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Trade Dress and Design Patent: Leveraging Recent Lessons to Maximize Protection Trademark, Patent, and Copyright Strategies to Challenge and Defeat Infringement Claims THURSDAY, SEPTEMBER 19, 2013

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Today’s faculty features: Robert D. Litowitz, Partner, Kelly IP, Washington, D.C. Rachel Hofstatter, Of Counsel, Steptoe & Johnson, Washington, D.C. Darius Gambino, Partner, DLA Piper LLP (US), Philadelphia

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Design Patent Protection

Rob Litowitz

Kelly IP 202-808-3572 [email protected]

What Is Patentable • 35 U.S.C. 171. Patents for Designs • Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefore, subject to the conditions and requirements of this title • The provisions of this title relating to patents for inventions shall apply to patents for designs, except as otherwise provided 5

Requirements for Patentability • Novel -- does not already exist • Nonobvious -- to a designer of ordinary skill who designs articles of the type involved • Original -- not the same as novelty – no derivation • Ornamental -- cannot be ENTIRELY functional, very rare

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Functionality and Form • Not completely functional – Some significant aspect of the design not dictated by function alone • Article of manufacture – Impression, print, or picture applied to an article of manufacture – Not an image – Shape or configuration of an article of manufacture

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Unique Requirements • Not offensive to any race, religion, sex, ethnic group, or nationality • Perceived as an ornamental design – If not visible in final intended use, the ornamental design must be a “matter of concern” at some time during its commercial life – Examples—hip joint, toner cartridge, internal component that is not sold as a replacement part 8

Design Patents v. Utility Patents Unique Characteristics • The scope of the design patent claim is the drawings, instead of focusing on the description • Design patent applications are examined for novelty, ornamentality, and nonobviousness—in reality examination focuses primarily on the clarity of the drawings or photographs • No PCT design patent applications • No multiple designs

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A Design Patent

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Drawings Define the Scope of Patent

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Why Get U.S. Design Patents? • A study showed that in design patent cases litigated over a recent five year period, preliminary injunctions were granted at the rate of 70% -- pre eBay • Only one out of three design patents was declared invalid • Design patents are inexpensive, with no post-grant fees • Design patents can be obtained in as quickly as 3-6 months with advance planning and expedited examination • Design patents last for 14 years from issuance 12

Patenting Product Designs • DESIGN PATENT -- an inexpensive way to: – Control the product configuration – Control the sale of replacement parts – Create a barrier to market entry by a competitor – Create the possibility of creating perpetual trade dress rights that can protect the product configuration forever 13

Costs and Timing • For a normal, one embodiment design, with no significant legal issues – Cost: $2,000 to file, $4,000 to grant – Timing: One to two years

• For an expedited application, again one embodiment design, with no significant legal issues – Cost: $4,000 to file (includes $800 petition fee, petition, and the cost of a patent search) – Timing: Three to six months 14

Important Issues • Four things to remember: 1. The patented design cannot be entirely functional 2. The drawings define the scope of the claim 3. Unnecessary elements in design patent drawings provide unnecessary non-infringement positions 4. Design patents can give your client the time to create trade dress rights 15

The Test of Infringement of a Design Patent • The “ordinary observer” test – Whether an ordinary observer, familiar with the prior art, would be deceived into thinking that the accused design was the same as the patented design? Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (modifying Gorham v.White, 81 U.S. 511 (1871)).

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Infringement of a Design Patent Examples • Crocs, Inc. v. Int’l Trade Comm’n (Fed. Cir. 2010) – Federal Circuit emphasized reliance on patent design figures, instead of verbal claim construction in finding infringement. Courts must do a side-by-side comparison of the accused design with the patent figures.

– “[M]inor differences between a patented design and an accused article’s design cannot, and shall not, prevent a finding of infringement.” Instead, ordinary observer must compare overall impression or effects of the designs. 17

Infringement of a Design Patent Examples • The omission of a depicted element – When the alleged infringing product does not include a feature depicted in the design patent drawing a court may find that there is no infringement. Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1577 (Fed. Cir. 1995) – Analogous to the “all elements” rule in utility patents

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Infringement of a Design Patent Examples • The omission of a depicted element – “If…the vertical ribs and upper protrusion were functional, not ornamental, features, [patentee] could have omitted these features from its patent application drawings. [Patentee] did not do so, however, and thus effectively limited the scope of the patent claim by including those features in it.” Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1577 (Fed. Cir. 1995)

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Application of the Egyptian Goddess Ordinary Observer Test

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Application of the Egyptian Goddess Ordinary Observer Test • Chef ’n v.Trudeau

– Lines “depict change in curvature or slope of a surface.” Trudeau steamer has only one change in slope. – The ‘503 patent has a “small, depressed ring at the center.” Not present in Trudeau steamer (other than hole pattern, which is irrelevant because of disclaimed elements). 21

Case Study: Apple v. Samsung

V.

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Apple v. Samsung Design Patent Battle

Source: Prafulla.net. “Samsung vs Apple Phone Patent Fight: Apple wins $1 billion in patent suit. “ Aug. 25, 2012

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Apple v. Samsung Design Patent Battle •

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In April 2011, Apple sued Samsung alleging that twenty-eight Samsung products infringed upon the patents below. – Design Patent No. D618,677 (the “D’677” patent) – Design Patent No. D593,087(the “D’087” patent) – Design Patent No. D504,889 (the “D’889” patent) Samsung countersued alleging that Apple’s iPhone and iPad products infringed various Samsung utility patents.

