Recent Evolution (or Revolution?) in Federal Trademark and Unfair Competition Law

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

Nick Marr:  Welcome, everyone, to this Federalist Society virtual event. Today, we’re discussing Recent Evolution (or Revolution?) in Federal Trademark and Unfair Competition Law. I’m Nick Marr, Assistant Director of Practice Groups here at The Federalist Society. As always, please note that expressions of opinion on our call today are those of our experts.

 

A couple of quick notes before some brief introductions and we get to the program: the first note is how one of our panelists, Christopher Riley, was called into a meeting and had to step out of the program, so we won’t be joined by Chris today, but we hope he can join in a future program. Also, for our audience, we’ll be looking to you for questions towards the end of the program, so please submit those via the chat function or the Q&A chat function. Again, that’s through the chat function, and we’ll be looking to those towards the end.

 

And with that, I’m going to introduce our moderator today. And thanks to our moderator for organizing the program. We’re joined today by Mr. Andrew Halaby. He’s a shareholder at GreenbergTraurig, a place he just joined. So congratulations to him. His longer bio can be found on our website. And with that, I’ll give the floor to Andy. Thanks very much for being with us.

 

Andrew Halaby:  Thanks, Nick. Thank you, everyone, for joining us. It’s a great pleasure to be here. Again, I’m Andy Halaby. I’m at GreenbergTraurig in Phoenix where my practice is focused primarily on intellectual property litigation. Before I introduce our distinguished panel, let me take just a few minutes to set up our subject matter.

 

The last year has seen a great deal of activity in the trademark arena. Some of this is statutory. I summarized an article earlier this week spearheaded by one of my colleagues, which you can see on our website online. Congress passed, and President Trump signed, the Trademark Modernization Act of 2020.

 

This had the effect of restoring, in trademark infringement matters, the presumption of irreparable harm arising from likelihood of confusion that had been eliminated, albeit indirectly, by the U.S. Supreme Court’s 2006 Decision in the patent case, eBay Inc. v. MercExchange.

 

Another development in just the last year is a case law development. The Supreme Court resolved a circuit split through its decision in Romag Fasteners v. Fossil Group over whether willfulness must be proven to obtain and award a defendant’s profits. The answer is no. Now, these developments were and are meaningful, but they are not our primary focus today.

 

To begin the presentation of what is our primary focus, I’m going to begin with just a few points of Federal Trademark and Unfair Competition Law that, just a year ago, one might have thought were well established. First -- And I have the expression “federal right to copy” in air quotes here because it’s an expression that isn’t particularly comfortable to use. There is, technically speaking, at least in my opinion, no federal right to copy.

 

But there were a series of decisions beginning with the companion cases of Sears and Compco in 1964, through the Justice O’Connor’s opinion for the court in Bonito Boats 1989, that said something close to, “as a general proposition under federal law, one has a right to copy one’s competitor’s materials, processes, and so on, in the absence of a patent copyright, trade secret, or contract constraint on doing so.”

 

And the question that this series of cases you see on your screen addressed was, in what regards does trademark law constrain that general understanding under American Law—federal law—that all of the things they equal in the absence of constraint, you have the right to copy. Well, in the Two Pesos case, the court held that virtually anything can be a trademark, not just symbols, but even trade dress, such as restaurant décor.

 

Now, those of us on the call, who practice in or pay attention to trademark law know that any mark has to be distinctive. It has to serve to identify and distinguish the source of goods or services sold under in connection with the mark.

 

We come to the Qualitex case, the third on your screen, which confirms, to many observers, that even a color could serve as a protectable trademark, but only if it had acquired distinctiveness. Many read Qualitex to hold that color couldn’t be inherently distinctive by itself. So if we think, for example, about The Pink Panther and insulation, that distinctiveness would've been something that would've been created or acquired through extensive advertising and promotion, not something that was inherently distinctive.

 

Turning from color marks to product configurations, or presentation as trademarks, many observers thought 20 years ago, with decisions in Walmart and TrafFix, that protecting product configuration through the trademark laws have fallen in some disfavor with the court. Justice Scalia, in Walmart, had written memorably for the court that product configuration could never be inherently distinctive, that it could only be protectable, if at all, if the product configuration had acquired trademark significance.

 

And while the TrafFix decision from the Supreme Court in 2001 was not a model of clarity, it generally suggested that plaintiffs would find it difficult to prove a product configuration nonfunctional, which is another requirement for trademark protection under federal law.

 

Let me turn quickly to issue of genericness. Just setting it up for our panel, it was generally understood that a word describing a genus of goods or services could not be lifted from ordinary usage and made into a trademark with corresponding or attended exclusive rights merely through such advertising and promotion.

