Hall v. Bed Bath & Beyond, Inc.

• Decision Date: 25 January 2013
• Docket Number: Nos. 2011–1165,2011–1235.,s. 2011–1165
• Citation: 705 F.3d 1357
• Court: U.S. Court of Appeals — Federal Circuit
• Parties: Roger J. HALL, Plaintiff–Appellant, and RJ Hall & Associates, Plaintiff, v. BED BATH & BEYOND, INC., Bed Bath & Beyond Procurement Co. Inc., and Farley S. Nachemin, Defendants–Appellees, and West Point Home, Inc., Defendant–Cross Appellant.

705 F.3d 1357

Roger J. HALL, Plaintiff–Appellant,

and

RJ Hall & Associates, Plaintiff,

v.BED BATH & BEYOND, INC., Bed Bath & Beyond Procurement Co. Inc., and Farley S. Nachemin, Defendants–Appellees,andWest Point Home, Inc., Defendant–Cross Appellant.

Nos. 2011–1165, 2011–1235.

United States Court of Appeals,

Federal Circuit.

Jan. 25, 2013.

Mitchell C. Shelowitz, Shelowitz & Associates, PLLC, of New York, NY, argued for plaintiff-appellant. With him on the brief was Darya Dominova.

Laura A. Wytsma, Loeb & Loeb, LLP, of Los Angeles, CA, argued for defendants-appellees and defendant-cross appellant. With her on the brief was Jordan A. Sigale, of Chicago, IL.

Before NEWMAN, LOURIE, and LINN, Circuit Judges.

Opinion of the court filed by Circuit Judge NEWMAN. Dissenting in part opinion filed by Circuit Judge LOURIE.

NEWMAN, Circuit Judge.

This case concerns a design patent for a “Tote Towel,” as the patented design is designated by inventor Roger J. Hall. The Tote Towel is a large towel with binding around all the edges, zippered pockets at both ends, and an angled cloth loop in the middle, pictured in U.S. Design Patent No. D596,439S (“the '439 patent”). The patent issued on July 21, 2009, claiming the following design and similar designs:

IMAGE

Mr. Hall filed this design patent application on November 17, 2008, and began producing the Tote Towel soon after the patent application was filed, with a label marked “patent pending.” On March 20, 2009, while the '439 patent application was pending, Mr. Hall contacted Bed Bath & Beyond (“BB & B”) to discuss whether BB & B would provide retail sales of the Tote Towel. At a business meeting, Mr. Hall left samples of his packaged Tote Towel with BB & B. Both the package and the towel were marked “patent pending.” BB & B then, through a supplier West Point Home, Inc., had copies of the Hall towel manufactured in Pakistan, for retail sale by BB & B. The patent duly issued, and Mr. Hall sued BB & B, West Point Home, and several executives of BB & B, for patent infringement, for unfair competition under the Lanham Act, and for misappropriation under New York statutory and common law. The defendants raised various defenses and counterclaims. The district court dismissed all of the claims and counterclaims on the pleadings,¹ and all parties appeal. We conclude that the counts of patent infringement, unfair competition, and misappropriation were not subject to dismissal on the pleadings, but affirm the district court's dismissal of the counts against the BB & B executives who had been sued in their personal capacity, and affirm the dismissal of the counterclaims.

Discussion

BB & B moved to dismiss Hall's complaint for failure to state a claim on which relief can be granted, Federal Rule of Civil Procedure 12(b)(6). On a motion to dismiss, the court “must accept as true all of the factual allegations contained in the complaint.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n. 1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). However, the factual allegations must “raise a right to relief above the speculative level” and must cross “the line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

