Federal Circuit Addresses Claim Construction, Invalidity, And Trade Dress Issues In Money-Clip Wallet Patent Case
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  • Federal Circuit Addresses Claim Construction, Invalidity, And Trade Dress Issues In Money-Clip Wallet Patent Case

    On December 20, 2022, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) issued a precedential opinion affirming in part, reversing in part, and vacating and remanding in part, the decision of the U.S. District Court for the Central District of California in a patent infringement and trade dress litigation between money-clip wallet competitors Mosaic Brands, Inc. (“Mosaic”) and Ridge Wallet LLC (“Ridge”).  Mosaic Brands, Inc. v. Ridge Wallet LLC, Appeal No. 22-1001 (Fed. Cir. Dec. 20, 2022).

    In the district court, Mosaic accused Ridge of infringing one of its patents and its trade dress.  Shortly thereafter, Ridge obtained a patent of its own, and filed a counterclaim against Mosaic for infringement.  After the district court construed the claim terms “lip” and “of varying thickness,” the parties stipulated that Mosaic could not prove infringement of its patent.  The district court then granted summary judgment of invalidity of Ridge’s patent, based on anticipation stemming from alleged prior art sales, and denied as moot Mosaic’s motion for summary judgment that Ridge had obtained its patent through inequitable conduct.  The district court also granted summary judgment to Ridge on Mosaic’s trade dress claim, finding the trade dress invalid on multiple grounds.  Mosaic and Ridge both appealed.

    With respect to claim construction, the CAFC affirmed the district court’s construction of “lip” as a “connector made of extrudable or injectable plastic material …,” because the written description of the patent expressly states that “the device of the present invention is constructed of extrudable plastic materials.”  In doing so, the CAFC rejected Mosaic’s argument that this construction is too narrow (e.g., the lip may be made of any softer flexible material such as silicone or elastic, and not just extrudable or injectable plastics) because the CAFC found that the written description’s statement of the present invention is not simply describing the best mode or particular embodiments, but rather that it describes the invention as a whole, thereby disclaiming inventions constructed out of materials other than extrudable plastics.  The CAFC also affirmed the district court’s plain-and-ordinary meaning construction of the term “of varying thickness,” noting that Mosaic failed to explain what is incorrect about the construction or how its own proposal deviated from plain and ordinary meaning.

    The bulk of the CAFC’s opinion focused on its reversal of the district court’s grant of summary judgment that Ridge’s patent is invalid as anticipated by 2011 sales of Mosaic’s Smart Money Clip II (“SMCII”), the evidentiary support for which was based in large part on the testimony of Scott Kaminski, the inventor of the SMCII.  Ridge made two arguments on appeal as to why summary judgment is inappropriate:  (1) Kaminski’s testimony lacks sufficient corroboration as a matter of law, and (2) there is a genuine dispute as to the material fact of Kaminski’s credibility.

    With respect to the former, the CAFC explained that, when a party claims that its own invention predates, and thereby anticipates, a patent asserted against it, the oral testimony of the inventor of the purported prior art must be corroborated.  This protects against fraud, and provides an additional safeguard against courts being deceived by inventors who may be tempted to mischaracterize the events of the past.  Possible corroborating evidence, from most to least probative, includes documentary and physical evidence created at the time of conception or reduction to practice, circumstantial documentary evidence about the inventive process, and oral testimony by someone other than the inventor.  The CAFC explained that it applies a rule-of-reason analysis, which does not require every aspect of an inventor’s testimony to be explicitly corroborated with a source independent of the inventor, but rather requires an evaluation of the evidence as a whole.  The CAFC further explained that the design plans and invoices at issue attached to Kaminski’s declaration, if credited, would be sufficient to corroborate his testimony.

    However, the CAFC explained that, while the district court correctly concluded that the evidence was sufficient to satisfy the corroboration requirement, the district court erred by proceeding to grant summary judgment of anticipation.  Finding that Mosaic presented legally sufficient evidence to corroborate the inventor’s testimony does not necessarily mean that Mosaic’s evidence would also lead every reasonable factfinder—taking the evidence in the light most favorable to Ridge, as the non-moving party—to find by clear and convincing evidence that the SMCII does, in fact, predate Ridge’s patent’s critical date.  The CAFC explained that a factfinder would first have to evaluate the credibility and persuasiveness of the evidence of corroboration, and that, as a general matter, even where there are no affidavits from the opposing party, it will often be appropriate to deny summary judgment because the inventor’s testimony raises issues of credibility that require a trial.

    Additionally, the CAFC explained that Ridge had identified specific facts in the record that cast doubt on Kaminski’s credibility and on the authenticity of the documents that Mosaic offered as corroboration.  For example, Ridge pointed to the lack of any contemporaneous images of the SMCII from 2011, the lack of documented sales from 2012 to 2019, Kaminski’s motive to misrepresent his invention date, the lack of any metadata confirming the documents’ authenticity, and other alleged inconsistencies in Kaminski’s representations.  The CAFC further noted the absence of any corroborating evidence from a third party showing that the SMCII is prior art.  For these reasons, the CAFC stated that Ridge is entitled to cross-examine Kaminski to test his credibility, and, if the factfinder were to find him not credible, then the record would lack the requisite corroborating evidence that would permit Mosaic to meet its clear and convincing burden. 

    The CAFC criticized the district court for basing its summary judgment decision on the apparent belief that Ridge failed to produce affirmative evidence challenging Kaminski’s testimony—both because this is inconsistent with precedent holding that affirmative evidence is not always necessary in order to create a genuine dispute of fact, and because Ridge did in fact present evidence, including a declaration from its CEO stating that he had not heard of Mosaic or its product until around 2019, and that it was his belief that the SMCII was first sold in 2019.  In light of these errors, the CAFC reversed and remanded for further proceedings as to whether the SMCII anticipates Ridge’s patent.  The CAFC accordingly vacated the district court’s denial of summary judgment on Mosaic’s inequitable conduct defense, given that Ridge’s infringement claim against Mosaic may now proceed.

    With respect to the district court’s trade dress finding, the CAFC affirmed that there is no genuine dispute of material fact as to whether Mosaic’s putative trade dress is functional.  The CAFC explained that Ridge introduced unrebutted testimony and documentary evidence explaining the utility of each aspect of Mosaic’s asserted trade dress and further testimony explaining why the overall design is functional as a whole, and that Mosaic did not meaningfully dispute the relevant facts.