Citations
- 936 F. Supp. 2d 555
Full opinion text
FINDINGS OF FACT AND CONCLUSIONS OF LAW
CONTI, District Judge.
I. INTRODUCTION
Pending before the court is the Motion for Preliminary Injunction (ECF No. 8) and brief in support (ECF No. 9) filed on May 7, 2012.by plaintiffs-American Beverage Corporation (“ABC”) and Pouch Pac Innovations, LLC (“PPi”) (collectively “plaintiffs”) ¿gainst defendants Diageo North America, Inc. and Diageo Americas Supply, Inc. (collectively “defendants” or “Diageo”). On June 8, 2012, defendants filed their response in opposition to plaintiffs’ motion (ECF No. 37) and brief in support (ECF No. 51.) Plaintiffs filed a reply brief on June 25, 2012. (ECF No. 54.) Plaintiffs’ complaint (ECF No. 1) and the present motion ■ (both filed the same day) allege that frozen cocktail products produced by defendants under the PARROT BAY and SMIRNOFF brand names infringe the design patent and trade dress utilized in frozen cocktail products produced by plaintiffs under the DAILY’S brand name. Specifically with respect to the patent infringement claim, plaintiffs allege that the pouches used by Parrot Bay and Smirnoff for their frozen cocktail products (individually the “Parrot Bay pouch” and the “Smirnoff pouch” and collectively the “Diageo pouches”) infringe United States Design Patent No. D 571,-672 (the “'672 patent”), which is exclusively licensed to ABC by PPi.
Following an expedited discovery period, the court held an evidentiary hearing on August 14, 15, 16, and 22, 2012 during which evidence was admitted and testimony from several witnesses was presented. Testimony was heard from: (1) R. Charles Murray (“Murray”) (the inventor of the '672 patent); (2) Timothy Barr (“Barr”) (ABC’s vice president of marketing and strategy); (3) Ian Lander (“Lander”) (senior vice president of client services at directive analytics); (4) Michael Ward (‘Ward”) (Diageo’s senior vice president for innovation in North America); (5) Travis Funk (“Funk”) (a scientist for Diageo’s innovation team) (6) Dr. Robert Kimmel (“Kimmel”) (defendants’ technical expert); and (7) Nicholas Mesiti (“Mesiti”) (plaintiffs’ patent expert). The court ordered the parties to file proposed findings of fact and conclusions of law by September 27, 2012. The matter now being ripe for disposition, the court makes the following findings of fact and conclusions of law.
II. FINDINGS OF FACT
A. The Parties
1. Plaintiffs
1. ABC is a Delaware corporation with its principal place of business in Verona, Pennsylvania. (ECF No. 1 ¶ 1.)
2. PPi is a Florida limited liability company with its principal place of business in Sarasota, Florida. (Id. ¶ 2.)
2. Defendants
3. Diageo North America, Inc. is a Connecticut corporation with its principal place of business in Norwalk, Connecticut. (Id. ¶ 3.)
4. Diageo Americas Supply, Inc. is a New York Corporation with its principal place of business in Norwalk, Connecticut. (Id. ¶ 4.)
B. The Daily’s Cocktails
1. Pouch Development and the '672 Patent
5. In 2005, ABC sought to develop a ten-ounce, single-serve ready-to-drink (“RTD”) frozen cocktail product in a flexible foil pouch to be sold under its Daily’s brand name. (Aug. 14 Tr. at 147-48.)
6. PPi initially provided ABC designs for two different pouches, Exhibits 31 and 32, which were used by ABC for its Daily’s frozen cocktails for short periods respectively, in 2005 and 2006. (Id. at 151-52.)
7. ABC wanted its frozen cocktail products to be packaged in a unique and distinctive flexible pouch. (Id. at 148-49.)
8. ABC contacted PPi’s owner, Murray, to create and develop a pouch for its Daily’s frozen cocktail products. (Id. at 50.)
9. ABC reviewed more than a dozen possible pouch designs over the course of approximately eighteen months in the process of developing its package design. (Id. at 50, 59,151-52.)
10. Ultimately, PPi produced a new pouch design for the Daily’s pouches, which ABC has used for the Daily’s frozen cocktail products since 2007. (Id. at 151.)
11. Murray’s pouch design for ABC is allegedly embodied in the '672 patent. (Id. at 60-61, 67); (Ex. A).
12. Murray assigned the '672 patent to PPi, which in turn licensed it exclusively to ABC. (Ex. B; Ex. C.)
2. The Daily’s Frozen Cocktail Products’ Appearance
13. The appearance of the Daily’s frozen cocktail products is generally consistent across all the flavors offered by ABC. (Ex. 146 (Frozen Peach Daiquiri); Ex. 147 (Frozen Pina Colada); Ex. 148 (Frozen Margarita); Ex. 149 (Frozen Lemonade); Ex. 150 (Frozen Pomegranate Acai Margarita); Ex. 151 (Frozen Mojito)).
14. The Daily’s frozen cocktail products are sold in pouches which all have a generally hourglass shape when viewed from the front, a wedge shape when viewed from the side, and a lenticular shape when viewed from the bottom. (Id.)
15. The graphic treatments on the packaging for the Daily’s frozen cocktail products include three general areas. (Ex. 151.) The topmost portion contains the words “FREEZE AND ENJOY” on a solid background in a color that generally corresponds to the flavor of the beverage (e.g. green for mojito, red for strawberry, etc.). (Id.) The large central portion contains a black rectangle with the words “DAILY’S READY TO DRINK” in silver at the top. (Id.) Below the black rectangle are the words “ALCOHOL IS IN IT!” printed above and just to the right of the central imagery on the package. (Id.) The central imagery (also in the central portion) is an image of a glass containing a colored liquid, surrounded by garnishes, both of which generally correspond to the flavor of the beverage (e.g., a peach-colored liquid surrounded by peach wedges). (Ex. 146.) The garnishes are depicted swirling around and splashing into the glass itself. (Id.) The images of the glass and the fruit, as well as the text related to alcohol are all presented over a background of a “swirl” pattern of two colors: one color is always white, while the other color is generally dictated by the flavor of the beverage, i.e. green for margarita and mojito, peach for peach, yellow for pina colada, etc. (Ex. 146; Ex. 147; Ex. 151.) The frozen lemonade “swirl” pattern is blue and white. (Ex. 149.) The bottommost band, below the central imagery, contains the name of the beverage, i.e. “Frozen Mojito.” (Ex. 151.) Text at the bottom of the package includes the alcohol content information, the volume of the pouch, and the words “AMERICA’S PREMIUM BRAND” in white text on a black background (Ex. 146; Ex. 147; Ex. 148; Ex. 149; Ex. 150; Ex. 151.)
C. The Smirnoff and Parrot Bay Frozen Cocktail Products
1. Diageo Product Development
16. Diageo, the world’s largest liquor manufacturer, noticed the rapid expansion of the RTD frozen pouch market segment as a result of the Daily’s frozen cocktail products and sought to enter the market in approximately December 2010 or January 2011. (Aug. 15 Tr. at 210-13.)
