DEI-Related Executive Orders Move Forward After Fourth Circuit Grants Stay of Preliminary Injunction; Federal Agency Actions
On March 14, 2025, the Fourth Circuit Court of Appeals issued a stay of the U.S. District Court’s preliminary injunction, which will allow the Trump administration to continue enforcing the Executive Orders (EOs) related to Diversity, Equity and Inclusion (DEI) programs while the litigation continues.
The National Association of Diversity Officers in Higher Education filed a lawsuit in the U.S. District Court for the District of Maryland (Maryland District Court) challenging the constitutionality of the following EOs, arguing they are vague under the Fifth Amendment and violate the First Amendment’s Free Speech Clause:
Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing.”
Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
Earlier, the Maryland District Court issued an injunction against three key provisions in the two Executive Orders, effectively blocking the federal government from enforcing: 1) the termination of equity-related grants or contracts by executive agencies, 2) a requirement for federal contractors and grantees to certify that they will not operate DEI programs that violate federal anti-discrimination laws and 3) the U.S. Attorney General’s authority to investigate and initiate civil compliance actions against private sector entities continuing DEI practices.
Federal agencies have taken actions to enforce the EOs. Below are examples of three federal agencies that have issued guidance and enforcement letters to public and private entities on ensuring they are compliant with removing DEI from its policies, practices and other programs.
Federal Agencies: Guidance and Enforcement Letters from the DOE, HHS and EEOC Guidance from The Department of Education
Guidance by federal agencies regarding DEI has been published since the signing of the EOs. In its initial Dear Colleague Letter issued on February 14, 2025, the Department of Education (DOE) advised educational institutions receiving federal funding to stop using race, color or national origin in decisions related to admissions, hiring, promotions, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies and all aspects of campus life.1 Additionally, the DOE advised that institutions are prohibited from using non-racial information (such as personal essays) as a proxy for race when making decisions.2 For example, the DOE asserts that using a students’ personal essays or other materials to determine a student’s race would constitute the misuse of non-racial information when used to make decisions about the student’s admission or status.3 To further clarify its guidance, the DOE shared a frequently-asked-questions (FAQs)4 document stating that “race cannot be used as a proxy for socioeconomic disadvantage.”5
The DOE emphasized that simply using terms like “diversity,” “equity” or “inclusion” is not enough to determine whether a program or policy violates federal law. The DOE’s Office for Civil Rights (OCR) will review additional materials for more subtle forms of discrimination. The DOE has stated that institutions failing to comply may face the potential loss of federal funding.6 The department has set up a new website where private individuals can report a school or school district for discriminatory practices.
On March 14, 2025, the DOE and the OCR published a press release that it has launched Title VI and Title IX investigations into 52 universities in 41 states in order to “reorient civil rights enforcement to ensure all students are protected from illegal discrimination.” The departments are looking into the universities’ race-based practices in their graduate and scholarship programs.
Pushback Against DOE’s Dear Colleague Letter
In response to the DOE’s Dear Colleague Letter, 14 state Attorneys General issued guidance7 on March 5, 2025 setting out their position that the EOs and the DOE’s guidance do not change current laws. These Attorneys General argued that the DOE misinterprets the SFFA ruling, and that while schools cannot use race as a factor in admissions, they can still evaluate applicants who discuss how race has influenced their lives—provided the mention of race ties back to “that student’s courage and determination.”8 In essence, these Attorneys General advise that schools cannot factor race into admissions decisions but may “consider the ways… race affected a particular student’s life.”9
HHS Investigates Alleged Discrimination in Medical School and Health Care Workforce Training Programs
On March 7, 2025, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) announced it is investigating four medical schools and hospitals that may be operating programs for education, training, or scholarships that discriminate based on race, color, national origin or sex. These investigations align with President Trump’s Executive Order 14173. The stated focus is on ensuring that healthcare professionals and students are not excluded from opportunities based on these factors. OCR’s actions are intended to enforce the Trump Administration’s position that DEI Programs violate civil rights laws under Title VI of the Civil Rights Act of 1964 and Section 1557 of the Affordable Care Act.
EEOC Requesting DEI-Related Employment Practices of 20 National Law Firms
On March 17, 2025, based on publicly available information, Equal Employment Opportunity Commission (EEOC) Acting Chair Andrea Lucas sent letters to 20 law firms requesting each firm’s employment practices with respect to using DEI or other employment programs that would violate Title VII of the Civil Rights Act of 1964. These firms are asked to create spreadsheets with personal information of each applicant for its diversity internship, fellowship and scholarship programs. The data points include the name, race, sex and GPA of the applicants. If the applicants were selected for these programs, the EEOC asks for the applicants’ compensation during the program, whether they received a full-time associate attorney position, and whether they received additional funds. Additionally, the letters requested similar data in relation to the firm’s compensation and partnership decisions, and whether any DEI or diversity considerations (ex. participation in firm-sponsored or third-party affinity group) play a role in such decisions. The information requested dates as far back as 2015.
What Does This Mean for Organizations and Employers?
Given the rapidity with which new orders, guidance, and judicial decisions are being issued, it is important for organizations and employers to stay as current as possible on legal developments.
All organizations and employers, but particularly grant recipients and federal contractors, should consider reviewing any DEI-related documents, policies, programs, initiatives, affirmative action plans, etc. for potential issues. This may include going beyond the obvious, and evaluating scholarship programs, hiring policies and processes, onboarding and application documents, marketing materials, governing documents, trainings, compensation and performance materials, equity language, mission and vision statements, internship programs and website language.