 

Now, we’re here today because court decisions over the last year have injected some, or perhaps even substantial, uncertainty in these arenas, and our panelists are here to talk about them. Before I give some more detailed introductions, let me say something about this panel. We’re taking a somewhat unique, for this setting, commercial approach to our presentation. Our panel consists of working lawyers who are in the business of spending their days working for one or more clients on one or more real oral trademark problems. And I’m delighted to introduce those panelists to you now.

 

So with that, let me begin by introducing you to my friend, Toni Tease, the founder of Antoinette M. Tease, PLLC, based in Billings, Montana. Toni is a registered patent attorney, who practices in intellectual property and technology law. I’ve worked with Toni for years, and at some risk of embarrassing her, I will say that in my experience in those fields, she’s the finest practitioner in those arts in the state of Montana.

 

She attended Harvard University where she got her Bachelor of Arts degree in economics, went on to the UCONN Law School, clerked for Judge Ezra in the district of Hawaii after that. She then practiced in New York -- in D.C. and New York respectively, with Wiley Rein and Shearman & Sterling. Then, upon moving to Montana in ’95, she practiced with a prominent firm there, the Crowley firm, went on to become the GC for Rocky Mountain Technology Group, and since 2003, has ran her own law firm, practicing in Montana and clients all over the United States and the world.

 

      Our second presenter today is my friend and partner, Steve Baird, who is a shareholder at GreenbergTraurig in its Minneapolis office. Steve graduated with his undergraduate degree, a Bachelor of Science from the University of Iowa College of Pharmacy, went on to graduate with high distinction from the University of Iowa College of Law.

 

Steve’s business is providing strategic guidance on trademark usage and clearance, branding strategies, domestic and worldwide portfolio management, litigation and enforcement, and other things for a wide variety of clients, and you can see them listed in his bio. I would take all the time we have if I listed all the different clients and services and goods that Toni and Steve have helped with and on over the years.

 

So with that, I’m going to turn the microphone over to Toni, who’s going to talk to us about that first line of cases and recent developments. So Toni, with that, take it away.

 

Antoinette Tease:  Andy, thank you very much for that introduction. Folks, I’d like to talk to you about three cases this morning having to do with the functionality doctrine as it applies to trade dress protection, and the three cases I’m going to be discussing today are Blumenthal v. Herman Miller, Ezaki Glico v. Lotte International, and then a case that I litigated myself, which is McGowen Precision Barrels v. Proof Research. So that’s where we will land after the next ten minutes. With regard to Blumenthal, Herman Miller had designed a couple of office chairs, and perhaps Andy could bring up those images for us right now.

 

Andrew Halaby:  You got it.

 

Antoinette Tease:  And while he’s doing that, the issue at stake was the enforceability of both registered and unregistered trade dress to what you’re looking at now, which is the Eames chair design, and then right here -- Andy’s just shown us the Aeron chair design. So, there were two different chair designs at issue.

 

With respect to the details of the claim trade dress, I want to tell you that, in this opinion—and I’m referring here to 963 F.3d 859—the Ninth Circuit did not get into the details of the trade dress. In fact, what they said is, “We’re considering the overall appearance,” and they use that phrase “overall appearance” a number of times. And they said, “The differences between the registered and unregistered trade dresses are not material,” and frankly, their focus was going to be on the overall appearance.

 

So, just with that in mind, the disposition of the trade dress claim, with respect to both of these chairs, was that the Ninth Circuit upheld the jury trial verdict in favor of the trade dress registration for the Eames chair, the one we’re looking at now, and then with respect to the Aeron chair that Andy’s just shown you -- the case was remanded for further consideration based on an erroneous jury instruction. So, let’s unpack both of those rulings.

 

With regard to the Eames chair, the court relied on TrafFix, which is one of the cases that Andy just discussed in connection with his previous slide. And quoting TrafFix, the court said, “There are two types of utilitarian functionality." So, there is – well, there are two types of functionality I should say. Utilitarian functionality, which is based on how well the product works—and I know that’s about as clear as mud right now—and aesthetic functionality, which is based on how good—that’s not proper grammar—but how good the product looks.

 

So, you’ve got utilitarian functionality and aesthetic functionality. I will tell you from having just gone to trial in the Proof Research case, I was defending there -- we’ll come back to Proof Research at the end of my segment here -- but I was defending a challenge against registered trade dress. And the plaintiff in that case asserted both the utilitarian functionality and aesthetic functionality and ended up just completely dropping, even from their trial brief, the aesthetic functionality argument --  and having reviewed all of that case law – although, TrafFix treats them as two different things.

 

And having reviewed all of the case law that I think exists on aesthetic functionality and how it differs from utilitarian functionality, you’re not going to find a good explanation of that. Courts really struggle with that. So, I would have to say up front here that, as a practical matter, in terms of in-the-trench litigation, utilitarian functionality and the aesthetic functionality are going to be treated more or less as the same thing, even if plead separately, and even if there are maybe nuances in the TrafFix Decision.