17. Pursuant to that goal, Diageo initiated “Project Vineyard,” which was aimed at producing a malt-based frozen cocktail product in a flexible pouch under its Parrot Bay brand to compete with the Daily’s frozén cocktail products. (Id. at 202-03.) Diageo also initiated a companion project, “Project Supersonic,” to produce a similar pouch under Diageo’s Smirnoff brand name. (Ex. LLL.) Diageo chose these two brands because customers are familiar with them, even outside the spirits categories with which they are traditionally associated. (Aug. 15 Tr. at 198-99.)
18. Diageo acquired the Parrot Bay trademark in 2002, after it had been in the marketplace for at least five years. Parrot Bay products have yielded Diageo over six hundred million dollars in sales, and Diageo has spent over one hundred million dollars on advertising those products. (Id. at 211-12.)
19. The Smirnoff brand has been sold in the United States for at least fifty years, and has enjoyed billions of dollars of sales in the last ten years alone. (Id. at 212.)
20. Diageo sought to enter the RTD frozen cocktail market because it had seen a loss in market share in the overall RTD category, specifically with its Smirnoff Ice line, as a result of the growth of Daily’s products in the frozen cocktail segment of the RTD market. (Id. at 213-14.)
21. In consultation with Wal-Mart, Diageo determined that a malt-based product could be brought to market more quickly than a wine-based product, and could be sold in more and different retailers — specifically, Wal-Mart stores in Tennessee, Kentucky and New York. (Id. at 198, 204-OS.)
22. Diageo had no experience with producing and filling pouches prior to beginning the Vineyard and Supersonic projects, but had worked with other frozen beverages in the past. (Id. at 220.)
23. Diageo followed an accelerated timetable for creating its frozen cocktail products, designing and launching the products in approximately five months in order to have them in the market by the summer of 2011. (Id. at 218-20.)
24. To meet its time goal, Diageo accelerated its multi-stage review and approval procedure, known as a gate process. (Aug. 16 Tr. at-75.) The acceleration required doing several activities at the same time, including designing the package and trade dress, locating pack film suppliers, package filling equipment, developing the beverage fluid, and determining the physical and technical requirements for the pouch. (Aug. 15 Tr. at 218-20.)
25. Diageo shortened the timeframe for product development by “wargaming” or engaging in “competitive benchmarking” with respect to the Daily’s frozen cocktail products. (Id. at 214-17); (Ex. AAA). This process involved examining the Daily’s products and determining what contributed to their success. (Id.) It also included reviewing the Daily’s packaging while designing the packaging for the Parrot Bay and Smirnoff products, (Aug. 16 Tr. at 43), and approximating the size and shape of the Daily’s pouch. (Aug. 16 Tr. at 163-64); (Ex. BBBB, FFFF, HHHH, NNNN).
26. Diageo sought to approximate the size and shape of the Daily’s pouch because it is common practice in the beverage industry to use the same or similar serving format and size as competing products so that consumers do not believe that they are getting less value from the competition. (Aug. 16 Tr. at 149.) In an effort to capture the “value ... perception” in the “overall pack appearance” of the Daily’s products, Diageo relied heavily upon the Daily’s pouch. (Aug. 15 Tr. at 216.) Diageo employee Rob Warren posed this question to a fellow employee: “Mike: What merchandising creativity can we steal from Daily’s?” (Ex. HHH.) Another Diageo employee, Stephen Chandler, sought to order prototype pouches from the manufacturer PTIS and confirmed in correspondence that he did not care what the prototypes looked like, but merely stated “Copy Daily’s;” (Ex. HHHH.) Ultimately Diageo sought a pouch size that would “match Daily’s,” and be the same width and height of the Daily’s pouch, and would have a “ ‘hole’ at top the same as on Daily’s.” (Aug. 14 Tr. at 104); (Ex. BBBB, FFFF.)
27. Diageo employee Katie Raath (“Raath”) was asked to produce an initial sketch of a possible pouch design for the Parrot Bay frozen cocktail product. (Ex. 132.) The initial pouch design was based upon a pouch die line produced by the company Liquid Manufacturing (Aug. 16 Tr. at 95; Ex. 134), which Raath modified to include a cutout in the upper right-hand corner shaped like a parrot’s wing. See (Ex. 133.)
28. Funk sent Raath’s sketch to Matthews Graphics Corporation for engineering guidelines and drawings. (Aug. 16 Tr. at 87.) Matthews returned a proposed die line, (Ex. 136), which Funk altered. (Ex. 137; Aug. 16 Tr. at 97-100.) Finally, Matthews returned a new die line reflecting Funk’s changes; specifically, the waist on the right-hand side of the pouch was moved up, and the location of the tear notches was changed. (Ex. 139); (Aug. 16 Tr. at 101-02).
29. Despite the effort put into the die line, the Diageo engineering team had concerns that the wing cutout could cause inadvertent tearing — it could become essentially a pull-tab for the tear-off portion of the pouch — or it could catch in the filling machines. (Aug. 16 Tr. at 102-03.) In order to save time and get the product into production, Diageo ultimately scrapped the wing cutout and approved the pouch shape and die line as set forth in Exhibit 140 — specifically, a pouch shape that is symmetrical from left to right. (Aug. 16 Tr. at 103-06.) Funk approved the die line for the Parrot Bay pouch on February 25, 2011. (Id. at 105,122.)
30. In February 2011, Funk expressed concern that “legal challenges on the die line” posed a risk for the Parrot Bay project, stating that the initial review was conducted, but “was not definitive.” (Ex. PPPP.) Funk acknowledged that waiting for legal approval would result in delays to the project and that the cost of the die itself was at risk if the die line was not approved by the legal department. (Id.) Ultimately, Diageo concluded that a die line similar to that used for the Daily’s pouch would “be okay in the short term.” (Aug.' 16 Tr. at 163-64); (Ex. NNNN). Following approval of the die line in February 2011, Diageo employees continued to use a photograph of a marked-up Daily’s pouch in correspondence related to the Parrot Bay .product. (Ex. L); (Aug. 14 Tr. at 71-72).
31. Angela Campisi (“Campisi”) (Diageo’s Engineering Asset Strategy Director) met with Murray at the PPi offices on May 4, 2011, at which time she was specifically informed about the existence of the '672 patent. (Aug. 14 Tr. at 73.) Murray presented Diageo with four potential alternative pouch designs to consider at that time. (Id. at 73-74.)
32. After the May 4, 2011 meeting, Kevin Scherry (Diageo’s Global Category Specialist for Flavors and Grain Neutral Spirits) (“Scherry”) received an email from Murray, in which Scherry was informed that the. Daily’s pouch is patented. (Id. at 75-76.) In response, Scherry asked Murray what the patents were “around,” believing that Diageo “may need to avoid certain design attributes.” (Id. at 76; Scherry Dep. at 118-120; Ex. G.)
33. During the development process, Diageo used a Daily’s frozen cocktail product as a stand-in for the Parrot Bay product while conducting product testing, a procedure that Funk admitted was “bad behavior.” (Aug. 16 Tr. at 142-46); (Ex. YYY).
