Sometimes it’s the little things that make all the difference.

Fingernail buffers, for instance. These small, inexpensive items recently produced a major court decision, dramatically revising the fundamentals of one type of IP protection.

Egyptian Goddess Inc., a privately held beauty products company, filed the suit. The company sells a rectangular fingernail buffer with a hollow interior (where the finger is placed) that contains three different pads with separate functions. A user selects which pad to use by changing the orientation of the buffer.

Swisa Inc. sells a similar buffer, but its product has four different pads. Egyptian Goddess, which has a design patent on its buffer, sued Swisa for infringement.

The district court, on summary judgment, found the two companies’ buffers were sufficiently distinct and threw out the infringement suit in December 2005. Egyptian Goddess appealed, and a Federal Circuit panel first heard the case in August 2007.

In late September 2008, the Federal Circuit issued a new en banc decision upholding the district court’s finding of noninfringement–but it did so under a new legal standard for infringement.

The ruling in Egyptian Goddess Inc. v. Swisa Inc. was dramatic in a number of ways. It was the first time that the Federal Circuit issued an en banc decision about design patents. And–at one stroke–it overturned 20 years of the court’s own precedents. This unanimous 13-0 decision set out a new, streamlined test for determining when a design patent is infringed, and this new standard will make it much easier for patentees to enforce their rights in court, according to experts.

“This is the most important design patent case since 1871 when the U.S. Supreme Court first addressed design patents,” says Christopher Carani, a shareholder at McAndrews Held & Malloy.

Designer’s Dilemma

In the U.S., design patents haven’t garnered the respect they deserve. These patents protect the purely ornamental aspects of manufactured items, such as the shape of automobile mufflers or the appearance of digital audio players. To be protected, a design must be new, original and nonfunctional. Once patented, the patentee gets the exclusive right to the design for 14 years.

Such exclusive rights are quite important for many types of consumer products–cars, desks, athletic shoes, cell phones–any time the appearance of a product matters.

Consider consumer electronics. “As electronic products such as computers and cell phones essentially become commodity goods … aesthetic appearance sometimes makes the biggest difference to consumers,” says Brent Yamashita, a partner at DLA Piper. “As aesthetics become more important for sales, you’d think design patents would become more important to companies.”

It hasn’t quite worked out that way. Many businesses have shied away from seeking design patent protection. And much of the blame lies with the Federal Circuit, experts say.

“The value of design patents was becoming eroded by prior Federal Circuit rulings,” says Patricia Rogowski, a partner at Connolly Bove Lodge & Hutz.

The Egyptian Goddess ruling, however, is expected to change all that. “I think we will see a lot more companies using design patents to protect their designs in the U.S.,” Carani says.

That’s because Egyptian Goddess does away with the Federal Circuit’s two-prong test for infringement and goes back to an easier one-part test. Sort of.

Creating Confusion

The U.S. Supreme Court established the traditional test for design patent infringement back in 1871. The court declared in Gorham Co. v. White that infringement exists if “in the eye of an ordinary observer, giving such attention as a purchaser usually gives, [plaintiff's and defendant's] two designs are substantially the same.”

In 1984, the Federal Circuit decided that substantial similarity was not enough to establish infringement–two products might appear substantially the same simply because they both used design elements that are in the public domain. So in Litton Systems, Inc. v. Whirlpool Corp., the court added a second prong to the test for infringement: A patentee must prove that an allegedly infringing product used an aspect of the patented design that was novel and not found in prior art.

This “point of novelty” test may sound reasonable enough, but it often created huge problems for patentees. If a patented design was novel because, as a whole, it differed from the prior art in multiple ways, a defendant could pick apart the patented design. The defendant could argue that each of the supposed points of novelty was found in a different piece of prior art, leaving the patentee with no single point of novelty that was infringed. Or the defendant could take the opposite tack, arguing that its design did not infringe because it did not copy all of the points of novelty–even though it copied most of them. In the end, the point of novelty test produced much confusion and a lot of unhappy patentees. “In many situations, validly granted design patents couldn’t be enforced,” Rogowski says.

Big Win

Recognizing that the point of novelty test created some serious problems, the Federal Circuit in Egyptian Goddess did away with this part of its two-prong test for infringement. Unfortunately, the court failed to clearly indicate what the new test for infringement should be. “The opinion has at least five different potential tests for infringement,” Carani says.

According to many experts, the Federal Circuit appears to be establishing a new test for infringement that merges the point of novelty test into Gorham‘s ordinary observer test. “Before, the point of novelty test was a bright line rule,” Yamashita says. “Here, the court said you must apply the ordinary observer test, but you must do so in the context of prior art. This new one-prong standard adds some ambiguity because points of novelty are now something to be considered, as opposed to something that must be present.”

This waters down the point of novelty test a bit, according to Charles R. Macedo, a partner at Amster Rothstein & Ebenstein. “This new test changes a clear two-prong test into a fuzzy one- prong test.”

Although the full impact of the ruling is uncertain, most IP experts see Egyptian Goddess as a big win for owners of design patents. “It will be easier to prove infringement,” Yamashita says. “It sounds like the test for infringement will be a more fact-intensive inquiry, and that will make it harder for defendants to get summary judgments of non-infringement.”

By making it easier to enforce design patents in court, the ruling is expected to spur businesses to take a fresh look at these patents. “Egyptian Goddess will encourage the use of design patents,” Macedo says. “It will help companies realize this is a viable form of protection for their IP rights.”