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Samsung Smartphones BEFORE iPhone

Apple’s iPhone (announced Jan. 2007)

Samsung Smartphones AFTERiPhone

Source: www.ZD.net. “Samsung’s case against Apple is bogus, here’s why. “ Aug. 3, 2012

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Battle Outcome • After three weeks of trial and three days of deliberations a jury unanimously found that: – Samsung had wilfully infringed on Apple’s patents (including all three design patents) and trade dress for the iPhone – Samsun’s Galaxy Tab 10.1 WiFi and Galaxy Tab 10.1 4G LTE did not infringe on Apple’s design patents – Apple had not infringed any of Samsung’s patents – The jury verdict form was over 20 pages accompanied with over 109 pages in jury instructions including tables for the jury to crossreference and rule on each patent for each allegedly infringing product • The jury originally awarded over $1 billion dollars in damages to Apple, but after finding an error in the instructions/verdict, the judge reduced the damage award by $450 million. • Permanent injunction requested by Apple is denied. 26

Follow-ups on the Apple v. Samsung Case • The USPTO is scheduled to reexamine U.S. Design Patent No. D618,677 based on an anonymous ex parte reexamination request. Source: www.blog.whda.com Westerman Hattori Daniels & Adrian, LLP. • Apple’s appeal from denial of permanent injunction pending

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • Background: – Buyers Direct owns U.S. Design Patent No. D598,183 (“D’183”) – The patent claims “the ornamental design for a slipper, as shown and described” in two drawings:

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • Background: – The D’183 Patent also discloses 2 additional design features for soles (a smooth bottom sole and a raised dotted sole):

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • Buyers direct sells Snoozies® • High Point Design, LLC which it asserted is an manufactured and distributed embodiment of the D’183 patent: FUZZY BABA® slippers:

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • High Point sued for a declaratory judgment “(1)that the manufacturing and sale of FUZZY BABA® slippers did not infringe on the D’183 Patent and (2) that the patent was invalid and/or unenforceable” • High Point moved for summary judgment.

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • The district court granted the motion for summary judgment, holding the ′183 patent invalid on the ground that the design claimed in it was both (1) obvious in light of the prior art and (2) primarily functional rather than primarily ornamental. Prior Art: Buyer’s Direct Patent

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High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013) • The Federal Circuit reversed the district court’s grant of summary judgment finding the following errors: • The district court failed to translate the design into a verbal description for purposes of comparison with the prior art, and to allow the appellate court to discern its reasoning. – District Court’s description was too abstract – Remanded for a verbal description sufficient to “evoke a visual image”; no guidance on how much detail would be sufficient. • This case possibly in conflict with Egyptian Goddess Inc. v. Swisa, Inc. en banc 2008, where Fed, Cir. warned against verbal claim construction of design patents for purpose of infringement analysis. • Question—is there really any legitimate distinction between infringement and obviousness analyses? 33

High Point Design, LLC v. Buyers Direct, Inc., 2013 WL 4826282 (Sept. 11, 2013)

• The Federal Circuit also found that the district court erred in failing to adequately explain why primary reference was basically the same as the patented design – Called for a side by side comparison on remand to see if designs create the same visual impression • Additionally, the district court erred in using an ordinary observer standard: – Proper test evaluates design and prior art from the vantage of an ordinary designer

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Damages • 35 U.S.C. 284. Damages – Same damages as for utility patent – Injunction, money damages, attorney’s fees – Reasonable royalty, price erosion, incremental profit

• 35 U.S.C. 289. Additional Remedy… – Infringer’s total profit for sale of an article including the design – Not less than $250 – Cannot recover profit twice—in other words you can’t get 284 and 289 damages, and you can’t multiply 289 damages 35

TRADE DRESS BASICS Rachel Hofstatter Steptoe & Johnson LLP 202-429-3000 [email protected]

What is Trade Dress?  Trade dress refers to the total or overall image and appearance of a product or its packaging. – Product design – Product packaging

 Can refer to part of an image or all of an image  The Supreme Court quoted the Eleventh Circuit: “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.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992).

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Examples of Trade Dress To help protect your privacy, PowerPoint prevented this external picture from being automatically downloaded. To download and display this picture, click Options in the Message Bar, and then click Enable external content.

To help protect your privacy, PowerPoint prevented this external picture from being automatically downloaded. To download and display this picture, click Options in the Message Bar, and then click Enable external content.

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Product Design vs. Product Packaging  Product design refers to the shape, appearance of a product itself. Also known as product configuration. – Examples • Design of a medical instrument • Shape of a sneaker • The Maker’s Mark wax bottle top configuration • Teddy bear appearance

 Product packaging refers to the labels, wrappers and containers used in packaging a product – Examples • Coca Cola Bottle • Design of a fitness facility • Restaurant interior or exterior

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What Is Not Trade Dress?  Courts have found that product design or packaging can be barred from protection as “generic”: – Mere theme or style of business/concept • Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.2d 27 (2d Cir. 1995) (idea of creating greeting cards out of die-cut photographs not protected as trade dress).

