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Not So Clean: Federal Circuit Upholds Trade Dress Preliminary Injunction, Finds Defenses Improperly Plead

The US Court of Appeals for the Federal Circuit upheld a “narrow” preliminary injunction in a trade dress case, finding that the opponent of a registered configuration mark failed to prove its lack of secondary meaning and functionality defenses. SoClean, Inc. v. Sunset Healthcare Solutions, Inc., Case No. 21-2311 (Fed. Cir. Nov. 9, 2022) (Newman, Lourie, Prost, JJ.)

SoClean manufactures Continuous Positive Airway Pressure (CPAP) machines. SoClean sued Sunset—a former distributor of SoClean products—for patent infringement and later added trademark infringement claims. At issue in this appeal was a single SoClean mark “for the configuration of replacement filters for its sanitizing devices.”

SoClean requested a preliminary injunction to stop Sunset from making or selling allegedly infringing CPAP filters. The district court granted the injunction but narrowly tailored the injunction to only enjoin Sunset from selling its filter cartridges without Sunset’s own brand name attached to the filter drawing so that customers would not falsely believe they were buying SoClean products. Sunset appealed.

While a party seeking preliminary injunction must prove all four eBay elements, this appeal focused on just one: “likelihood of success on the merits.” Sunset argued that the district court abused its discretion in finding that SoClean would likely defeat Sunset’s lack of secondary meaning defense and its functionality defense.

After noting that the parties agreed that SoClean’s trade dress was protectable only upon a showing that it had obtained secondary meaning, the Federal Circuit divided the secondary meaning issue into two subparts:

  1. Whether the district court should have questioned the validity of SoClean’s registration in light of Sunset’s evidence
  2. Whether the district court held Sunset to an improperly high standard of proof.

As to the first issue, the Court noted that federal registration is prima facie evidence of a mark’s validity. When, as here, the challenged mark was registered fewer than five years prior, the burden shifts from plaintiff to defendant, such that the defendant must rebut the presumption of validity. Sunset acknowledged that it had this burden, but its arguments to the district court focused only on the US Patent & Trademark Office’s decision to grant SoClean’s registration. The Court rebuffed that argument, noting that “scrutinizing the application process and deciding whether the trademark examiner was correct to issue the registration in the first place is the opposite” of the statutory presumption of validity.

Next, the Federal Circuit addressed Sunset’s standard of proof argument. The Court acknowledged that the district court misstated the law by suggesting that there was a “vigorous evidentiary requirement” on the challenging party, instead of simply a “preponderance of the evidence.” However, the Court also noted that the district court considered Sunset’s lack of secondary meaning evidence to be “equivocal, at best,” which “plainly fails to satisfy a preponderance-of-the-evidence standard.” Therefore, the Court judged the error to be harmless.

The Federal Circuit thus affirmed the finding that SoClean would likely defeat Sunset’s secondary meaning challenges.

The Federal Circuit next turned [...]

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Colorful Non-Functionality Argument Misses the (Design) Mark

Addressing the functionality of colors in design marks, the US Court of Appeals for the Second Circuit reversed the district court’s entry of judgment for a trademark owner on its unfair competition and trademark claims, ruling that where color is used as an indicator of size or parts matching, it is functional and does not qualify as trade dress. Sulzer Mixpac AG v. A&N Trading Co., Case No. 19-2951 (2d Cir. Feb. 18, 2021) (Pooler, J.)

Sulzer Mixpac and A&N Trading are competitors that manufacture and supply mixing tips, which dentists use to create impressions of teeth for dental procedures. Mixpac obtained trademarks for the colors yellow, teal, blue, pink, purple and brown (collectively, the Candy Colors) as applied to mixing tips. Mixpac filed suit against A&N, claiming unfair competition; common law trademark infringement; and trademark infringement, trademark counterfeiting and false designation of origin under the Lanham Act. A&N countersued, claiming that Mixpac’s use of the Candy Colors on mixing tips was functional and therefore not entitled to trademark protection. The district court concluded that Mixpac’s use of the Candy Colors was non-functional (based in part on the increased cost of adding color to the mixing tips, and noting that other competitors used clear tips), and entered judgment and a permanent injunction in favor of Mixpac. A&N appealed.

The Second Circuit reversed, explaining that the district court erred by failing to apply the Louboutin three-part aesthetic functionality test to Mixpac’s marks. Under the Louboutin test, to determine whether a design feature is non-functional and thus entitled to trademark protection, courts look to whether the design feature (1) is “essential to the use or purpose” of the product, (2) “affects the cost or quality” of the product, and (3) has a significant effect on competition. A&N argued that the mixing tips’ color coding helps users identify useful product characteristics, such as diameter, and that it aids users in selecting the correct tip. Applying the Louboutin test in the first instance and citing trial testimony, the Second Circuit concluded that the colors signify diameter, which assists users when selecting the proper cartridge, as the colors “enable users to quickly match the proper mixing tip with the proper cartridge, and (citing Louboutin) thereby ‘improve[] the operation of the goods.'”