 

So, with regard to TrafFix this is, again, with respect to the Eames chair that we’re looking at here and in considering the overall appearance, the court stated that protecting trade dress threatens -- well, the determination as to whether the overall appearance is functional hinges on whether protecting the trade dress would threaten to eliminate a substantial swathe of competitive alternatives in the relative market.

 

And in that regard, the court cited the four Disc Golf factors, which are: number one, whether the design yields a utilitarian advantage; number two, whether alternative designs are available; number three, whether advertising touts the utilitarian advantages, not just of the product but of the design specifically; and four, whether the particular design results from a relatively simple or inexpensive method of manufacture. And again, we briefed all four of those issues in the Proof Research case, so I’ll come back to that.

 

With regard to the Eames chair that’s on your screen right now, the court based its decision upholding the trade dress registration on the fact that Herman Miller had provided testimony from its designers that they were “Always working to find the exact right look of something,” and “were as much sculptors as they were designers.” These same witnesses testified that aesthetics were one of the most important considerations in designing these chairs. If I sound a little skeptical, it’s because we made all of these arguments in the Proof Research case and lost -- “and that the visual or aesthetic impact was significant.”

 

A program manager for Herman Miller testified that he was not aware of any utilitarian purpose for several of the specific features of these chairs, including the specific trapezoidal shape, which you can see here, of the armrest -- so, there was testimony that they were not functional -- as well as the one-piece construction of the seat and back. Now, that’s interesting. So, they had testimony that that was not functional. I could go on and on. Specific horizontal stitching of the upholstery, not ornamental. Again, there was much testimony along these lines.

 

Now, Herman Miller also introduced testimony that there were a variety of alternative designs on the market and that their advertising materials emphasized the Eames chair’s distinctive appearances, specifically, through large, artistic photographs and statements touting their appearance as iconic, unmistakable, those kinds of things. Now, in terms of any rebuttal -- according to the Ninth Circuit, the rebuttal to all of this evidence did not compel a different conclusion. So, on that basis, the court upheld the trade dress registrations for these two chairs.

Now, scrolling down to the Aeron chair here [inaudible 16:35], the trial court – and this is interesting. This was a Ninth Circuit model civil jury instruction. So, for anyone litigating trade dress cases, beware that the Ninth Circuit has now held that this particular jury instruction is outdated and needs to be rewritten. So, the judge follows this jury instruction. It was number 15.12. And the jury instruction stated—and I will quote here— “A product feature is nonfunctional if its shape or form makes no contribution to the product’s function or operation.” And the part I’m about to read was the basis for the remand. “If the feature is part of the actual benefit that consumers wish to purchase when they buy the product—that’s kind of a mouthful—the feature is functional.

 

It’s a mouthful, and it doesn’t really make sense to me. And that last sentence is the part that the Ninth Circuit held “it does not reflect the law,” needs to be rewritten and remanded for the reason that the district court was apparently unjustified in reading that particular instruction to the jury. So, that’s where we are on Aeron chair.

 

Let’s turn to the next case, Andy. The Blumenthal decision -- there was a lot of case law, discussion of the TrafFix case, discussion of Disc Golf factors. It read like a typical legal opinion. I have to tell you, by contrast, I really enjoyed reading this Gliko Kabushiki Kaisha v. Lotte International case. Thank you, Andy. This was a case about long stick-like cookies. And the reason I enjoyed reading this case is because -- perhaps more than almost any other case I can call to mind, in my now 30-year career -- this was really written in plain language.

 

It’s a Third Circuit decision, and the citation is 986 F.3d 250. And I’m going to read to you some of the findings from this opinion. And I want to note initially that from 1993 to 1995, okay, Gliko sent cease and desist letters to Lotte, based on this trade dress argument -- so, early ‘90s. In 2015, they sued. I have to tell you that this is a fact that’s recited toward the beginning of the decision, and you have to ask yourself whether the court’s ruling is based in part on the fact that there was a 20-year span between the cease and the desist letter in the filing of suit. There is an obligation to pursue any IP infringement claim with due diligence.

 

So, here’s some of the language they used: “The functionality doctrine keeps trademarks for usurping the place of patents.” I like that. That’s a good distillation of the TrafFix case right there. They said, “Conversely, a design is not functional if all it does is identify its maker.” Again, plain language—language that a jury will understand. This is language we should all be using in front of, perhaps, judges who don’t see a lot of IP cases and, certainly, in jury trials. The court said that “One way to determine whether a feature is functional is if it’s essential to the use or purpose of the article,” quoting from Qualitex there. Some quotes from TrafFix.

 

I will note that there was no citation nor reference to the Disc Golf factors at all in this case. And then quoting McCarthy — and they quote McCarthy quite a bit — the court concluded here, “As the leading trademark treatise concurs, functional means useful.” So, if you have evidence that a feature or design makes a product work better, then you’re going to be able to prove functionality.