IThe Complaint

A. Design patent infringement

The district court stated that Hall's patent infringement complaint did not contain “any allegations to show what aspects of the Tote Towel merit design patent protection, or how each Defendant has infringed the protected patent claim.” Order at 15–16. Hall states that its complaint properly pleaded the issue of design patent infringement. In Phonometrics, Inc. v. Hospitality Franchise Systems, Inc., 203 F.3d 790 (Fed.Cir.2000), this court outlined five elements of a patent infringement pleading, to (i) allege ownership of the patent, (ii) name each defendant, (iii) cite the patent that is allegedly infringed, (iv) state the means by which the defendant allegedly infringes, and (v) point to the sections of the patent law invoked. Id. at 794. The court stated that this is “enough detail to allow the defendants to answer” and that “Rule 12(b)(6) requires no more.” Id. These pleading requirements have been generally followed, including in the district courts of New York, as illustrated in Digigan, Inc. v. Ivalidate, Inc., No. 02 Civ. 420, 2004 WL 203010, at *4 (S.D.N.Y. Feb. 3, 2004), where the district court explained that “Plaintiff has met the standard articulated in Phonometrics for stating a claim under § 271.” Indeed, the defendants themselves stated in their Motion to Dismiss (on other grounds) that Hall's patent infringement claim “as set forth in the Amended Complaint is pled properly.” Although the defendants now argue that the complaint is flawed because of the absence of “claim construction,” the position taken by the district court, claim construction is not an essential element of a patent infringement complaint.

The district court stated that the complaint should have included answers to questions such as: “What is it about Plaintiff's towel that he claims is ‘new, original and ornamental,’ meriting the protection of a design patent?” Order at 16. The Federal Rules, and the Court in Twombly and Iqbal, do not so require. In Twombly the Court stated that “Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Here the defendants never stated that they were not apprised of Hall's infringement claim and its grounds.

In addition, the district court erred in its view of design patent law, for, as confirmed in Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed.Cir.2008) (en banc), infringement of a design patent is based on the design as a whole, not on any “points of novelty.” As stated in L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1125 (Fed.Cir.1993), “[i]n conducting [infringement] analysis the patented design is viewed in its entirety, as it is claimed.” See Gorham Co. v. White, 81 U.S. (14 Wall.) 511, 528, 20 L.Ed. 731 (1871) (infringement is determined by visual comparison of the pictured design and the accused article). The criterion is “if, in the eye of the ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.” Id.

Hall's complaint identified the patent, showed the patented design, and described the accused towel as follows:

¶ 27. The Counterfeit Towel is virtually identical in design to the Tote Towel. It [has] the same shape and almost the same dimensions—50? x 9.? The Counterfeit Towel also features the Tote Towel's unique zippered compartments and hanging loop. In fact, the inseam of the Counterfeit Towel, from one pocket to the other, is exactly the same length as that of the Tote Towel.

Paragraphs 26–40 of the complaint add specificity, and the record before the district court included pictures comparing the patented and the accused towel, such as:

IMAGE

Hall v. Bed Bath & Beyond, No. 10–cv–4391 (S.D.N.Y. June 11, 2010) (preliminary injunction hearing).

Hall presented a lengthy complaint, stating that the resemblance is such as to deceive an ordinary observer, in accordance with the Gorham criteria of infringement. Hall's assertion that the accused towel is “virtually identical in design” to Hall's Tote Towel, Egyptian Goddess, 543 F.3d at 677–78, is plausible, see Twombly, supra. The pleading requirements for design patent infringement were readily met. The district court erred in requiring that the complaint identify “new, original, and ornamental” aspects of the design, for in Egyptian Goddess the court negated the “point of novelty” requirement for design patents. And as stated in Richardson v. Stanley Works, Inc., 597 F.3d 1288, 1295 (Fed.Cir.2010), “[t]he ordinary observer test similarly applies in cases where the patented design incorporates numerous functional elements.”

Nonetheless, the district court sua sponte dismissed the complaint. The Second Circuit in Kittay v. Kornstein, 230 F.3d 531, 541 (2d Cir.2000), observed that a sua sponte dismissal of a complaint “is usually reserved for those cases in which the complaint is so confused, ambiguous, vague, or otherwise unintelligible that its true substance, if any, is well disguised.” Id. (quoting Salahuddin v. Cuomo, 861 F.2d 40, 42 (2d Cir.1988)). Such unintelligible traits are not here alleged, and cannot be discerned in the complaint. “A court's task in ruling on a Rule 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.” Levitt v. Bear Stearns & Co., 340 F.3d 94, 101 (2d Cir.2003) (internal quotations omitted).

The defendants cite this court's precedent that a “patent holder, if challenged, must be prepared to demonstrate to both the court and the alleged infringer exactly why it believed before filing the claim that it had a reasonable chance of proving infringement.” View Eng'g, Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed.Cir.2000). That case did not relate to dismissal on the pleadings; View Engineering concerned a district court's discretion to sanction a patentee under Rule 11 for filing “baseless counterclaims,” id., counterclaims that the patentee admitted...