February 03, 2021

Third Circuit Panel Revises Half-Baked Trade Dress Functionality Decision

5 min

"That's the way the cookie crumbles," a panel of judges from the Third Circuit again concluded in rejecting trade dress protection for the well-known "Pocky" cookie design. However, in a revised decision following a request for rehearing, the panel clarified its initial analysis on trade dress functionality that provides a more fulsome explanation of its reasoning and may soothe some trade dress advocates.

As background, more than 50 years ago, a Japanese confectionery company called Ezaki Glico Kabushiki Kaisha ("Glico") released Pocky—thin, elongated cookies partially covered with chocolate:

Pocky stick     Pocky Packaging

Pocky eventually entered the U.S. market, and about five years later, Lotte Confectionery ("Lotte") began selling Pocky look-alike biscuit sticks by the name "Pepero," pictured below:


Pepero didn't go unnoticed. After obtaining U.S. trade dress registrations for the Pocky design, Glico sent cease-and-desist letters to Pepero in the early to mid-1990s. Nevertheless, Lotte continued selling Pepero.

In 2015, Glico sued Lotte for trade dress infringement and unfair competition under the federal Lanham Act and state law in the U.S. District Court in New Jersey. Glico based its claims on its two trade dress registrations for Pocky, covering elongated biscuit sticks partially covered with chocolate:


Despite these two incontestable registrations, the district court granted summary judgment against Glico, deeming its asserted Pocky design functional and not subject to trade dress protection.1 The court cited Pocky's advertising over the years and a utility patent held by Glico as evidencing the functional advantages of the design—"enabling ease of consumption" and allowing the sticks to be "packed close together" in a box. Glico appealed to the Third Circuit.

In its initial decision on appeal, a Third Circuit panel affirmed the lower court, appearing to rule that any "useful" feature is a fortiori functional and, thus, not available for trade dress protection.2 The panel began by making clear its intention to "keep trademark law in its lane," distinguishing trademark law from copyrights and patents, stating that "trademark law protects not inventions or designs per se, but branding." According to the panel, "[i]f the Lanham Act protected designs that were useful but not essential, as Ezaki Glico claims, it would invade the Patent Act's domain. Because the Lanham Act excludes useful designs, the two statutes rule different realms." At the same time, the panel acknowledged the important goals of trademark law: "protecting the owner's goodwill and preventing consumers from being confused about the source of a product."

On the facts, the panel affirmed the lower court's finding that the Pocky design is useful because it "makes it work better as a snack," citing Glico's advertisements referring to "the no mess handle" and "compact, easy-to-carry package" holding "plentiful amounts of Pocky." It found Glico's evidence that many other cookie designs have been used in the field "relevant" but not enough to overcome the other evidence of functionality. While affirming the lower court's ultimate functionality determination, it reversed on the import of Glico's utility patent, finding the patent "irrelevant" to functionality; the "innovation" in the patent was "a better method for making the snack's stick shape," not the design of the snack.

Following the decision, Glico petitioned the Third Circuit for rehearing en banc, with support from several amici, arguing that the panel's decision set the bar too low for finding functionality.

The Third Circuit denied the en banc request, but the original panel took the rehearing opportunity to issue a revised decision that provided additional clarity on its ruling.3 Among other changes, it added a section making clear that "[j]ust because an article is useful for some purpose, it does not follow that all design features of that article must be functional." As it explained, "[t]he question is not whether the product or feature is useful, but whether the particular shape and form chosen for that feature is."

It illustrated the point with case examples from the Supreme Court and recent appellate courts:

  • "Though ironing-board pads need to use some color . . . there is no functional reason to use green-gold in particular."
  • "Though French press coffeemakers need some handle, there is no functional reason to design the particular handle in the shape of a 'C.'"
  • "And though armchairs need some armrest, there is no functional reason to design the particular armrest as a trapezoid."4

As the panel summarized, "[i]roning-board colors, coffee-pot handles, and armrests are all generally useful. But the particular designs chosen in those cases offered no edge in usefulness."

In addition, the panel noted that "a combination of functional and non-functional features can be protected as trade dress, so long as the non-functional features help make the overall design distinctive and identify its source."

On the other hand, more confusion may be generated by the panel's newly added statement that Glico had "not borne its burden of showing nonfunctionality," despite having earlier (and correctly) explained that the burden for proving functionality of registered trade dress like Pocky is on the challenger, not the trade dress proponent.5

On balance, the panel's modified decision may provide some comfort to brand owners, but whether the case is fully baked will depend on whether review is sought from the Supreme Court.

[1Ezaki Glico Kabushiki Kaisha v. Lotte Int'l Am. Corp., No. 15-5477, 2019 WL 8405592 (D.N.J. July 31, 2019).

[2See Ezaki Glico Kabushiki Kaisha v. Lotte Int'l Am. Corp., 977 F.3d 261 (3d Cir. 2020).

[3See Ezaki Glico Kabushiki Kaisha v. Lotte Int'l Am. Corp., No. 19-3010, 2021 WL 253451 (3d Cir. Jan. 26, 2021).

[4Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 166 (1995); Bodum USA, Inc. v. A Top New Casting Inc., 927 F.3d 486, 492–93 (7th Cir. 2019); Blumenthal Distrib., Inc. v. Herman Miller, Inc., 963 F.3d 859, 867–68 (9th Cir. 2020).

[5See 2021 WL 253451, at *5 ("The trade dresses are presumptively valid because they are registered and incontestable. See 15 U.S.C. § 1115. So Lotte bears the burden of proving that they are functional."). For unregistered designs, the trade dress proponent must prove non-functionality. See 15 U.S.C. § 1125(a)(3).