Consolidating the Diffuse Paths to Trade Dress Functionality: Encountering TrafFix on the Way to Sears

Washington and Lee Law Review, Winter 2004 by Barrett, Margreth

I. Introduction

Dissatisfied with the available protection under U.S. patent and copyright law1 and repeatedly failing to win passage of sui generis protection,2 U.S. product designers have increasingly looked to federal trademark and unfair competition law3 in their attempts to prevent product knock-offs. They have argued that consumers identify and distinguish the products of one producer from those of others not only through the producers' marks and packaging, but also through the appearance of the products themselves. Accordingly, if one producer is permitted to copy the appearance of another producer's product, this will lead to a likelihood of consumer confusion about the source of the products or cause consumers falsely to assume an affiliation between the producers. This potential consumer confusion is the very harm that the Lanham Act, which provides a federal cause of action for trademark and trade dress infringement, seeks to prevent.

Businesses found reasonably fertile ground for such Lanham Act claims during the 1980s and 1990s. To establish trademark or unfair competition rights, the claimant must demonstrate that its alleged indication of origin is distinctive (meaning that it indicates the origin of the claimant's product to consumers) and nonfunctional, and that the defendant's use of a similar indication of origin causes a likelihood of consumer confusion about the source, sponsorship, or affiliation of the products.4 On the whole, courts were receptive to arguments alleging that product feature trade dress could meet these standards.5 In 2000, however, product feature trade dress claimants received a significant set-back from the Supreme Court's decision in Wal-Mart Stores, Inc. v. Samara Brothers, Inc.6 In Wal-Mart, the Court expressed skepticism that consumers typically rely on product features to indicate origin7 and concern about the potential anticompetitive effects of readily recognizing Lanham Act rights in unpatented aspects of the product itself.8 Accordingly, the Court held that product feature trade dress (as opposed to product packaging trade dress) can never be deemed inherently distinctive.9 Lanham Act Section 43(a)10 claimants who seek to assert rights in product features must always demonstrate secondary meaning-in other words, establish that "in the minds of the public, the primary significance of a [trade dress] is to identify the source of the product rather than the product itself."11 Because of the difficulty of establishing secondary meaning in many unregistered trade dress cases, the Court's decision significantly decreased the availability of the Lanham Act Section 43(a) cause of action.12

The Supreme Court dealt an even stronger blow the following year, in TrafFix Devices, Inc. v. Marketing Displays, Inc.13 which addressed the proper standard for determining whether product feature trade dress is nonfunctional. As a general matter, the nonfunctionality requirement's purpose is to ensure that trade dress protection will not unduly interfere with free competition.14 The circuit courts of appeals had struggled considerably to define the proper standard for functionality and failed to agree on a uniform standard. The majority of circuits determined that functionality should be measured by evaluating the actual likely anticompetitive impact (or "practical effect") of trade dress protection for product features under the circumstances of each case. While these circuits varied in their formulations for measuring functionality, they all placed considerable weight on the availability of alternative product features that would provide competitors with an equally effective product.15

In TrafFix, the Supreme Court rejected the practical effect approach as the primary standard for functionality. It adopted instead a standard that focuses on the role that the product feature plays in the product. If the feature is "essential to the use or purpose of the article or if it affects the cost or quality of the article," it is functional and unprotectable.16 The Court held that measuring the actual anticompetitive impact of trade dress protection should serve only as a second hurdle for plaintiffs if the plaintiffs demonstrate that the product features at issue are nonfunctional under the role of the feature standard.17

While most commentators agree that the TrafFix decision further reduces a business's ability to assert trade dress protection for product features, considerable disagreement exists among both scholars and the courts of appeals over precisely how the Supreme Court intended its functionality standard to be interpreted and applied.18 This Article attempts to construe the difficult TrafFix decision in light of earlier case law and to place it in the larger context of courts of appeals and Supreme Court jurisprudence regarding trade dress protection and the relationship between Lanham Act protection for product features and patent law.

The first part of this Article reviews prior Supreme Court and courts of appeals decisions and argues that the functionality standards that the courts have stated can be roughly divided into three general categories: (1) a role of the feature standard, which focuses on the role the feature plays within the product;19 (2) a practical effect standard, which evaluates the actual likely anticompetitive impact of product feature trade dress protection in a given case (taking into account the availability of alternative product features);20 and (3) an important ingredient standard, which asks whether the product features at issue are an important ingredient in the commercial success of the product.21