2. The Parrot Bay and Smirnoff Frozen Cocktail Products’ Appearance
34. The graphics on the Parrot Bay frozen cocktail products are based upon the Parrot Bay rum bottle graphics (Ex. 104) and the Myers’s frozen cocktail shaker graphics (a separate Diageo rum brand). (Ex. 100); (Aug. 15 Tr. at 199).
35. The Parrot Bay and Smirnoff frozen cocktail products are sold in pouches which all have the same general shape, including an hourglass shape when viewed from the front, a wedge shape when viewed from the side, and a lenticular shape when viewed from the bottom.
36. The packaging for the Parrot Bay and Smirnoff frozen cocktail products prominently features an image of a glass surrounded by fruit to depict the product, provide a serving suggestion, and indicate the flavor and potential garnishes for the product. (Aug. 15 Tr. at 231-32); (Ex. 23, 97.) The . colored bands at the top and bottom of the Diageo packages generally reflect the flavor of the product itself. (Aug. 15 Tr. at 232.) The top band contains the words “FREEZE & SQUEEZE,” while the bottom band contains the word “FROZEN,” the flavor of the beverage, and other prodúct information including the alcohol content and a notice that the beverage is malt-based and contains added flavorings and colorings. (Ex. 23, 97.) Both the Parrot Bay and Smirnoff packages have a centrally-located notice that states “BEVERAGE ALCOHOL DO NOT SELL TO CONSUMERS UNDER 21.” (Id.) The notice on the Parrot Bay packages is crafted to look like a postal cancellation stamp. (Ex. 97.)
37. Just above the image of the glass on the Smirnoff packages is the Smirnoff name and “double eagle” mark. (Ex. 23.) Each Smirnoff package incorporates a silver background with rays extending out from the Smirnoff mark, intended to convey a “more vibrant, high energy ... type of offer.” (Aug. 15 Tr. at 229-30); (Ex. 23).
D. Design Patent Infringement
1. Claim Construction
38. The '672 patent claims an ornamental design for a flexible liquid-containing pouch, as shown in Figures 1-8 of Exhibit A.
From left to right, FIG. 1, FIG. 2, FIG. S, and FIG. I from the '672 patent
2. Defendants’ Validity Challenges
a. Functionality
39. The design claimed in the '672 patent was one of at least a dozen proposed designs that resulted in the design for the Daily’s pouch. (Aug. 14 Tr. at 58-59.)
40. The curved sides claimed in the '672 patent are one of many ways of achieving a generally hourglass shape in a flexible pouch, as can be seen by reviewing other design patents in evidence. (Ex. OOOOO (U.S. Design Patent No. 410,838); Ex. WVW 20 (U.S. Design Patent No. 435,-440); Ex. WVW 24 (U.S. Design Patent No. 502,092); Ex. 40 (U.S. Design Patent No. 434,976)). Other design patents for flexible pouches do not claim curved sides or an hourglass shape. (Ex. 44.) Murray and Kimmel both testified that there are many alternatives for the shapes of the sides of a flexible pouch. (Aug. 14 Tr. at 63); (Aug. 22 Tr. at 33.) The ARBOR MIST frozen wine cocktail pouch does not have curved sides. (Ex. 87.) The SEAGRAM’S ESCAPES frozen sangría pouch has sides that continuously curve from top to bottom, as opposed to having a discrete curved portion of the side. (Ex. 143.)
41. The curved sides of the flexible pouch embodying the '672 patent make the pouch more difficult to produce and manufacture, thus making it more expensive. (Aug. 14 Tr. at 146-47.) The curved sides, therefore, are not necessary and their shape is ornamental and not purely dictated by function.
42. The portion of the pouch above the side curvatures in the design claimed in the '672 patent is one of many possible choices for the top of a flexible pouch, as can be seen in Exhibit 92, wherein that portion of the pouch curves inward, (Ex. 92), or the top can resemble the top of a cocktail shaker, as shown by the Arbor Mist pouch. (Ex. 87.)
43. The triangle-shaped notches, or “tear notches” indicated on both sides near the top of the pouch depicted in Figure 1 of the '672 patent are one of several ways of removing the flat portion at the top of the pouch and can be placed in multiple locations, or not included at all. (Aug. 14 Tr. at 64, 104.) Murray testified that other shapes can be used for the tear notches. (Id. at 104.) The Seagram’s Escapes pouch, Exhibit 143, only has one tear notch, as does the design embodied in Exhibit 43. Testimony indicated that there are other, cheaper ways of removing the top of a pouch, including a simple tear in the packaging. (Aug. 14 Tr. at 104.)
44. The hole at the top of the pouch in Figure 1 of the '672 patent (often called a “sombrero hole”) is one of several ways available to hang a flexible pouch. Both the Seagram’s Escapes (Ex. 143) and the Arbor Mist (Ex. 87) pouches employ circular holes of two different sizes. Murray testified that such an opening “can be a circle; it can have two 70-degree cuts; it can be a larger sombrero; it can be an oval; many shapes.” (Aug. 14 Tr. at 64.)
45. The double lines on the outside edge óf the pouch design claimed in Figure 1 of the '672 patent are “seal lines.” Seal lines can be of varying widths, thereby achieving different ornamental results. (Id. at 65.)
46. The two circles at the bottom of the pouch in Figure 1 of the '672 patent are known as “cooling holes,” which are an unsealed area that allows for a higher pressure to be applied when affixing the gusset to the bottom of a pouch. (Ex. 46.) Murray “chose those smaller round holes to fit into the design” of the '672 patent. (Aug. 14 Tr. at 135.) As evidenced in Exhibit 46, there can be more of these holes (the image in Figure 1 of Exhibit 46 contains six holes), and they can be of varying shapes and sizes (the image in Figure 1 of Exhibit 46 contains circular and oval holes). Murray testified that the holes can be triangular, as well. (Aug. 14 Tr. at 103.) The holes are visible in the commercial embodiment of the '672 patent, i.e. the Daily’s pouch. See e.g. (Ex. 149.) Although the cooling holes do assist in the manufacturing process, the number, size, and shape can be varied as part of the ornamental design of a pouch.
47. The semicircular shapes between the seal lines near the base of the pouch in Figure 1 of the '672 patent reflect cutouts in the gusset panel that allow the two sides of the pouch to seal together. These are referred to as “seal holes” and Kimmel agreed that “these patterns and shapes [are] interchangeable.” (Aug. 22 Tr. at 21.)
48. The rounded shape that occupies the center of the base of the pouch in Figure 1 of the '672 patent is known as a “gusset seal.” Gusset seals - can be of varying heights and shapes, as indicated in Exhibit 5 (the Daily’s “Party in a Pouch”), which has a hexagonal seal. (Ex. 5.)
49. The base of the pouch, or “gusset,” as depicted in-Figure 4 of the '672 patent, can be of varying shapes and sizes. (Aug. 14 Tr. at 121-22.) Changing the size and shape of the curve changes the overall visual impression of the pouch. (Id.); (Aug. 16 Tr. at 203); (Aug. 22 Tr. at 65). Although the base of most stand-up flexible pouches (known as “Doyen-style” pouches) have a generally lenticular shape, as shown in Figure 4 of the '672 patent, the shape of the base can vary based upon the design. (Ex. 5, 92, 93, 94.)