Organizations and employers may also want to review their workplace facility and pronoun usage policies. These policies and initiatives should apply equally to be lawful. In addition, organizations and employers may want to do department level reviews to ensure all DEI-related documents and materials are properly evaluated.
Finally, federal contractors do have a deadline by which to comply with Executive Order 14173. Thus, they likely will want to put additional resources to this task in the short-term. Other employers should begin evaluating these documents and be ready to show good faith efforts in case of questions from employees or governmental agencies.
[1] Craig Trainor, United States Department of Education (Feb. 14, 2025), https://www.ed.gov/media/document/dear-colleague-letter-sffa-v-harvard-109506.pdf.
[2] Id. at 3.
[3] Id. at 2.
[4] Press Release, U.S. Department of Education, U.S. Department of Education Releases Frequently Asked Questions on Dear Colleague Letter About Racial Preferencing (Mar. 1, 2025), https://www.ed.gov/about/news/press-release/us-department-of-education-releases-frequently-asked-questions-dear-colleague-letter-about-racial-preferencing.
[5] United States Department of Education (Feb. 28, 2025), https://www.ed.gov/media/document/frequently-asked-questions-about-racial-preferences-and-stereotypes-under-title-vi-of-civil-rights-act-109530.pdf.
[6] Craig Trainor at 4.
[7] The Attorneys General of Illinois, Massachusetts, New York, California, Connecticut, Delaware, Maine, Maryland, Minnesota, New Jersey, Nevada, Oregon, Rhode Island, Vermont, and the District of Columbia, Office of the New York State Attorney General (Mar. 5, 2025), https://ag.ny.gov/sites/default/files/publications/joint-guidance-re-school-programs-guidance-2025.pdf.
[8] Id. at 2 n.7.
[9] Id. at 2.
Palette of Evidence: PTAB Must Consider Entire Record to Determine Prior Art Status
The US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial & Appeal Board patentability determination, finding that the Board failed to consider the entire record regarding the prior art status of a sample and did not explain why it did not do so. CQV Co., Ltd. v. Merck Patent GmbH., Case No. 23-1027 (Fed. Cir. Mar. 10, 2025) (Chen, Mayer, Cunningham, JJ.)
Merck owns a patent that covers alpha-alumina flakes included in paints, industrial coatings, automotive coatings, printing, inks, and cosmetic formulations to impart a pearlescent luster. CQV petitioned the Board for post-grant review (PGR) of the patent, arguing that the challenged claims were obvious in view of prior art samples of Xirallic®, a trademarked product produced by Merck. In its final written decision, the Board found that CQV had not adequately supported its contention that the alleged Xirallic® lot qualified as prior art and therefore had not shown by a preponderance of the evidence that the challenged claims were unpatentable. CQV appealed.
The Federal Circuit reviewed the Board’s finding under the substantial evidence standard. The Court found that the Board erred in failing to consider the entire record and did not provide any basis for that failure. In terms of the prior art status of the Xirallic® samples, the Court found that the Board failed to consider testimony regarding the availability of Xirallic® for customer order and the length of the quality control process. The Court could not “reasonably discern whether the Board followed a proper path” in determining that CQV failed to show by a preponderance of the evidence that the sample of Xirallic® constituted prior art. The Court remanded, suggesting that the Board carefully consider whether the sample of Xirallic® would have been publicly available as of the alleged critical dates.
Construing Unambiguous Claim Language and Qualifying Challenged Expert as POSITA
Addressing the issues of claim construction and the requisite expert qualifications to testify on obviousness and anticipation, the US Court of Appeals for the Federal Circuit vacated a Patent Trial & Appeal Board decision invalidating half of the challenged patent’s claims and instructed the Board to clarify whether the patent owner’s expert was indeed qualified as a person of ordinary skill in the art (POSITA). Sierra Wireless, ULC v. Sisvel S.P.A., Case Nos. 23-1059; -1085; -1089; -1125 (Fed. Cir. Mar. 10, 2025) (Moore, CJ: Schall, Taranto, JJ.)
Sisvel owns a patent directed to methods for retrieving data lost during wireless transmission. The prior art taught methods for flagging lost protocol data units (PDUs) so that the data transmitter could retry the transmission. Sisvel’s patent includes a timer that prescribes a period of time to elapse before alerting a transmitter of a missing PDU, allowing the transmission to be completed without notification. The patent has 10 claims, two of which are independent. The primary independent claim has four limitations, including one related to stopping the timer before a status report issues if the missing PDU is located and another related to issuing a status report upon the timer’s expiration. The limitations are linked by the word “and.”
Sierra Wireless initiated inter partes review (IPR), arguing that all 10 of the claims were both anticipated and obvious in light of the “Sachs” prior art patent. The Board found that half of the claims, including both independent claims, were anticipated and obvious. In finding that the other claims were not unpatentable, the Board relied on the testimony of Sisvel’s expert. Both parties appealed.
Sisvel raised two arguments in support of the claims the Board found unpatentable. First, Sisvel argued that the Board misconstrued the two above-noted limitations as mutually exclusive. Sisvel argued that the prior art had to teach both limitations to invalidate the claim. Second, Sisvel argued that the Board’s interpretation of Sachs’ teachings to include the first of the two limitations was unsupported by substantial evidence.
The Federal Circuit agreed. On the claim construction issue, the Court found that the two limitations in issue could not be mutually exclusive because the claim language linked them using the word “and.” To construe the limitations as mutually exclusive would be inconsistent with the unambiguous claim language. With regard to the prior art, the Court looked to Sachs Figure 5, which the Board relied upon in determining that the prior patent had taught the first limitation. Both the figure and the patent’s surrounding language made clear that the time referenced therein was dependent upon reordering of PDUs, not upon receiving missing ones. The Court thus vacated the Board’s invalidity determination as not supported by substantial evidence.
