The Chalk Pencil infringement claims have been erased: Lanard Toys v. Dolgencorp

A Chalk Kat

This Kat is always excited to see intellectual property cases concerning product designs, as these cases present a great opportunity to explore the intersection of various IP regimes in a single work. Earlier this month, this Kat got his wish: the Federal Circuit Court of Appeals decided Lanard Toys Limited v. Dolgencorp LLC - a case concerning the design of a chalk-holder. Lanard Toys filed this suit against Dolgencorp, alleging infringement of a design patent, copyright, and trade dress, as well as unfair competition.

In this case, the Federal Circuit provided substantial guidance on claim construction and infringement analysis regarding design patents. Concerning Lanard's copyright claim, the Court also addressed the separability of the design of a useful article from the useful article itself, considering the separability analysis outlined in Star Athletica v. Varsity Brands. Additionally, the Court addressed secondary meaning as it relates to product design trade dress protection. 

Background

The Lanard Chalk Pencil

Lanard is a toy company, headquartered in Hong Kong. Lanard filed a graphic design of a chalk holder for copyright registration in 2010; the company received a copyright registration (VA 1-794-458) for the design in 2011. In 2012, the toy maker was also granted a design patent (D671,167) for a chalk holder designed to resemble a pencil. The chalk takes the place of graphite in the pencil shape.

In 2011, Lanard began selling the chalk holders as the "Lanard Chalk Pencil" to national distributor, Dolgencorp. Dolgencorp is a subsidiary of Dollar General, a large, national, low-cost retailer. In 2012, Lanard also began selling the chalk pencil to Toys "R" Us - Delaware, Inc; a leading toy retailer for many years, Toys "R" Us filed for bankruptcy in 2017 and has since restructured.

Ja-Ru Product

In 2012, American toy company, Ja-Ru designed a chalk holder that resembles a pencil; Ja-Ru used the Lanard Chalk Pencil as a market sample for reference in designing their chalk holder. Toys "R" Us and Dolgencorp began ordering and selling the Ja-Ru product in 2013, ending their orders for the Landard Chalk Pencil. The next year, Landard filed suit against Doglencorp, Toys "R" Us, and Ja-Ru, alleging (1) design patent infringement, (2) copyright infringement, (3) trade dress infringement, and (4) unfair competition.

The U.S. District Court for the Middle District of Florida issued a ruling on motions for summary judgment in 2019. The District Court was not persuaded by any of Lanard's claims, ruling that: (1) the design patent was not infringed by the Ja-Ru product, (2) the Lanard Chalk Pencil design was not entitled to copyright protection as a useful article, (3) the claimed trade dress had not achieved secondary meaning, and (4) the unfair competition claim fails because it rests upon the trade dress claim. Following this ruling, Lanard appealed its claims regarding a "simple toy, retailing at less than $5, [that] has spawned five years of contentious litigation" to the Federal Circuit Court of Appeals.

Design Patent

Regarding design patent infringement, Lanard appealed the ruling of the lower court on both claim construction and the evaluation of infringement. Lanard claimed that the lower court improperly eliminated elements of the claimed design. The Federal Circut was not convinced, strongly endorsing the ruling of the lower court; the Federal Circuit held that "the district court followed our claim construction directives to a tee ... meticulously acknowledg[ing] the ornamental aspects of each functional element" in relation to the prior art.

D671,167, Fig. 1

Lanard raised two issues regarding the evaluation of infringement. First, it asserted that the lower court had improperly used an element-by-element comparison for the ordinary observer test, rather than a comparison of the whole of the claimed design and the accused product. The Federal Cirucuit disagreed, noting that the lower court was proper to consider the ornamental features of both designs, analyzing the affect upon the overall design.

Second, Lanard argued that the lower court had improperly reinstated the "point of novelty" test for infringement, rather than applying the ordinary observer test. The Federal Circuit disagreed again, ruling that, while the lower court "undoubtedly considered the points of novelty of the patented design over the prior art," it also considered those points of novelty in context of how an ordinary observer would view the designs. According to the Federal Circuit, the attention of the ordinary observer is actually drawn to points of novelty. 