50. Likewise, the side perspective of the '672 patent as shown in Figure 2 is characteristic of Doyen-style pouches in that it is generally wider at the bottom than at the top; however, other design patents entered into evidence reveal that the shape of those sides also can vary. (Ex. 92, 93, 94.)
51. Other testimony and documentary evidence indicates that the curved sides of the pouch offer an “ergonomic” shape that makes the pouch comfortable for the user to hold. Defendants indicate that the “waist” in the pouch allows the consumer to manipulate the product; and it acts as a dam to hold the slush in place. (Aug. 16 Tr. at 112.) Finally, defendants note other allegedly functional aspects of the hourglass shape, including helping the filling process. (Id. at 113.)
b. 35 U.S.C. § 112 Indefiniteness
52. The design claimed in the '672 patent shows one pouch design and two embodiments of that design. (Aug. 16 Tr. at 200.) Figures 1 through 4 illustrate the first embodiment and Figures 5 through 8 illustrate the second. (Id.)
53. The design claimed in the figures of the '672 patent passed without objection by the patent examiner, as evidenced by the issuance of a design patent with respect to the application embodying that design. (Ex. 7.)
54. Figures 1 and 5 of the '672 patent illustrate the front elevational views of the claimed design; Figures 2 and 6 illustrate the side elevational views of the same; Figures 3 and 7 illustrate the rear elevational views of the same; and Figures 4 and 8 illustrate the bottom elevational views of the same. (Ex. A); (Aug. 16 Tr. at 200-01). The patent claims that each view is of the same pouch. (Ex. A.)
55. Testimony at the hearing indicated that the pouch illustrated by the figures of the '672 patent is filled. (Aug. 16 Tr. at 201). If the pouch illustrated in the '672 patent was not filled, the gusset would not expand, and the pouch would be essentially flat, thus rendering Figures 2, 4, 6, and 8 inconsistent. (Id.)
56. Murray testified that the pouch illustrated in the '672 patent is an open pouch, unsealed at the top. (Aug. 14 Tr. at 99.) Murray could not specifically articulate what the line just above the sombrero hole was. (Id.) He did confirm that such a line is not the bottom edge of the top seal of the pouch. (Id. at 100.) Murray’s application for a utility patent for a flexible pouch similar to the pouch claimed in the '672 patent identifies line 2a as a “closing seal,” but does not specify whether the line corresponds to the top or bottom of the seal, or whether such a line is present in an unsealed pouch. (Kelly Dec. (ECF No. 43) Ex. Q.)
57. A review of the commercial embodiment of the '672 patent — the Daily’s pouch, reveals that such a line is present, and that it is not the bottom edge of a top seal. (Ex. 148.) It is unclear whether such a line is present on an unsealed pouch.
58. If line 2a were construed as a seal line, the pouch would not function, since liquid could freely flow out through the sombrero hole. (Ex. A.) Moreover, a wider seal can be placed at the top of the pouch, based upon customer specifications, as confirmed by defendants’ own packaging expert. (Aug. 16 Tr. at 197); (Murray Dep. 138-39, 141). The court concludes that line 2a in Figure 1 represents a line on a filled, unsealed pouch, prior to the top seal being applied. (Aug. 14 Tr. at 82.) This construction is consistent with the shape of the pouch claimed in Figure 2, which does not include a straight line at the very top (which would be present if a top seal had been applied). (Ex. A.)
59. The tear notches in Figures 1, 3, 5, and 7 are illustrated with a closed outside edge. (Ex. A.) Testimony at the hearing revealed that these notches should be illustrated as “open Vs” that would allow a user to tear off the top portion of the pouch. (Aug. 22 Tr. at 19.)
c. Defendants’ Section 102 Anticipation Claims and Section 103 Obviousness Claims
60. The design claimed in the '672 patent is an ornamental design for a flexible Doyen-style pouch. Doyen-style pouches were first invented in 1963 by the Doyen brothers, who obtained United States Patent No. 3,380,646. (Aug. 16 Tr. at 192-96); (Ex. 10). Subsequently, many ornamental designs have been applied to Doyen-style pouches, and those designs have received design patent protection. (Ex. A, 40, 43, 92, 93, 94.) Testimony from Murray indicates that the design claimed in the '672 patent is unique and that at the time of its invention, there was nothing else like it in the world. (Aug. 14 Tr. at 52, 84, 122.)
61. Defendants’ expert on packaging suggests that several hourglass-shaped pouches (when viewed from the front) with lenticular bases (when viewed from below) and triangular or wedge shapes (when viewed from the side) existed prior to the issuance of the '672 patent. (Aug. 16 Tr. at 197-98); (Aug. 22 Tr. at 8-10). Defendants cite numerous pieces of prior art that they claim show that the '672 patent was anticipated and, therefore, lacks novelty-
Ex. 92, from left to right, FIG. 3, FIG. 6, and FIG. 2
62. Exhibit 92, pictured above, is the design claimed in United States Design Patent No. 392,559. Exhibit 92 discloses a flexible pouch with sides that continuously curve in and out from the center of the pouch, and are never vertical or parallel to one another. The design discloses no sombrero hole, gusset curve, tear notches, cooling holes, sealing holes, and has a top seal that appears to be taller than the seals on the sides.
Ex. 10, from left to right, FIG. I, FIG. 3, and FIG. 5
63. Exhibit 40, pictured above, is the design claimed in United States Design Patent No. 434,976. Exhibit 40 discloses a flexible pouch with an hourglass shape and straight sides above and below the waist of the pouch. The corners both above and below the waist are sharp, and the sides above and below the waist are approximately the same length. The design claimed in Exhibit 40 discloses no sombrero hole, no cooling holes, no sealing holes, and no tear notches. When viewed from the side, the front and back portions of the pouch remain parallel to each other as they extend from the bottom of the pouch, before making a rounded curve inward toward the top of the pouch. When viewed from below, the base of Exhibit 40 forms a narrow oval shape with fins extending from each side.
Exhibit IS, from left to right, FIG.S, FIG. 8, and FIG. I
64. The design in Exhibit 43, pictured above, is the design disclosed in United States Patent No. 6,912,825. Exhibit 43 has sharply pronounced side curvatures and sharp corners at the base. Exhibit 43 does not disclose a sombrero hole or cooling holes, but does disclose a single, large tear notch on the left-hand side. When viewed from the side, the front and back portions of Exhibit 43 remain parallel to each other from the bottom to almost the top, where they sharply curve inward toward the top.
65. All the prior art pouches relied upon by defendants include a straight line extending from the top of the pouch when viewed from the side. This line is meant to illustrate the top seal on the pouch. The front and back walls of the pouches, however, curve differently from the bottom to the top of the pouch. (Ex. 40, 92, 93, 94.) While all the prior art pouches relied upon by defendants share a generally lenticular-shaped base, the ovals and circles formed by those bases can be continuously curving (Ex. 94), can have straight sides (Ex. 92), or can resemble a narrow oval. (Ex. 40.)
66. Defendants also contend that the design claimed in the '672 patent is embodied in the Daily’s Party in a Pouch (the “Party Pouch”). (Ex. 5.) The Party Pouch was in use as early as 2004, which makes it prior art to the '672 patent. (Aug. 15 Tr. at 42.) Testimony indicated that the Party Pouch was produced by Saddlesprings for ABC. (Id. at 50.)
