[00:00:11] Speaker 03:
May it please the court?

[00:00:13] Speaker 03:
First, patent exhaustion.

[00:00:15] Speaker 03:
Please allow me to state the core argument on patent exhaustion, and then I will defer.

[00:00:23] Speaker 03:
There are allegations in this case by Ford that components of the F-150 truck infringe upon a hood and a headlamp design patent.

[00:00:34] Speaker 03:
Since the F-150 truck that was sold under Ford's allegations embodies

[00:00:41] Speaker 03:
the subject design patents.

[00:00:43] Speaker 03:
The F-150 truck can be repaired under the repair doctrine without infringing the design patents.

[00:00:51] Speaker 03:
Now Ford cites the Aiken case.

[00:00:55] Speaker 03:
That involves the knitting needle.

[00:00:57] Speaker 03:
But let me distinguish Aiken and make two important points.

[00:01:02] Speaker 03:
First, under the repair doctrine, it is important to identify what the article of manufacture is.

[00:01:09] Speaker 03:
So you can see if the repair doctor applies.

[00:01:12] Speaker 03:
Is the article being repaired?

[00:01:14] Speaker 03:
Is it being replaced?

[00:01:15] Speaker 03:
Is it being reconstructed?

[00:01:18] Speaker 03:
The Aiken case was a utility patent case.

[00:01:21] Speaker 03:
And so in that case, it was clear what the article of manufacture was.

[00:01:26] Speaker 03:
It was the needle.

[00:01:27] Speaker 03:
And that is because it was a utility patent case.

[00:01:30] Speaker 03:
And that is the way the utility patent statute works.

[00:01:34] Speaker 04:
Was the utility patent directed to the needle?

[00:01:38] Speaker 03:
Yes.

[00:01:39] Speaker 04:
Like here, the design patent is directed to particular parts?

[00:01:45] Speaker 03:
There is a distinction between how utility patent works, utility patent statute, and the design patent statute.

[00:01:54] Speaker 03:
Under Section 101, which is the utility patent statute, the word therefore refers back to Article of Manufacture.

[00:02:04] Speaker 03:
So it's clear what the Article of Manufacture is.

[00:02:07] Speaker 04:
Why isn't it clear in these design patents that are at issue in this case what they're directed to, and they're directed to specific parts?

[00:02:15] Speaker 03:
Under section 171A of the design patent statute, the word therefore does not refer to article of manufacture.

[00:02:25] Speaker 03:
It refers to design for an article of manufacture.

[00:02:30] Speaker 03:
That allows portion claiming in design patents

[00:02:35] Speaker 03:
And it allows for potentially multiple articles of manufacture and components thereof that may embody the claim design.

[00:02:43] Speaker 03:
That point, the exact point, was made by the Supreme Court relatively recently in the Samsung versus Apple case when they said that the term article of manufacture was broad enough to include both a parent and a component.

[00:03:00] Speaker 03:
And they said there was ambiguity.

[00:03:02] Speaker 03:
And since there was ambiguity,

[00:03:04] Speaker 03:
they needed a separate test to determine what the Article of Manufacture was.

[00:03:08] Speaker 03:
Now, they were doing that under Section 289, the damages statute.

[00:03:13] Speaker 03:
And they remanded it to the lower courts.

[00:03:15] Speaker 03:
They came up with a four-part test that has not yet been reviewed by this court.

[00:03:19] Speaker 03:
But the important point is, under the design patent statute, you don't know what it is.

[00:03:26] Speaker 03:
And so the question becomes, how should we handle the Article of Manufacture issue

[00:03:35] Speaker 03:
In the patent exhaustion repair context, we say that the test should be if the article sold embodies the claim design, then that article can be repaired without infringing the claim design.

[00:03:53] Speaker 03:
That's the test.

[00:03:54] Speaker 01:
In fact, that's the test that was already.

[00:03:57] Speaker 01:
But do you agree that that article can't be replaced?

[00:04:00] Speaker 01:
It just has to be repaired.

