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Legal observers say a judgment by the U.S. Court of Appeals for the Federal Circuit upholding a patent appeals board ruling is a signal that a very minor alteration to an existing design patent is enough to uphold another design patent. The Federal Circuit’s Jan. 24 judgment in Vanguard Identification Systems Inc. v. Kappos is a unanimous per curiam order by three judges. Judges Daniel Friedman, Alan Lourie and Pauline Newman did not issue an opinion with the judgment, but lawyers say the Federal Circuit’s wholesale adoption of the holding by the Board of Patent Appeals and Interferences’ speaks volumes about the court’s views in this area. The Federal Circuit affirmed the patent appeals board’s ruling in favor of Bank of America Corp, whose design patent was at issue in a patent re-examination. Vanguard started the process by initiating a so-called inter partes patent re-examination with regard to the Bank of America design patent. Third parties can participate in these types of re-examinations. A patent examiner initially ruled that Bank of America’s patent for a data card design was obvious, but the patent appeals board reversed. According to the briefs, Bank of America’s design patent is an ornamental design for a rectangular data card with rounded corners, a magnetic data stripe parallel to and near one of the long sides and a circular key-ring hole near one of the corners. The patent examiner found two prior design patents that were the same as Bank of America’s except for the hole. The ruling is believed to be the first time the Federal Circuit has reviewed a patent appeals board ruling on an inter partes patent re-examination, said Christopher Carani, a partner at Chicago’s McAndrews, Held & Malloy who specializes in design law and who is not involved in the case. Neither Bank of America, nor its lawyers at Moore & Van Allen of Charlotte, N.C., responded to requests for comment. “People will be looking at that board decision as indicating that even the slightest variation from the prior art is sufficient to get a design patent,” said Vanguard’s lawyer, Gary Rosen, a Philadelphia solo practitioner. “We’re really pretty shocked we got a one-page response from these three judges,” said Rick Warther, Vanguard’s founder and the inventor of its patent. “The [patent] examiner got it right,” Warther said. “If you take a look at our prior art, it’s identical.” Vanguard has a billion-and-a-half bar coded cards worldwide, so it was a natural transition for the company to make cards with a magnetic stripe, Warther said. “How it is that someone [can] come in with a patent issued years after your clear prior art and their patent can be upheld?,” Warther said. “It is beyond belief.” Carani said that, despite the lack of opinion, the Federal Circuit’s Vanguard judgment is important because there’s very little jurisprudence concerning design patents. “Every time an opinion comes down, it could be a tectonic shift,” he said. “[The takeaway is if] you’re going to seek a design patent and there’s prior art, it says that prior art has to be darn close as the basis of denying the design patent,” Carani said. “It gives more teeth to design patents.” The judgment also indicates that it could be easier to defend a design challenge in the future, he said Sheri Qualters can be contacted at [email protected].

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