67. The design pictured above is the Party Pouch. As with Exhibit 40, discussed above, the corners both above and below the curved sides on the Party Pouch are sharp and not rounded. The Party Pouch does not have a sombrero hole, and instead has a zipper top, which allows the pouch to be resealed after the top has been removed. The base of the pouch has a distinctly hexagonal appearance, due to the use of a hexagonal gusset piece. The resulting gusset curve is not rounded, but instead looks like one-half of a hexagon when viewed from the front. The tear notches on the Party Pouch are quite close to the top edge of the pouch, and are correspondingly quite far from the top of the curved sides. When viewed from the side, the bottom half of the Party Pouch is quite bulbous, above which point the sides narrow quickly, with approximately the top one-quarter to one-half of the package appearing as essentially a straight line.
68. Defendants also contend that Exhibits 31 and 32 are prior art to the '672 patent, insofar as Exhibit 31 was in use in 2005 and Exhibit 32 was in use in 2006 by Daily’s. (Aug. 15 Tr. at 29.) Exhibits 31 (left) and 32 (right) are pictured below.
69. As described by Murray, Exhibits 31 and 32 both have a “radius top,” in which the sides above the waist on the pouch are not straight, but instead are constantly curving. (Murray Dep. at 62.) As a result, Murray indicated that they are “totally different” from the Daily’s pouch in issue (the commercial embodiment of the '672 patent). (Aug. 14 Tr. at 60.) Neither pouch pictured above has a sombrero hole. (Ex. 31, 32.) With respect to Exhibit 31, the gusset is hexagonal in shape, as discussed previously with respect to the Party Pouch, thus giving the base more of a hexagonal shape.
70. With respect to obviousness, Kimmel opined that the design of the pouch pictured in Exhibit 43 could serve as a primary reference for the design claimed in the '672 patent, even though Kimmel acknowledged that there are differences between the two. (Aug. 22 Tr. at 30.) Kimmel also opined that one skilled in the art would understand that the bottom curves on the pouch claimed in Exhibit 92 could be substituted for the top curves on the pouch embodied in Exhibit 43, thus creating a piece of hypothetical prior art that he opines is similar to the '672 patent. (Id. at 30-35.) Kimmel previously testified, however, that the curves on the sides of the '672 patent were purely functional, and opined that if all functional features of the '672 patent were removed, all that would remain is a “rectangle with rounded corners.” (Id. at 61.)
3. Plaintiffs’ Infringement Claims
71. A comparison between the design claimed in the '672 patent (shown in the middle picture below), the relevant prior art (as embodied in the Party Pouch and shown in the picture on the left below), and the allegedly infringing Parrot Bay pouch (shown in the picture on the right below) reveals the similarities between the design claimed in the '672 patent and the Parrot Bay pouch.
72. The Parrot Bay pouch and the design claimed in the '672 patent share many features in common. The sides both above and below the waist on the pouches are straight, with the sides below the waist being substantially longer than those above the waist. The corners above the waist are both generally smooth rather than sharp, while the corners below the waist of the design claimed in the '672 patent are slightly more pronounced than on the Parrot Bay pouch. The curvature of the waist on both the Parrot Bay pouch and the design claimed in the '672 patent are approximately the same depth, although the rate of curvature is slightly different. Both share a sombrero hole that is the same size and proportion, and the tear notches on both are in the same location. Both have a large rectangular space above the waist in the pouch (regardless where the seal is placed, the space is the same on both pouches). The bottom corners of both pouches are nearly identical as well. The top corners of the Parrot Bay pouch are slightly sharper, but they are still rounded, much like those of the design claimed in the '672 patent. A closer inspection reveals that, despite the printing on the Parrot Bay pouch, the seal holes and the cooling holes are both visible, as is the curvature of the gusset seal.
73. Based upon the above comparison, the Parrot Bay pouch appears moré like the design claimed in the '672 patent than the Party Pouch. The most pronounced difference between the Party Pouch and the Parrot Bay pouch is the square bottom, which results in the sides below the waist appearing to angle inward, while the same sides on the Parrot Bay pouch remain parallel from the waist down. The curvature on the sides of the pouches also differ. The curve on the Party Pouch is a discrete cutout with sharp corners, whereas there is more of a gentle curve on the Parrot Bay pouch. Additionally, the Party Pouch does not have a sombrero- hole; rather it has a zipper.
74. Comparing the bases of the three designs also indicates the similarities between the Parrot Bay pouch and the design claimed in the '672 patent.
75. As can be seen in the photographs above, the curvature of the lenticular base in both the design claimed in the '672 patent (shown in the middle) and the Parrot Bay pouch (shown on the right) is the same. The fins protruding from either side are also fairly similar. The fin on the right in the photograph of the Parrot Bay pouch appears to be slightly wider, but that appears to be a result of the flexibility of the packaging rather than a difference between the two designs. As indicated above, the basé of the Party Pouch (shown on the left) differs greatly from both the design claimed in the '672 patent and the Parrot Bay pouch, as it has a generally hexagonal- shape, due to the hexagonal shape (as opposed to circular shape) of the gusset.
76. With respect to the side views shown above, the Parrot Bay pouch (shown on the right) and the design claimed in the'672 patent (shown in the middle) more closely resemble each other than the Party Pouch (shown on the left). The front and back of the design claimed in the '672 patent and the Parrot Bay pouch are both relatively straight, and both gradually angle toward the top. The Parrot Bay pouch does have a straight- line protruding from the top of the pouch that is not portrayed in the design claimed in the '672 patent, but it only extends a short distance from the top of the otherwise wedge shape of the side. The Party Pouch, on the other hand, has a large straight portion at the top, along with a very bulbous base. As discussed previously the Smirnoff pouch and the Parrot Bay pouch are the same and any facts applicable to the Parrot Bay pouch are applicable to the Smirnoff pouch.
E. Trade Dress Infringement and Unfair Competition
1. ABC’s Claimed Trade Dress
77. ABC set forth the following list of elements that it claims allegedly comprise its trade dress:
In addition to its hourglass shape, ABC’s trade dress includes three horizontal labeling partitions, with the topmost portion consisting of a perforated tear-away flap with the language “FREEZE AND ENJOY,” the middle portion containing the Daily’s brand name, a colorful depiction of the particular frozen cocktail flavor and corresponding fruit imagery, and the bottom portion identifying the specific product and key information thereof.
(ECF No. 9 at 17-18.) This construction of ABC’s trade dress was corroborated by Barr in testimony at the preliminary injunction hearing. (Aug. 14 Tr. at 231-32.)
78. The specific details of the pouch packaging design and layout are set forth above at Findings of Fact 13-15 and 34-37.
79. This claimed trade dress is embodied with only minor differences in the packaging of all the Daily’s frozen cocktail products, which come in several flavors, including Frozen Peach Daiquiri (Ex. 146); Frozen Pina Colada (Ex. 147); Frozen Margarita (Ex. 148); Frozen Lemonade (Ex. 149); Frozen Pomegranate Acai Margarita (Ex. 150); and Frozen Mojito (Ex. 151).