[00:04:04] Speaker 03:
Well,

[00:04:05] Speaker 03:
The article sold in this case is the F-150 truck.

[00:04:08] Speaker 01:
And so we're saying... Is the design patent on the entire truck or is it on separate components of the truck?

[00:04:13] Speaker 01:
That's the question.

[00:04:15] Speaker 01:
No.

[00:04:16] Speaker 01:
What does the patent actually patent?

[00:04:18] Speaker 01:
I mean, don't we look to see the language of the patent and see what the designs, it is seeking a patent?

[00:04:25] Speaker 03:
You can gain some clues.

[00:04:29] Speaker 01:
In this case, both... I don't know.

[00:04:32] Speaker 01:
Why this is a difficult question.

[00:04:34] Speaker 01:
The patent says what designs and what particularly ornamental features it's patenting.

[00:04:39] Speaker 01:
Aren't those the subject of the patent?

[00:04:42] Speaker 03:
Not necessarily.

[00:04:43] Speaker 03:
I mean, the design patent has a certain claim to it in the drawings and it has a title.

[00:04:50] Speaker 03:
In this case, the title is vehicle, vehicle headlamp and vehicle hood.

[00:04:57] Speaker 03:
So headlamp and hood.

[00:05:00] Speaker 03:
Yes, the title, but the title does not define the claim, and the title should not define the article of manufacture.

[00:05:08] Speaker 01:
In fact, in the government's brief... Doesn't what is shown define the claim in the patent law?

[00:05:15] Speaker 03:
Generally, what is shown and described defines the claim, but that's separate from what is the article of manufacture, because again, under design patent law... I think that going back to Judge Hughes' question, what doesn't matter?

[00:05:29] Speaker 04:
if the entire design is not being repaired, it's being, I mean, it's not being repaired, it's being totally replaced.

[00:05:41] Speaker 03:
Again, the core issue here is are we talking about replacement of the hood or headlamp or are we talking about repair of a truck?

[00:05:49] Speaker 03:
And our argument is that under the design patent law, since it's a design for an article of manufacture, you should look at

[00:05:58] Speaker 03:
an article of manufacture that embodies the claim design.

[00:06:02] Speaker 03:
And clearly, the F-150 truck as a whole embodies the claim design.

[00:06:07] Speaker 04:
But the headlamp also embodies the claim design.

[00:06:11] Speaker 03:
Yes, it also does.

[00:06:12] Speaker 03:
That's right.

[00:06:13] Speaker 04:
And also, by the way... If there is ambiguity, why is that a question for this court?

[00:06:18] Speaker 03:
I'm sorry.

[00:06:18] Speaker 04:
If there is ambiguity, why is that a question for this court?

[00:06:22] Speaker 04:
I mean, am I correct in understanding that there's attempts

[00:06:26] Speaker 04:
in Congress to clarify this?

[00:06:29] Speaker 04:
Do I understand that?

[00:06:31] Speaker 03:
There have been attempts at doing that.

[00:06:34] Speaker 03:
But we say it can be done as a matter of judicial interpretation and application of the patent exhaustion doctrine to design patents.

[00:06:45] Speaker 01:
And I still don't understand why there isn't a distinction, even if we're looking at the whole truck, between repairing it and we're wholly replacing parts.

[00:06:56] Speaker 03:
Well, that gets into the repair doctrine.

[00:07:01] Speaker 01:
I would suggest... The repair doctrine doesn't allow you to put in a totally new part and infringe a patent.

[00:07:09] Speaker 03:
Does it?

[00:07:12] Speaker 03:
Well, it depends on... In the design patent context, you're allowed to repair something by replacing a component.

[00:07:25] Speaker 03:
You're allowed to do that as long as it's not a total reconstruction of the article of manufacture that you're talking about.

[00:07:32] Speaker 03:
And here again, we say- Where's your support for that?

[00:07:35] Speaker 01:
I don't understand that.

[00:07:36] Speaker 01:
To me, it sounds like you're saying as long as it's a design patent that's directed to the entire vehicle, you can replace whatever you want short of replacing the entire vehicle.

