Pattishall IP Blog

January 11, 2013

Air Force 1 trade dress dispute held moot – Nike wins at Supreme Court, but at what cost?

Filed under: Litigation, Trade Dress, Uncategorized — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:41 am

UW low res

by Uli Widmaier

A sues B for infringing its registered mark.  B counterclaims for cancellation of A’s registration.  A executes a comprehensive covenant not to sue B in the future for using any colorable imitation of A’s mark, and moves to dismiss the lawsuit with prejudice.  B, intent on pursuing its counterclaim, opposes the motion.  The district court holds that the case is moot, and grants A’s motion.  The Court of Appeals affirms, as does the Supreme Court.  Case over.

This is the short version of Already, LLC, v. Nike, Inc., decided unanimously by the Supreme Court on January 13, 2013.  See — U.S. –, No. 11-982 (U.S. January 9, 2013).  To put some meat on the factual bones:  Nike was the plaintiff, Already was the defendant, the mark was the trade dress of Nike’s famous Air Force 1 shoe, for which Nike has a federal registration.  Already sold shoes that Nike felt infringed the Air Force 1 trade dress.  Nike sued, Already counterclaimed.  Nike then reconsidered, successfully mooting the case via a unilateral covenant not to sue.  “The covenant promised that Nike would not raise against Already or any affiliated entity any trademark or unfair competition claim based on any of Already’s existing footwear designs, or any future Already designs that constituted a “colorable imitation” of Already’s current products.”  Already, slip op. at 2.

The Supreme Court’s decision clarifies (to a degree) the burden for showing the existence or absence of an actual controversy where a plaintiff seeks to moot a defendant’s counterclaim via a unilateral covenant not to sue.  But its importance lies just as much, if not more, in the barriers the Court erects against future uses of covenants not to sue, and in the insight it provides into the Justices’ thinking about trademarks and about basic competitive fairness.

The opinion was written by Chief Justice Roberts.  Justice Kennedy wrote a concurrence, which Justices Thomas, Alito, and Sotomayor joined.

I.    The Holding:  Burdens and Burden-Shifting

Both the district court and the Second Circuit held that, once Nike had executed the covenant not to sue, the burden was on Already to show that the case had not become moot.  Slip op., Kennedy concurrence at 1.  This was “wrong.”  Id.  “Under our precedents, it was Nike’s burden to show that it could not reasonably be expected to resume its enforcement efforts against Already.”  Slip op. at 5, quoting Friends of the Earth, Inc., v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 190 (2000) (quotation marks omitted).  In other words, the “voluntary cessation doctrine” articulated in Friends of the Earth applies to Nike, who in this situation was the party who voluntarily ceased the allegedly wrongful conduct (i.e. a lawsuit based on an allegedly invalid registration) .  Id. at 5-6.  This burden imposed on Nike by the doctrine is a “formidable” one.  Id. at 6. (more…)

June 15, 2012

Recent Cases Show That Utilitarian Functionality Is A Serious – And Common – Impediment To Trade Dress Protection

Filed under: Litigation, Trade Dress — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 3:14 pm

By Janet Marvel, Trademark Attorney

A product shape or package must be non-functional to qualify for trade dress protection.  Yet a spate of recent cases reveals many plaintiffs who try to expand or lengthen patent protection by alleging that their product features designate source.  Below is a description of recent trade dress protection attempts along with a short refresher on the reasons for the functionality doctrine and how to deal with it.

A mark is functional if it is “essential to the use or purpose of an article or affects the cost or quality of an article.”  TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32 (2001).  If a mark fits this test, it is functional, and not protectable.  If it does not, courts may still consider whether there is a competitive necessity to use the product feature.  In other words, courts may consider whether alternative product designs are available, and whether the cost or time involved in using an alternative design makes it impractical.  Id. at 33. See also, In re Becton, Dickinson and Co., 675 F.3d 1368, 1376 (Fed. Cir. 2012).

The functionality bar to trade dress protection exists to prohibit would-be trademark owners from protecting functional features in perpetuity, rather than for the limited time permitted by patent law.  For this reason, the existence of a patent covering a feature claimed to constitute trade dress is the kiss of death for trademark protection.

Four factors have developed to help determine whether an alleged mark is functional.  They vary by circuit, but the Federal Circuit’s list is instructive.  The Federal Circuit and the United States Patent and Trademark Office consider the following in determining functionality:

(1)       the existence of a utility patent that discloses the utilitarian advantages of the design sought to be registered;

(2)       advertising by the applicant that touts the utilitarian advantages of the design;

(3)       facts pertaining to the availability of alternative designs, and

(4)       facts pertaining to whether the design results from a comparatively simple or inexpensive method of manufacture.