2. Consistent Overall Look
80. ABC began utilizing a similar version of its trade dress beginning with the launch of the Daily’s frozen cocktail products in 2005. (Aug. 14 Tr. at 151-52.) The two pouches used between 2005 and 2007 were slightly smaller, but were still hourglass-shaped, with text, layout and imagery identical to the present iteration of the Daily’s frozen cocktail product. (Ex. 31, 32.)
3. Inherently Distinctive/Secondary Meaning
81. Prior to the launch of the Daily’s frozen cocktail products, the market for single-serve, RTD frozen cocktail products in a flexible pouch did not exist. ABC created this market segment, and remained the only producer of such products for several years. (Aug. 14 Tr. at 171; Aug. 15 Tr. at 28, 77; Aug. 16 Tr. at 62-64; Ex. LLL.)
82. From 2005 until the summer of 2011 (when defendants’ frozen cocktail products were launched), ABC possessed 99% of the market share for the single-serve, RTD frozen cocktail segment. (Barr Dec. (ECF No. 24-1) ¶ 27); (Aug. 14 Tr. at 189, 215). There were essentially no other significant competitors in that category at the time the Daily’s frozen cocktail products launched; therefore, ABC launched the category. (Aug. 15 Tr. at 28, 64); (Aug. 16 Tr. at 64); (Ex. LLL).
83. Since the launch of the Daily’s frozen cocktail products, the sales of those products have been exponential, doubling and tripling every year they have been on the market. (Barr Dec. (ECF No. 24-1) ¶¶ 24-25). Prior to 2011, ABC sold approximately 33,031,392 units, with sales totaling $29,439,917. (Id.)
84. The Daily’s frozen cocktail products have been sold throughout the United States, in grocery stores, liquor stores, drug stores and other large mass merchandisers, including Wal-Mart (which is the largest retailer for those products and has marketed them nationwide). (Aug. 14 Tr. at 172,191.)
85. Since the launch of the Daily’s frozen cocktail products, ABC has consistently invested in the advertising for those products. (Aug. 14 Tr. at 153.)
86. ABC has spent a significant amount of money on advertising — between $8 and $10 million since 2007. (Aug. 14 Tr. at 161.) This represents a “considerable portion of ABC’s advertising budget.” (Barr Deel. (ECF No. 24-1 ¶ 20).) Although ABC did not provide a breakdown with respect to how much was spent per year for advertising, Barr’s testimony and declaration indicate that ABC spent, on average, more than $215,000 per year between 2005 and 2011. (Jet); (Aug. 15 Tr. at 28.)
87. The advertising prominently features the Daily’s frozen cocktail products, including the trade dress. (Aug. 14 Tr. at 162) (Ex. JJ-1, JJ-2, JJ-3 JJ-4, JJ-5, JJ-6, JJ-7, JJ-8). The advertising for the Daily’s frozen cocktail products was spread across a wide variety of publications, including trade publications such as “Bev Media,” and “Bev Spec,” as well as consumer publications, such as Cosmopolitan, Vogue, Shape, InStyle, Glamour, and Woman’s Day. (Ex. GG); (Aug. 15 Tr. at 37-38.) Testimony indicated that at least by 2010, ABC was advertising the Daily’s frozen cocktail products on a national scale. (Aug. 15 Tr. at 37-38.) ABC also uses social media as a way of reaching customers, particularly customers in their twenties, who frequently use social media and the Internet to interact with the company. (Aug. 14 Tr. at 162.)
88. According to Murray, many other companies have approached PPi and asked to use the Daily’s pouch shape, and have been unable to do so. (Id. at 52.)
89. With respect to copying, the court has made certain findings indicating that Diageo sought to copy the size and shape of the Daily’s pouch. See Findings of Fact 16-33. Diageo referred to the Daily’s frozen cocktail products as part of the process of designing the artwork for the Parrot Bay frozen cocktail products. (Aug. 16 Tr. at 42-43); (Ex. CCC).
4. Likelihood of Confusion
90. ABC’s and defendants’ frozen cocktail products both cost the consumer less than two.dollars per pouch, or approximately $1.97 to $1.99. (Aug. 14 Tr. at 172, 191.) This price point offers what Barr referred to as a “low barrier to purchase,” while still having an “enormous amount of appetite appeal.” (Id. at 186.)
91. Because of the price, the products are “impulse purchases,” meaning that customers do not generally go into a retail establishment specifically to buy them. (Id.) As an impulse purchase, customers are primarily motivated by the product’s price and location in’the store. (Id. at 186, 192.) Bkrr emphasized that consumers “just buy[ ] it based on price. Price is a major component.” ' (Id. at 187.) The products are often displayed prominently at the ends of store aisles, in large bins, and in freezers. When purchased frozen, they may be. quickly consumed. (Id. at 172, 186); (Ex- Q, R, S, T, U). ABC’s and Diageo’s frozen cocktail products are often sold hanging from the same rack, or intermixed in the same freezer cases. (Id. at 173-75); (Ex. Q, R, S, T, U).
92. Barr’s testimony at the hearing indicated that customers rarely exercise much care when selecting impulse purchases, and do not rely on brand loyalty when making their purchase decisions. (Aug. 14 Tr. at 186-87.)
93. To the extent that defendants emphasize the importance of brand loyalty and strength of branding in the alcoholic beverage industry, see generally ECF No. 96 at 81-88, they rely upon documents prepared by ABC in anticipation of trying to enter into an entirely new market, one in which they had never competed. (Ex. 63); (Aug. 15 Tr. at 45-46). Defendants point to Ward’s testimony, which indicates that companies invest millions of dollars to build brand awareness, thus keeping their brands in customers’ heads when entering a retail establishment. (Aug. 15 Tr. at 245.) Ward indicated that “I certainly look at the marketing money invested ... to be indicative that they certainly think that brands are important.” (Id.) (emphasis added).
94. ABC presented several voicemail messages that purportedly indicate that consumers were confused with respect to the source of the products they had purchased. The first voicemail asked why the mango daiquiri product does not contain an ingredients listing; however, ABC does not make a Daily’s mango flavor (although Diageo does), and the Daily’s frozen cocktail products display an ingredients list (but Diageo’s products do not). (Aug. 14 Tr. at 203-04); (Ex. Y). A second voice-mail requested a donation of “pirate bay” “ready-made frozen drink packets” from Daily’s. (Id.); (Ex. X).
95. The Daily’s Facebook page contains other evidence of customer confusion with respect to the source of some frozen cocktail products. Several individuals posted references to a mango-flavored Daily’s product which, as indicated above, ABC does not produce. (Aug. 14 Tr. at 205-07); (Ex. CC).
96. Another consumer, who registered to receive email updates about Daily’s frozen cocktail products, indicated that her favorite Daily’s product was “the MANGO DAIQUIRI POUCH MIX.” (Aug. 14 Tr. at 201-02); (Ex. AA).
97. In a posting on the Parrot Bay Face-book page, another consumer noted that “peach is even better,” although Parrot Bay does not produce a peach flavor. (Ex. DD.)