 

So, in this case, the court held that every feature of the registration relates to the practical functions of holding, eating, sharing, or packing the snack. The same is true of the stick shape. The court acknowledged there was plenty of evidence that Gliko promotes its convenient design, and then Gliko also defended its stick-shaped snack on the grounds that its utility patent was not specific to the features that constituted the trade dress.

 

And the Third Circuit concluded that the district court erroneously considered the utility patent for that reason, but that that error was immaterial, and then concluded, even setting that aside, many other factors showed that Pocky’s trade dress is functional and so not protectable. And the district court properly granted summary judgment.

 

So, I go back to that 20-year time span and I just think if you try to enforce any kind of IP, whether it’s patent trade dress or copyright, 20 years after you sent the cease and desist letter, the court’s most likely going to find some way to rule against you.

 

So, I know I’m limited to about 10 minutes or so here, so I’ll just spend a few minutes talking about the Proof Research case. Now, I represented Proof Research. We filed a trade dress infringement case in the U.S. District Court in Montana. And this was anticipated, but when the process server served the complaint on the defendant, McGowen Precision Barrels, McGowen was ready and handed that same process server, kid you not, their petition to cancel our trade dress registration. So, the process server turned around in his car, drove back to Proof Research, and served us with that petition to cancel.

 

We were anticipating this. We wanted to be before the Trademark Trial and Appeal Board on the issue of validity. We had an issued registration and we figured we would be in front of judges who are steeped in the case law and would understand the nuances of a functionality argument in particular. So, the plaintiff in this case asserted -- so, we were now the defendant before the Trademark Trial and Appeal Board.

 

The plaintiff asserted five causes of action in an attempt to invalidate our trade dress; functionality, which TrafFix would refer to as utilitarian functionality; multiple marks, which I won’t discuss today; genericness, I won’t discuss today; fraud, which is not on our agenda for today; -- I did not prosecute this application, by the way, nor did I file it -- and then aesthetic functionality, which I mentioned earlier, was essentially wrapped up with the first cause of action.

 

In terms of functionality, Proof Research did have, when the Trademark Trial and Appeal Board proceeding was initiated, a utility patent application that was pending for its seven-layer, carbon-fiber laminate design. You are looking at, here in this image, the outer layer — the seventh layer —after the carbon fiber is wound at a specific angle. There’s not enough time in a just few minutes to get into the manufacturing process, but manufacturing process is something that courts and the Trademark Trial and Appeal Board will want to hear about when assessing functionality. That is absolutely something you will get into.

 

But we’re looking at here that seventh layer wound at a specific angle and then ground in a specific proprietary manner. It’s not coated. It’s not concealed. This isn’t a paint or a sticker. And I will tell you that the Trademark Trial and Appeal Board invalidated our trade dress registration. And one of the things they said is that the trade dress did not constitute a concealment of that outer layer.

 

I don’t think that is or should be a requirement of a registered trade dress, but that was one of the things they pointed out. I’m a bit frustrated, frankly. Andy, I promise you I won’t go on and on, but reading the Lotte International case and their comment that the utility patent did not go to the trade dress because we made the same argument here. So, our utility patent was based on that specific -- not the thickness -- the carbon fiber wind angles, which differed among those seven separate layers, the relationship between the differences and angles among those seven --.

 

So, our utilitarian patent didn’t go to what you’re looking at here. This is just what it looks like when you’re done finishing it. And –

 

Andrew Halaby:  Right.

 

Antoinette Tease:  -- the utility patent, in and of itself, left open the possibility of finishing it in a number of ways. So, in short, unless there are questions, that’s the –

 

Andrew Halaby:  Well, --

 

Antoinette Tease:  -- Proof Research case. Yeah. [crosstalk 25:38].

 

Andrew Halaby:  Well, Toni, actually, it’s funny you mention that. We are starting to get some questions in, but I think I’m going to hold them for the time being until we hear from Steve, and then we’ll take on the questions. I’ll read them and then we’ll team up for answers at the end if that’s all right?

 

Antoinette Tease:  You bet.

 

Andrew Halaby:  Okay. So with that, let me turn this over to Steve. And Steve, I’ll let you begin your presentation while I’m pulling up your slide show here.

 

Stephen Baird:  Sounds good. And thanks so much, Andy. And, Toni, that was an excellent presentation. Wonderful to hear those updates. Maybe before I jump into what I was going to talk about, I thought -- when I heard you, Toni, describing the jury instruction in the Ninth Circuit that is being questioned, it struck me that it is very much like the Purchaser Motivation Test that was rejected.

 

I think that was a Ninth Circuit case way back in the anti-monopoly decision that put [inaudible 26:40] in that change and said purchaser motivation cannot be a basis for determining genericness. And so when you’re – I like to think of functionality as being the twin of genericness when you’re in the world of nontraditional trademarks. So, it’s kind of fascinating to hear purchaser-motivation-type language seeping into that jury instruction. Am I reading that right?