Affirming the ruling that the Ja-Ru product does not infringe the D167 patent, the Federal Circuit issued a harsh rebuke to Lanard for these arguments raised on appeal. The Federal Circuit offered a cold shoulder, stating:

[W]e deliberately disregard Lanard’s seeming attempt to side-track the infringement analysis by emphasizing similarities between its product—the Lanard Chalk Pencil—and the Ja-Ru product ... To the extent that the Lanard Chalk Pencil embodies features that are not claimed in its D167 patent, features that are purely functional, or features that are in the prior art, those features are not themselves entitled to patent protection.

Reg. '458, First Image

Copyright

The lower court had ruled that the Lanard Chalk Pencil design (1) is a useful article, lacking separable features eligible for copyright protection, and (2) that even if the design were found to have separable features, Lanard would seek copyright for an idea, rather than protectable expression. 

Although useful articles are excluded from copyright protection, creative design features that can be separately identified from and are capable of existing independently of the useful article may be eligible for protection. The Federal Circuit ruled that the design features of the Lanard Chalk Pencil are not separately identifiable nor are they capable of existing independently from the useful article of a chalk holder. Lanard argued that the design

features of a "cartoonish No. 2 pencil design" are separable, but the Federal Circuit agreed with the lower court that Lanard was improperly claiming copyright in a useful article,

A "No. 2" pencil in the U.S. equates to an
HB pencil in the rest of the world

[T]he pencil design does not merely encase or disguise the chalk holder, it is the chalk holder. When one imagines the pencil design as a separate work of sculptural art, one is merely picturing a replica of the chalk holder.

In addition, the Federal Circuit noted that the registered design consists of a pencil of generic appearance with the words "Chalk Pencil" and a No.2 symbol on it; the work registered is titled, "Pencil/Chalk Holder." As a result, the Court concluded that Lanard had sought to claim the idea of a chalk holder designed to resemble a pencil. This, combined with the finding of inseparability led the Federal Circuit to affirm that the Lanard Chalk Pencil design is not entitled to copyright protection.

Trade Dress & Unfair Competition

As a threshold issue, a plaintiff must show that trade dress has achieved secondary meaning to assert a claim of trade dress infringement. On appeal, Lanard had argued that the district court improperly considered only the end-users of the chalk holder, rather than distributors and retailers; Lanard sold its products through those entities with substantial sales. Successful sales figures were not sufficient to acquire distinctiveness. However,

[R]egardless of the identity of Lanard’s customers, Lanard has not identified evidence with which it could satisfy its burden to prove at trial that, when customers see the Lanard Chalk Pencil, their minds jump to the producer of the product rather than the product itself.

The Federal Circuit affirmed the ruling that the trade dress had not achieved secondary meaning. As a result, the Federal Circuit also affirmed the deficiency of Lanard's unfair competition claim, noting that it rests upon the trade dress infringement claim.

Comment

A Stein lamp base statuette 

Generally, this Kat is pleased with the Federal Circuit's ruling in this case. The rights granted by a design patent should not be expanded by tacking the features of a subsequent commercialization of the design. Trade dress protection should be afforded to those designs that customers associate with the producer of the associated product, rather than to products that merely have substantial sales. 

On the other paw, the Court's analysis of separability is puzzling. The pencil design of the chalk holder closely reflects the separability of the lamp bases at issue in Mazer v. Stein, the first U.S. Supreme Court case regarding separability. In Star Athletica v. Varsity Brands [Katpost here], the Supreme Court considered whether cheerleader uniform designs as pictured below were separable from the uniforms themselves; the Court applied a separability analysis, finding that "imaginatively removing the surface decorations from the uniforms and applying them in another medium would not replicate the uniform itself." As a result, the uniform designs were separable; this Kat does not see a substantial difference between the separability of these design features and those of the chalk pencil design. 

Two of the Star Athletica
uniform designs

That is not to say that the Lanard Chalk Pencil should be eligible for copyright protection. However, rather than relying upon separability, the Court could have found the pencil design ineligible for copyright protection for a want of originality. Lanard acknowledged that the design is that of a "cartoonish No.2 pencil;" this design is a generic representation of a ubiquitous item with the addition of the phrase "Chalk Pencil." Rather than restricting separability such that the design of a chalk holder with the external appearance of a pencil is inseparable from the associated useful chalk holder, the chalk holder design should have been denied copyright protection due to its lack of originality.