In its appeal, Sierra argued that the Board’s reliance on Sisvel’s expert’s testimony to find certain claims not unpatentable was an abuse of discretion. The Federal Circuit agreed, finding that the Board abused its discretion by not finding that the proposed expert qualified as a POSITA before relying upon his testimony. The Court found that the proposed expert’s qualifications fell outside the parameters the Board itself set when defining who qualified as POSITA. The Court noted that while the proposed expert had more work experience than the Board required, he lacked the requisite electrical engineering degree. The Court further noted that his work experience was not identical to the adopted level of skill in the art. Because obviousness and anticipation are both viewed from the perspective of one of ordinary skill in the art, it was improper for the Board to rely on the proposed expert’s testimony. The Court thus vacated the Board’s decision and remanded with instructions that the Board determine whether the proposed expert qualified as a POSITA.
Don’t Be a Junkyard Dog: Put Your Agreements in Writing!
A federal judge in Louisiana has dished out some harsh criticism of contractors who don’t reduce their contracts to writing. The case involves the decommissioning of 26 orphaned oil and gas wells near Baton Rouge. The defendant orally hired the plaintiff in 2013 to perform a portion of the cleanup and remediation work after deciding the plaintiff was a “junkyard dog like me.” The plaintiff commenced work shortly thereafter based on a handshake deal because he considered himself “kind of old school” and a “man of his word.” He subsequently sent the defendant invoices, on a time and materials basis, totaling over $1.6 million. A dispute inevitably ensued. The central issue was whether the plaintiff was entitled to payment on a time and materials basis, or whether the plaintiff was entitled to receive only the scrap value of the salvaged equipment. That dispute was complicated by the undisputed fact that the parties never reduced their agreement to writing.
In his 59-page decision released last week – some 12 years after the dispute began – U.S. District Judge John deGravelles waded through the parties’ conflicting testimony as to the existence and terms of the parties’ agreement. He ultimately sided with the plaintiff on the central issue, awarding roughly $750,000 plus interest – but not before offering this stern advice for parties who neglect the most basic task of putting their agreements in writing:
The Court repeats: it is astounding that this contract involving the expenditure of millions of dollars by both parties and untold hours of work was not reduced to writing. [Defendant] claimed he didn’t reduce the agreement to writing because [Plaintiff] was a “junkyard dog like me.” [Plaintiff] said he did the “handshake … deal” because he is a “man of his word,… kind of old school ….” This colossal failure of good business practice and common sense on both sides led to an extensive pre-lawsuit dispute, eventually this lawsuit, and undoubtedly the payment of significant sums by both sides in attorney fees.
The case is Belden Investments, LLC v. Pharaoh Oil and Gas, Inc., 2025 WL 795689 (Mar. 12, 2025, M.D. La., Civil Action No. No. 22-62-JWD-SDJ), and a copy of the court’s opinion can be found here.
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Get a Grip: Not All Cords Have Handles
The US Court of Appeals for the Federal Circuit vacated a district court’s grant of summary judgment of noninfringement because the district court improperly narrowed a claim term during its construction. IQRIS Technologies LLC v. Point Blank Enterprises, Inc. et al., Case No. 2023-2062 (Fed. Cir. Mar. 7, 2025) (Lourie, Linn, Stoll, JJ.)
IQRIS sued Point Black and National Molding for infringing its patents related to “quick release systems on tactical vests.” The patent claim vests include a “pull cord.” When pulled, the pull cord causes releasable hooks to disengage, detaching the front and rear portions of the vest. The defendants moved for summary judgment of noninfringement, arguing that the claimed “pull cord” is “a cord on the exterior of the ballistic garment grasped by a user that is capable of disengaging the releasable fastener or releasable hook when a user pulls on the pull cord.” IQRIS argued that the term should be construed as “a component which, when put into tension, can result in activating the releasable fastener.”
The district court construed “pull cord” as a “cord that can be directly pulled by a user to disengage a releasable fastener or releasable hook,” a construction that excluded cords with a handle. The district court found that one of the accused products featured a “trigger manifold” that enabled the user to apply “indirect force to [an] internal wire by applying a direct force to the trigger.” As a result, the district court determined that no reasonable jury could find infringement for that product. For another product, the district court found summary judgment to be appropriate because to rule otherwise, the accused vest would improperly encompass prior art criticized in the “background of the invention” portion of the patent specification. The specification criticized prior art having “cutaway vests with ‘handle’ release systems.”
IQRIS appealed. The Federal Circuit considered whether the district court correctly restricted “pull cord” to cords that are “directly pulled by a user.” The Court found that the claim language, which made no reference to “who or what pulls,” did not distinguish between direct and indirect pulling. Citing the patent specification, the Federal Circuit disagreed with the lower court’s interpretation, noting that the specification referred to a directly pulled element as a “pull cord” but an indirectly pulled element as just a “cord.” The Court noted that even though all disclosed embodiments depicted a directly pulled pull cord, “our precedent counsels against reading this requirement into the claims when the claims do not expressly require as much.”