98. Kimmel was asked during the hearing to “[u]se the Parrot Bay pouch to demonstrate” a particular aspect of the product. There were several frozen cocktail products in front of him, and he picked up the Daily’s product instead. (Aug. 16 Tr. at 194, 211.)
99. The Daily’s frozen cocktail products and the Parrot Bay and Smirnoff frozen cocktail products are both marketed to essentially the same consumers. (Aug. 14 Tr. at 192,193.)
100. Malt-based products (like Diageo’s) are brought to market through beer distributers, as opposed to wine-based products (like ABC’s), which are brought to market through spirits and wine distributers. (Aug. 15 Tr. at 207.)
101. Due to differences in alcohol retail laws, there are some differences in the kinds of retailers that can sell malt-based beverages as opposed to wine-based beverages. (Ward Decl. (ECF No. 48) ¶ 14).
F. Irreparable Harm
1. Plaintiffs’Alleged Delay
102. ABC first became aware of defendants’ Parrot Bay frozen cocktail products on June 30, 2011, and of the Smirnoff products in May 2012. (Ex. 153 at 4.) Barr testified that as soon as he became aware of the Parrot Bay products, ABC “went immediately to the patent holder.” (Aug. 14 Tr. at 225.) ABC was concerned about the Diageo products after hearing about their launch. (Id. at 188.)
103. Barr indicated that ABC received examples of the Parrot Bay frozen cocktail products “several weeks later,” possibly at the beginning of August 2011. (Id. at 198.) Seeing the Parrot Bay frozen cocktail products caused ABC concern, because “the shape was identical to what [ABC was] selling.” (Id. at 199.) ABC received market information about the distribution of the Parrot Bay frozen cocktail products in mid-September 2011. (Id. at 198-99.) An ABC representative attending a trade show in October 2011 apparently learned that Diageo was voluntarily pulling the Parrot Bay pouch off the market; however, “shortly thereafter,” ABC learned that this was not the case. (Id. at 199-201.)
104. On October 16, 2011, Murray sent an email to Scherry, seeking to “discuss the copy of the Daily’s pouch” and informing him that the “design and trademark and dress are all protected.” (Ex. 83.) Murray received a response from Evan Gourvitz, Diageo senior counsel, asking Murray to contact him. (Id.)
105. On December 8, 2011, counsel for PPi sent Diageo a cease and desist letter alleging that the Parrot Bay pouch infringed the '672 patent, noting as well that “not only has Diageo copied the shape of the pouch but has also copied aspects of the Daily’s branding. (Aug. 14 Tr. at 112-14); (Ex. 54). Counsel for Diageo responded by letter dated January 18, 2012, denying the infringement allegations. (Ex. J.) Counsel exchanged other letters between January 2012 and March 2012 in which Diageo denied the infringement allegations. (Id.)
106. In an email exchange between Murray and Bill Lanham (“Lanham”), Murray agreed with Lanham’s proposal to wait and see if sales of the Parrot Bay products would “take off,” preferring to see if “there is potential big dollars involved then the settlement potential is bigger and it would be easier to negotiate.” (Ex.. 53.) Murray responded “[t]hanks and good comments and that is why I am doing very little at this time.” (Id.) This email confirms Murray’s earlier statements to Campisi, in which he indicated that his practice was to wait until an alleged infringer’s sales volume grew to the point where it was good enough for him to sue them, at which time he would sue for patent infringement. (Campisi Depo. at 48-49.)
107. ABC contacted Diageo to assert its trade dress rights to the packaging of Daily’s frozen cocktail products on April 24, 2012. (Ex. 109); (Aug. 14 Tr. at 226-28). Plaintiffs filed the instant suit on May 8, 2012.
2. Irreparable Harm .
108. ABC’s primary contention with respect to irreparable harm is the alleged loss of market share in the single-serve RTD frozen cocktail market segment. ABC occupied 99% of that market segment prior to June 2011, at which point its market share decreased to 59%. (Aug. 14 Tr. at 215-17); (Ex. FF, EEEEE). As of the date of the preliminary injunction hearing, the Parrot Bay frozen cocktail products occupied 26% of that market, while Smirnoffs products occupied 3%. (Ex. FF.)
109. After Diageo’s entry into the frozen RTD pouch market, ABC’s sales increased exponentially, from $18,999,419 in sales in 2010 to $69,660,130 in 2011. (Barr Decl. (ECF No. 24-1) ¶¶ 24-25.) The number of units sold likewise experienced a corresponding sales jump. (Id.) ABC’s sales in 2012 (prior to the date of Barr’s declaration on May 7, 2012) nearly exceeded the total sales in all of 2010, and far exceeded any of ABC’s yearly sales numbers prior to that time. (Id.) Therefore, despite Diageo’s entry into this market segment, ABC’s sales continue to improve at an exponential rate, and increased since Diageo entered the market. (Id.); (Ex. FF).
110. Despite ABC’s ongoing sales successes, Barr stated that “if [the frozen pouch] business doesn’t meet the expectations we have, then that’s lost profit to our company.” (Aug. 14 Tr. at 190.) Barr testified that after Diageo’s entry into the market, ABC did not “get the sales [it] had anticipated,” and has had to lay off employees. (Id.)
111. ABC’s sales to Wal-Mart declined after Diageo entered the frozen RTD cocktail market. (Ex. EEEEE.) ABC’s customers, however, were on “allocation,” because ABC was not able to meet the demand for the Daily’s frozen cocktail products. ■ (Aug. 15 Tr. at 67-68.)
112. ABC points out that the Parrot Bay pouch is prone to leaking, and refers to two photographs which appear to show liquid on the floor under a rack holding Parrot Bay frozen cocktail products. (Ex. HH, II.) ABC believes that consumers of the Diageo products “may associate” any quality issues with the Daily’s products.
113. Murray testified that PPi could be harmed if it allowed another company to use the design of a pouch that PPi had licensed to another customer. (Aug. 14 Tr. at 54.)
114. Ward asserted that Diageo could change its pouch design in approximately six months. (Aug. 15 Tr. at 246.) Murray, however, claims that kind of change could take place in three months for either Diageo or ABC. (Aug. 14 Tr. at 88, 220.) Diageo disputes this timeframe based upon the current scale of its production. (Aug. 16 Tr. at 23.)
115. The frozen RTD cocktail market is subject to seasonality, with sales increasing in the warm summer months and decreasing in the colder winter months. (Aug. 15 Tr. at 218, 249-50.)
116. Diageo has approximately $19,800,000,000 annually in global sales. (Aug. 16 Tr. at 72.)
III. CONCLUSIONS OF LAW
A. Preliminary Injunction Standard and Applicable Law
1. A preliminary injunction is an “extraordinary remedy” that is largely within the discretion of the trial court. Winter v. Natural Res. Defense Council, 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Plaintiffs seeking such a remedy are charged with making a “clear showing” of entitlement to relief. Id. at 22, 129 S.Ct. 365.
2. Due to the nature of the claims plaintiffs asserted, the court will consider the relevant law of a jurisdiction for each claim, as set forth below.