[00:07:51] Speaker 03:
If,

[00:07:51] Speaker 03:
the substantial embodiment, or if the embodiment test is used, then the article of manufacture can be the F-150 truck.

[00:08:00] Speaker 03:
And if you're just replacing a hood or a headlamp, I would suggest you're just repairing the truck.

[00:08:06] Speaker 04:
When you say can be, that's where I get a little concerned, because what if it's both?

[00:08:11] Speaker 03:
OK.

[00:08:12] Speaker 03:
If it's both, if it's ambiguous.

[00:08:15] Speaker 04:
What if it's both, though?

[00:08:17] Speaker 04:
The design patent could be for a design on the whole truck.

[00:08:22] Speaker 04:
Or it could be the design on just a replacement part.

[00:08:26] Speaker 03:
And by the way, the design patent is not for the entire headlamp or hood.

[00:08:31] Speaker 03:
It's for components of those.

[00:08:32] Speaker 03:
I know.

[00:08:32] Speaker 03:
And so they could be subcomponents.

[00:08:35] Speaker 03:
Sure.

[00:08:35] Speaker 03:
Because when you have this ambiguity, the repair doctrine is based on implied license.

[00:08:40] Speaker 03:
And that goes to the reasonable expectation of the parties.

[00:08:45] Speaker 03:
And so if you have ambiguity here on what it should be,

[00:08:50] Speaker 03:
then the one that you choose is the article sold.

[00:08:55] Speaker 04:
Here, the headlamp- Both of the articles are sold, right?

[00:08:57] Speaker 04:
Pardon me?

[00:08:58] Speaker 04:
Both of the articles are sold.

[00:09:00] Speaker 03:
Yes, but the entire article sold and the reasonable expectation of the purchaser of their F-150 is this is my article that's sold.

[00:09:08] Speaker 04:
I should get to- The reasonable expectation of a purchaser of an F-150 that's been damaged and they need a replacement part would be to have the headlamp, right?

[00:09:21] Speaker 04:
It would be the replacement part.

[00:09:23] Speaker 04:
So It depends on the circumstances, right?

[00:09:27] Speaker 03:
Yes, but it depends on the article again But assume the headlight headlamp is the only thing that's damaged in a collision Then then you repeat again Under the patent exhaustion doctrine if you use embodiment and by the way That is the test used by the district court when they were trying to determine associational standing

[00:09:48] Speaker 03:
They cited quanta method patents.

[00:09:50] Speaker 03:
This is the way that method patents work.

[00:09:52] Speaker 03:
You look at the entire article of manufacture.

[00:09:56] Speaker 03:
If that embodies the design patent, that can be repaired.

[00:10:00] Speaker 03:
And that is the test that we're urging upon the court.

[00:10:03] Speaker 03:
I see I only have five minutes left.

[00:10:05] Speaker 03:
If I may just go to the functionality argument.

[00:10:11] Speaker 03:
The key here, we're basing functionality on the reasoning and holding in the Beslok case.

[00:10:17] Speaker 03:
In that case, Best Lock obtained a design patent only for a portion of the key and not for the entire key lock combination.

[00:10:26] Speaker 03:
That was done in an effort to control the market for replacement keys, just like Ford is trying to repair, trying to control the market for repair parts here.

[00:10:37] Speaker 01:
This court's reason... But that's the consequence of getting a patent on something is that if it's patented,

[00:10:43] Speaker 01:
Other people can't make or manufacture or sell it, absent the license.

[00:10:48] Speaker 03:
Unless it's functional.

[00:10:50] Speaker 03:
In this case, the best lock reasoning was based on a concept called complementary functionality.

[00:10:56] Speaker 03:
And if you have two complementary articles, like the lock and the key, and you've only obtained a design patent on one, then the designs, and here's the key point,

[00:11:10] Speaker 03:
The designs are not analyzed for functionality when they're originally created, but rather when a replacement part is needed.

[00:11:19] Speaker 03:
And so in the best lock case, the key had to look a certain way in order to restore the combination.