The Federal Circuit next considered whether the proper construction of the term “pull cord” excluded cords with handles. The Court found that “nothing in the claim language, specification, or prosecution history supports this construction.” The claim language was “silent about the structure of the pull cord,” and the specification “suggest[ed] otherwise because each of the figures depicts a circular ball at the end of the pull cord[], suggesting that the inventors contemplated pull cords with handles.” While the specification criticized the cutaway vests with “handle release systems,” it made no criticism of the handles themselves. The Court concluded that the patent’s criticism of pull cords with handles did not rise to the level of disavowal: “[T]he standard for disavowal is exacting, requiring clear and unequivocal evidence that the claimed invention includes or does not include a particular feature.” The Federal Circuit therefore determined that the district court erred by excluding pull cords that include handles.
ADGM Courts and Dubai Courts Sign Memorandum on Reciprocal Enforcement of Judgments
On 14 January 2025, the Abu Dhabi Global Market (ADGM) Courts and onshore Dubai Courts signed a memorandum of understanding (MoU) for the reciprocal enforcement of judgments. The MoU, which is publicly available, took effect the day it was signed and the mechanism it sets forth is available for parties seeking to utilize its reciprocal enforcement mechanisms.
The MoU, which follows approximately seven years after a similar MoU was signed between the ADGM Courts and the onshore Abu Dhabi Courts in February 2018, is designed to facilitate judicial cooperation between the ADGM and Dubai relating to mutually enforceable judgments.
Prior to the enactment of the MoU, parties seeking to enforce an ADGM Courts judgment in Dubai had to either go through the onshore Abu Dhabi Courts and then seek to rely on Federal Law No. 10 of 2019 (known as the Judicial Relations Law), which provides for reciprocal judgment enforcement between the onshore courts of the seven emirates, or seek recognition and enforcement directly in Dubai without the benefit of a streamlined process.
Highlights of the MoU
Extends to various executory instruments: The MoU applies to “judgments.” However, it defines the term to include all final judgments, decisions, orders, ratified or recognized arbitral awards, certified memoranda of composition, as well as any other paper that is defined as a judgment or executory instrument by law.
No re-examination of judgments: The MoU makes clear that the court requested to enforce the judgment will not re-examine judgments on their merits.
Framework for reciprocal enforcement: The MoU sets out a clear framework for enforcement, either by direct application or deputization.
Enforcement Under the MoU
A party can either enforce a judgment by direct application or deputization.
Enforcement of ADGM Courts Judgments in Onshore Dubai
As a first step, parties must apply to the ADGM Courts for a certified copy of the judgment, enclosing an Arabic translation. The ADGM Courts will then affix an executory formula on the judgment. For the direct application procedure, the judgment creditor must apply directly to the onshore Dubai Courts’ enforcement division, submitting a certified copy of the judgment translated into Arabic and affixed with the executory formula.
If seeking enforcement through deputization, the judgment creditor must first file an application. The ADGM Courts enforcement judge will then deputize an enforcement judge of the onshore Dubai Courts to enforce the judgment by providing the court with a letter enclosing, among other materials, an order indicating the enforcement measures or actions to be taken.
Enforcement of Dubai Courts Judgments in the ADGM
A similar process applies to enforcing onshore Dubai Courts judgments in the ADGM, save that such judgments must be translated from Arabic into English.
Conclusion
The process outlined in the MoU seeks to align judicial processes across the UAE. It signals a commitment to enhancing justice, transparency, and efficiency within the UAE’s diverse legal systems, while also aiming to integrate the nation’s common law and civil law courts.
Chady Deeb also contributed to this article.
Design Patent Obviousness
The landscape of design patent law has recently evolved with the introduction of a new standard for determining obviousness. For decades, the Rosen-Durling test was used to assess obviousness of design patents. The test’s rigid standard resulted in few design patents being invalidated as obvious. In its first en banc decision since 2018, the Federal Circuit overruled the long-established obviousness test in the case of LKQ Corporation v. GM Global Technology Operations LLC.
The Rosen-Durling test had been the standard for evaluating the obviousness of design patents since the 1990s. It involved a two-step process. First, a single primary reference, often referred to as the “Rosen reference,” must be identified, possessing design characteristics that are “basically the same” as the claimed design. If no Rosen reference is found, the assessment ends here. If the first step is satisfied, the second step requires the use of additional references to supplement the primary Rosen reference. These additional references must be “so related” to the primary Rosen reference that applying certain ornamental features from one to the other would be obvious. This rigid framework often made it difficult to invalidate design patents, as challengers had to find a primary reference that was nearly identical to the patented design. The LKQ case represents a significant shift in how obviousness in design patents is evaluated, moving away from the stringent Rosen-Durling test.
General Motors (GM) is well-known for manufacturing automobiles, many of which are protected by intellectual property (IP) rights, including design patents for various components like fenders, bumpers, and headlights. For many years, GM did not produce most of its replacement body parts; instead, it contracted with LKQ to manufacture those parts. Eventually, GM decided to start producing its own replacement body parts, terminating its agreement with LKQ.
Despite the termination of the agreement, LKQ continued to manufacture aftermarket parts for GM—specifically the parts covered by GM’s design patents. In response, GM sent a cease-and-desist letter to LKQ, asserting that LKQ was infringing on approximately 250 different design patents held by GM. In turn, LKQ filed multiple Inter Partes Review (IPR) and Post Grant Review (PGR) petitions concerning various design patents, including an IPR against U.S. Design Patent No. D979,625, which claims the ornamental design for a vehicle front fender.
The Patent Trial and Appeal Board (PTAB) determined that the ’625 Patent was valid when evaluated against prior art on both anticipation and obviousness grounds. Specifically, the PTAB found that LKQ failed to meet step one of the Rosen-Durling test because the primary reference was not “basically the same” as the claimed design. LKQ then appealed to the Federal Circuit.