– Ordinary shapes • Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042 (9th Cir. 1998) (purple grapes appearing on a wine bottle used by many competitors and considered generic and not protected trade dress). • Glassbaby, LLC v. Provide Gifts, Inc., 102 U.S.P.Q.2d 1155 (W.D. Wash. 2001) (claimed trade dress of the shape of a round glass container with convex sides, thick clear base and wide mouth for votive candles generic).

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Test for Infringement  Three elements of a trade dress infringement claim: – 1. Plaintiff owns a protectable trade dress in a clearly articulated design or combination of elements that is either inherently distinctive or has acquired distinctiveness through secondary meaning – 2. Plaintiff’s trade dress is not functional • Benefit to federal registration of trade dress: The Lanham Act places the burden of showing nonfunctionality on the plaintiff if the trade dress is not registered. A federal registration is presumptive evidence of non-functionality, and it is the defendant’s burden to prove functionality. (Lanham Act Section 43(a)(3).)

– 3. The accused design creates a likelihood of confusion as to source, sponsorship, affiliation or connection. Defined Trade Dress Distinctive

Likelihood of

Not Functional

Confusion

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Infringement

Defined Trade Dress  A court needs to know the exact elements claimed to be protected for two reasons: – 1. To determine whether the trade dress is protectable; and – 2. To determine whether the accused trade dress infringes the plaintiff’s. – Sleep Science Poartners v. Lieberman, 2010 WL 1881770 (N.D. Cal. 2010) (overall “look and feel” of a website is too indefinite; the plaintiff needed to define the elements of the website that it sought to protect)

 Fairness: McCarthy has stated, and courts have agreed, that the “law of trade dress should not be used as an anti-competitive weapon based upon undefined claims of ‘trade dress.’” McCarthy on Trademarks and Unfair Competition Section 8:3. – Unfair to defendants to defend against claims of exclusivity that are of unknown dimensions. See Planet Hollywood Inc. v. Hollywood Casino Corp., 80 F. Supp. 2d 815 (N.D. Ill. 1999) (unfair to defendant to define the plaintiff’s trade dress as a general “Hollywood theme”).

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Were these descriptions protectable trade dress?  Hummers: “the exterior appearance and styling of the vehicle design which includes the grille, slanted and raised hood, split windshield, rectangular doors, squared edges, etc.” General Motors Corp. v. Lanard Toys, Inc., 468 F.3d 405 (6th Cir. 2006), cert. denied, 128 S. Ct. 356 (U.S. 2001).  David Yurman jewelry: “the artistic combination of cable [jewelry] with other elements” for a line of 18 kinds of jewelry such as rings, bracelets and earrings. Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101 (2d Cir. 2001).  Marilyn Monroe Wine: “high quality, distinctive photographs of Marilyn Monroe in various poses taken at different times during her career that show her, [sic] beauty, glamour and sex appeal.” Nova Wines, Inc. v. Adler Fels Winery LLC, 467 F. Supp. 2d 965 (N.D. Cal. 2006).  Legal Website: Legal website features, “includ[ing], but…not limited to :A. A blue header bar listing topics in white type relating to personal injury and mass torts, separated by white vertical bars…. B. Directly above (A) on the left is the firm name, logo, and the descriptive line, “A National Law Firm.” C. Directly below (A) is an element of scrolling images and news headlines with back, pause and forward buttons. D. Directly below (C) is a shaded box containing links to current drugs, products and legal issues, with just headers and no additional description. E. A blue footer bar of approximately ten lines repeating the element (B). F. A brightly colored side banner form allowing visitors to input: (i) their personal information; (ii) the date of their incident; (iii) the name of the drug, device or accident description; and (iv) a description of their case, with a larger white text heading that states: “FREE CASE REVIEW NO COST NO OBLIGATION” G. A blue, floating side banner, addressed to visitors with a question, which states in white type “FREE CASE REVIEW” and clicks through to a page with a case submission form. H. Topic pages that click through from (A) and list subtopic pages on numerous liability issues. Parker Waichman LLP v. Gilman Law, 2013 WL 3863928 (E.D.N.Y. July 24, 2013).

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Distinctiveness: Inherent or Acquired  Trade dress can be inherently distinctive, as the Supreme Court ruled in Taco Cabana, except: – Product design can never be inherently distinctive and requires proof of acquired distinctiveness. Wal-Mart Stores, Inc. v. Samara Brothers, Inc. (2000) – Color is not inherently distinctive and requires proof of acquired distinctiveness. Qualitex Co. v. Jacobson Products, Inc. (1995)  Close calls: When in doubt, court err on the side of product design requiring evidence of acquired distinctiveness.

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Inherent Distinctiveness for Product Packaging  How does a court decide if product packaging is inherently distinctive? – Trade dress requires a different evaluation than trademarks for inherent distinctiveness. The Abercrombie fanciful/arbitrary/suggestive/descriptive spectrum does not apply. – The Seabrook test: • (1) whether the design or shape is a common, basic shape or design; • (2) whether it was not unique or unusual in a particular field; • (3) whether it was a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods which consumers would view as mere ornamentation. • If the trade dress fails any of these factors, it is not inherently distinctive. Seabrook Foods, Inc. v. Bar-Well Foods Ltd., 568 F.2d 1342 (C.C.P.A. 1977).

