IP Law Bulletin, March 22, 2000: Wal-Mart Stores, Inc. v. Samara Brothers, Inc.

On March 22, 2000, the Supreme Court delivered an opinion on the following question: when is a product.s design protectible as unregistered trade dress under ' 43(a) of the Lanham Act? In essence, the Court ruled that product design cannot be protected under ' 43(a) without "secondary meaning," or meaning acquired through association with the product.s maker. To be protected under the Lanham Act, a product must be distinctive, which courts have held can be shown by either inherent distinctiveness or secondary meaning. Because product design can never be inherently distinctive, the Court ruled, unlike product packaging, it must have secondary meaning to be distinctive and, consequently, protectible. The decision, Wal-Mart Stores, Inc. v. Samara Brothers, Inc., Case No. 99-150, grew out of Wal-Mart.s appeal of a jury verdict for copyright infringement, consumer fraud, unfair competition, and unregistered trade dress infringement arising from Wal-Mart.s commission and sale of "knock-offs" of certain children.s outfits. The decision, written by Justice Scalia, deals only with the unregistered trade dress infringement issue. Justice Scalia.s decision distinguishes between two kinds of trade dress: product design and product packaging. Product design refers to the way a product itself looks and feels, while product packaging refers to the way a product is packaged for consumers,. The product packaging of laundry detergent, for example, is the colored box or bottle it is sold in, while the product design refers to the detergent itself. According to the Court, "design, like color, is not inherently distinctive." Product design can only qualify as "distinctive" and protectible through a separate showing of secondary meaning." Product packaging, in contrast, is inherently distinctive because it almost always connotes the product.s source. Product packaging is therefore protectible under ' 43(a) of the Lanham Act, except in those cases where the packaging simply describes the products. general quality or geographic origin. The Court.s decision applies only to the design of tangible products. The trade dress of restaurants or stores, according to the Court, is more akin to product packaging than product design. Indeed, the Court may have been forced to reach its conclusion to some extent because it already has held that a restaurant.s interior design can be protected under '43(a) without a showing of secondary meaning (Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992)). In fact, the bright line the Court has drawn may not be so bright. Distinguishing between design and packaging in practice may be tough. The Court itself recognized that there may be some close cases, and cited the example of a glass Coca-Cola bottle. Which is the product and which is the packaging? To thirsty consumers, the product is the Coca-Cola itself. To bottle collectors, however, the product is the classic bottle. Alternatively, the product may be a combination of the two for those who prefer to drink their Coke from a stylish glass bottle instead of a can. The Court concluded that "in an action for infringement of unregistered trade dress under ' 43(a) of the Lanham Act, a product.s design is distinctive, and therefore protectible, only upon a showing of secondary meaning." Under the terms of the Wal-Mart decision, product designs may not remain unique in the market long enough to acquire secondary meaning. Absent unregistered trade dress protection, they may be copied before consumers can form an association with the product design.s original source. In the wake of Wal-Mart, product manufacturers may have to take new steps to protect their product designs. As the Court pointed out, design patents and copyrights still offer some protection for them. Design patents, however, like all patents, often take months or years to issue . time that may be critical in a high-turnover industry where the success of a new product depends on its rapid availability to the market. Spurred by this decision, manufacturers may now flood the PTO with design patent applications, further slowing the process. Moreover, only "ornamental" and non-obvious designs qualify for design patents, and obviousness in aesthetic matters is often hard to judge. In addition, the decision.s comparatively greater protection of packaging, together with its urging that lower "courts should err on the side of caution and classify ambiguous trade dress as product design," may lead to a shift towards even more prominent branding, already a significant retailing trend. When in doubt, manufacturers may add their source-identifying (and therefore distinctive ) logos to an even broader array of products, and more obviously, in order to maximize their protection. For certain products, more explicit branding may not be enough. Consumers may not always distinguish among brands based on the manufacturer.s label. Parents who buy children.s clothing, the product on which the Wal-Mart suit was originally brought, for example, may care less about the brand of overalls they buy than the overalls. aesthetic appeal. The appealing design itself, under Wal-Mart, cannot be protected under ' 43(a) absent a showing of secondary meaning. Will businesses now have less incentive to come up with new, aesthetically pleasing designs? Probably not. The marketing advantages of competitive design will still continue to attract consumers, and therefore make good business sense . especially for those products whose packaging is unmistakably separate from the product itself. The Court.s conclusion that free competition is in the best interests of the consumer, however, is squarely at odds with one of the fundamental tenets of intellectual property law: namely, that rewarding innovation by granting exclusive rights for use is the best means of fostering creativity. As such, we predict an uptick in litigation over whether a particular trade dress qualifies as product packaging or product design.