum of discovery, Owens raised the affirmative defense of patent invalidity under 35 U.S.C. § 102(b), alleging that Continental sold or offered for sale containers embodying the design of the ‘905 patent more than one year before its filing date. On 10 October 1995, Owens filed a motion for summary judgment on both the patent and trade dress claims.

The district court granted summary judgment in favor of Owens, holding (1) that the patent was invalid under 35 U.S.C. § 102(b) because of an “on-sale” bar, and (2) that Owens’ trade dress did not create a likelihood of confusion as to source in the relevant market so as to support an action under the Lanham Act. Continental appeals both the patent and the Lanham Act rulings. Owens alleges that Continental’s appeal is frivolous and requests damages and costs under Rule 38 of the Federal Rules of Appellate Procedure.

DISCUSSION

I

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). We undertake plenary review of a grant of summary judgment. KeyStone Retaining Wall Sys., Inc. v. Westrock, Inc., 997 F.2d 1444, 1449, 27 USPQ2d 1297, 1301 (Fed. Cir.1993).

A material fact is one that may affect the decision, so that the finding of that fact is relevant and necessary to the proceedings. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A genuine issue is shown to exist if sufficient evidence is presented such that a reasonable fact finder could decide the question in favor of the nonmoving party. Id. The evidence submitted by the nonmovant, in opposition to a motion for summary judgment, “is to be believed, and all justifiable inferences are to be drawn in [its] favor.” Id. at 255, 106 S.Ct. at 2513. In ruling on a motion for summary judgment we consider the actual quantum and quality of proof necessary to support liability under the applicable law. Id. at 254, 106 S.Ct. at 2513. We must assess the adequacy of the nonmovant’s response and must determine whether the showing the nonmovant asserts it will make at trial would be sufficient to carry its burden of proof.

II

A claimed design is considered to be “on-sale,” within the meaning of section 102(b), when an embodiment of the design was sold or offered for sale in this country more than one year before a filing date to which the claim is entitled (the critical date) and the sale or offer to sell was primarily for profit rather than for experimental purposes. See King Instrument Corp. v. Otari Corp., 767 F.2d 853, 859-60, 226 USPQ 402, 406 (Fed.Cir.1985). Integral to our analysis are “[a]ll of the circumstances surrounding the sale or offer to sell, including the stage of development of the invention and the nature of the invention, [which] must be considered and weighed against the policies underlying section 102(b).” UMC Elec. Co. v. United States, 816 F.2d 647, 656, 2 USPQ2d 1465, 1471-72 (Fed.Cir.1987).

We have enumerated the policies governing the totality of the circumstances as follows: (1) discouraging the removal from the public domain of inventions that the public reasonably has come to believe are freely available; (2) favoring the prompt and widespread disclosure of inventions; (3) allowing the inventor a reasonable amount of time following sales activity to determine the potential economic value of a patent; and (4) prohibiting the inventor from commercially exploiting the invention for a period greater than the statutorily prescribed time of one year. King Instrument Corp., 767 F.2d at 860, 226 USPQ at 406.

The district court held on summary judgment that the ’905 patent was invalid as being “on-sale” within the meaning of 35 U.S.C. § 102(b), by virtue of the fact that Continental had offered the patented design to customers and agreed to supply L & A Juice, Inc. (L & A Juice) with gallon bottles embodying the patented design prior to the critical date of 16 February 1992.

The following facts pertinent to the alleged sale are either undisputed or represent Continental’s version. Continental entered into a supply agreement with L & A Juice on 3 January 1992 (the supply agreement). The supply agreement provided that Continental was to supply L & A Juice with all of its inventory requirements for polypropylene lamieon 155 gram 128 oz. bottles, effective 1 April 1992. As a result of a series of delays, Continental did not begin providing L & A Juice with the bottles until the fall of 1992. On appeal Continental argues that it was not until well after the critical date that it was able to manufacture the patented design and hence the supply agreement did not represent the sale of an embodiment of the patented design.

The supply agreement represented the culmination of a series of events which began in late 1990 when Continental began wooing Tree Top as a potential customer. Tree Top had expressed an interest in a 128 oz. bottle made of polypropylene lamicon, suitable for apple juice. As is customary in the industry, Continental solicited Tree Top’s interest based on relatively crude line drawings or silhouettes.

