In its recently issued opinion in Automotive Body Parts Association v. Ford Global Technologies, LLC, the Federal Circuit reaffirms the importance of design patents and their value in an overall patent portfolio strategy for automotive manufacturers and others who may be threatened by aftermarket sales of replacement parts.  It also provides guidance on the arguments that can and cannot be used to invalidate a design patent based on functionality of the design and whether, and to what extent, the concepts of patent exhaustion and repair rights can be used to protect potential infringers.

Ford Global Technologies (Ford) is an original equipment manufacturer (OEM) that owns design patent numbers D489,299 and D501,685 directed to ornamental features of the vehicle head lamp and hood design, respectively, of Ford’s F-150 trucks.  Automotive Body Parts Association (ABPA) is an association of companies whose members include aftermarket suppliers of parts, including for Ford trucks.  Ford previously alleged infringement by some of ABPA’s members of these two design patents, as well as others, in a complaint filed with the International Trade Commission (ITC).  That matter was settled.  ABPA then sued Ford in the US District Court for the Eastern District of Michigan seeking a declaratory judgement of invalidity of these two design patents.  ABPA moved for summary judgment, but the District Court instead entered summary judgement sua sponte in favor of Ford.  ABPA promptly appealed.

On appeal, the Federal Circuit explored the differences between design patents and utility patents.  While design patents protect “new, original and ornamental design for an article of manufacture,” utility patents rely on their functionality to be patentable.  Ultimately, the Court affirmed the ruling of the District Court, rejecting the various arguments presented by the ABPA and applying well-established law to find Ford’s patents valid and enforceable.

The Federal Circuit soundly rejected arguments that the aesthetic appeal of a design shows that a design patent is improperly directed to functional – rather than ornamental – aspects of an article, and hence invalid.  In making this argument, ABPA tried to analogize the Ford design patents with the design patents in Best Lock Corp. v. Ilco Unican Corp., 94 F.3d 1563 (Fed. Cir. 1996), where designs for a blade portion of a key were held functional based on the admitted fact that no alternatively designed blade would mechanically operate the corresponding lock.  Similarly, it said, alternative designs for Ford truck headlamps and hoods would not do, because they were not aesthetically acceptable to Ford truck owners.  The Federal Circuit disagreed:

“ABPA argues that Ford’s hood and headlamp designs are functional because they aesthetically match the F-150 truck. But ABPA does not identify, nor can we find, any design patent case ruling aesthetic appeal of this type functional. We hold that, even in this context of a consumer preference for a particular design to match other parts of a whole, the aesthetic appeal of a design to consumers is inadequate to render that design functional.”

The Court rejected ABPA’s further arguments that the concept of “aesthetic functionality” from trademark law should be applied to design patents, finding no precedent to support application of this concept to design patents and noting persuasive differences between trademarks and design patents that would not support such an application.

ABPA also argued that the protected designs were not a “matter of concern” for consumers, and that Ford’s design patents should – as a matter of policy – only be enforceable in the OEM market for sale of the F-150 trucks.  The Federal Circuit rejected the idea that the designs embodied in Ford’s design patents were not a “matter of concern” to the end consumers, noting evidence that consumers select replacement parts similar to the parts embodying the protected design, based on aesthetic matching to original F-150 truck parts.  The Court rejected the ABPA’s initial market arguments based on ample evidence of the importance of aesthetic appearance in the aftermarket parts market.

The Federal Circuit further rejected ABPA’s “attempts to develop design patent-specific exhaustion and repair rules,” noting:

“[W]e apply the same rules to design and utility patents whenever possible.”

In this regard, the Court first rejected ABPA’s arguments that Ford’s patents are unenforceable against aftermarket suppliers under the doctrine of exhaustion.  ABPA contended that exhaustion permits use of Ford’s designs on replacement parts that are intended for use with the F-150 truck.  The Federal Circuit confirmed that the doctrine of exhaustion only applies to design patents in the same way it applies to utility patents, i.e. it applies to the items originally sold or authorized to be sold – not to separately manufactured replacement products.  Since ABPA’s members were not authorized to sell the replacement parts, those members were not protected by exhaustion. The Federal Circuit also rejected ABPA’s attempt to extend the right of repair to encompass replacement parts.  The Federal Circuit agreed that a purchaser of a F-150 truck has a right to repair the specific parts on the truck, but that this right does not allow for a third party to create articles that embody the protected designs of those parts.

In summary, this case represents a strong affirmation of design patent rights and shows:

• A protected design is not deemed functional for purposes of invalidity merely because the alternative designs do not aesthetically match the vehicle into which they are incorporated.

• Design patents are enforceable beyond the initial market for the patented designs.

• Aftermarket parts dealers are not protected from infringement of OEM design patents based on the doctrine of patent exhaustion or the right of repair.

This decision should buoy OEM design patent owners, as it demonstrates that design patents can provide OEMs with valuable protection against unauthorized aftermarket production and sale.  It also reinforces the value of design patents within a larger IP protection strategy and affirms that law developed with respect to utility patents will be applied similarly, whenever possible, to design patents.