LKQ Corp. and General Motors have agreed to stay a lawsuit filed by LKQ regarding alleged patent infringement pending a decision from the U.S. Court of Appeals for the Federal Circuit.

In the suit, filed in November 2021 and amended in January 2022, LKQ and its subsidiary, Keystone Automotive, argue that they didn’t infringe on two GM patents regarding vehicle fenders.

The patents in question are GM’s D818,406 and D828,256. Regarding the 406 patent, the plaintiffs argue that fender design by Mitsubishi on its 2016 Pajero Sport looks basically the same as GM’s patented fender design and that the 2015 Toyota Tundra looks similar to the Pajero Sport’s. A similar argument is made for the 256 patent — the patented fender design has the same overall visual appearance as the 2015 Chevrolet Colorado.

The joint motion to stay states, “LKQ and GM have engaged in significant litigation before the U.S. Patent Trial and Appeal Board relating to GM design patents covering automotive parts. One of these cases led to an appeal to the Federal Circuit Court of Appeals, which has now spawned a rare en banc [bench] review of this dispute.

“…a stay will provide clarity as to the appropriate legal standard to apply to LKQ’s claims that the GM patents-in-suit are invalid as obvious. And this in turn will simplify the issues this Court and the parties will face as it relates to obviousness inasmuch the parties will advance their respective obviousness and non-obviousness arguments under the same standard and at just one time, instead of moving forward with expert discovery and dispositive motions under one standard and then being forced to relitigate obviousness under a potentially new standard.”

The appeal, which is to be reviewed by the entire bench, i.e. all 19 of the court’s judges, will address leading cases that set forth the standard for design patent obviousness, whether the test for obviousness should be changed, and if so, to what, the motion states.

Judge Jorge L. Alonso’s order on the motion grants the stay until one week after the Federal Circuit’s en banc decision. At that time, LKQ and GM must submit a joint status report recommending dates and deadlines for expert discovery, dispositive motions, and remaining dates and deadlines.

In January, a three-judge panel of Federal Circuit judges affirmed the U.S. Patent and Trademark Office and Appeal Board’s decision in favor of GM because LKQ “failed to show by a preponderance of the evidence that U.S. Patent D797,625 (the “’625 patent”) was anticipated or would have been obvious over the cited prior art before the effective filing date.”

“GM and LKQ had previously been parties to a license agreement, under which LKQ was granted a license to many of GM’s design patents,” the January disposition states. “The license agreement expired in February 2022 following a breakdown of renewal negotiations, after which GM sent letters to LKQ’s business partners alleging that the now unlicensed LKQ parts infringe its patents.

“…the Board concluded that, although there were some similarities between the claimed design and Lian, there were a number of key differences, including: (1) the wheel arch shape and terminus, (2) the door cut line, (3) the protrusion, (4) the sculpting, (5) the first and second creases, (6) the inflection line (i.e., third crease), and (7) the concavity line. Decision, J.A. 30–45. The Board found that these differences in the claimed features contributed to different overall appearances in the design.”

LKQ contends the Board included retail customers as ordinary observers in testing patent obviousness who wouldn’t have cared about “trivial differences” between OEM and aftermarket parts. Also, LKQ says the tests the Board used were previously overruled by the Supreme Court and that the Board failed to properly compare the designs as a whole.

According to court filings, LKQ also argues that its replacement parts are a downstream consequence of prior whole vehicle sales, that front fenders aren’t in the first instance as replacement products, and that replacement products make up a small subset of total fender sales.

GM argues that the ordinary observer must include the person who purchases the part in question, or at least is interested in that part; not necessarily the vehicle as a whole.

GM also argues that, regardless of who the ordinary observer is, the Board’s decision was supported by substantial evidence.

“We agree with GM that the Board’s finding that the ordinary observer would include both retail consumers who purchase replacement fenders and commercial replacement part buyers who purchase replacement fenders was supported by substantial evidence,” the appellate judges wrote.

LKQ has also been accused of three other patent design infringements by GM. That case is pending as well with LKQ most recently seeking summary judgment of invalidity and non-infringement.

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