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Inherent Distinctiveness for Product Packaging  Examples – In re Chippendales USA, Inc., 622 F.3d 1346 (Fed. Cir. 2010): Chippendales uniform not inherently distinctive because it was a mere refinement of the Playboy trade dress of a bunny suit with cuffs and collar that was used for decades before the applicant’s trade dress. – Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225 (5th Cir. 2010): finding a star within a circle design not inherently distinctive because evidence showed many similar or identical designs; this design was not unique. – Nabisco, Inc. v. PF Brands, Inc., 50 F. Supp. 2d 188 (S.D.N.Y. 1999), aff’d, 191 F.3d 208 (2d Cir. 1999): finding Goldfish cracker shape inherently distinctive under the Seabrook test. – AmBrit, Inc. v. Kraft, Inc., 805 F.2d 974 (11th Cir. 1986), cert. denied, 481 U.S. 1041 (1987): under Seabrook test, an ice cream wrapper with a pebbled texture, image of a polar bear and sunburst, bright coloring and square shape was found inherently distinctive.

 Cases indicate that designs need to be unique in the market and prominent to be inherently distinctive.

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Acquired Distinctiveness: Product Design/Color  In 2000, the Supreme Court made it harder for plaintiffs to prove trade dress infringement of product design by ruling that product design can never be inherently distinctive in Wal-Mart.  Consumers must recognize that the trade dress identifies a single source of the product, whether or not the source is known by name.  Heavy burden on the plaintiff – In re MGA Entertainment, Inc., 84 USPQ2d 1743 (TTAB 2007): finding the applicant’s burden heavier where the claimed mark is a box design used to identify boxes [product design], as opposed to a box design used to identify the contents of the box [product packaging].

 Assumption is that consumers do not usually perceive a product’s design to identify and distinguish source.  Benefit to registration: Once a registration of a trade dress is incontestable, lack of distinctiveness is not challengeable. While contestable, the trade dress is presumed valid with secondary meaning, but the presumption may be rebuttted. 47

Factors to Show Acquired Distinctiveness  Advertising expenditures  Consumer studies linking the mark to the source  Unsolicited media coverage of the product  Sales success  Attempts to plagiarize the mark  Length of exclusivity of the mark’s use  “Look for” advertising

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Acquired Distinctiveness Example  Christian Louboutin, S.A. v. Yves Saint Laurent America Holding, Inc., 696 F.3d 206 (2d Cir. 2012) (reversing District Court). – Red outsole for shoes of a contrasting color had acquired distinctiveness as a mark • Use since 1992 • Red placed in a context considered “unusual” • CEO of YSL’s parent admitted “distinctive signature” • Substantial investment in building the reputation in the mark • Red carpet coverage, press, use in popular media • Survey evidence

– Red outsole for red shoes had not acquired distinctiveness as a mark • Only 4 of hundreds of photos of Louboutin shoes were monochromatic • Survey evidence

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Functionality  Trade dress is not protected if it is de jure functional – incapable of serving as a source indicator.  McCarthy explains it in one sentence: “[S]omething is “functional” if it works better in this shape.” McCarthy Section 7.63.  Competitive need test: In re Morton Norwich Prods., Inc., 213 USPQ 9 (CCPA 1982). – Is the product design the best or one of a few superior designs such that excluding others from using it will hurt competition? – 4 factors: • Existence of utility patent disclosing the utilitarian advantages of the design • Advertising materials touting the utilitarian advantages of the design • Availability of functionally equivalent designs • Facts indicating the design results in a comparatively simple or cheap method of manufacturing a product.

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Functionality  The “traditional rule”: TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001) – Reaffirms the rule from Inwood Labs, Inc. v. Ives Labs, Inc., 456 U.S. 844 (1982) – A product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. • If de jure functional under this test, there is no need to use the comparative needs test. • Exception: aesthetic functionality, inquiring into whether protection of the trade dress would put competitors at a “significant, non-reputation-related disadvantage” is relevant.

– The Federal Circuit in Valu Engineering, Inc. v. Rexnord Corp., 61 USPQ 2d 1422 (Fed. Cir. 2002), read TrafFix as not removing the competitive needs test entirely. Rather, it is ok to still consider whether there are alternate designs available, i.e., a competitive need, as part of the overall mix. But, there is no need to do so if the court finds the design functional under Inwood’s test.

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Functionality: Utility Patent Kills Trade Dress  Under TrafFix, existence of a utility patent is “strong evidence that the features claimed therein are functional.”  Georgia-Pacific Consumer Products LP v. Kimberly-Clark Corp., 647 F3d 723 (7th Cir. 2012). “[W]e find that the “central advance” claimed in the utility patents is embossing a quilt-like diamond lattice filled with signature designs that improves (perceived) softness and bulk, and reduces nesting and ridging. This is the same “essential feature” claimed in the trademarks. Thus, the language of the patents—the claims, abstracts, and preferred embodiment—is “strong evidence” that the Quilted Diamond Design is functional, and Georgia-Pacific has failed to offer evidence that the design is merely incidental.”

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Functionality: Advertising Utility Kills Trade Dress  In re Gibson Guitar Corp., 61 USPQ 2d 1948 (TTAB 2001). The design of a guitar was not entitled to registration as trade dress. – “The new Epiphone Advanced JumboTM (AJ) acoustics are different from any other ordinary dreadnought guitar. Our AJ body shape not only looks more like a bell, but also rings like a bell. The more rounded upper bout produces sweeter highs while the broader waist and wider lower bout creates more powerful lows. Combined with a solid Sitka spruce top, mahogany back and sides, reverse-bellyTM rosewood bridge and AJ scalloped top bracing, this unique body shape creates a sound which is much more balanced and less “muddy” than other ordinary dreadnought acoustics.”

