Nikola Corporation v. Tesla Incorporated

Filing 127

ORDER RE MOTION TO DISMISS. Case Management Statement due by 10/22/2020. Case Management Conference set for 10/29/2020 at 10:00 a.m. Signed by Judge James Donato on 9/9/2020. (jdlc3S, COURT STAFF) (Filed on 9/9/2020)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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NIKOLA CORPORATION,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 3:18-cv-07460-JD
ORDER RE MOTION TO DISMISS

v.

Re: Dkt. No. 109
TESLA, INC.,
Defendant.

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In a third amended complaint (TAC), plaintiff Nikola Corporation has sued defendant

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Tesla, Inc., for infringement of design and utility patents, and trade dress infringement under the

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Lanham Act, 18 U.S.C. § 1125. Dkt. No. 57. The claims relate to the “Nikola One,” an

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alternative fuel heavy-duty or “semi” truck that is Nikola’s flagship product. Dkt. No. 57 ¶¶ 1-2.

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The case was transferred from the District of Arizona to this Court. Dkt. No. 70. Tesla filed a

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motion to dismiss the design patent claims. Dkt. No. 109. This motion is denied.

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BACKGROUND
As alleged in the complaint, Nikola publicly debuted the Nikola One in 2016 as a heavy-

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duty, long-haul truck powered by a hydrogen fuel cell. Dkt. No. 57 ¶¶ 47-49, 128. The Nikola

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One was the product of “several million dollars” of investment in design and development. Id. ¶

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46. Nikola booked over $2 billion in pre-orders for the Nikola One, and projected at the time of

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the TAC that the truck will enter into production in 2020. Id. ¶¶ 50, 57.

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In the course of developing the Nikola One, Nikola applied for several design and utility

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patents, and obtained the four patents-in-suit in the TAC. Id. ¶¶ 75-76. The design patents at

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issue here are: (1) U.S. Patent No. D811,944 (the D944 patent), which claims the ornamental

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design of a semi-truck fuselage; (2) U.S. Patent No. D811,968 (the D968 patent), which claims the

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ornamental design of for a wrap windshield; and (3) U.S. Patent No. D816,004 S (the D004

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patent), which claims the ornamental design of a side door on a semi-truck. The utility patent in

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issue is U.S. Patent No. 10,077,084 (the ’084 patent), which recites a device and method for an

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automobile door or window. Id. ¶¶ 77-80.

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The TAC alleges that Tesla, a leading competitor of Nikola, unveiled in 2017 a proposed

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design of its own heavy-duty semi truck that was substantially similar to Nikola’s patented

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designs. Id. ¶¶ 16-19. The TAC provides a detailed comparison of Tesla’s wrap windshield,

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fuselage, and mid-entry door designs to Nikola’s patents, and features a number of side-by-side

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illustrations to support the claims of similarity. See, e.g., id. ¶¶ 84-115. The TAC also provides
specific facts about Tesla’s alleged infringement of the ’084 patent, id. ¶¶ 116-124, and trade dress

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United States District Court
Northern District of California

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infringement, id. ¶¶ 125-139. The design patents, and a pre-filing notice of potential infringement

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sent by Nikola’s counsel to Tesla, are attached to the TAC. Id., Exhs. 1-4.

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On the basis of these allegations, Nikola contends that an ordinary observer would find

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Tesla’s windshield, fuselage, and door designs to be substantially similar to Nikola’s patented

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designs. Nikola claims this also constitutes trade dress infringement under 18 U.S.C. § 1125. For

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the utility patent, Nikola alleges that the door on the Tesla truck infringes claim 1 of the ’084

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patent literally or under the doctrine of equivalents.

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Tesla asks to dismiss only the design patent claims under Federal Rules of Civil Procedure

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Rule 8 and Rule 12(b)(6). Dkt. No. 109. It says that an ordinary observer could not confuse the

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Nikola and Tesla designs. See id. at 3. Tesla does not challenge the trade dress claim, or the claim

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for infringement of the ’084 patent.

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DISCUSSION

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The standards governing Tesla’s motion are straightforward. Rule 8 requires a complaint

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to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.”