[00:11:27] Speaker 03:
Same complementary functionality also exists in this case.

[00:11:31] Speaker 03:
Your entry or rebuttal time, do you want to say that?

[00:11:34] Speaker 03:
I'll just say that it's complementary functionality because you must return

[00:11:39] Speaker 03:
the F-150 truck back to its original appearance.

[00:11:43] Speaker 03:
And because complementary functionality does not depend on mechanical or utilitarian, it can also be based on aesthetic or ornamental.

[00:11:53] Speaker 04:
What about the fact that there's alternatives that somebody could purchase if they wanted to?

[00:11:59] Speaker 04:
If I recall correctly, Ford had some figures in their brief that showed that you could pick different designs if you wanted to

[00:12:08] Speaker 04:
spice it up.

[00:12:09] Speaker 02:
Alternative functionality, or the alternative... Like an alternative key.

[00:12:16] Speaker 03:
But the alternative hood and headlamp would not return the vehicle back to its original appearance.

[00:12:22] Speaker 03:
If you want it, if you need to return it back to its original appearance, you need the original look of the hood or the headlamp.

[00:12:28] Speaker 03:
Final point I want to make on patent exhaustion, the right to repair

[00:12:36] Speaker 03:
includes the right to obtain repair parts, and that protects the manufacturers and distributors of the repair parts, including New World.

[00:12:45] Speaker 03:
If the case law is, we cite Kendall, but that also cites Standard Havens, Arrow, and Thompson Houston Electric Company back to 1897, I believe.

[00:12:56] Speaker 03:
The only requirement is that the part is being used for repair.

[00:13:01] Speaker 03:
Like in the have-made, you might need pre-approval.

[00:13:04] Speaker 03:
But in the repair context, in these cases, they say you don't need the pre-approval.

[00:13:09] Speaker 03:
And as long as the parts are being used for repair, then the manufacturer and distributor are protected under the repair doctor.

[00:13:17] Speaker 03:
Thank you.

[00:13:24] Speaker 00:
Good morning.

[00:13:25] Speaker 00:
Good morning, Your Honors.

[00:13:26] Speaker 00:
And may it please the court, Jessica Ellsworth, on behalf of Ford Global Technologies.

[00:13:30] Speaker 00:
I'd like to begin just briefly with

[00:13:32] Speaker 00:
My opposing counsel's suggestion that this case is similar to the best lock case and the functionality analysis that the court used in that case.

[00:13:43] Speaker 00:
And the answer is that that argument is plainly wrong.

[00:13:47] Speaker 00:
In the best lock case, there was a particular design of a key blade.

[00:13:52] Speaker 00:
And only that design of a key blade would actually fit into the keyway and make the lock work.

[00:14:00] Speaker 00:
There is no clear and convincing evidence here that there is anything remotely similar.

[00:14:05] Speaker 00:
Judge Stoll, as you pointed out, there is an entire market of alternative parts that exist that are hoods and headlamps that will serve the same function as the hood and the headlamp on the F-150.

[00:14:17] Speaker 00:
They'll cover the engine.

[00:14:18] Speaker 04:
What about the response that you must return the vehicle back to its original state?

[00:14:24] Speaker 00:
So there's two responses to that.

[00:14:27] Speaker 00:
The first is that there is no

[00:14:29] Speaker 00:
evidence, certainly not clear and convincing evidence, that anyone is required to do that.

[00:14:34] Speaker 00:
People may choose to do that because they liked the way that it looked in the first place, and they purchased it, in fact, because they liked the way that it looked in the first place.

[00:14:43] Speaker 04:
But as the... What about the emphasis on insurance in their brief?

[00:14:49] Speaker 00:
Sure.

[00:14:49] Speaker 00:
There's a reference to insurance, and there was a witness who provided a couple insurance policies and said an insurance company will only pay for

[00:14:58] Speaker 00:
something that matches the same thing that was damaged.

[00:15:02] Speaker 00:
What a third party will pay for has never been held to be something that would impact the patent eligibility of a design.

