Columbia Sportswear Case Offers Chance for New Design Patent Law

Columbia Sportswear North America Inc.’s second trip to the Federal Circuit promises to address some major design patent issues that attorneys expect to become more salient as those relatively rare cases rise in prevalence.

A US Court of Appeals for the Federal Circuit panel held in 2020 that a district court must consider if Seirus Innovations Accessories’ logo placement in its waved-pattern design for cold-weather products could save it from infringing Columbia’s patented design. On appeal for the second time after Seirus avoided liability, attorneys say the nation’s top patent court must clarify when logos can help alleged infringers avoid liability and what part of the product matters for damages calculations.

The dispute has the potential to create new precedent as courts see more fights over design patents. Oral argument has yet to be scheduled.

Design patents and infringement suits based off of them became more popular over the past decade following a series of litigation between Apple Inc. and Samsung Electronics Co. that went to the US Supreme Court and later delivered one of the first big paydays in that area—a $539 million infringement verdict for the iPhone maker in 2018.

“Particularly since the Apple-Samsung smartphone design patent cases there’s been an influx of design patent filings, and, consequently litigation,” said Brendan T. O’Dea of Womble Bond Dickinson LLP. “The popularity of design patents has grown to where we’re in a catch up period. Issues that some would say are fundamental, things that you might think would’ve been settled before, are now being settled or clarified for the first time.”

Even though the original billion-dollar verdict was shrunk to hundreds of millions, the case still shook up the patent world, said Sarah Burstein, a law professor and co-director of the Suffolk Law IP Center.

“The thunderclap that was Apple v. Samsung continues to reverberate,” Burstein said. “I think people are willing to fight at the Federal Circuit in a way that they weren’t 10 years ago.”

Calculating Damages

Design patents differ from utility patents, which protect the structure or function of an invention and more commonly generate infringement litigation.

“The focus was on the utility side of patents for such a long time,” O’Dea said. “People are starting to see such large paydays.”

Apple used design patents to protect the look of an early iPhone—the rectangular shape with a black, reflective surface and rounded corners, the round home button, and the arrangement of color icons on the screen.

When a design patent is infringed, a patent owner can collect damages from the total profits arising from the infringer’s use of the design. Though, the Supreme Court ruled in the Apple case that the end product isn’t always the relevant tool to calculate damages.

Before the high court’s decision, a patent owner with a design patent covering a chair leg, for example, could collect damages based on the total profits of the entire chair sold. The justices ruled that a component or multiple components could instead be used for the calculation, but didn’t provide further guidance.

Lower courts since then have used a four-factor test suggested by the solicitor general, though an appeals court hasn’t weighed in.

The Columbia case gives the Federal Circuit a chance to settle that open question. Columbia’s design patent covers a heat reflective material used on gloves, footwear, socks, sleeping bags, and other cold weather products. For Columbia, a bigger payday would come if the damages were calculated on those end products, while Seirus is arguing the heat reflective material is the only relevant part of the product.

“The Federal Circuit has just not spoken,” said Perry Saidman of Perry Saidman LLC. “That is a big issue. It was teed up in the first appeal of Columbia, and they dodged it, and it’s up again on appeal.”

‘Escape Hatch’

Columbia sued Seirus in 2015 in the US District Court for the District of Oregon. Columbia accused Seirus of design patent infringement for Seirus’ HeatWave products, saying the waved-pattern was too close to Columbia’s D657,093 design patent.

The district court ruled that Seirus infringed the design, using a test laid out in an 1871 Supreme Court case to find that an “ordinary observer” would have difficulty differentiating between the two designs if Seirus’ logo was removed. The Federal Circuit disagreed, saying the lower court needed to consider the effect of the logo on the design.

On remand, a jury found that Seirus didn’t infringe Columbia’s patent.

Attorneys warned that the patent court’s initial ruling could open a “Pandora’s box” of non-infringement arguments, providing an easy way out for alleged infringers. Some said the ruling muddled a 1993 Federal Circuit decision, L.A. Gear, Inc. v. Thom McAn Shoe Co., which found that labeling wasn’t a way out of design patent infringement liability.

The L.A. Gear case and first Columbia decision are at odds, Saidman said, and the Federal Circuit will have to thread the needle now between those two decisions.

Saidman called the first opinion “disastrous” because it would allow infringers to “stick a little surface decoration or logo on their products and avoid infringement by that minor embellishment. It’s another escape hatch for infringers.”

But for Burstein, the Federal Circuit was correct. The appeals court wasn’t making new law, she said, but more binding decisions would help settle any outstanding questions.

“The problem is there’s so little design patent case law that everything’s kind of new,” Burstein said. “We need more precedential decisions.”