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Fed. R. Civ. P. 8(a)(2). To meet that rule and survive a Rule 12(b)(6) motion to dismiss, a

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plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl.

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Corp. v. Twombly, 550 U.S. 544 (2007). “A claim has facial plausibility when the plaintiff pleads

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factual content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550

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U.S. at 556). The plausibility analysis is “context-specific” and not only invites, but “requires the

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reviewing court to draw on its judicial experience and common sense.” Id. at 679.

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The detailed allegations in the TAC, particularly the side-by-side visual comparisons of the

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challenged features, leave no doubt that Nikola has plausibly alleged claims for design patent

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infringement. A design patent is infringed when “in the eye of an ordinary observer, giving such

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attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is

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such as to deceive such an observer, inducing him to purchase one supposing it to be the other.”

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Egyptian Goddess, Inc., v. Swisa, Inc., 543 F.3d 665, 670 (Fed. Cir. 2008) (quoting Gorham Co. v.
White, 81 U.S. (14 Wall.) 511, 528 (1871)). Put more plainly, “[i]nfringement is determined by

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United States District Court
Northern District of California

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visual comparison of the pictured design and the accused article.” Hall v. Bed Bath & Beyond,

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Inc., 705 F.3d 1357, 1363 (Fed. Cir. 2013) (citing Gorham, 81 U.S. at 528). The “‘ordinary

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observer test similarly applies in cases where the patented design incorporates numerous

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functional elements.’” Id. at 1364 (quoting Richardson v. Stanley Works, Inc., 597 F.3d 1288,

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1295 (Fed. Cir. 2010)). For design infringement purposes, “the ordinary observer is not an expert

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in the claimed designs, but one of ‘ordinary acuteness’ who is a ‘principal purchaser[]’ of the

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underlying articles with the claimed designs.” Ethicon Endo-Surgery, Inc., v. Covidien, Inc., 796

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F.3d 1312, 1337 (Fed. Cir. 2015) (quoting Gorham, 81 U.S. at 528).

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Nikola has amply satisfied these standards to make out plausible claims of design

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infringement. The TAC invoked the correct test of substantial similarity to an ordinary observer,

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see, e.g., Dkt. No. 57 ¶¶ 85, 98, 106, and 114, and pleaded specific facts in support of the claims.

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The TAC also expressly alleged that a former trucking company CEO contacted Nikola to say that

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“the Tesla semi looked like the Nikola design.” Id. ¶ 17. Overall, the TAC identified the proper

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legal standard, alleged specific facts about infringement, and presented evidence of confusion

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among likely ordinary observers. Rule 8 requires no more for a design infringement claim. See

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Hall, 705 F.3d at 1364.

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In support of dismissal, Tesla simply invites the Court to eyeball the visual comparisons in

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the TAC, and conclude that they are “plainly dissimilar,” and so not infringing. See Dkt. No. 109
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at 4. After careful inspection, the Court cannot say that design elements depicted in the TAC are

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sufficiently dissimilar to warrant dismissal as a matter of law. In addition, as the Court stated in

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another design patent dispute, design infringement is primarily a question of fact. Kenu, Inc., v.

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Belkin International, Inc. No. 15-cv-01429-JD, 2018 WL 2445318 at *3 (N.D. Cal. May 31, 2018)

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(quoting Richardson, 597 F.3d at 1295). While that holding was in the context of a summary

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judgement motion, the principle that design infringement “is a quintessential fact question,” id.,

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applies equally to a motion to dismiss. To be sure, there may be circumstances where a complaint

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shows on its face that an accused article is so dissimilar to the patented design that dismissal under

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Rule 12(b)(6) would be appropriate. This is not such a case. Whether Nikola will be able to prove

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up its claims at trial, or in other dispositive proceeding, is a question for another time.

CONCLUSION

United States District Court
Northern District of California

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The motion to dismiss is denied. A case management conference is set for October 29,
2020. A joint case management conference statement is due by October 22, 2020.
IT IS SO ORDERED.
Dated: September 9, 2020

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JAMES DONATO
United States District Judge

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