[00:15:11] Speaker 00:
And secondly, the fact that an insurance company will provide a certain amount of money doesn't mean that the owner of the vehicle has to use that part.

[00:15:20] Speaker 00:
The owner of the vehicle is entitled to take that money and put on any part that they want to put on.

[00:15:24] Speaker 00:
So if they prefer a hood that has a different set of elevations and depressions, or they prefer one of the headlamps that, as ABPA's own witnesses said, looks sportier, they're certainly entitled to do that.

[00:15:38] Speaker 00:
And what insurance will pay for has no impact on what is ultimately put on the vehicle.

[00:15:45] Speaker 00:
And I do think it's important to remember that it was the ABPA's burden to come forward with clear and convincing evidence, because this was an affirmative defense that they were offering

[00:15:54] Speaker 00:
and they lack that evidence.

[00:15:56] Speaker 00:
You can see that in a number of their responses to requests for admission and in a significant amount of their witness testimony, which we have cited extensively in our brief, where they acknowledge that there are all sorts of ways in which other hood and headlamp designs can, in fact, function.

[00:16:13] Speaker 00:
And they disclaim the notion that they are arguing for any sort of utilitarian functionality.

[00:16:19] Speaker 00:
And really, that puts them, I just want to make one more point on functionality, which is that in Ethicon Endo,

[00:16:24] Speaker 00:
What this court said is that consumer preferences are not enough to find something functional.

[00:16:30] Speaker 00:
That was a case about surgical instruments.

[00:16:33] Speaker 00:
And one of the things that this court said in reversing the district court's functionality finding was that the fact that doctors may prefer a certain arrangement of the buttons and the setup of that surgical instrument doesn't make it functional if, in fact, other designs serve the exact same useful purpose.

[00:16:52] Speaker 00:
And that is really, I think, puts an end to what the ABPA is arguing here.

[00:16:56] Speaker 00:
That brings us to their exhaustion argument, which they spent a lot of time discussing with you all today.

[00:17:02] Speaker 00:
The exhaustion argument that they're making flies in the face of case law dating back to the Aiken case involving the knitting machine and knitting needles.

[00:17:11] Speaker 00:
That decision in Aiken, which was subsequently approved by the Supreme Court in the Morgan Envelope case,

[00:17:17] Speaker 00:
says that the exhaustion does not extend to the right to repair an unpatented component.

[00:17:26] Speaker 00:
But you do have a problem where someone wants to replace a patented component.

[00:17:32] Speaker 00:
And that's what we have here.

[00:17:34] Speaker 00:
The headlamp and the hood are both each subject to a patent.

[00:17:40] Speaker 00:
And when someone wants to replace them or the AVPA's members want to manufacture

[00:17:46] Speaker 00:
knockoff replacements that they then make available for sale, that is the replacement of a patented component.

[00:17:54] Speaker 01:
Just to be clear, this is only about new replacement parts, right?

[00:17:58] Speaker 01:
It's not about used or salvaged parts that Ford already sold

[00:18:03] Speaker 01:
exhaustion would apply to those.

[00:18:04] Speaker 00:
That's right, Your Honor.

[00:18:06] Speaker 00:
That's absolutely right.

[00:18:07] Speaker 00:
Once someone has driven off the lot with an F-150, they can take the hood off and do anything with it they want.

[00:18:12] Speaker 00:
They can take the headlamps out.

[00:18:14] Speaker 00:
If, in fact, they replace them with sportier performance parts, they can sell the ones that were on their original vehicle, absolutely.

[00:18:22] Speaker 00:
And that's not what this case is about.

[00:18:24] Speaker 00:
But from Aiken to Morgan Envelope to Aero involving the convertible tops to this court's decision in the Helferich case, the question is,

[00:18:33] Speaker 00:
whether or not the component being replaced is subject to a patent.

[00:18:37] Speaker 00:
And here it is.

[00:18:39] Speaker 00:
And you can also see this in the recent Bowman decision from this other report, where it specifically talked about exhaustion being the loss of a right to control an article after an authorized first sale, but leaving untouched a patentee's ability to prevent a buyer from making new copies of a patented item.