Practice Note: In trade dress cases, be sure to apply the Louboutin three-part aesthetic functionality test. Failure to do so may lead to reversal on appeal. In this case, the Second Circuit noted that “[t]he district court erred because it did not apply this test when it considered only that Mixpac’s use of the Candy Colors adds to manufacturing costs and that other companies use different or no colors.”




Cookie Trade Dress Infringement Case Crumbles in Face of Functionality Challenge

The US Court of Appeals for the Third Circuit found that trade dress protection did not extend to the design of a chocolate-dipped, stick-shaped cookie, because the product configuration was useful. Ezaki Glico Kabushiki Kaisha v. Lotte Int’l America Corp., Case No. 19-3010 (3d Cir. Oct. 8, 2020) (Bibas, J.).

Ezaki Glico is a Japanese confectionary company that makes and sells the snack food Pocky, which is a thin, stick-shaped cookie with one side dipped in chocolate (or a flavored cream) and the other uncoated. Pocky cookies have been sold in the United States for more than 40 years, during which time Ezaki Glico obtained two trade dress registrations for the Pocky design and a patent for a “Stick Shaped Snack and Method for Producing the Same.”

In 2015, Ezaki Glico sued its competitor, Lotte, alleging that Lotte’s similarly designed cookie, Pepero, infringed the Pocky trade dress. The district court granted Lotte’s motion for summary judgment, finding the Pocky product configuration functional and therefore not protected by trade dress. Ezaki Glico appealed.

Ezaki Glico argued that the Pocky trade dress is not functional because it is not essential to its design. The Third Circuit disagreed, stating “that test is too narrow.” The Court explained that functionality applies to features that are useful, even if they are not necessarily essential. The Court enumerated four indicators of functionality:

  • Evidence that the feature or design makes the relevant product work better
  • Examples of marketing materials touting the usefulness of the feature or design
  • Existence of a utility patent
  • Availability of other designs.

The Third Circuit found that most of these factors supported the finding of functionality. First, the design makes the product work better because “[e]very feature of Pocky’s registration relates to the practical functions of holding, eating, sharing, or packing the snack.” Ezaki Glico’s advertisements also promoted the functional features of Pocky’s design: they featured phrases such as “convenient design,” “the no mess handle of the Pocky Stick,” and “easier for multi-tasking without getting chocolate on your hand.” Likewise, the Court was unpersuaded by Ezaki Glico’s evidence of alternative designs, finding that “[e]very aspect of Pocky is useful. The nine other designs do not make it less so.”

The existence of the utility patent, however, was not a supporting factor in the functionality analysis. The Third Circuit explained that “the patent’s innovation is a better method for making the snack’s stick shape. The method is useful for making the shape whether or not the shape itself is useful for anything.” Although the district court improperly considered this factor in its analysis, the Third Circuit noted that the misstep was “immaterial” given that the district court ultimately reached the correct conclusion.

Practice Note: It is not necessary for a design feature to be essential for it to be considered functional. Trade dress may be considered functional—and therefore not protectable via trademark law—if it is merely useful to the design.




Knock It Off, Knockoffs? Ninth Circuit Affirms Trade Dress Rights but Not Fame

Taking on issues of functionality and fame relating to trade dress rights, the US Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the district court’s judgment after a jury trial on claims of infringement and dilution of trade dress rights in furniture. The Ninth Circuit distinguished utilitarian functionality from aesthetic functionality, and reaffirmed the high burden on the proponent of dilution to establish that the mark has become a “household name.” Blumenthal Distributing, Inc. DBA Office Star v. Herman Miller, Inc., Case Nos. 18-56471, -56493 (9th Cir. June 25, 2020) (Korman, J.).

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Belt Fastener Trade Dress Conveyed as Invalid for Being Functional

The US Court of Appeals for the Seventh Circuit affirmed a district court finding that a trade dress for a conveyor belt fastener was invalid as functional because its utilitarian advantages were disclosed in patents, advertising materials and internal corporate documents. Flexible Steel Lacing Co. v. Conveyor Accessories, Inc., Case No. 19-2035 (7th Cir. Apr. 7, 2020) (Ripple, J.).

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No Trade Dress Protection for Functional Shape and Color Scheme

Addressing the scope of trade dress protection, the US Court of Appeals for the Fourth Circuit found that the shape and color scheme of a product was functional and therefore only eligible for patent law’s protection of utilitarian inventions. CTB, Inc. v. Hog Slat, Inc., Case No. 18-2107 (4th Cir. Mar. 27, 2020) (Wynn, J.) (Keenan, J. concurring) (Rushing, J. concurring).

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