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Aesthetic Functionality  Most courts follow competitive need test. In Christian Louboutin, the Second Circuit stated the test below, but did not rule on the merits. – 1. Is the design essential to the use or purpose of the product; – 2. Does the design affect the cost or quality of the product – 3. If necessary, will the design have a significant effect on competition

 Examples – Abercrombie & Fitch Stores, Inc. v. American Eagle Outfitters, Inc., 280 F.3d 619 (6th Cir. 2002) (solid, plaid, stripe designs on casual clothing made from cotton, wool, twill fabrics found aesthetically functional because giving protection would prevent competition in the market for casual clothing aimed at young people). – Maker’s Mark Distillery, Inc. v. Diageo North America, Inc., 679 F.3d 410 (6th Cir. 2012) (red dripping wax seal on MAKER’S MARK bourbon whiskey bottle not aesthetically functional because it served no utilitarian purpose, there were alternative ways to appealingly seal a bottle, and competitors were not put to a competitive disadvantage by not using the red dripping wax seal).

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Likelihood of Confusion  “A likelihood of confusion exists when consumers viewing the defendant's trade dress probably would assume that the product it represents is associated with the source of a different product identified by the plaintiff's similar trade dress.” McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 511 F.3d 350 (3d Cir. 2007) (store brand artificial sweetener packaging not confusingly similar with Splenda packaging).  Factor-based test, varies by circuit. Example of factor list (6th Cir.): – Strength of the plaintiff’s mark – Relatedness of the goods or services – Similarity of the marks – Evidence of actual confusion – Marketing channels used – Likely degree of purchaser care – Defendant’s intent in selecting its mark – Likelihood of expansion of the product lines

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Infringement Found - Example  Maker’s Mark: – Wax-like coating covering the cap of the bottle and trickling down the neck of the bottle in a freeform irregular pattern. (Conceded in case enforced only in red color.) Defendant’s Jose Cuervo tequila bottle had a red dripping wax seal. – Likelihood of Confusion Analysis • Conceptually and commercially strong trade dress • Facially similar seals, although other marks on the bottles differed • Goods “somewhat” related • Some similar marketing channels and some different • Careful purchasers (expensive tequila) • No bad intent • No actual confusion (neutral factor), • Lkelihood of expanding product lines neutral factor – “The balance of the factors compels a finding of infringement. Excluding the neutral factors, the majority of the factors—strength, relatedness of the goods, similarity, and marketing channels— favor Maker's Mark. The district court found that Maker's Mark's trademark is “extremely strong,” and we have adopted that finding. Further, we have said that the “most important Frisch factors” are similarity and strength of the mark; both of these factors favor Maker’s Mark.”

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Remedies for Infringement  Injunction (preliminary and/or permanent) – Can enjoin the use of the offending trade dress, require corrective advertising, destruction of inventory, etc.

 Defendant’s profits  Damages sustained by the plaintiff  Costs of the action  Attorneys’ fees in exceptional cases  Treble damages available for willful infringement  Statutory damages for counterfeits

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Trade Dress Infringement Can Give Big Payouts  Mixed Chicks LLC v. Sally Beauty Supply, et al., SACV11-00452 AG (FMOx) (C.D. Ca. 2012). – MIXED CHICKS hair products sold in translucent bottles and pumps with orange lettering and different colors for different products – MIXED SILK hair products sold in translucent bottles of the same shape, with the same orange lettering and the same color products.

 Jury verdict: – $839,535 actual damages – $7.275 million punitive damages

Photo from case study, http://www.haynesboone.com/files/Uploads/Documents/ Newsletters/IP-Case-Study-Mixed-Chicks.pdf 58

Final Thoughts – Benefits to Trade Dress  Indefinite in duration – as long as the trade dress continues to be used  Relatively inexpensive to apply, but costs increase if there is a need to show acquired distinctiveness  Benefits to registration – Presumptions and shifting burdens of proof (Principal Register) • Presumption of validity (incontestable after 5 years) • Presumption of non-functionality

– Constructive notice to third parties of the trade dress – Federal court jurisdiction without needing to prove diversity of citizenship or amount in controversy – Damages available – Ability to use ® registration symbol, providing further notice to potential infringers that you claim trade dress rights

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Intellectual Property Protection for Product Designs: The Search for an IP Trifecta Darius Gambino, Partner [email protected] 215-656-3309 Copyright 2013 © Darius C. Gambino. All Rights Reserved.