The panel of the Federal Circuit affirmed the PTAB’s decision, prompting LKQ to request a hearing en banc, which was granted. On appeal, LKQ argued that the Rosen-Durling test was inconsistent with the Supreme Court’s decision in KSR, which advocated for a more expansive and flexible approach to assessing obviousness in utility patents. The en banc Federal Circuit agreed with LKQ, ruling that the Rosen-Durling test was unduly rigid. The court held that the non-obviousness requirement under Section 103 applies equally to both design and utility patents and adopted the Graham factors used for evaluating obviousness in utility patents when assessing design-patent obviousness.
There are four Graham factors to consider when assessing obviousness. The first Graham factor involves determining the scope and content of the prior art. For design patents, this entails identifying a primary reference, which is the piece of prior art that most closely resembles the claimed design. The key requirement for a primary reference is that it must be at least analogous art. The Federal Circuit clarified that “analogous art for a design patent includes art from the same field of endeavor as the article of manufacture of the claimed design.” LKQ Corp. v. GM Glob. Tech. Operations LLC, 102 F.4th 1280, 1297 (Fed. Cir. 2024). This guidance aligns with the current practice in examining utility patents, where only references that are at least analogous to the claimed invention are considered valid for evaluating obviousness. According to the Federal Circuit, the requirement for identifying a primary reference is intended to protect against hindsight bias, ensuring that designs that are less visually similar do not overly influence the determination of obviousness. “Analogous art” includes previous designs from the same field—such as automobile fenders in the LKQ case—or other designs outside the field that would fall within the knowledge of a hypothetical ordinary designer familiar with the type of object being designed. For instance, a nursing pad and necklace adhesive brassier may be analogous art to a flexible garment insert, whereas a teardrop-shaped vase and engagement ring likely would not be.
When evaluating the differences between the prior art designs and the design claim in question, we must follow Graham factor 2. This evaluation does not require a threshold “similarity” criterion. Instead, it involves comparing the overall visual appearance of the claimed design with that of prior art designs from the perspective of an ordinary designer familiar with the type of product in question. The Federal Circuit emphasizes that both the claimed design and the prior art should be assessed based on their overall visual appearances, rather than on the specific similarities or differences of individual elements.
The third Graham factor examines the level of ordinary skill in the relevant field. The Federal Circuit determined that the correct perspective for evaluating whether a design is obvious is that of “a designer of ordinary skill who designs articles of the type involved.” The primary and secondary references do not need to be “so related” that features in one would directly suggest the application of those features in the other. However, both must be considered analogous art to the patented design. Additionally, the motivation to combine these references does not have to come explicitly from the references themselves. It is required that there be some record-supported reason—free from hindsight—that an ordinary designer in that field would have modified the primary reference using features from the secondary reference(s) to achieve an overall appearance similar to the claimed design.
The court confirmed that secondary factors related to nonobviousness (specifically Graham factor 4) should be taken into account for design patents. These factors include commercial success, industry recognition, and acts of copying. However, it was left to future courts to decide whether long-standing unmet needs and the failures of others are relevant in the context of design patents.
So, what does this all mean? The overruling of the Rosen-Durling test is expected to significantly impact the prosecution and enforcement of design patents. The new standard will simplify the process for determining design patent obviousness, likely making it more challenging to secure and protect these patents. Now, the focus will be on whether prior art is considered analogous, which opens up a broader range of references for evaluation.
This new approach encourages a more nuanced, fact-based analysis, allowing for greater consideration of common sense and the knowledge of an ordinary designer. GM raised concerns that overruling the Rosen-Durling test may lead to confusion and inconsistency. The Federal Circuit acknowledged these concerns but noted that there is a substantial body of precedent to guide the Patent Office and courts when assessing obviousness.
While there is undoubtedly less certainty in the near future, the Federal Circuit stated that “[w]hether a prior art design is analogous to the claimed design for an article of manufacturer is a fact question to be addressed on a ‘case-by-case basis.’” LKQ Corp., 102 F.4th at 1297-98. Future cases will help clarify how parties, examiners, and courts should apply the Graham factors and the analogous art requirement to design patents.
Litigation Risk for Mortgage Lenders with a Less Active CFPB
With the recent developments at the Consumer Financial Protection Bureau (CFPB), many mortgage lenders have been left wondering about the extent to which the CFPB will enforce federal laws governing the mortgage lending industry. Many industry participants expect a significant reduction in CFPB enforcement activity for the foreseeable future. While the states could ramp up their enforcement efforts to account for a less active CFPB, mortgage lenders should also recognize that borrowers – and by extension the plaintiff’s bar – could step in to any gap left by the CFPB and exercise their private rights of action under various federal and state laws governing mortgage lending.
While the torts adage of “anyone can sue anyone over anything” still rings true, we have identified several prominent mortgage lending laws below that provide borrowers a private right of action and pose litigation risk for mortgage lenders. Mortgage lenders should continue to ensure compliance with these laws for both short-term and long-term mitigation of potential liability. Failure to mitigate these risks today could lead to deficiencies in compliance that are compounded across multiple loans over time and create greater lender exposure to potential borrower litigation.
