Center for Advanced Study & Research on Innovation Policy


CASRIP Newsletter - Autumn 1999, Volume 6, Issue 2

Federal Circuit to Apply Own Law, Rather than Circuit Law, in Preemption Issues

by Orland S. Seballos

The Federal Circuit, in Midwest Industries Inc. v. Karavan Trailers Inc.,1 decided on May 5, 1999, held that it will apply its own law when called upon to decide preemption issues concerning federal patent law and state law causes of action. This en banc ruling effectively overrules previous Federal Circuit decisions which state that regional circuit laws must be applied in cases involving conflict between patent law and other legal rights.

The case involved two manufacturers and sellers of trailers for hauling watercraft behind automobiles. Midwest filed suit in the federal court claiming that Karavan's use of curved winch posts in its watercraft trailers infringed Midwest design patents and violated Midwest's rights under federal and state trademark law. As a nonpatent count, Midwest alleged that Karavan committed trade dress infringement by copying the curved winch post design, in violation of the Lanham Act and Iowa trademark statute. Midwest likewise accused Karavan of violating its rights under the Iowa common law of trademarks.

Karavan filed a motion to dismiss Midwest's nonpatent claims for failure to state a claim, alleging that Midwest's claim for relief would improperly extend Midwest's patent rights to provide additional state and federal protection for the curved winch post design. The district court granted the motion, which it treated as a motion for summary judgment, relying on the Tenth Circuit's decision in Vornado Air Circulation Systems, Inc. v. Duracraft Corp.2

In Vornado, the Tenth Circuit refused to grant trade dress protection under the Lanham Act to a fan having a grill with spiral vanes. The plaintiff in that case had a utility patent that claimed a fan with multiple features, including a spiral grill. The appellate court held that no trade dress protection can be extended to a product configuration that embodies "significant features of patented products" if such protection would interfere with "the public's ability to practice patented inventions after the patents have expired."3 Accordingly, the court held that that no Lanham Act protection may be accorded a product configuration when the configuration is a "described, significant inventive component" of an issued utility patent.

Without addressing the question whether the curved winch post is "functional," the trial court in Midwest concluded that because the curved winch post is disclosed in its patent, it is a "significant inventive aspect" of the patent. For that reason, relying on the circuit law as enunciated in Vornado, the court ruled that Midwest is not entitled to Lanham Act trade dress protection. The court then concluded that Midwest's state law claims conflicted with patent policy for the same reasons and that those claims were preempted by federal patent law.

In reversing the district court's grant of summary judgment, the Federal Circuit expressly abandoned its previous practice of applying regional circuit law in resolving questions involving the relationship between patent law and other federal and state law rights.4 Instead, the court held that it will apply Federal Circuit law to patent law issues, but will apply the law of the circuit where the district court sits to nonpatent issues. Such a rule, the court reasoned, would advance one of the reasons for the Federal Circuit's creation: promote uniformity in patent law. At the same time, applying regional circuit law to nonpatent issues would avoid the risk "that district courts and litigants will be forced to select from two competing lines of authority based on which circuit may have jurisdiction over an appeal that may ultimately be taken, and to minimize the incentive for forum-shopping by parties who are in a position to determine, by their selection of claims, the court to which an appeal will go."5

The court acknowledged that distinguishing between "patent issues" and "nonpatent issues" may at times be difficult, especially in instances involving "mixed" questions of patent and nonpatent law. The court held that rigid division between substantive patent law issues and all other substantive and procedural issues, which was the basis for its choice-of-law ruling in Cable Electric, will no longer be the approach to choice-of-law questions. Rather, the court will apply its own construction of patent law to determine whether and to what extent patent law preempts or conflicts with other causes of action. The court must therefore apply its own law to the issue in the instant case: whether patent law forecloses Midwest's claim under the Lanham Act and under Iowa state trademark law.

The court held that the district court erred in granting summary judgment and in holding that patent law forecloses Midwest's Lanham Act and state law claims. In arriving at this conclusion, the Federal Circuit addressed the interaction between patent law and trade dress protection and drew from its own cases on how these two rights should be interpreted. Trade dress protection, the court held, does not depend on whether a patent has been obtained for the product or feature in question.6 Patent and trade dress protection exist independently of each other, under different laws, and for different reasons. "The fact that a patent has been acquired does not convert what otherwise would have been protected trade dress into nonprotected matter." Moreover, under Bonito Boats7 decided by the U.S. Supreme Court, trade dress protections does not impermissibly interfere with the federal patent scheme, as trade dress protection has been "traditionally limited to protection against copying of nonfunctional aspects [of the product]."

The Federal Circuit found the district court's summary ruling on Midwest's Lanham Act claim as not based on a finding of functionality, but rather on the Tenth Circuit's Vornado decision. The appellate court concluded that that is not a sufficient basis to deny Lanham Act trade dress protection. Based on its own interpretation of the principles involved, the court held that patent law did not preempt the Lanham Act protection in this case. This does not mean, however, that patent law principles can never have preemptive effect on state law claims "simply because those claims are for trade dress protection." Rather, courts must look into the question of whether the feature for which trade dress protection is sought is functional. Thus, "the fact that Midwest's patent discloses and claims a trailer having a curved winch post does not necessarily mean that Midwest cannot assert trade dress rights in the particular curved winch design .." The court remanded the case to the district court to determine whether Midwest's winch post design is functional and whether Midwest has satisfied the other requisites for protection under the Lanham Act and Iowa state trademark law.


1. 175 F.3d 1356 (Fed. Cir. 1999).
2. 58 F.3d 1498 (10th Cir. 1995).
3. Id. at 1508.
4. The Federal Circut expressly abandoned its ruling in such cases as Cable Electric Products, Inc. v. Genmark, Inc., 770 F.2d 1015 (Fed. Cir. 1985), Interpart Corp. v. Italia, 777 F.2d 678 (Fed. Cir. 1998), and Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1999).
5. Midwest, 175 F.3d 1356.
6. In re Mogen David Wine Corp., 328 F.2d 925 (CCPA 1964).
7. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989).

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