 

Andrew Halaby:  Yes. Toni’s nodding, and I’m agreeing. I think you’re right.

 

Antoinette Tease:  Yes.

 

Stephen Baird:  Well, thank you all. And I think this is my first foray in this forum, but I’m happy to be with you on the call today. I thought I would provide, maybe, three updates in the trademark and brand protection field. I’ve been doing nothing but trademark and brand protection for about 30 years now. I was a registered pharmacist before law school, so I thought I was going to be a patent attorney, and kind of fell in love with the trademark area. So, that’s really been my focus for the last three decades, I’m shocked to say.

 

After graduating from Iowa Law School in 1990, I spent a year clerking for Wilson Cowen in D.C. He was a senior judge on the Court of Appeals for the Federal Circuit, and that’s relevant because he was the judge who joined Pauline Newman in In re Owens Corning back in 1985. So, five years before I showed up to work for him, he sided with Pauline Newman in a 2-1 decision to basically reverse decades of a per se rule against ownership of single-color trademarks.

 

And the Trademark Office had been dead set on not permitting registration, and really -- it took, as Andy highlighted, The Pink Panther case and that licensing arrangement to really raise the possibility of a trademark being able to be wrapped up into a single color if done properly. So, then a decade later in 1995, as Andy identified in the Qualitex case, basically the Supreme Court took all of the arguments that my judge and Judge Newman thought were persuasive in In Re Owens Corning and said, “Color can function as a trademark. It can serve the purpose of the trademark as long as it identifies, distinguishes, and indicates source.”

 

And so we have now been living with that decision, for, what, almost a quarter of a century. And just last year, the Federal Circuit revisited the color trademark issue in a case — precedential decision — called In Re Forney. I don’t have a site for you, but it’s easily obtained online. I don’t know whether it has a fed second site yet. But it was importantly not a single-color trademark case. Qualitex was a single-color trademark case. In re Owens Corning was a single-color trademark case.

 

In Re Forney involved, really, three colors that kind of bled into each other, and it also related to a color scheme that appeared on packaging. So, they kind of tie into some of the things that Andy and Toni have already said. Packaging or trade dress, the Supreme Court said, “can be inherently distinctive.” And so the Federal Circuit, really by extension in In Re Forney, has said, “We don’t read Qualitex to forbid a multi-color trademark from being inherently distinctive.” And so that’s really the development for the day.

Now, I guess we’ll have to wait and see whether the Supreme Court weighs in on that particular question in the future, but for now, applicants are free to argue that “we’re not talking about a single-color trademark. We’re talking about a multi-color pattern that appears on packaging or perhaps appears on the goods themselves.” And in that context, applicants are free to argue that it would be fair to presume consumer perception of that as a trademark and had to be considered inherent and distinctive as opposed to what was said in Qualitex where we have to prove a prior distinctiveness.

 

It reminds of a case I worked on, probably, 15 or more years ago, for a company called Datacard, where we helped them register the color blue as applied to these printer cores that would be part of printers that would create credit cards and other sorts of ID cards. And so the printer cores were the replenishable products to make these things. And as you can imagine, they faced all sorts of price competition from Asian knockoffs. And so they were frustrated -- every time they changed the color, that color would get mimicked.

 

And so they ended up developing a translucent blue with a suspended platinum flecks. And I made the very same arguments that prevailed in Forney years earlier, but it was unsuccessful at the PTO to the examining attorneys. Maybe we were before our time. But it allowed us to keep that application pending long enough and to influence marketing materials in a way that it was looked for advertising, such that we had to keep that intent to use application pending for a period of time and made a number of arguments to say, “This isn’t a single color. We’re not within Qualitex. This is an inherently distinctive mark.”

 

And while we ultimately amended to [inaudible 33:08] to show acquired distinctiveness, we were able to shrink that gap of usage. [Inaudible 33:13] I think you need five years or more of use during an 18-month period of time. So, all of those rights could relate back to that original filing day of the intent-to-use application.

 

The slide before you illustrates the most recent example of a single-color mark that I had been involved in. And Chris Riley had been so disappointed. Chris has a fantastic new position, and he’s moved from Yuma, Arizona to Boca Raton, so I think he’s thrilled about this new opportunity. And he was unable to join us today, but he was the general counsel of the Gowen Company, and I worked with him on obtaining, first of all, the single-color registration for the color purple as applied to bottles that hold herbicides.

 

And the significance of obtaining that registration is because the Permit brand was starting to receive generic competition, and as is frequently the case, and as I was starting [inaudible 34:19], most folks appreciated that they use a brand name when they’re going to compete, right? Then, we’d be talking about counterfeiting, perhaps. But in the Permit case, they were using a different brand name, but they copied the purple bottle. And so that resolved favorably with just a letter-writing campaign that didn’t involve litigation, but it really illustrates the point that, just from a commercial perspective, it’s important to think really broadly about trademarks and not be focused only on word marks when you can capture non-traditional trademark elements and satisfy the Trademark Office that you built a brand around those non-traditional elements that provide so much more power to be able to keep competitors at a fair distance.