What Are Product Designs?  Product Designs are the shape and configuration of goods.  Some examples include:

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What Are Product Designs?  Product Designs are a type of trade dress that includes the shape and ornamental features of a product.  Product Designs (sometimes called Product Configurations) should be contrasted with Product Packaging, which includes the graphics and color combinations used in connection with products and services (e.g., the color scheme, decor and signage used for a restaurant, the packaging for M&Ms, etc.)  Product Designs should also be contrasted with Product Color (e.g., pink for insulation, yellow for artificial sweetener, etc.).  There are also other types of trade dress including sounds, smells, and textures. 62

What Are Product Designs?  Note: It matters whether your product you are trying to protect is classified as Product Design or Product Packaging (presumption of secondary meaning).  Product Packaging may be ‘inherently distinctive,’ making enforcement easier.  Product Designs and Product Color may not be inherently distinctive (Wal-Mart).  Practice Tip: Enforcement for Product Design requires additional evidentiary burdens (i.e., proof of acquired distinctiveness/secondary meaning).  Product Designs can be protected through not only trade dress, but also patents and copyrights (the “IP Trifecta”).  In most cases, Product Packaging and Product Color can only be protected through trade dress. 63

What Are Product Designs? Wal-Mart Stores, Inc. v. Samara Brothers Inc., 529 US 205 (2000)  Samara Brothers brought trade dress claim against Wal-Mart for sale of knock-off children’s clothes.  Jury found for Samara Brothers, Wal-Mart appealed to 2nd. Circuit, 2nd. Circuit affirmed for Samara; Supreme Court reversed and remanded.  SC: Trade dress for product designs can never be inherently ‘distinctive’ – secondary meaning must always be proved.  SC: Product designs are distinguishable from product packaging, which can be inherently distinctive.  SC: Samara Brothers must prove that public associates product design with only them. 64

What Are Product Designs? Wal-Mart Stores, Inc. v. Samara Brothers Inc., 529 US 205 (2000)

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What Are Product Designs? Traffix Devices Inc. v. Marketing Displays Inc., 532 US 23 (2001)  District court granted summary judgment to Defendant Traffix on trade dress claim, 6th Circuit reversed, Plaintiff appealed to Supreme Court, Supreme Court reversed and remanded.  SC: Dual-spring feature of signs could not be protected as trade dress because it is functional (as evidenced by expired utility patents).  SC: Product features which are functional cannot serve as trade dress.  SC: Utility patents on the same product are evidence of functionality which can defeat subsequent trade dress claim.

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What Are Product Designs? Traffix Devices Inc. v. Marketing Displays Inc., 532 US 23 (2001)

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Open Questions  1. What is the effect of a prior design patent on a subsequent trade dress claim?  Design patents are presumed devoid of functionality, so Traffix plays no role in outcome.  Some use design patents as evidence of non-functionality.  2. What if the design patent is expired?  Some argue that granting trade dress protection essentially creates a patent of unlimited term  The argument is based on a claim that the essence of the patent system is a bargain – public disclosure for limited exclusivity.

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Post-Traffix Decisions  E-Z Bowz v. PPR (SDNY 2003) – defendant’s motion for summary judgment on trade dress claim denied; design patents do not preclude trade dress protection, AND are evidence of non-functionality.  Fuji Kogyo v. Pacific Bay (6th Cir. 2006) – presence of expired utility and design patents should bar subsequent trade dress protection (functionality of utility patents trumped nonfunctionality of design patents).  Keystone Mfg. v. Jaccard (WDNY 2007) – Judge Skretny denies the defendant permission under 28 USC 1292(b) to appeal the ‘right to copy’ defense to the Federal Circuit.

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What About The ‘Right To Copy’?  Some legal commentators do not believe patents and trade dress can peacefully coexist.  Shredded Wheat case - Kellogg Co. v. National Biscuit Co., 305 U.S. 111 (1938) (shredded wheat biscuits not protectable after expiration of design and utility patents).  SC ultimately found biscuit design was functional – thereby preventing subsequent trade dress protection.  Judge Cudahy & Kennedy dissents in Kohler Co. v. Moen Inc. (7th Cir. 1993) & Ferrari v. Roberts (6th Cir. 1991) – public should have right to copy designs covered by expired patents.  Kohler – Majority found that faucet designs could be protected as trade dress; Ferrari – Majority found that shape of automobile bodies were protectable as trade dress.

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What About The ‘Right To Copy’?  Winning Ways v. Holloway (D.Kan. 1995) – there is an inherent “tension” between patent and trade dress.  District Court ultimately denied defendant’s motion for summary judgment on trade dress count.  “[Prior cases do] not compel acceptance of the position defendants advance here: that the right to copy precludes any attempt to afford trade dress protection to any product configuration under any circumstances.”  Fuji Kogyo v. Pacific Bay (6th Cir. 2006) – post-Traffix decision which considers ‘right to copy’ arguments (but does not rule on that ground) and ultimately finds for defendant on trade dress claim based on functionality of features described in expired utility patent. 71

Questions Answered  1. Will the existence of a prior design patent impair a subsequent trade dress claim? No, but it can help.  2. What if the design patent is expired? It doesn’t matter.  Current precedent does not discriminate against trade dress merely because design patents exist for the same product.  In fact, subsisting design patents are evidence of nonfunctionality which may be used to further strengthen a trade dress claim.  Finally, design patents by their nature create a period of continuous and exclusive use which may be used to develop secondary meaning in the trade dress.

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Design Patents – Why Not?  Term: 14 Years from issue.  Pendency: 8-12 months.  Obstacles: Claiming, Functionality  Benefits:  Infringement is arguably easier to prove than ever before – Ordinary Observer test (Egyptian Goddess).  Pendency of application can be relatively short compared to trade dress.  No need to show secondary meaning (which can take 5 years or more).  Design patent provides evidence of non-functionality which may be used in trade dress prosecution or enforcement.  Design patent also provides period of exclusive and continuous use for secondary meaning purposes.

