February 16, 2012

Product Configuration Trade Dress Claims Can Be Costly

4 min

Two recent federal court rulings rejecting the protectability of alleged trade dress in product configurations should make plaintiffs think twice before pursuing such claims.  In both cases, the plaintiffs lost at summary judgment and now face the prospect of paying defense counsel fees and the costs incurred in defending against the claims. 

The first case involves the alleged trade dress in the "cubist" appearance of a mechanical hoist used in commercial construction and maintenance, such as window washing.  On February 7, the Ninth Circuit Court of Appeals affirmed the lower court decision in the case, which rejected the trade dress claim on the basis that the product configuration was functional and, in turn, granted a substantial award of attorneys' fees and costs to the defendant.  See Tractel, Inc. v. Wuxi Shenxi Construction Machinery Co., Ltd., Case No. 10-17007 (9th Cir. Feb. 7, 2012). 

In its decision, the appellate court noted the plaintiff's "fundamental misunderstanding...that the presumption of functionality can be overcome on the basis that its product is visually distinguishable from competing products."  As the court explained, uniqueness alone is "insufficient to warrant trade dress protection."  Rather, the plaintiff must demonstrate some "evidence of fanciful design or arbitrariness," which was not met by the asserted elements, such as "rectangular" components, "right angles," and "cube shaped" housing, all mechanical aspects of the industrial machinery at issue.  The court recounted the plaintiff's own witness testimony as having "honestly laid out the functional nature of the design," without any evidence "like engineering notebooks or testimony from the designers about design or aesthetics."  According to the court, the plaintiff's hoist is, "at bottom, a utilitarian machine with no indication that the visual appearance of its rectangular exterior design is anything more than the result of a simple amalgamation of functional component parts." 

Based on the plaintiff’s "utter failure of proof" to support non-functionality, the appellate court affirmed the lower court’s finding that the  case is "exceptional" for purposes of awarding defense counsel fees.  Those fees, largely affirmed by the appellate court, amounted to nearly $850,000.  In affirming the award, the court noted that, just months before summary judgment briefing, another district court had rejected plaintiff's proposed trade dress on functionality grounds.  That decision, the Ninth Circuit found, should have put plaintiff "on notice" that it did not have a colorable claim.  Finally, the appellate court largely affirmed the grant of over $80,000 in defense costs, pushing the total award to defendant to nearly $1M. 

In the other recent trade dress decision, this one involving the shape of tequila bottles, the court again found the plaintiff’s claimed trade dress unprotectable, and again granted summary judgment to the defendant.  See E&J Gallo v. Proximo Spirits, Inc., Case No. 10-411 (JLT) (E.D. Cal. Jan. 30, 2012).  At the outset of its decision, the court noted the inconsistency in plaintiff's claimed trade dress, which focused on the trapezoidal shape of plaintiff's tequila bottle, but also "sporadically" included other features such as color scheme, wooden enclosure top, and other packaging elements.  The court analyzed both (1) the "broader trade dress," including the bottle shape and other elements, and (2) the bottle shape alone.  In both instances, the court found that the claimed trade dress was not protectable.  The court noted that the broader trade dress claimed by plaintiff does not actually appear in the marketplace -- it includes, and excludes, elements from plaintiff’s products found in the market.  And with respect to the bottle, the court noted the lack of distinctiveness in plaintiff’s shape, reproducing a chart depicting a full bar of trapezoidal-shaped tequila bottles found in the market.  The court also found a total lack of evidence to support any claim of protectability through secondary meaning.  As a result, the court granted judgment against plaintiff on its trade dress claim, and the defendant has now filed a request for over $75,000 in costs from plaintiff.

If nothing else, these decisions should remind plaintiffs that product configuration trade dress claims cannot serve as a “catch-all” where other intellectual property protections are unavailable.  Caution must be exercised to be certain that the required elements of a claim are met in order to avoid what can be costly consequences.