Federal Law Private Rights of Action
Truth in Lending Act (TILA)
TILA imposes various requirements on mortgage lenders, including disclosure-related requirements for both open-end and closed-end loans. Under 15 U.S.C.A. § 1640(a), a borrower is provided a private right of action for a creditor’s violation of TILA that generally must be brought within one year of the violation. A creditor is liable for actual damages sustained as a result of its TILA violation, attorneys’ fees, and statutory damages depending on the circumstances of the transaction, such as damages between $400 and $4,000 for closed-end mortgage transactions. Some jurisdictions allow for the application of vicarious liability on creditors for the acts of its servicers under TILA(see e.g., Montano v. Wells Fargo Bank N.A., 2012 WL 5233653 (S.D. Fla. Oct. 23, 2012)). TILA also provides for borrower class actions and limits a lender’s liability in those cases to the lesser of $1 million or 1% of the lender’s net worth.
Home Ownership and Equity Protection Act (HOEPA)
HOEPA governs abusive lending practices related to high-cost mortgages. Although HOEPA is technically part of TILA, federal law imposes additional lender liability for HOEPA violations. In addition to the lender liability for TILA outlined above, a lender that violates HOEPA is required to refund all finance charges and fees that were assessed in connection with the particular loan pursuant to 15 U.S.C.A. § 1640(a)(4). Moreover, violating HOEPA’s disclosure requirements (creditor’s must “clearly and conspicuously disclose” the borrower’s rights of rescission) may trigger an extended right of rescission, which expires three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first (15 U.S.C. § 1635(f)).
HOEPA is also important to consider as industry changes related to interest rates may impact the prevalence of loans that fall under HOEPA. For some mortgage lenders, this new interest rate environment may lead to the lender making an increased number of high-cost mortgage loans.
Homeowners Protection Act (HPA) – PMI Cancellation Act
While seen more prominently in the servicing context, HPA outlines requirements regarding borrower paid private mortgage insurance. More importantly in the originations context, HPA requires the lender provide certain disclosures to borrowers at consummation regarding rights to cancel PMI and the necessary procedures for doing so (12 U.S.C. § 4903(a), (b)). HPA creates a private right of action for violations, and the borrower may recover actual and statutory damages, attorneys’ fees, and costs (with class action defendants liable for costs and attorneys’ fees) (12 U.S.C. § 4907(a)). The borrower must bring an HPA claim within two years of the discovery of the violation.
Equal Credit Opportunity Act (ECOA)
ECOA creates various requirements for lenders related to the extension of credit, including obligations in evaluating a borrower’s credit application and an obligation to provide specific borrower notifications. Under 15 U.S.C.A. § 1691e, a lender is liable for any actual damages, attorneys’ fees, or punitive damages resulting from a violation of ECOA. The punitive damages are capped at $10,000 for an individual borrower, or in the case of class action, punitive damages are capped at the lesser of $500,000 or 1% of the lender’s net worth. Pursuant to 12 CFR § 1002.16(b)(1), a borrower’s claim for an ECOA violation must be brought within five years of the violation or within one year of an administrative enforcement action that is brought within five years of the violation.
Real Estate Settlement Procedures Act (RESPA)
Pursuant to 12 U.S.C. § 2607(d), RESPA provides a private right of action and treble damages for a number of violations, including Section 8 prohibitions on kickbacks and unearned fees. Similarly, borrowers may bring a private action for violations of RESPA Section 9’s prohibition on required usage of title insurance providers under 12 U.S.C. § 2614. Such claims must be brought within one year of the alleged violation. Moreover, 12 U.S.C. § 2605(f) establishes a private right of action for borrowers where the lender fails to provide a notice disclosing whether the loan may be assigned, sold, or transferred. Costs, attorneys’ fees, actual damages and statutory damages are all recoverable (the latter when a pattern or practice of noncompliance is established). Claims under this provision must be brought within three years.
State Law Private Rights of Action
While federal law tends to be at the forefront for most mortgage lenders, all states also have laws that can impact mortgage lenders, including laws that provide borrowers a private right of action against lenders. And at times, these state laws can present an easier route for borrower recovery compared to federal law. For example, federal law prohibits unfair, deceptive, or abusive acts or practices (UDAAP) in the mortgage lending context. This prohibition is indeterminate to the point that it could be applied in a wide variety of factual scenarios. Many states have a comparable prohibition, although the state version of UDAAP typically only prohibits unfair or deceptive acts or practices (UDAP). And while there is some variation in whether state UDAP laws apply to mortgage lenders, almost all state UDAP laws provide borrowers, individually or as a class, a private right of action, unlike the federal UDAAP law.
Many states also regulate a lender’s ability to make high-cost mortgage loans. As indicated above, there are various legal requirements, such as conducting an ability to repay analysis, a mortgage lender must typically satisfy before or in connection with making a high-cost mortgage loan. Many states provide borrowers a private right of action for a lender’s violation of these laws, which can result in anything from lenders refunding excess interest to lenders having to pay actual and statutory damages.
The federal and state laws discussed above are only a portion of the laws governing mortgage lending that grant borrowers a private right of action. Mortgage lenders should keep this in mind even if the CFPB takes a backseat in enforcement, because at the end of the day, those laws are still valid and enforceable in a court of law.
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California AG Again Enjoined from Implementing California Age Appropriate Design Code Act
On March 13, 2025, the U.S. District Court for the Northern District of California granted a second motion for preliminary injunction in favor of the technology trade group NetChoice. The injunction once again enjoins the California Attorney General from enforcing the California Age Appropriate Design Code Act (the “AADC” or “Code”), which was originally intended to take effect on July 1, 2024. The District Court determined that NetChoice is likely to succeed on claims raised in its amended complaint that the AADC is facially invalid under the First Amendment guarantee of free speech. As a result, the California AG is immediately enjoined from enforcing the Code during the pendency of the litigation.