 

You can move to the next slide, Andy. And then that really then provides – getting back to the kinds of products that the Second Amendment was designed for. And one of the experiences I had a few years back was helping Walther, who was facing a similar problem of those that I just identified. There’s a lot of replicas that have been used in the airsoft industry. And so what they were seeing is cheap knockoffs coming in that – they were smart enough not to put the Walther brand name, or the P99 brand name, or the PPK brand name on the replicas, but the shape’s still the same.

 

And so getting a non-traditional trademark registration for both the contours and the shape of those handguns that -- were very important to the business. And it’s not an easy task to show acquired distinctiveness. There were, maybe, three firearm trademark configuration registrations when we started that process and then we added another three. There may be greater -- more now.

 

But one of the things that we had working for us was all the movie references to the PPK and the P99, and it was well known to be James Bond’s guns of choice. So, that’s always helpful when you have James Bond on your side.

 

The image below the handguns is a depiction from a federally registered trademark for another outdoor industry client that I worked for, Paradigm. And we were able to obtain, using Section 2(f), an acquired distinctiveness, a registration for a red band that appears in the middle of that arrow—archery arrow.

 

One of the things that’s helpful to build those kinds of rights in a nontraditional trademark -- in that case, they also had a wordmark, called red zone, that was federally registered, and it helps draw attention to that particular feature as something that would be telling you who’s behind it as opposed to it serving some functional purpose.

 

That then leads to the image below it—and, no, it’s not a roll of toilet paper. It happens to be the drawing associated with an application that was filed by the Hodgdon Powder Company to try to register the color white for preformed gunpowder charges that were in the color white. And it has fascinating parallels to some of what Toni described in terms of functionality. It’s one where I represented another ammunition manufacturer that didn’t really like the idea of Hodgdon owning the color white for gunpowder.

 

And so we filed a Notice of Opposition that was about 50 pages long. We discovered a patent that was in the utility patent that was in existence that spoke about the ingredients that were added to replace carbon so it would reduce the amount of fouling within a barrel. And so there were a series of functionality arguments that we deployed. We had about a 50-some page Notice of Opposition, and interestingly this was a case that went to the TTAB before we ever filed our Notice of Opposition.

 

Hodgdon had won and convinced the TTAB to overrule an examining attorney that said that they had not acquired distinctiveness in the color white. They also had a word trademark to kind of draw attention to it. And they had done a very good job of executing, what we call, look-for advertising to try to educate consumers that this is really something that is source-identifying, not something that is just aesthetic or ornamental.

 

And so after prevailing with the TTAB, the mark was then published for opposition, and we opposed, filed a 50-page Notice of Opposition detailing various grounds for functionality, and Hodgdon never answered, and so we prevailed by default. So, functionality can be a powerful tool.

 

One of my former partners at the Fish & Richardson firm years ago, Tony Fletcher, has oftentimes written and said that functionality is just a ticking time bomb because there’s no statute of limitations on when you can bring a functionality charge.

 

      So, maybe let’s turn now quickly -- maybe I’ve just got a couple more minutes here. And when I speak about genericness, I often throw this slide up -- and we don’t really have an interactive environment for everybody to raise hands and say which one of these is not generic. But spoiler alert, it’s booking.com and that’s because of the Supreme Court decision from last year where – it’s interesting. If you think back to the Owens Corning decision -- that’s one where the Trademark Trial and Appeal Board made a ruling, and then the applicant went straight up to the Federal Circuit Court of Appeals for the Federal Circuit. And when you appeal that way, it’s a frozen record, and you can’t add to it.

 

In booking.com, the Trademark Trial and Appeal Board was asserting a per se rule to say when you have a generic term for the goods and services and you add .com to it — a generic suffix — you can’t get anything more than something that’s generic. And the Trademark Trial and Appeal Board said booking.com was, in fact, generic. So, I think very smartly, the applicant didn’t go straight up to the Federal Circuit. They sought a de novo trial in the Eastern District of Virginia and got a more favorable form there added to the record.

 

The Fourth Circuit agreed that booking.com could serve as a trademark, and the Supreme Court, just last year, agreed and redacted the Trademark Office’s attempt to apply this per se rule, that in some sense would afford brand owners predictability, but at the same time deny the reality that when consumers perceive a certain designation as serving the purpose of the trademark, and not only identifying goods and services and distinguishing those goods and services from those of others and indicating the source of those goods and services with those three elements, you have the makings of a trademark. And the Supreme Court agreed with that. Now—

 

Andrew Halaby:  Steve, if I can jump in. We’ve gotten a question from the audience that I think is appropriate to [inaudible 42:44]. And it relates to color trademarks, but I think it also resonates thinking about consumer perception, and it’s a thoughtful question. “For color trademarks, what is the standard of specificity? Computer RGB codes, light wavelengths, spectral range, etc.? What if a particular product color looks different under different lighting sources, e.g. natural sunlight, fluorescent light, and so on.”

