Background
Last spring, in Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U. S.205 (2000), the Court issued a warning to potential plaintiffs and trial courts against overextending the reach of trade dress law. In Wal-Mart, the Court held that in an action for infringement of unregistered trade dress, a product's design is protectible only upon a showing of secondary meaning. "Secondary meaning" is a term of art in trademark law. It permits descriptive terms that are not protectible as trademarks when initially adopted to gain trademark protection if, over time, customers come to recognize the particular term as having a second meaning, signifying a single brand.
The facts in Wal-Mart were straightforward. Wal-Mart contracted with one of its suppliers to manufacture a line of children's outfits and sent the supplier photographs of several garments from Samara's line. Wal-Mart's garments were then based on those photos. Samara filed suit for trademark infringement, claiming that Wal-Mart's activities constituted, among others things, infringement of unregistered trade dress under §43(a) of the federal trademark law, the Lanham Act, 15 U. S. C. §1125(a). The jury found for Samara, finding that Samara's clothing designs could be legally protected as distinctive trade dress for purposes of §43(a).
The Supreme Court unanimously reversed, holding that in an action for infringement of unregistered trade dress under §43(a) of the Lanham Act, a product's design is protectible only upon a showing of secondary meaning. Thus, Wal-Mart and TrafFix have clearly narrowed the scope of protection for certain types of trade dress. Interestingly, it was the Supreme Court's holding in two prior cases during the 1990s that had expanded both the scope of trade dress and, consequently, the number of lawsuits being brought alleging trade dress infringement.
The definition of "trademark" in the Lanham Act is broad, being defined as "any word, name, symbol, or device, or any combination thereof used or intended to be used to identify and distinguish a producer's goods ... from those manufactured or sold by others and to indicate the source of the goods...." 15 U. S. C. §1127. Throughout the last decade, that expansive definition, and two Supreme Court decisions, made trade dress the most contentious and highly litigated area of trademark law.
In 1992, the Supreme Court stated in Two Pesos Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992), that trade dress "...involves the total image of a product and may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques." The Two Pesos Court held that inherently distinctive trade dress is protectible without a showing that it has acquired secondary meaning, since distinctive trade dress is capable of identifying products or services as coming from a specific source.
The Supreme Court in Two Pesos held that trade dress serves the same function as trademarks and must be treated the same way under the Lanham Act. There is no basis in the statute for distinguishing between trademarks and trade dress, nor any reason to apply a different analysis to them. The Court stated that engrafting a requirement of secondary meaning for inherently distinctive trade dress undermines the purposes of the Lanham Act. The Court's broad language in Two Pesos opened the doors to a flood of litigation. Each week another court was faced with deciding whether a fan grill, cable tie, sweater design, or color bands on a broom functioned as a trademark and could be protected from a competitor's similar product.
Three years after Two Pesos, the Court further enlarged the scope of trademark protection in Qualitex Co. v. Jacobson 514 U.S. 159 (1995). The Qualitex Court held that the Lanham Act permits the registration of a single color as a trademark upon a showing of secondary meaning. The Court found that a single color on a dry cleaning pad can function as a trademark by identifying its source.
In a unanimous opinion, Justice Breyer stated that the Lanham Act is very broad and not restrictive. Almost anything is capable of identifying and distinguishing goods and functioning as a trademark. Justice Breyer cited with approval the expansive definition of "trademark" in the 1988 Amendments to the Lanham Act.
A number of plaintiffs and their lawyers read the language of Two Pesos and Qualitex together and assumed that the Supreme Court had sanctioned trade dress protection for virtually anything. Almost overnight, the lower courts were flooded with cases in which plaintiffs claimed trademark rights in functional features of products that had been at one time protected by patents and, arguably, failed the definitional test of a trademark. That is, these functional features simply did not indicate a source of origin.
It was little surprise that the 10th Circuit Court of Appeals refused to find that the grill of a fan functioned as trade dress in Vornado Air Circulation Sys., Inc. v. Duracraft Corp., 58 F.3d 1498 ever, it was startling when the court went on to hold that when a product configuration is part of a described utility patent claim, patent law precludes the configuration from enjoying trade dress protection, even if it is nonfunctional. The court suggested that patent law "trumped" trademark law, and that protecting consumers from confusion in product configuration cases is "...at best, a peripheral concern of...the Lanham Act."
Other circuit courts reacted with frustration in struggling to define a standard for when trade dress is inherently distinctive enough to qualify for trademark protection. Chief Judge Posner of the Seventh Circuit Court of Appeals expressed it this way: "[A] seller should be encouraged to make his products recognizable by consumers at a glance as his product and not that of another seller. However, a seller should not be able to use trade dress and obtain a monopoly over elements that are not associated with a single producer or do not indicate source." Publications International Ltd. v. Landoll Inc. 164 F.3d 337 (7th Cir. 1998).