When it had piqued Tree Top’s interest, Continental created a blueprint three-dimensional article drawing and subsequently a solid wood model. It forwarded the wood model to Tree Top in April 1991. A solid wood or epoxy model is customarily produced after the customer expresses interest, with the expectation that changes might be necessary to cement customer approval. Continental continued to negotiate with Tree Top throughout 1991, until Tree Top shelved the project in the late fall of that year.

It was at this juncture that Continental and L & A Juice began their relationship. Because Continental had already produced the drawings and the model in conjunction with the Tree Top negotiations, Continental was able to solicit L & A’s interest in design of the gallon bottles using the wooden model and some three-dimensional article drawings which were based on the model. The series of drawings begin with the three-dimensional article drawing designated HM-2189-1 and dated 18 October 1991, and end with the article drawing designated HM-2189-7 and dated 19 August 1992.

Continental’s commitment to the project was demonstrated on 11 December 1991, when a “critical female duplicating model” was produced. This model can be used to create unit or production molds. The production molds are a capital intensive endeav- or and, as such, are generally the subject of thoughtful consideration. Continental ordered a prototype production mold on 3 January 1992—the same day that the supply agreement was executed. Subsequently, on 10 February 1992, a proto-mold was shipped to Continental. Thus, prior to the critical date of 16 February 1992, a wooden model and the first three of the three-dimensional article drawings were complete and the production molds were ordered and .shipped.¹

A.

Continental argues that these molds and article drawings did not embody the patented design because significant changes were made to the design as a result of its inability to mass produce a gallon bottle represented by the early drawings, specifically changes to the rocker bottom and surface handle eye, height, vertical load, cavity area, wall thickness, lip width and label size/contour. The district court acknowledged that the design was revised seven times to accommodate the manufacturing difficulties.² However, as Owens points out and the court found, the changes to the drawings in the HM-2189 series were so minute that Continental’s product designer, Manderfield, had to use a measuring instrument to distinguish between the article drawings in the series. Since the designer himself could not distinguish between the designs without a measuring instrument, we must conclude that there were insufficient differences to rise to the level of a practical ornamental difference from the pre-critical date drawings and, hence, the molds and article drawings did embody the patented design.

B.

Continental argues that the ‘905 patent is not subject to the “on-sale” bar because, as manufacturer, it was unable to produce a functionally operable article embodying the design prior to the critical date. Continental asks us to extend Tone Bros. v. Sysco Corp., 28 F.3d 1192, 31 USPQ2d 1321 (Fed.Cir.1994), to hold that any adjustments to functional features of the article of manufacture suspends the application of a section 102(b) bar for the purpose of claiming the ornamental design.

In Tone Bros, this court held that “public use” under section 102(b) could be negated by experimentation directed at optimizing the functional aspects of an article while not addressing the ornamental aspects of its design. Tone Bros., 28 F.3d at 1199-1200, 31 USPQ2d at 1325-26. Tone Bros, is a “public use” case. We see no reason to extend the analysis to the “on-sale” context. “Public use” and “on-sale” bars, while they share the same statutory basis, are grounded on different policy emphases. The primary policy underlying the “public use” case is that of detrimental public reliance, whereas the primary policy underlying an “on-sale” case is that of prohibiting the commercial exploitation of the design beyond the statutorily prescribed time period. Thus, in Tone Bros. the court merely distinguished between the display of a design to generate public interest versus the display of a design for experimental use. It concluded that the display was not contrary to the policy of detrimental public reliance because the display was for the sole purpose of experimentation. In contrast, Continental’s agreement with L & A Juice to sell the patented design is an explicit commercial exploitation of the claimed design outside of the generous one year grace period.

We further note that Continental’s premise that the “on-sale” bar should not apply because the ornamental design for an article of manufacture is merely a conception until the underlying article is functionally operable is fundamentally flawed for several policy reasons. First, the specific functions of the article of manufacture are not necessarily disclosed in the design patent. There is, for example, nothing in the ‘905 patent which indicates that the article of manufacture should not rock or should be suitable for mass production. If we were to adopt Continental’s interpretation, not only would district courts likely be deluged with hindsight analysis as to what features were required to produce a functional article, but it would virtually require parties to seek judicial determinations in order to establish that which should be readily apparent from the face of the design patent.