1. Plaintiffs’ Design Patent Infringement Claim
3. With respect to plaintiffs’ design patent infringement claims, the court- must apply the preliminary injunction standards determined by the Supreme Court and the United States Court of Appeals for the Federal Circuit. Pursuant to 28 U.S.C. § 1295, “[t]he United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction ... of an appeal from a final decision of a district court of the United States ... arising under, any Act of Congress relating to patents.” Braun Inc. v. Dynamics Corp. of Am., 975 F.2d 815, 819 (Fed.Cir.1992).
4. The plaintiffs, as movants, bear the burden of demonstrating the need for preliminary injunctive relief. Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed.Cir.1994).
5. To obtain a preliminary injunction, plaintiffs “must establish a- right thereto in light of four factors: (1) reasonable likelihood of success on the merits; (2) irreparable harm; (3) the balance of hardships tipping in its favor; and (4) the impact of the injunction on the public interest.” Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1451 (Fed.Cir.1988). In proving a reasonable likelihood of success, a plaintiff must show a likelihood of success with respect to both validity and infringement. Id.
2. Plaintiffs’ Trade Dress Infringement Claim
6. Plaintiffs’ trade dress infringement claim is brought pursuant to the Lanham Act, 15 U.S.C. § 1051 et seq., and therefore the precedents which are controlling for this court are the decisions of the Supreme Court and the Court of Appeals for the Third Circuit. To obtain a preliminary injunction on a Lanham Act claim, a court must consider “(1) the likelihood that the moving party will succeed on the merits; (2) the extent to which the moving party will suffer irreparable harm without injunctive relief; (3) the extent to which the nonmoving party will suffer irreparable harm if the injunction is issued; and (4) the public interest.” McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 511 F.3d 350, 356-57 (3d Cir.2007) (citing Shire U.S. Inc. v. Barr Laboratories Inc., 329 F.3d 348, 352 (3d Cir.2003)).
3. Plaintiffs’ Unfair Competition Claim
7. Plaintiffs’ unfair competition claim arises under Pennsylvania common law and, therefore, is governed by Pennsylvania law.
8. Federal courts addressing Pennsylvania unfair competition claims and federal Lanham Act claims, however, apply the same standard to both; thus, the Lanham Act and unfair competition claims will be considered together for purposes of the present motion. R.J. Ants, Inc. v. Marinelli Enterprises, LLC, 771 F.Supp.2d 475, 489 (E.D.Pa.2011) (citing Moore Push-Pin Co. v. Moore Bus. Forms, Inc., 678 F.Supp. 113, 116 (E.D.Pa.1987)).
B. Plaintiffs’ Design Patent Infringement Claim
1. Claim Construction
9. The parties offer competing claim constructions; and the court must, therefore, first construe the claim set forth in the '672 patent. “[A] design patent, unlike a utility patent, limits protection to the ornamental design of the article.” Richardson v. Stanley Works, Inc., 597 F.3d 1288, 1293-94 (Fed.Cir.2010). “‘If the patented design is primarily functional rather than ornamental, the patent is invalid.’” Id. Functionality is defined as a design element that “ ‘is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” Amini Innovation Corp. v. Anthony Cal. Inc., 439 F.3d 1365, 1371 (Fed.Cir.2006) (quoting Inwood Labs., Inc. v. Ives Labs., Inc.,0 456 U.S. 844, 851, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982)). The court’s task, therefore, is to construe the claim in a way that excludes the purely functional elements.
10. Unlike in a utility patent case, courts are cautioned to avoid “excessive reliance on a detailed verbal description in a design infringement case.” Crocs, Inc. v. Int’l Trade Comm’n, 598 F.3d 1294, 1302 (Fed.Cir.2010) The Court of Appeals for the Federal Circuit has held that courts should construe design patent claims simply as a certain design “as shown in drawings.” Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 679 (Fed.Cir.2008). The design claimed in the '672 patent is an ornamental design for a flexible liquid-containing pouch, as shown in Figures 1-8 of Exhibit A. Shown below are Figures 1 through 4 from the '672 patent.
From left to right, FIG. 1, FIG. 2, FIG. S, and FIG. k from the '672 patent
2. Defendants’ Challenges to Validity
11. At trial, issued patents have a statutory, presumption of validity under 35 U.S.C. § 282. Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1327 (Fed.Cir.2008). A patent enjoys the same presumption of validity during preliminary injunction proceedings as at other stages of litigation. Canon Computer Sys., Inc. v. Nu-Kote Int’l, Inc., 134 F.3d 1085, 1088 (Fed.Cir.1998).
12. If a patentee moves for a preliminary injunction and the alleged infringer does not challenge validity, the existence of the patent with its concomitant presumption of validity satisfies the patentee’s burden of showing a likelihood of success on the validity issue. See Purdue Pharma L.P. v. Boehringer Ingelheim GmbH, 237 F.3d 1359, 1365 (Fed.Cir.2001).
13. If a patent exists (as in this ease), the burden is on the challenger to come forward with evidence of invalidity, just as it would be at trial. The challenger satisfies its burden upon raising a “substantial question” about the validity of the patent. Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1376 (Fed.Cir.2009). To avoid a conclusion that it is unable to show a likelihood of success, the patentee then has the burden of responding with contrary evidence, “which of course may include analysis and argument.” Id. at 1377.
14. While the evidentiary burdens at the preliminary injunction stage track the burdens at trial, the ultimate question before the court in determining whether it should grant a preliminary injunction is different. The court in determining whether a preliminary injunction should issue “does not resolve the validity question, but rather must ... make an assessment of the persuasiveness of the challenger’s evidence, recognizing that it is doing so without all evidence that may come out at trial.” New England Braiding Co., Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed.Cir.1992).
15. At the preliminary injunction stage, instead of the alleged infringer having to persuade the court that the patent is invalid, it is the patentee, the movant, who must persuade the court that, despite the challenge presented to validity, the patentee nevertheless is likely to succeed at trial on the validity issue. Titan Tire, 566 F.3d at 1376.
16. Defendants set forth several challenges to the validity of the '672 patent. Defendants argue: (1) that most of the elements claimed in the '672 patent are functional, rendering the patent invalid; (2) that the '672 patent is unclear, indefinite, and non-enabling, and therefore invalid pursuant to 35 U.S.C. § 112; (3) that the design claimed in the '672 patent was on sale more than one year before the application for the '672 patent was filed and therefore the '672 patent lacks novelty and was anticipated; and (4) that the design claimed in the '672 patent would be obvious to one skilled in the art.
a. Functionality
17. “Under 35 U.S.C. § 171[ ], a design patent may be granted only for a ‘new, original and ornamental design.’ ” Power Controls v. Hybrinetics, Inc., 806 F.2d 234, 238 (Fed.Cir.1986). Once a patent issues, it is presumed valid pursuant to 35 U.S.C. § 282, but this presumption can be overcome if the challenger establishes that “the patented design is primarily functional rather than ornamental.” Id. “The design of a useful article is deemed to be functional when ‘the appearance of the claimed design is ‘dictated by’ the use or purpose of the article.’ ” PHG Techs., LLC. v. St. John Companies, Inc., 469 F.3d 1361, 1366 (Fed.Cir.2006) (quoting L.A. Gear Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1123 (Fed.Cir.1993)).
18. Many designs or elements thereof perform some function; however, while “[t]he elements of the design may indeed se