The tide began to shift when Congress enacted the Trademark Amendments Act of 1999, which amended the Lanham Act by requiring parties claiming infringement of unregistered trade dress to bear the burden of proving nonfunctionality as part of their prima facie case. 15 U.S.C. § 1125(a)(3). Thus, the stage was set for a circuit split when, on December 29, 1999, the Sixth Circuit Court of Appeals held in Marketing Displays Inc. v. TrafFix Devices Inc., 53 USPQ2d 1335, that a two-spring design for a road construction sign meant to withstand heavy wind was not functional nor barred from trademark protection, even though the spring design was referred to in an expired utility patent.
In fairness to the Sixth Circuit, in holding that the spring design was not functional, they relied upon the Supreme Court's (apparent) restrictive language of what is "functional" in the 1995 Qualitex decision, specifically, "If it affects the cost or the quality or the objective (nonreputational) desirability of competitors' products negatively enough, then the trade dress element may be deemed legally functional. Having any effect on cost or quality is not enough. Exclusive use of a feature must put competitors at a significant non-reputation-related disadvantage" before trade dress protection is denied on functionality grounds. Qualitex, 514 U.S. at 165.
Indeed, the Supreme Court in TrafFix may not have reversed itself, but it certainly hinted that its language in both Two Pesos and Qualitex was "misconstrued" to say the least. With respect to the accepted wisdom that Two Pesos had found trade dress in the form of a restaurant interior and d cor to be distinctive and protectible without a showing of secondary meaning, the Court said, "[i]n Two Pesos, however, the Court at the outset made the explicit analytic assumption that the trade dress features in question (decorations and other features to evoke a Mexican theme in a restaurant) were not functional." 505 U.S., at 767, n. 6.
The TrafFix Court then explained its 1995 Qualitex language that a functional feature is one that, "...exclusive use of which would put competitors at a significant non-reputation-related disadvantage." 514 U. S., at 165. The TrafFix Court retreated to the expansive definition of functionality in its 1982 decision in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 850, n. 10 (1982), "[i]n general terms, a product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article."
In an almost apologetic fashion, the Court explained how the Sixth Circuit misunderstood its Qualitex decision:
The Court of Appeals in the instant case seemed to interpret this language to mean that a necessary test for functionality is "whether the particular product configuration is a competitive necessity." 200 F. 3d, at 940... This was incorrect as a comprehensive definition. As explained in Qualitex, supra, and Inwood, supra, a feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device. The Qualitex decision did not purport to displace this traditional rule.In TrafFix, the Court concluded by pronouncing that once it had been established that the dual spring design of the road sign is functional, there was no further analysis needed - the design can never be protected as trade dress. Thus, the Court firmly returned to the Inwood analysis, "Whether a utility patent has expired or there has been no utility patent at all, a product design which has a particular appearance may be functional because it is essential to the use or purpose of the article" or "affects the cost or quality of the article."
Interestingly, the Court decided the TrafFix case without ruling on the issue that it had certified, namely, whether the Patent Clause of the Constitution, Art. I, §8, cl. 8, prohibits the holder of an expired utility patent from claiming trade dress protection. The Court stated only that it need not resolve this question, but made it clear that claims of trade dress in functional features are prohibited.
The Court also provided a warning for would-be trade dress claimants and their counsel when there is a question as to functionality. The Court stated that a utility patent is strong evidence that the features therein claimed are functional. Thus, if trade dress protection is sought for such features, the fact that there is a prior patent merely adds additional strong evidence of functionality to the already strong statutory presumption that functional features are unprotectible. The Court also suggested that when parties attempt to claim trade dress in expired patents that may be considered functional, trial courts should examine the patent and its prosecution file history to see if the feature in question was a useful part of the invention.
The TrafFix Court went further, stating, "[E]ven if there has been no previous utility patent the party asserting trade dress has the burden to establish the nonfunctionality of alleged trade dress features." This language is troubling, since it virtually requires the defendant in every trade dress case to raise the defense of functionality, even when there is no record that the trade dress is functional.
Last year in Samara, the Court explicitly directed lower courts to err on the side of denying trade dress protection for product designs. The Court in TrafFix gave a similar warning to potential litigants if they continued to make trade dress claims in features that were or could be covered by patents. "If, despite the rule that functional features may not be the subject of trade dress protection, a case arises in which trade dress becomes the practical equivalent of an expired utility patent, that will be time enough to consider the matter."
Thus, it is essential that clients and their lawyers consider functionality and its impact on trade dress claims prior to filing any utility patent application. Further, what is clear from the TrafFix decision is that those seeking to protect a product's design as an indicator of origin must be extremely careful in either a patent prosecution or even marketing literature about making any claim about the design that relates to functionality. The TrafFix Court ruling indicates that such claims will leave the design owner with an almost insurmountable burden to carry when seeking trade dress protection.
Further Information
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