In re Morton-Norwich Products, Inc., 671 F.2d 1332, 213 USPQ 9 (CCPA 1982).  See also, Valu Engineering Inc. v. Rexnord Corp., 278 F.3d 1268, 1275, 61 USPQ2d 1422, 1426 (Fed. Cir. 2002).

Most recent trade dress claims have foundered on these factors.  In particular, plaintiffs and trademark applicants have tried to argue around the existence of prior patents – to no avail.  See Seirus Innovative Accessories, Inc. v. Gordini U.S.A., Inc., 2012 WL 368044 (S.D. Cal. Feb. 3, 2012) (court found patent invalid but held that patent nonetheless supported finding of functionality); Great Neck Saw Manufacturers, Inc. v. Star Asia U.S.A., LLC, 727 F. Supp. 2d 1038 (W.D. Wash. 2010), aff’d 432 Fed. Appx. 963 (Fed. Cir. 2011) (utility knife shape found functional based, in part, on prior utility patent); In re Charles N. Van Valkenburgh, 97 USPQ2d 1757 (TTAB 2011) (refusing registration of shape of motorcycle stand: “[W]e look to the features disclosed in the patent which have been incorporated into the present product designs and the teachings of the patent with respect to these features”).

It is irrelevant whether a patent is expired or current.  See Georgia-Pacific Consumer Products LP v. Kimberly-Clark Corp., 647 F.3d 723 (7th Cir. 2011) (factors for evaluating functionality include the “existence of a utility patent, expired or unexpired, that involves or describes the functionality of an item’s design element”).  Third party patents can block trademark protection.  Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855 (7th Cir. 2010) (third party utility patents are “excellent cheat sheets” for determining functionality).  While parties have argued that only patent claims should bar trademark protection, courts have not been so constrained.  See In re Becton, Dickinson and Co., 675 F.3d 1368 (Fed. Cir. 2012) (rejecting applicant’s arguments that only patent claims can evidence functionality).  A patent application, even if rejected or abandoned, is evidence of functionality.  Ogosport LLC. v. Maranda Enterprises LLC, 2012 WL 683111 (E.D. Wis. March 2, 2012) (citing plaintiff’s abandoned patent applications but relying on third party patents to support functionality holding); Seirus Innovative Accessories, Inc., 2012 WL 368044 (same).

Similarly, a party’s own advertising is often construed as an admission of functionality.  See Secalt S.A. v. Wuxi Shenxi Construction Machinery Co., Ltd., 668 F.3d 677 (9th Cir. 2012) (plaintiff’s advertisements regarding alleged trade dress in square shape of scaffold hoist stated that the product was square so it would not roll off tables; alleged trade dress found functional); Talking Rain Beverage Co., Inc. v. South Beach Beverage Co., 349 F.3d 601, 604 (9th Cir. 2003) (plaintiff’s advertising encouraging consumers to “Get a Grip.” on water bottle found to weigh in favor of functionality); Poly-Am., L.P. v. Stego Indus., L.L.C., No. 3:08-CV-2224-G, 2011 WL 3206687, at *7 (N.D. Tex. July 27, 2011) (advertising utilitarian benefits of yellow trade dress for vapor barrier nullifies the presumption of validity bestowed on the alleged mark by registration); Kistner Concrete Products, Inc. v. Contech Arch Technologies, Inc., 97 USPQ2d 1912 (TTAB 2011) (bridge culvert shape advertised as superior for shedding water held functional).

Moreover, while many plaintiffs have tried to argue that there are other ways to make products competitive to theirs, courts have rejected this “alternative designs test.”  See Specialized Seating, Inc. v. Greenwich Industries, L.P., 616 F.3d 722 (7th Cir. 2010) (existence of many alternative designs for folding chair did not mean that the plaintiff’s design was non-functional.  It was not “the only way to do things” but “it represent[ed] one of many solutions to a problem.”)

Many of the recent functionality cases arise from facts that seem to show that plaintiffs have tried to continue protection beyond a patent period.  It is understandable that a party with a successful and unique product would view post-patent copyists as interlopers.  The better way to differentiate against such competitors upon expiration of a patent may be to consider trade dress protection at the time that a patentable product is developed.  If a source-differentiating feature can be added to the product upon its introduction, that feature will have time to develop secondary meaning during the patent period.  When the patent expires, the source identifier will serve to identify its associated product as the original, and likely the market leader.

 *     *     *

Janet Marvel is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.  Ms. Marvel’s practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, Internet, and copyright law.  She co-authored the Fifth Edition of the Trademarks and Unfair Competition Deskbook, recently published by LexisNexis.

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