The Court of Appeals for the Third Circuit has issued a simplistic decision on product configuration trade dress that, if adopted, could effectively eliminate most trade dress claims within that circuit. The Third Circuit’s decision is troubling on multiple levels.
Although plaintiff’s trade dress in a partially chocolate-dipped cookie stick was the subject of two incontestable federal registrations, the court affirmed (on summary judgment) that plaintiff’s trade dress was useful and therefore functional without any consideration of competitive alternatives.
That the decision was reached on summary judgment is notable as the case involves one of the most nuanced and challenging areas of trademark law—the intersection of patent and trademark law.
The court’s decision relies on a standard dictionary definition to construe a complicated legal term of art. It drastically changes the functionality standard without transparency into its analysis or guidance on a new test. And it charts a path that diverges dramatically from its fellow circuits and from the prior directives of the US Supreme Court.
Functionality
Whereas utility patents afford protection for useful and novel processes, machines, and material inventions for a finite period of time, trade dress protection can be perpetual. To encourage innovation and fair competition, US trademark law excludes from perpetual protection both specific product features and overall product configurations which qualify as “functional”.
While the concept of functionality has long existed in trademark parlance, courts today follow the functionality test articulated by the Supreme Court in Qualitex Co v Jacobson Products Co (1995)—a case addressing the protectability of a single colour—which defined a product feature as functional “if it is essential to the purpose of the article or if it affects the cost or quality of the article”.
The competitive landscape has always been a central consideration in evaluating whether a grant of protection would further or damage future innovation and fair competition.
Product configuration, a subset of the category of trade dress, refers to the three-dimensional arrangement of the combination of elements and features which comprise a product’s overall appearance.
There are two branches of the functionality doctrine: (i) utilitarian functionality (which denies protection for product features which make a product work); and (ii) aesthetic functionality (which denies protection for features deemed commercially desirable, aesthetically appealing, and not source identifying).
”An evaluation of functionality in the context of an overall product configuration is necessarily a nuanced and complicated one.”
Julia Anne Matheson, Potomac Law
The Circuit Courts are currently split on the appropriate test to apply in evaluating utilitarian functionality. The Fourth, Fifth, Sixth, and Ninth Circuits focus on whether the feature is “essential to the use or purpose of the product”, whereas the US Court of Appeals for the Federal Circuit focuses instead on the degree to which a grant of protection would hinder market competition.
All circuits, however, recognise the need to evaluate the question of functionality first as it trumps evidence of acquired distinctiveness.
An evaluation of functionality in the context of an overall product configuration is necessarily a nuanced and complicated one. Courts evaluating a product configuration (in contrast to individual product features) are required to evaluate functionality in relation to the combination of features as a unitary whole, rather than merely by individual component parts.
The distinction renders the functionality analysis more complicated and challenging. On top of this, the Third Circuit has held that functionality is a question of fact, not law.
The record
The record before the district court (and again before the Third Circuit as the issue was considered de novo) was lengthy and highly disputed. It included, among other things:
- Plaintiff’s two longstanding and incontestable trade dress registrations;
- Defendant’s admission of intentional copying;
- Evidence that defendant repeatedly sought (and failed) to obtain trade dress registration for its own configuration;
- Evidence that cost and degree of difficulty involved in packaging plaintiff’s product configuration was higher than competitive alternatives;
- A long list of alternative designs for similar/competitive products;
- Expert testimony from two industry experts that plaintiff’s configuration was essential neither to its use nor its purpose;
- Expert testimony from defendant’s expert undermining the factual basis for defendant’s functionality claim; and
- Evidence that the utility patent defendant asserted as evidence of functionality was issued several decades after the release of the product, was a method patent, and did not claim the configuration for which the trade dress registrations were granted.
In its decision granting summary judgment, the district court did not address the significance of the fact that the trade dress was the subject of two longstanding and incontestable federal trade dress registrations. It offered no commentary on the implications to be drawn from defendant’s contradictory efforts to register its own configuration or the presumptions to be drawn (if any) from defendant’s intentional copying.
Fact File
- 1966: Pocky, chocolate-coated biscuit sticks, made by Ezaki Glico first appear on sale in Japan.
- Mikado: Pocky’s brand name in Europe, produced under license by Mondelēz International.
It did not analyse the functionality of the product’s collective features as a whole or address the evidence of available alternative designs. Nor did it address the import of evidence showing that the product of plaintiff’s configuration costs more to manufacture and involves a higher degree of complexity than competitive alternatives. It did not address the industry/expert testimony on the record attesting to the product’s non-functionality.
Instead, the district court substituted its personal product observations to support its conclusion that plaintiff’s product configuration was functional as a matter of law because it was “suited for easy consumption and sharing” and “portable”—features that would apply to every snack food and defeat product configuration protection across the board.
The court was heavily influenced by plaintiff’s own advertising touting certain aspects of its trade dress (such as mess-free, hands-free eating, and easy-to-share packages) in reaching its conclusion.
Proper definition
In affirming the lower court’s decision, the Third Circuit asserts that the dispute turns on the proper definition to be accorded the term “functionality”. The Third Circuit nevertheless rejects Supreme Court precedent (in Qualitex and progeny) and the thoughtful interpretations of its fellow circuits, in favour of applying a standard dictionary definition to a complex term of art.
Once off course, the court proffers the equally sweeping synonyms “useful”, “practical”, and “convenient” without any analytical guidance or new test. Further blind spots are evident in its conflation of the concepts of utilitarian and aesthetic functionality and its outright dismissal of the relevance of alternative designs or the impact on competitors of upholding protection for the designs.
This opinion is interesting for brand owners on multiple levels. It solidifies a split among the circuits, highlights the consequence of incautious advertising, and raises questions about the ultimate value of notoriously more costly and complicated product configuration registrations. If Ezaki, the producer of Pocky, petitions for certiorari, watch this space—including for interesting amicus briefs.
Julia Anne Matheson is a partner in the trademark group of Potomac Law. She can be contacted at: jmatheson@potomaclaw.com
Image: Shutterstock.com / Africa Studio