The claims of free speech infringement stem primarily from the Code’s requirement for covered businesses to perform a data protection impact assessment (“DPIA”) to identify material risks to children under the age of 18, document and mitigate those risks before such children access an online service, product or feature and provide the DPIA to the California Attorney General upon written request. NetChoice asserts that on this basis the Code violates the expressive rights of NetChoice, its members and is void for vagueness under the First Amendment.
An injunction previously granted by the District Court in respect of the Act’s 2023 implementation was partially upheld by a Ninth Circuit panel in August of 2024, with respect to the DPIA requirement and provisions of the Code not grammatically severable from the DPIA requirement, including notice and cure provisions with respect to non-compliance. The Ninth Circuit vacated the rest of the district court’s first ruling and remanded the case to assess other provisions of the Code in more detail and consider whether the law’s unconstitutional provisions are severable from the remainder of the law.
The District Court determined that the AADC is not sufficiently narrowly tailored (under the strict scrutiny standard) to achieve its interest in protecting children online. On the basis that NetChoice has a colorable First Amendment claim, it would suffer irreparable harm if the Code were to take effect. The District Court also found that the enjoined DPIA provisions are not volitionally severable from the remainder of the AADC, though they are functionally severable.
The District Court determined, on the other hand, that NetChoice had not shown that it is likely to succeed on certain other claims, such as that the AADC was pre-empted by the federal Communications Decency Act or by the Children’s Online Privacy Protection Act.
How the Lashify Decision Could Expand IP Enforcement Strategies at the ITC to Protect U.S. Domestic Industry
A recent decision by the U.S. Court of Appeals for the Federal Circuit expands which intellectual property (IP) owners can seek relief before the U.S. International Trade Commission (ITC) to block the import of infringing products into the U.S.
Complainants asserting infringement or misappropriation of IP rights (patents, trademarks, copyrights, trade secrets, and mask works) under Section 337 of the Tariff Act of 1930 at the ITC must show that “an industry in the United States . . . exists or is in the process of being established.” This is referred to as the “domestic industry requirement” and has been interpreted by the ITC as requiring satisfaction of both an “economic prong” and a “technical prong.” The “economic prong” requires that the complainant, or a complainant’s licensee, has made in the United States significant investments in plant and equipment, significant investments in labor or capital, or substantial investments in engineering, research and development, or licensing. The “technical prong” requires that such investments must further be directed to articles that practice a valid claim of the asserted patent.
Until now, the ITC has relied on a relatively narrow interpretation of the statute in determining whether certain activities are sufficient to satisfy the economic prong of the domestic industry requirement. Specifically, the ITC excluded certain types of expenditures and activities, such as marketing and distribution, when evaluating domestic industry in the absence of domestic manufacturing.
In Lashify, Inc. v. US International Trade Commission, the Federal Circuit clarifies that Section 337 complainants now may rely on investments or expenses in sales, marketing, warehousing, quality control, or distribution activities to establish a domestic industry, even when the complainant’s articles are manufactured outside the United States. Thus, the precedential opinion by Judge Richard Taranto greatly expands the types of investments, expenses, and activities that a complainant may use to satisfy the economic prong of the domestic industry requirement.
For context, Lashify sells salon-style artificial eyelashes for users to apply at home. Although the products are made overseas, Lashify is a U.S.-based company with extensive domestic operations. The company leases several U.S. facilities and employs more than 100 American workers. Lashify had asked the ITC to investigate alleged patent infringement by competitors that import similar artificial eyelash products into the U.S. However, the ITC determined that Lashify failed to meet the domestic industry requirement under Section 337 because investments and expenses related to sales, marketing, warehousing, quality control, or distribution activities were excluded by the ITC.
The Federal Circuit’s recent March 5 decision vacated the ITC’s ruling and determined that the ITC improperly excluded Lashify’s expenditures on sales, marketing, warehousing, quality control, and distribution. Judge Taranto explained that the plain language of the Omnibus Trade and Competitiveness Act of 1988, which amended the Tariff Act of 1930, shows that the “economic prong” of the domestic industry requirement is satisfied by:
(A) significant investment in plant and equipment;(B) significant employment of labor or capital; or(C) substantial investment in its exploitation, including engineering, research and development, or licensing.
Judge Taranto emphasized that Section 337’s use of the word “or” means that satisfaction of any of these three requirements by a complainant is enough to satisfy the requirement. The decision further clarified that “significant employment of labor or capital” referred to in Section 337(a)(3)(B) covers significant use of “labor” and “capital” without “any limitation” on the type of activities that may constitute such labor or capital. In particular, the statute does not exclude sales, marketing, warehousing, quality control, or distribution activities, nor does it require that such activities be related directly to U.S.-based manufacturing. The evidence showed that Lashify met these requirements.
Additionally, throughout the Lashify opinion, the Federal Circuit cited with approval its previous decision, handed down just last month, in Wuhan Healthgen Biotechnology Corp. v. International Trade Commission. In Wuhan, the Court held that a patent holder’s relatively small investment within the U.S. satisfied the domestic industry prong when all of its research investment occurred within the U.S. and that research investment represented a significant portion of the company’s overall costs, including foreign manufacturing costs. The Court clarified that “[s]mall market segments can still be significant and substantial enough to satisfy the domestic industry requirement” and that “[a] finding of domestic industry cannot hinge on a threshold dollar value or require a rigid formula; rather the analysis requires a holistic review of all relevant considerations that is very context dependent.”