Second, Continental’s interpretation improperly imbues the patented design with additional limitations taken from a commercial embodiment. See Berry Sterling Corp. v. Pescor Plastics, Inc., 122 F.3d 1452, 43 USPQ2d 1953 (Fed.Cir.1997). There is nothing in the 905 patent which restricts size, volume, weight, wall thickness, manufacturing materials or labels. The claim is solely directed to the ornamental or appearance aspects of the article of manufacture as depicted in the patent drawings. See 35 U.S.C. § 171 (1994). We conclude that it was irrelevant to triggering the “on-sale” bar that Continental had not yet manufactured a “functionally acceptable container.” There is no functionality requirement in obtaining a design patent. See 35 U.S.C. § 171 (1994).

C.

Continental argues that the “on-sale” status of its patented design before the critical date is negated by experimental use. Experimental use negation applies, in utility patent cases, if there is genuine experimentation directed to perfecting the features of the claimed invention. See Western Marine Elec., Inc. v. Furuno Elec. Co., 764 F.2d 840, 226 USPQ 334 (Fed.Cir.1985). The policy behind experimental use negation is to give the inventor an opportunity to reduce the invention to practice. TP Lab., Inc. v. Professional Positioners, Inc., 724 F.2d 965, 220 USPQ 577 (Fed.Cir.1984). Thus, experimental use can not occur after a reduction to practice. See Atlantic Thermoplastics Co. v. Faytex Corp., 5 F.3d 1477, 1480, 28 USPQ2d 1343, 1346 (Fed.Cir.1993). Since design inventions are reduced to practice as soon as an embodiment is constructed, Fitzgerald v. Arbib, 46 C.C.P.A. 969, 268 F.2d 763, 122 USPQ 530,' 532 (1959) (“[T]his court and its predecessors in patent jurisdiction have held that reduction to practice of a three-dimensional design invention requires the production of an article embodying that design.”), experimental use negation is virtually inapplicable in the design patent context. Applying experimental use negation in the design patent context would allow entities to increase the life of their design patents merely by tarrying over the production of the article of manufacture.

Continental contends that regardless of whether the design was reduced to practice, Continental was merely perfecting the functional aspects of its design and thus, under Tone Bros, the sale should be subject to experimental negation. Even if we extend Tone Bros., a “public use” case, to the “on-sale” context, there is no nexus between the alleged experimentation and the sale in this case. Continental did not sell the bottles to L & A Juice for any purpose other than commercial exploitation. The fact that it had to make minor modifications to the article is entirely unrelated to the sale. This is not a case in which Continental sold a discrete number of the bottles to L & A Juice so that L & A Juice might experiment on them to ascertain whether they were suitable for a particular purpose. In fact, under the terms of its supply agreement with L & A Juice, Continental was to provide as many bottles of the patented design as L & A Juice required for its retail sales. This is a clear commercial exploitation unaccompanied by any of the indicia of experimentation.

Accordingly, we affirm the court’s ruling on summary judgment that the ‘905 patent is invalid under the “on-sale” bar.

Ill

Section 48(a) of the Lanham Act creates a federal cause of action for trade dress infringement. Section 43(a), 15 U.S.C. § 1125(a), read, at the time of this action, in pertinent part:

False designation of origin and false descriptions forbidden

(a) Civil Action

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—

(A) is likely to cause confusion or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, ...

shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act. In reviewing Lanham Act claims we look to the law of the regional circuit where the district court sits, here the Seventh Circuit. Payless Shoesource, Inc. v. Reebok Int’l Ltd., 998 F.2d 985, 987-88, 27 USPQ2d 1516, 1518 (Fed.Cir.1993).

In order to prevail, Continental must show that its trade dress is either inherently distinctive or has acquired a secondary meaning, and that the similarity between Owen’s trade dress and its own would cause a likelihood of confusion as to the source of the product. See, e.g., Computer Care v. Service Sys. Enter., Inc., 982 F.2d 1063, 1067-68 (7th Cir.1992). For the purposes of summary judgment, Owens conceded secondary meaning. Thus, the district court addressed only the issue of likelihood of confusion as to source. It found that there was no trade dress infringement because Continental had failed to establish a likelihood of confusion in the relevant consumer base.

