Written by Mark C. Humphrey

On May 14, 2020, the Federal Circuit Court of Appeals issued a decision in Lanard Toys Limited v. Dolgencorp LLC et al., Case No. 2019-178, affirming summary judgment for the defendants and dismissing claims for design patent and copyright infringement.  The claims were grounded in a challenging intellectual property law concept: the level of protection available for objects claimed to have both aesthetic and utilitarian functions.  While the decision does little to provide additional clarity on the issue, it offers a useful snapshot of current jurisprudence, particularly in the copyright context in light of the United States Supreme Court’s Star Athletica decision, and identifies the salient distinctions between copyright law, design patent law, and trade dress law as they apply to a product design.

Lanard involves toy chalk holders made to look and function like pencils.  Since 2011, Lanard had been making and selling one such product, the “Lanard Chalk Pencil,” to national distributors including Dolgencorp LLC (parent of Dollar General) and Toys R’ Us (“TRU”).  Lanard owned patent registrations for its design, as well as a copyright for a work entitled “Pencil/Chalk Holder.”  In 2012, Ja-Ru, Inc. (“Ja-Ru”) released a similar toy chalk pencil holder that used the Lanard Chalk Pencil as a design reference.  By 2013, Dolgencorp and TRU had stopped ordering the Lanard Chalk Pencil in favor of Ja-Ru’s product.

A few months later, Lanard filed suit against Ja-Ru, Dolgencorp, and TRU, asserting claims for copyright infringement, design patent infringement, trade dress infringement, and statutory and common law unfair competition under federal and state law.  The parties filed cross-motions for summary judgment, with defendants prevailing on the grounds that (1) Ja-Ru’s product did not infringe Lanard’s patent; (2) Lanard’s copyright was invalid and in the alternative not infringed by Ja-Ru’s product; (3) Ja-Ru’s product did not infringe Lanard’s trade dress; and (4) Lanard’s unfair competition claims failed because its other claims failed.  Lanard appealed to the Federal Circuit, which had jurisdiction owing to Lanard’s design patent infringement claim.

Of particular note is the discussion of Lanard’s copyright infringement claim.  The Federal Circuit agreed with the district court that Lanard’s copyrighted design had an intrinsic utilitarian function: storing and holding chalk and facilitating writing.  This made it a useful article under 17 U.S.C. § 102(a)(5).  Under the standard recently annunciated by the United States Supreme Court in Star Athletica, LLC v. Varsity Brands, Inc., 137 S. Ct. 1002, 1008 (2017), a feature incorporated into the design of a useful article is eligible for copyright protection only if it (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in another tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.

The Federal Circuit concluded that the district court correctly applied Star Athletica, because the pencil design for which Lanard sought protection did not merely encase or disguise the chalk holder; the design for which Lanard sought protection was the chalk holder itself.  As such, if one were to imagine the pencil design as a separate work, they would be picturing a replica of the chalk holder.  The court thus concluded that Lanard’s copyright was invalid.  While Lanard argued that its rights protected a “cartoonish” pencil, which therefore could be perceived as an independent sculptural work if imagined in another medium, the court was unconvinced.  Citing Star Athletica, 137 S. Ct. at 1010, the court noted that in attempting to identify separable features, “the feature cannot itself be a useful article.”  Lanard’s copyright claim, though, asserted protection for the chalk holder itself, including its dimensions and shape.  This, in the court’s view, combined with the fact that Lanard’s copyright was titled “Pencil/Chalk Holder,” showed that Lanard was seeking monopolistic protection over “any and all expressions of the idea of a pencil-shaped chalk holder.”  Accordingly, the court affirmed the grant of summary judgment on the copyright infringement claim under the Star Athletica standard.

Aside from the copyright infringement claim, the court focused heavily on the design patent infringement claim – an often-claimed alternative to copyright protection for the appearance of useful articles.  To determine whether a design patent has been infringed, (1) a court must construe the plaintiff’s claim to determine its meaning and scope and (2) the fact finder then must compare the properly construed claim to the accused design.  Elmer v. ICC Fabricating, Inc., 67 F. 3d 1571, 1577 (Fed. Cir. 1995).  Infringement is found if, in the eyes of an “ordinary observer” giving such attention as a purchaser usually gives, the two designs are substantially the same, such that the observer is deceived and induced into purchasing one supposing it to be the other.  Egyptian Goddess, Inc. v. Swisa, Inc., 543 F. 3d 665, 670 (Fed. Cir. 2008).

Lanard asserted that the district court (1) erred in its claim construction analysis by eliminating elements of the design based on functionality and lack of novelty; (2) improperly conducted an element-by-element comparison rather than comparing the overall designs; and (3) used a rejected “point of novelty” test to evaluate infringement.  The Federal Circuit rejected each argument.  First, the court held that the district court’s claim construction analysis construed Lanard’s claim consistent with exemplary figures from its design patent and by pointing out ornamental and functional features as they related to prior art.  Second, the court held that the district court properly compared the overall designs, necessarily considering how ornamental differences in individual elements would impact an ordinary observer’s perception of the design.  This was because design similarities between the two stemmed from aspects that were not protectable either because they were functional or well-established in prior art.  As a result, any differences between the two products would take on greater significance to an ordinary observer.  Third, the court held that the district court properly placed points of novelty in context by considering that they would draw the attention of an ordinary observer, and correctly balanced the need to consider such points of novelty while remaining focused on how an ordinary observer would view the overall design.  Ultimately, Lanard’s position was untenable because—just as the Federal Circuit held with respect to Lanard’s copyright claim—Lanard sought to exclude any chalk holder in the shape of a pencil and extend the scope of Lanard’s patent beyond what is protectable by law.

Separate from the functionality issue upon which the patent and copyright claims turned, the Federal Circuit agreed with the district court’s finding that Lanard’s trade dress infringement claim failed because Lanard could not provide sufficient evidence that the Lanard Chalk Pencil had acquired secondary meaning.  In order to do so, Lanard would have had to show that “the primary significance of the product in the minds of the consuming public [was] not the product itself but the producer”—i.e., Lanard.  Lanard had focused exclusively on the fact that it had sold large numbers of units to wholesalers and retail stores, yet provided no evidence of how actual end-customers perceived its product, and its claimed design in particular.  Unable to document how, and if, consumers saw the design itself as a source identifier, it was impossible for Lanard to prove secondary meaning as a matter of law.

Though it lacks broad precedential impact, Lanard is a clear reminder that businesses should be wary of banking on intellectual property protection for products that have utilitarian functions, particularly where the claim is truly intertwined with the utility of the product itself.  In light of Star Athletica, it is vitally important that what one seeks to copyright is in some way separable from an object’s functional elements; it is not enough to claim broad copyright protection for a stylized version of a functional object, as Lanard attempted to do.  One wonders whether this case would have turned out differently if Lanard’s copyright claim had been based on an original pattern or design present on the Lanard Chalk Pencil that was capable of being independently perceived, rather being based on the chalk holder itself.  Such a scenario would have been analogous to the cheerleading uniform patterns at issue in Star Athletica, which the Supreme Court found eligible for copyright protection because they could be independently perceived as two-dimensional works of art if placed on a canvas.  Regardless, by presenting its case as potentially claiming artistic expression, design rights, and trademark-like rights, Lanard overplayed its hand, exposing itself to an argument that it was seeking a monopoly over the expression of a particular idea.