Together, the Lashify and Wuhan decisions open the doors of the ITC to an expanded array of companies that may manufacture products outside the United States but have sales, marketing, distribution, research and development, and perhaps other key non-manufacturing operations in the U.S. These decisions may also potentially expand the patent and other IP enforcement options of foreign companies that satisfy the domestic industry requirement through significant investments in marketing, warehousing, quality control, and distribution in the United States.
The Lashify and Wuhan decisions provide in-house counsel at such companies an additional tool that may be used to protect their IP assets from infringement or misappropriation. Conversely, moving forward U.S. importers may have increased exposure to IP infringement and misappropriation claims before the ITC as well as elevated risk for ITC exclusion orders, as additional IP-holders may now more easily meet the requirements to file ITC complaints. Those existing IP owners having current domestic industries, as well as those looking to invest in US domestic industries to reduce the risk of tariffs or to have enhanced access to US markets, now have expanded ITC enforcement tools to protect their IP assets.
UK-Based Graffiti Artists Sue Vivienne Westwood in California for Misuse of Their Tags
“In a culture where association with philistines is a death knell,” UK-based graffiti and street artists Cole Smith, Reece Deardon and Harry Matthews have brought a lawsuit against Vivienne Westwood and retailers of the brand for the fashion house’s allegedly unauthorized use of their tags “to lend credibility and an air of urban cool” to its apparel. See Smith v. Vivienne Westwood, Inc., Case No. 2:25-cv-01221 (C.D. Cal. Filed 02/12/25). The artists, known professionally as DISA, SNOK and RENNEE, respectively, argue that their tags are, like their name or signature, “deeply personal and determinative of their identity.” In turn, they claim that Vivienne Westwood’s use of their tags falsely represents their endorsement of the fashion house to the consumer and causes “the world to think that they are corporate sellouts, willing to trade their artistic independence, legacy and credibility for a quick buck.”
According to allegations in this and a long string of similar lawsuits by street artists against fashion brands like Moschino, Roberto Cavalli, Guess?, North Face and Puma, the use of graffiti artists’ tags on apparel purportedly generates “huge revenues” for brands based on their supposed affiliation with the artists. Those familiar with the legacy of Vivienne Westwood’s eponymous founder as a punk icon (far from a philistine) might agree that her brand illustrates the profitability of incorporating urban counterculture into retail fashion.
Yet, the extent to which DISA, SNOK and RENNEE may recover their alleged damages as UK-based artists before the US District Court for the Central District of California remains an open question. While these artists may pursue their copyright infringement claims under the Berne Convention without having registered their tags in the United States Copyright Office, they probably are not entitled to recover either statutory damages or attorneys’ fees without US registrations. Additionally, although they may have a viable claim that their tags are copyright management information subject to the Digital Millenium Copyright Act (17 U.S.C. § 1202) — as other courts in the Central District ruled in the cases against Moschino and Roberto Cavalli — their claims under California’s right of publicity statute (Cal. Civ. Code § 3344) may be somewhat less certain. There is a dearth of precedent for extending the protections of California’s right of publicity statute to out-of-state residents, even if the court, as in the case against Moschino, finds that a graffiti artist’s tag is a name in a literal sense.
Therefore, this case has the potential to better define the legal landscape faced by foreign street artists pursuing copyright infringement in the United States and right of publicity claims in California. Still, the lawsuit is at its infancy and, similar to the cases against other retailers, may settle before being fully litigated on its merits. We will continue to monitor this case and provide updates as it develops.
Will Ling Chi Kill The Corporate Transparency Act?
Ling Chi was a slow and torturous method of execution practiced in Imperial China. Better known in English as “death by a thousand cuts”, ling chi took a terribly long time to kill the condemned prisoner.
The Corporate Transparency Act, or CTA, may also be killed by a thousand cuts. Since enactment, the CTA has been challenged in numerous courts around the country, bills have been introduced in Congress to delay implementation of the act, FinCEN has announced suspension of enforcement against U.S. citizens and domestic reporting companies. See Navigating the Changing Landscape of Corporate Transparency Act Compliance. Now, U.S. District Court Judge Robert J. Jonker has granted judgment:
(1) declaring the Reporting Requirements of the CTA a violation of the Fourth Amendment prohibition against unreasonable searches; (2) relieving Plaintiffs and their members of any obligation to comply with the Reporting Requirements of the CTA; and (3) permanently enjoining Defendants from enforcing any of the CTA’s Reporting Requirements against the plaintiffs and their members, and from using or disclosing any information already provided by the plaintiffs and their members under the Reporting Requirements.
Small Bus. Ass’n of Michigan v. Yellen, 2025 WL 704287 (W.D. Mich. Mar. 3, 2025). Judge Jonker’s comments on the Fourth Amendment are worth noting:
The Constitution generally, and the Bill of Rights in particular, are all about protecting citizens from the power of government. Governmental power has a natural tendency to expand and encroach on the freedom and privacy of citizens. That is true even when the government is pursuing goals—like crime investigation and prevention—that are worthy and important. The Fourth Amendment is one of the key limits on government power that protects the legitimate privacy interests of citizens from unreasonable government intrusion. In Orwell’s 1984, “Big Brother” had omnipresent telescreens everywhere—including every citizen’s living room—that made sure nothing beyond a smuggled, hand-written diary was truly private. The CTA doesn’t go that far, to be sure, but it’s a step in that direction. It compels citizens to disclose private information they are not required to disclose anywhere else just so the government can sit on a massive database to satisfy future law enforcement requests. It does so at a cost of billions of dollars to the citizens least likely to afford it. It amounts to an unreasonable search prohibited by the Fourth Amendment.