 

My answer, at least, would be the legal test relates to the ordinary consumer’s perception. And you see that concept coming through in a variety of ways in the trademark law. For example, in the booking.com case, on that issue, the inquiry would be: Who’s the average ordinary consumer who’s perceiving the mark of booking.com? And I think in the color trademark context, the inquiry, too, would be: What’s the perspective of the ordinary consumer of goods or services sold under a [inaudible 43:43]? Do you have any other reactions in response to that question?

 

Stephen Baird:  I agree with that, Andy. I would also add, under normal purchasing conditions. And so I think one of the – I mentioned about, there was decades of case law that said you can’t own color trademarks. One of the concerns was courts’ inability to resolve issues about shade confusion. And both the Supreme Court and the Federal Circuit in In Re Owens Corning said, “The test is likelihood a confusion.” And so those are the kinds of things that courts deal with, and shape confusion tend to determine.

 

I think that one of the things that I had noticed in the trademark world, in terms of registration, more and more parties are, maybe, limiting the scope of the registration by plugging in a Pantone number to associate with it. And I’ve never gone that direction. The registrations I’ve obtained are purple, blue—pretty broad.

 

I wonder whether parties might be able to use Section 18 as a tool to narrow the scope of those to the actual shade that is, in fact, being used in commerce, but I think that what we’re talking about is likelihood of confusion, and the court’s going to have to consider what are the purchasing conditions, what are the normal lighting conditions there, and that will all be part of the mix that they consider in trying to determine whether there’s been a trademark.

 

Andrew Halaby:  Okay. Thank you. And Toni, let me flip this one over to you. One of you, I think, very appropriately, commented early in the presentation that in several ways, when we’re talking about genericness, we are talking about functionality. The question is, are you serving trademark purposes or are you serving other purposes?

 

And the question comes to us from the audience from someone who self-identifies as being primarily in construction law, where the word function has a “solidly blue-collar meaning,” as the questioner puts it, and asks, “Can we get a general overview of the concept of aesthetic functionality?”

 

To my knowledge, the Supreme Court has never defined what that is. I’ve always thought of it as, if you buy it for how pretty it is, or how pleasing it is, and how it looks or impacts your senses -- but even that definition fails because that has usefulness. So, how would you answer the question?

 

Antoinette Tease:  Yeah. I’m dying to answer this question. I don't know if the gentleman who posed the question is a hunter, but I’m going to use my hunting example because I think the rifle barrel trade dress—and maybe, Andy, I don't know if you want to pull it up—is a great way to address this. And the caveat being, okay, the courts have really struggled. And as Andy just alluded to, you’re not going to find a clear delineation between aesthetic functionality and utilitarian functionality in the case law.

 

However, this is how I argued it in our case, and I think it makes sense. So, if you look at our barrel, the utilitarian functionality argument would be, I have to wrap the outer layer of this barrel at a 45-degree angle, and then sand it, and then hand polish it, and leave it just that way in order for that barrel to function, for it to get the projectile, or the bullet, right, out of that barrel. That would be utilitarian functionality.

 

Here’s aesthetic functionality, okay? It has to look that way because that resembles camouflage, and camouflage patterns have a utilitarian function in the hunting context, so I have to have a rifle barrel that looks this way when I’m in the field because that way the deer, or the elk, or whatever, the bear won’t see me.

 

Now, literally, this argument was made in our case when it came to aesthetic functionality. And they had images of people wearing camo apparel and holding these rifle barrels, and tried to make the argument that because we were somehow advertising camo apparel, showing people wearing camo apparel and holding these rifles at the same time, that -- they made the leap -- that therefore, there was some aesthetic functionality to the way this barrel looked.

 

We refuted that in two ways. You can tell from this image right here. This is still reflective. You can see that in the image. And so the light shines on it, and it’s going to look just a lot like a steel barrel, to some degree. It’s going to be reflective. So we argued, no, this isn’t at all like an opaque surface, or even painting it, or putting a Cerakoted finish on it to resemble camo. You could do all those things. And I won’t get too far in the weeds here. So we tried to refute that argument that way.

 

And then -- here was the best argument -- we sell these barrels to the military, and when the military get them, they don’t leave them like this unless it’s for their personal use, like a Navy SEAL -- and I shoot competitively -- and we had testimony from a Navy SEAL, who shoots competitively, who said this finish is not functional. But when they are using it for their military operations, they’re going to Cerakote it—that’s like a paint—and make it black, or olive drab green, or something else.