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Trade Dress – Why Not?  Term: Indefinite – As long as design is used.  Pendency: 12-16 months; possibly 2-3 years if secondary meaning and/or functionality are disputed.  Obstacles: Showing Non-Functionality, Secondary Meaning  Benefits:  Novelty not required – trade dress can be used to protect a product’s appearance even after it has been in public use for more than a year.  Two Infringement Options: Likelihood of Confusion or Likelihood of Dilution (for famous trade dress).  Ability to register with US Customs.

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Trade Dress – Why Not?  Example: Successfully obtained trade dress protection for a kitchen timer design which was unpatentable due to being in the public domain for over 60 years.  Registered with Customs to stop imports from China.  Varying scope of protection for same device.

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Copyrights – Why Not?  Term: 100-120 Years.  Pendency: 3-6 months in most cases.  Obstacles: Functionality, Originality  Benefits:  Easily and cheaply obtained – low originality standard and perfunctory examination; Statutory damages.  Infringement is easy to prove – “substantial similarity” as judged from the perspective of an ‘ordinary observer’ (similar to design patent test).  Can be used to prevent copying even in the absence of competition (much like patents); Be careful about originality – if not met, may also doom trade dress arguments (Jeffrey Milstein case).

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The Apple Example  Apple protects the unique shape of its computers and portable electronics thorough trade dress, design patents and copyrights.  Apple has multiple design patents and trademark registrations covering the iPod, iPhone and iPad shapes.

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The Apple Example  The Apple v. Samsung litigation concerned Apple’s design patents and trade dress on the iPhone and iPad vs. the Samsung Galaxy phones and tablets.  This litigation resulted in $1B verdict for Apple.  That verdict was subsequently reduced to about $600M, but it still shows the value of product design litigation.

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Louboutin v. YSL  Another trade dress case which has been receiving significant publicity lately is Christian Louboutin v. Yves Saint Laurent (SDNY 2011).  In August 2011, a New York court refused to grant a preliminary injunction barring Yves Saint Laurent (YSL) from selling fashion shoes with red outsoles, despite Louboutin’s registration for the same (U.S. Reg. 3,361,597).  The court relied heavily on fashion industry standards and practices in ruling that the color red for high-heeled shoes could not function as a trademark.

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Louboutin v. YSL  Louboutin appealed to the 2nd Circuit and won.  The 2nd Circuit held that color can act as a trademark (even in the fashion industry) so long as it does not “significantly undermine competitors' ability to compete in the relevant market” by severely limiting the range of alternative designs.  The 2nd Circuit found that where Louboutin’s trade dress was limited to a red sole that contrasts with the rest of the shoe, competition could be prevented.

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Not Just For Consumer Products  GSK has registered the shape (and color) of a Flovent® inhaler (US Reg. No. 2,625,335).  The mark consists of the configuration of an orange inhaler with a peach tethered cap. The cap has generally flat sidewalls to cover the mouthpiece of the same shape. The upright portion has a cross section shaped like the letter "U" which has a generally flat surface facing the user. The drawing is lined for the color peach, shown by the horizontalvertical cross hatching and the color orange, shown by diagonal crosshatching.

 GSK has also registered the color (dark blue/light blue) of a Ventolin® inhaler (US Reg. No. 1,957,230).  Pfizer has registered the shape (and color) of a Viagra® tablet (US Reg. No. 2,593,407).  The mark consists in part of the configuration of the goods consisting of a diamond-shaped dosage tablet, combined with the color blue as applied to the entire surface of the goods. The drawing is lined for the color blue. 81

Trade Dress in the Pharmaceutical & Medical Device Fields  However, drug shape and color may be functional. See, Shire US Inc. v. Barr Labs, Inc., 329 F.3d 348 (3d Cir. 2003).  The Shire case dealt with color and shape of Adderall® pills  The District Court found that “the record developed for purposes of this injunctive relief application fails to support the conclusion that Shire’s alleged trade dress is non-functional.”

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Trade Dress in the Pharmaceutical & Medical Device Fields  GSK has registered various other configurations for inhalers as trade dress (both on the Principal and Supplemental Registers), including the ones shown below:

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Trade Dress in the Pharmaceutical & Medical Device Fields  “The mark consists of a threedimensional configuration of a blood chamber consisting of the following features: a set of two raised and stepped rings placed on each side of a square piece with rounded corners; the top ring on one side containing two notches thereby dividing the top ring through the center; the inner ring's circumference being truncated on opposing sides around a flat viewing lens..” US Reg. No. 4,058,490 (Fresenius).

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Trade Dress in the Pharmaceutical & Medical Device Fields  More applications are being filed in medical device field every day.  “The color(s) black, green, yellow and blue is/are claimed as a feature of the mark. The mark consists of alternating helical bands of the color black with the colors yellow, green and blue applied to the surface of medical guidewires.” US App. No. 76583765 (Boston Scientific).  “The mark consists of a surgical implant comprised of a pattern of interlocking circles and a rounded rectangular or elliptical shapes.” US App. No. 85539384 (Synthes). 85

Trade Dress in Other Fields

• Large awards: • A ‘yellow and black color scheme’ for rooftop wire supports (Clearline Technologies) - $5.9M verdict • A line of beauty products including clear pumps, translucent bottles, orange lettering, and similar color palettes for the contents of the bottles (Mixed Chicks) - $8.5M settlement.