On appeal, Continental argues that the district court erred because it did not properly identify the relevant consumer base in applying the test for likelihood of confusion and, as a result, failed to recognize the evidence of confusion adduced by Continental. We disagree. The district court found that the relevant consumer base was wholesale purchasers of empty bottles without lids or labels. As the district court noted, the wholesale purchasers may be characterized as sophisticated buyers because, by Continental’s own description of the custom in the industry, sales to these parties are likely to be the culmination of long-term negotiations, direct communication between the parties, and ongoing contact, for example, to make design adjustments such that the bottle will be suitable for the customer’s particular mass production needs. These purchasers are very unlikely to be confused over the source of the bottles.

Continental argues that the relevant market includes the ultimate retail consumer, i.e., the person purchasing bottled juice in the grocery store. It argues that the evidence is that the container, as well as the contents of the container, sells the ultimate product to the consumer. If a consumer has a bad experience with the product because of Owen’s faulty design, this directly impacts Continental’s sales. Thus, it was the ultimate consumer market that Continental surveyed for confusion.

The district court properly rejected this data on the basis that these consumers are buying juice, not plastic bottles. As Owens points out, the Seventh Circuit has indicated that in determining whether there exists a likelihood of source confusion, “the proper inquiry centers on the confusion of consumers in the market for the particular product at issue.” Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382, 39 USPQ2d 1990, 1995 (7th Cir.1996) (“The proper examination is not whether some people viewing [the products] might be confused, but rather whether consumers in the market for [the products] are likely to be confused.”). Thus, Continental is faced with an insurmountable hurdle. The wholesalers to whom it markets its bottles are not in the bottle business, they are in the juice business. While the shape of the bottle may create confusion as to the source of the juice, this is irrelevant to the determination as to confusion as to the source of the bottles. Common sense and Seventh Circuit law dictate that there must be a clear nexus between the relevant product and confusion of the potential customer of that product.

Lastly, Continental asserts that the district court erred in failing to apply the Seventh Circuit’s “seven factor test” for likelihood of confusion. It argues that application of the test reveals Owens to be in violation of the Lanham Act. We disagree. First, the district court was not required to apply the seven factor test. See Libman Co. v. Vining Industries, Inc., 69 F.3d 1360, 1364, 36 USPQ2d 1751, 1754 (7th Cir.1995); DorrOliver, 94 F.3d at 381, 39 USPQ2d at 1994. The seven factor test simply provides the district court with a general framework for analysis. There are occasions, such as this, where that framework is not required. Second, in light of our determinations of the relevant consumer market, we see no need to address Continental’s flawed application of the seven factor test to its facts.

Accordingly, we affirm the court’s ruling on summary judgment that there was no likelihood of confusion as to source in the relevant market to support a finding of trade dress infringement.

IV

Owens raises a claim for damages under Fed. R.App. P. 38 for frivolous appeal both in its brief and through a separate motion. We deny the motion without comment.

AFFIRMED.

1 . The production mold is produced based on specifications agreed upon after the customer has reviewed the wooden or epoxy model. Often times, Continental reports, the mold is altered to accommodate the customer's mass production requirements. Continental emphasizes that in its industry it is the customer who ultimately approves the shape of the container because it is the customer who best knows the appeal of a particular shape in the market. Further, it is the customer who sets the specifications for and performs the definitive tests on the container because it is the customer who knows what its buyers want and has the filling lines on which the container must run.

2 . These changes are as follows:

1. Article Drawing H-2189-2, dated January 20, 1992, reflects changes in the relative height and the addition of a label panel contour;

2. Article Drawing H-2189-3, dated January 28, 1992, reflects another height adjustment, a different base length, and alterations of the label area and size;

3. Article Drawing H-2189-4, dated February 22, 1992, reflects changes to the area of finish or the section of the container receiving the cap;

4. Article Drawing, H-2189-5, dated February 24, 1992, reflects a fourth height adjustment;

5. Article Drawing H-2189-6, dated March 25, 1992, reflects a fifth height adjustment;

6. Article Drawing H-2189-7, dated April 24, 1992, reflects changes in the shape of the handle area (increased handle opening) and a reduction of the size of the label area; and

7. Article Drawing H-2189-8, dated August 19, 1992, reflects a new label contour and a new relative height.