Opinion ID: 614670
Heading Depth: 1
Heading Rank: 1

Heading: PPC's Investment in Engineering, Research, and Development

Text: The ITC determined that although PPC had made considerable investments in the engineering, research, and development of its EX connector, the investment was directed solely to the underlying functionality of the connector, and therefore could not support a finding of domestic industry with respect to a patented design that arose out of the very same effort. No apportionment or weight was given to PPC's research and development regarding the design. See Comm'n Op. at 52-53. The ITC emphasized the following findings: the '539 design patent and the '194 utility patent include the same drawing figures; both patents were filed as continuations of a single prior application; and PPC has not made any product covered by its '539 patent. Id. Based on these findings, the ITC concluded that Mr. Montena's salary, time, effort, and use of PPC's equipment and facilities are more likely attributable to his development of the structural and functional design of the connector. . . than to his development of the ornamental design. Id. This conclusion was arbitrary and capricious. First, the ITC's analysis regarding PPC's research and development expenditures was cursory and arbitrary. The ITC suggests that without a showing to the contrary, a design patent that was based on an underlying utility application having the same drawing figures renders the design a mere incidental afterthought to which no amount of investment or effort can be attributed. Id. Since the ITC does not base its reasoning on any evidence or testimony as to the work done by the inventor of the connector and creator of the design, its determination that such a patent application filing strategy must reveal that the design was essentially valueless was speculative. This decision arbitrarily diminishes the availability of section 337 relief with respect to design patents and undermines the value of design patents generally. Design patents possess unique and valuable properties long ago recognized by the Supreme Court. See Gorham Co. v. White, 81 U.S. 511, 524-25, 14 Wall. 511, 20 L.Ed. 731 (1871) (The law manifestly contemplates that giving certain new and original appearances to a manufactured article may enhance its salable value, may enlarge the demand for it, and may be a meritorious service to the public.). Design patents protect fundamentally different subject matter than that which is encompassed by a utility patent, and can be used to effectively and efficiently combat knock-off products that can be easily identified by visual inspection alone. Second, that PPC has not made and sold products covered by the '539 patent is not a reasonable basis to entirely discount PPC's research and development of the design. It is clear that Mr. Montena's work yielded a functional connector invention and an ornamental design for it. Some non-zero portion of Mr. Montena's time and effort was necessarily devoted to the ornamental aspects of the connector. It was arbitrary for the ITC to assume that this portion was de minimis and insubstantial because PPC did not ultimately put the design into one of its commercial products. PPC may have had good business reasons for not including the patented design in its products. The mere non-use of the design cannot justify a total disregard of the related underlying investment in research and development of it. Third, the ITC should be wary of diminishing the contribution of an ornamental design particularly where, as here, the inventor/designer's effort yields both functional and ornamental features applicable to the same underlying article. The result may be greater than the sum of its parts, and the parts may not be easily separable. See Perry J. Saidman & Theresa Esquerra, A Manifesto on Industrial Design Protection: Resurrecting the Design Registration League, 55 J. COPYRIGHT SOC'Y USA 423, 425 (2008) (Since a good industrial design ideally inseparably blends form and function, the designer is penalized [by the functionality doctrine] because her design embodies functional qualities.). Patentable designs are by definition embodied in underlying utilitarian articles. See 35 U.S.C. § 171 (Whoever invents any new, original, and ornamental design for an article of manufacture may obtain a patent therefore. . . .) (emphasis added). Whether or not that underlying article embodies a separately patentable utility invention, the utility of the article itself cannot be presumed to completely overshadow the investment in research and development of the article's design. The majority argues that no remand is necessary because the ITC found PPC failed to meet its burden of proof on the issue of investment in research and development of the patented design. See Comm'n Op. at 52 (PPC presented no evidence of any investment in research and development related to the '539 patent.). While PPC did not affirmatively apportion out its investment as it pertained to the '539 design patent only, PPC introduced substantial evidence showing its considerable investment in the EX connector research project as a whole, which necessarily included the work that yielded the patented design. The ALJ considered all the evidence and found it sufficient to show that at least some portion of Mr. Montena's salary, plus his time, effort, and use of PPC's equipment and facilities, is attributable to his development of the design that became the '539 patent. Initial Determination at 113. The ITC rejected [t]his inference, and instead would have required some better or more precise allocation of investment costs to show direct attribution to the design. Comm'n Op. at 52-53. Without first verifying the possibility and extent to which such an allocation can be made, there are no facts in the record before us sufficient to support the ITC's conclusion that time and resources spent by PPC in researching or developing the ornamental design of the '539 patent are minimal and could not constitute a substantial investment. Comm'n Op. at 52-53. This conclusion is not a cost allocation but mere conjecture. The ITC's determination that PPC's research and development with respect to the design patent failed to meet a substantial investment threshold was therefore arbitrary and capricious. Remand is necessary to conduct further fact finding as to the extent to which PPC's research and development efforts may be allocated between the functional and ornamental features created by Mr. Montena.