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Trade Dress in Other Fields • The color green as applied to the inside surface of cookware (Telebrands) – registered trade dress. • Meyer Manufacturing Company v. Telebrands Corp., (EDCA 2011) – defendant citing Louboutin and alleging it should be free to make an entirely green frying pan – what do you think?

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Trade Dress in Other Fields • The shape of a guitar (Gibson) – registered trade dress. • Gibson vigorously protects its unique designs against copiers, and has been successful for the most part. • Compare: Gibson Guitar v. Paul Reed Smith Guitars (6th Cir. 2005) – injunction reversed because there was little evidence of confusion at point of sale (i.e., music store).

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Trade Dress Registration • Registrations can be key in: (1) establishing a defensive position with regard to competitors, (2) ensuring that cease and desist letters are taken seriously (due to the burden of proving non-functionality), and (3) surviving a motion to dismiss/motion for summary judgment in federal court. • The mere presence of a trade dress registration may deter competitors from copying. • As companies become more attuned to trade dress, new product introductions will necessarily encompass trade dress searches (in addition to the more typical patent Freedom to Operate searches).

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Guess The Trade Dress – Part 1  Who is the manufacturer of these hard drives?  Both are protected by design patents, but not by trade dress. Can they be protected by trade dress?

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Guess The Trade Dress – Part 1  The manufacturer of the first is Maxtor.  The manufacturer of the second is Seagate.  Maxtor and Seagate have filed for federal registration of other marks, but not for trade dress.

 Why: Possibly because of the perception that trade dress protection is time-consuming and ultimately difficult to obtain.  Practice Tip: The issued design patents are evidence of nonfunctionality which can be used to streamline the trade dress application through the Trademark Office. 91

Guess The Trade Dress – Part 2  Who is the manufacturer of this jacket?  This jacket is protected by a design patent, but not trade dress. Can it be protected as trade dress?

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Guess The Trade Dress – Part 2  The manufacturer is Arc’Teryx.  Arc’Teryx lost a Motion for Summary Judgment of noninfringement brought by Defendant over this jacket. See, Arc‘Teryx Equipment, Inc. v. Westcomb Outerwear, Inc., 89 U.S.P.Q.2d 1894 (D. Utah 2008).  Query: Would Arc’Teryx have lost on a registered trade dress infringement claim? How about copyright infringement? Assuming Arc’Teryx could prove fame in the trade dress, how about trade dress dilution?  Advice: Exhaust all your avenues.

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Comparison of Product Design Protections

 Design Patent – protects claimed features  Requirements – novelty, non-functionality  Benefits – no need to show sales / advertising for secondary meaning; can be done early in product life or development

 Copyright – protects artistic image of product  Requirements – originality, non-functionality  Benefits – no need to show sales / advertising for secondary meaning; ease of registration

 Trade Dress – protects commercial impression of product  Requirements – secondary meaning, non-functionality  Benefits – can be obtained using exclusivity provided by other forms of protection; duration of protection; no need to show novelty or originality

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Develop a Protection Strategy  1. Determine whether the product design is patentable  Perform a patentability analysis looking at both design and utility patents.

 2. Consider functionality issues  Do prior utility patents exist for the same product?  Do marketing materials tout utilitarian features?

 3. File design patents  4. File trade dress registrations  Consider waiting 3-4 years so that secondary meaning can develop.  Use issued design patents as evidence of non-functionality and proof of exclusive use.

 5. File copyright applications

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Conclusions  With the costs of patent infringement litigation in the $3.5-5.5M range on average, trade dress/design patent/copyright litigation presents a potentially lower-cost alternative.  The average trademark or copyright infringement case is in the $750K-$1.5M range (for $1M-25M at risk). Design patent cases would be in a similar range.  Significant cost savings, and end result is the same – competitor prohibited from selling product.  Protection for virtually the entire lifetime of the product – often have to wait 2-3 years for a single utility patent to issue.  Cost to maintain is minimal – no maintenance fees for design patents; no post-registration copyright fees; Sec. 8, 9 & 15 Affidavits only due once every 6-10 years.

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The Future of Trade Dress

 What do you think?  Beats Electronics v. Yamaha (CDCA 2013) – motion to dismiss denied.

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The Future of Trade Dress

 What do you think?  Cointreau v. Pura Vida (NDTX 2012) – preliminary injunction issued barring Controy sales in US.

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The Future of Trade Dress

 What do you think?  Bern Unlimited v. Burton et al. (D.Mass 2011) – summary judgment to defendant denied.

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The Future of Trade Dress

 What do you think?  Airwair Intl. (Dr. Martens) v. Vans (NDCA 2012) – Vans motions to dismiss denied; trade dress in stitching on shoes.

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The Future of Trade Dress

 What do you think?  Hayward Indus. v. Optimum Pool (DNJ 2013) – complaint alleging trade dress in control panel for pools.  Have we gone too far?

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Conclusions

 Check out Trade Dress: Evolution, Strategy and Practice from Oxford University Press and Lexis/Nexis.

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Conclusions

 Follow me on Twitter http://twitter.com/PhillyIP

 Questions?

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