 

So, anyway, that’s the best answer I can give to that wonderful question about, what is aesthetic functionality? It would have to be the argument – I view it, Andy, not so much as the argument that I purchased it because of the way it looks. To me, that proves it’s a trade dress, so that’s the opposite of what you’re trying to prove when you’re arguing aesthetic functionality. I think they have to show it somehow functions in a certain way because of the way it looks.

 

Andrew Halaby:  Okay. Okay. Well, I appreciate that. And thank you to the audience for the questions. In the few minutes we have left, I’m going to turn it back to Steve real quick to go ahead and address his last slide. And so let me share that. And Steve, fire away.

 

Stephen Baird:  Yeah. So, the last update I wanted to bring folks’ attention to is something called – the Trademark Office is obsession lately with informational refusals and determining that a certain matter is informational and incapable of serving as a trademark without going through the effort of building a case for genericness. So, the outcome is the same as genericness, but the record needed to support it is very different.

 

And this all started, I would say, in fervor, back in 2016 -- maybe 2017 -- around the time that the Tam case and the Brunetti case were percolating through the Trademark Trial and Appeal Board in the courts, and it was starting to look like maybe Section 2(a) of the Lanham Act for disparaging [inaudible 50:45] subject matter might become unconstitutional.

 

And I would say the USPTO issued an exam guide, in early 2017, detailing all the ways in which examining attorneys might be able to refuse applications based on informational matter and that, in their view, would be incapable of ever serving as a trademark. The exam guide was then made part of the 2018 version of the TMEP. That’s the bible that examining attorneys consult when they are issuing refusals. But this particular infographic didn’t make it into the TMEP. I’m throwing it up here on the screen to help illustrate the point that, basically, all roads lead to incapability as far as this chart shows and as the TMEP reads now.

 

And what I think is important for folks to appreciate is the kinds of refusals that we’re seeing now from the PTO on matter that you would normally expect to be maybe issued -- have the Trademark Office issue a descriptiveness refusal under Section 2(e)1, that the matter is merely descriptive, and then that bill gives you the chance to either amend to the supplemental register and try to come back later and prove that you have acquired distinctiveness, and then in the meantime, your supplemental registration keeps others from being able to register confusingly similar marks. Or the other path would be to build a case and show that you now have acquired distinctiveness in this merely descriptive term.

 

The Trademark Office’s focus on incapable matter now deprives an applicant of the ability to go attempt to make that shown. And so when that evidence is put forward now, it’s typically disregarded as de facto secondary meaning because the Trademark Office has jumped to the ultimate conclusion that -- “We don’t care how much evidence you show us; you’re never going to be able to show that you’ve acquired distinctiveness.” And next slide, Andy. And that is because of a Federal Circuit decision back in 1999 — the Boston Beer Company case, that owns the Sam Adams brand. And they were attempting to register the mark “The Best Beer in America.”

 

And in that case, they were unsuccessful in proving acquired distinctiveness, and then the Trademark Trial and Appeal Board went on and said, “And we think it’s incapable anyway.” The Federal Circuit did just the same thing when it reviewed the Board’s decision, and from my perspective, I’d call that dicta. And so my hope is that when we take into consideration that the Federal Circuit decision on incapability in In Re Boston Beer will be considered dicta because it wasn’t essential to affirming the refusal based on a lack of proving acquired distinctiveness.

 

If we take that and combine it with the Supreme Court’s ruling in booking.com, saying that consumer perception controls whether or not matter serves a trademark purpose, my hope is that combining these two elements will arm applicants to fend off these kinds of per se attacks on matter that gives applicants no hope, currently, of being able to show that they’ve acquired distinctiveness.

 

Andrew Halaby:  So, we have just another minute left, and I think I’m going to take the opportunity to thank both of our panelists. Let me turn off the share. Thank you both for coming and talking about this very interesting subject matter. Thank you to the audience for the questions. We got one right at the end, and I say this with respect and affection, if we had an hour, we could tackle it.

 

It asked whether these developments are like the evolution of business method patents and patent-eligible subject matter, and is it a good or bad thing, generally? And we don’t have another hour that it would take -- to give that the attention and respect it deserves, but it’s a great question.

 

And generally, I want to thank Toni and Steve for being here. I want to thank The Federalist Society for giving us the opportunity to talk to the audience. I’m sure Toni and Steve, and I, for that matter, all are available and readily findable on the internet. If you want to engage in any further discussion on any of these issues privately, feel free. But Nick, with that, I think I’m going to turn the microphone back over to you to close us up.

 

Nick Marr:  Well, thanks very much, Andy. Thanks for organizing. Thanks to our panelists and our moderator for this great discussion today. Thanks for our audience for calling in, for your great questions, great engagement. Also, just a reminder, we welcome your feedback on this program and others by email at [email protected].

 

Also, check your email and our website for announcements about upcoming Zoom events, like this one. Especially, with the Supreme Court term winding down, we’re covering all those cases this week and next week, so take a look on our website to see our coverage of those cases and register. But until next time, thank you all for joining us today. We are adjourned.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.