[00:18:58] Speaker 00:
And that's what's at issue here.

[00:18:59] Speaker 00:
The ABPA's members want to make new copies of patented items

[00:19:03] Speaker 00:
and make them available for sale.

[00:19:05] Speaker 00:
That's not something that the exhaustion doctrine has ever allowed to happen.

[00:19:11] Speaker 00:
And in fact, in the Helfrich decision, this court went out of its way to stress that the court should be very cautious about expanding the exhaustion doctrine into any new territory.

[00:19:23] Speaker 00:
Just to mention briefly, method patents, since my opposing counsel brought them up, the quandary about method patents comes from the fact that what's often at issue is an unpatented component.

[00:19:36] Speaker 00:
And when does the sale of an unpatented component trigger exhaustion?

[00:19:41] Speaker 00:
Here, we're not talking about sales of unpatented components.

[00:19:45] Speaker 00:
And frankly, even if we were, the substantial embodiment test that the Supreme Court adopted to deal with that

[00:19:51] Speaker 00:
would be met here.

[00:19:52] Speaker 00:
These headlamps and hoods substantially embody the patented designs.

[00:19:59] Speaker 00:
You can see that just by looking at the patented designs themselves, which are in the joint appendix.

[00:20:06] Speaker 00:
So for all of these reasons, we ask that the court affirm the district court's ruling below, which really was consistent with precedent in all ways, and that this court reject the ADPA's argument.

[00:20:18] Speaker 00:
Thank you very much, Your Honor.

[00:20:25] Speaker 01:
Mr. Oak, you have a little less than two minutes left.

[00:20:28] Speaker 03:
Thank you, Your Honor.

[00:20:30] Speaker 03:
All of the case, all the patent exhaustion cases cited are not design patent cases.

[00:20:35] Speaker 03:
They're utility patent cases and some method patent cases.

[00:20:40] Speaker 03:
The issue is, how do we apply patent exhaustion to a design patent case when the statute says design four and there are potentially multiple articles of manufacture?

[00:20:52] Speaker 03:
Unless, under the facts,

[00:20:56] Speaker 03:
there is a clear and distinct article of manufacture to be identified, like in Aiken.

[00:21:02] Speaker 03:
And here there is not, because multiple articles of manufacture embody this.

[00:21:08] Speaker 03:
The F-150 embodies it, the hood and the headlamp embody it, and the component parts embody it.

[00:21:14] Speaker 03:
So you have to identify what it is.

[00:21:16] Speaker 03:
If it's ambiguous like that, then the test should be whatever article of manufacture embodies that

[00:21:25] Speaker 03:
A sale of that article will exhaust the patents.

[00:21:29] Speaker 03:
Now, if this court wants to come up with a test for how patent exhaustion works, then that may raise some issues of fact here.

[00:21:37] Speaker 03:
This is on summary judgment and have to be remanded.

[00:21:39] Speaker 03:
But we say any article of manufacture that embodies, if that's sold, that exhausts the patent.

[00:21:47] Speaker 03:
So in closing, the design patents are invalid.

[00:21:55] Speaker 03:
under the complementary functionality doctrine of Beslok, that doctrine properly prevents design patents from controlling the market for repair and replacement parts.

[00:22:07] Speaker 03:
And that's really the key.

[00:22:09] Speaker 03:
When you have a repair replacement part issue, and that's what needs to be focused on.

[00:22:15] Speaker 03:
In Beslok, this court did not allow that control to happen.

[00:22:18] Speaker 03:
It shouldn't allow that control to happen here.

[00:22:20] Speaker 03:
And you can do it through ornamental functionality, if I may have been to the 10 seconds.

[00:22:25] Speaker 03:
If the patents are not invalid, then they are exhausted, because the F-150 is an article of manufacture that embodies the claim designs and can be repaired under the repair doctrine.

[00:22:38] Speaker 03:
Again, that is the test that's already been used in this case by the district court on the associational standing issue.

[00:22:45] Speaker 03:
Thank you.