Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-56577/USCOURTS-ca9-13-56577-0/pdf.json

Parties Involved:
Ameritox, Ltd.
Appellee
Millennium Laboratories, Inc.
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MILLENNIUM LABORATORIES, INC., a

California corporation,

Plaintiff-Appellant,

v.

AMERITOX, LTD., a Texas limited

partnership,

Defendant-Appellee.

No. 13-56577

D.C. No.

3:12-cv-01063-

MMA-JMA

OPINION

Appeal from the United States District Court

for the Southern District of California

Michael M. Anello, District Judge, Presiding

Argued November 5, 2015

Submitted April 4, 2016

Pasadena, California

Filed April 4, 2016

Before: Susan P. Graber and Ronald M. Gould, Circuit

Judges, and Wiley Y. Daniel,* Senior District Judge.

Opinion by Judge Gould

* The Honorable Wiley Y. Daniel, Senior District Judge for the U.S.

District Court for Colorado, sitting by designation.

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2 MILLENNIUM LABS. V. AMERITOX

SUMMARY**

Lanham Act

The panel reversed the district court’s grant of summary

judgment in favor of the defendant on claims of trade dress

infringement under the Lanham Act and unfair competition

under California Business and Professions Code section

17200.

The panel held that there were triable issues as to whether

the plaintiff’s claimed trade dress ̄the visual layout of a

urine test report ̄was functional, and thus disqualified for

protection under the Lanham Act. The panel remanded the

case for further proceedings.

COUNSEL

Randall E. Kay (argued), Jones Day, San Diego, California;

Craig E. Stewart and Matthew J. Silveira, Jones Day, San

Francisco, California, for Plaintiff-Appellant.

Eric D. Miller (argued), Perkins Coie LLP, Seattle,

Washington; Matthew F. Carmody and Michael R. Osterhoff,

Perkins Coie LLP, Chicago, Illinois, for Defendant-Appellee.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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MILLENNIUM LABS. V. AMERITOX 3

OPINION

GOULD, Circuit Judge:

Millennium Laboratories, Inc., appeals the district court’s

grant of summary judgment to Ameritox, LTD, on

Millennium’s claims of trade dress infringement under the

Lanham Act and unfair competition under California

Business and Professions Code section 17200. Millennium

contends that: (1) the district court applied the incorrect

standard for assessing the functionality of Millennium’s trade

dress; and (2) the district court erred by granting summary

judgment to Ameritox on Millennium’s claims. At the heart

of this appeal, we consider whether a product’s visual layout

is functional, defeating a claim for trade dress infringement. 

The Ninth Circuit has not previously addressed the

functionality of any publication formats. But several other

circuits have done so. Tools USA & Equip. Co. v. Champ

Frame Straightening Equip., Inc., 87 F.3d 654, 657–59 (4th

Cir. 1996) (concluding that the catalogue page format was not

functional);Comput. Care v. Serv. Sys. Enters., Inc., 982 F.2d

1063, 1071 (7th Cir. 1992) (holding that the computergenerated report format was not functional); Hartford House,

Ltd. v. Hallmark Cards, Inc., 846 F.2d 1268, 1272–75 (10th

Cir. 1988) (concluding that a greeting card format was not

functional). We have jurisdiction under 28 U.S.C. § 1291.

I

Millennium and Ameritox compete in the medication

monitoring industry, and sell urine-testing services to

healthcare providers who treat chronic pain patients with

powerful pain medications. The testing services provided by

these companies help the healthcare providers to evaluate

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4 MILLENNIUM LABS. V. AMERITOX

whether patients are taking the pain medications as prescribed

and to assess whether the patients are taking any nonprescribed drugs. Millennium gives these test results using

its R.A.D.A.R.® Report. Ameritox gives its test results using

its own RX GuardianTM Report.

A few years before this lawsuit was filed, both companies

were revising the way they presented the urine-test results. 

In May 2011, Ameritox launched a new service known as

“RXGuardian CD,” which included a single graph. 

Millennium also intensified its efforts in late 2010, and,

recognizing that consumers could easily read comparative

and historical results in graphical format, turned to its

marketing team to “assist[ ] in the formatting on the report.” 

On June 2, 2011, Millennium released a sample R.A.D.A.R.®

Report with its new design. Within the year, Ameritox began

to reevaluate its report and the use of a single graph. 

Ameritox considered several designs, all of which used a

design similar to Millennium’s new report, and introduced its

new format in March 2012.

On April 30, 2012, Millennium sued Ameritox for trade

dress infringement under the Lanham Act and for unfair

competition under California Business and Professions Code

section 17200, alleging that Ameritox had copied its report

design. Ameritox moved to dismiss the complaint, arguing

that Millennium’s claimed trade dress was functional and

therefore did not qualify for protection. The district court

dismissed the motion, ruling that “[c]onstruing Millennium’s

complaint liberally, it has alleged facts showing that

competitors would not need the features of its report in order

to compete without disadvantage.”

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MILLENNIUM LABS. V. AMERITOX 5

Before discovery was complete, Ameritox moved for

summary judgment on the Lanham Act claim, again arguing

that Millennium’s trade dress was functional. The district

court granted the motion, and also concluded that

Millennium’s claim for unfair competition failed. 

Millennium appealed.

II

The Lanham Act creates a cause of action for a party

injured when another entity uses “any word, term, name,

symbol, or device, or any combination thereof . . . which is

likely to cause confusion . . . as to the origin, sponsorship, or

approval of his or her goods.” 15 U.S.C. § 1125(a)(1)(A). 

This statute provides protection for a trade dress, TrafFix

Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 29 (2001);

15 U.S.C. § 1125(a)(3) (1994 ed., Supp. V), which is the

“total image of a product,” including features such as size,

shape, color, texture, and graphics, Disc Golf Ass’n v.

Champion Discs, Inc., 158 F.3d 1002, 1005 n.3 (9th Cir.

1998).

Like most intellectual property protections, trade dress

protection exists to facilitate competition.

It is well established that trade dress can

be protected under federal law. The design or

packing of a product may acquire a

distinctiveness which serves to identify the

product with its manufacturer or source; and

a design or package which acquires this

secondarymeaning, assuming other requisites

are met, is a trade dress which may not be

used in a manner likely to cause confusion as

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6 MILLENNIUM LABS. V. AMERITOX

to the origin, sponsorship, or approval of the

goods. In these respects protection for trade

dress exists to promote competition.

TrafFix, 532 U.S. at 28. But trade dress protection cannot be

asserted for any functional features of a product.115 U.S.C.

§ 1125(a)(3) (1994 ed., Supp. V) (“In a civil action for trade

dress infringement under this chapter for trade dress not

registered on the principal register, the person who asserts

trade dress protection has the burden of proving that the

matter sought to be protected is not functional.”); 15 U.S.C.

§ 1125(a)(3) (1994 ed., Supp. V); TrafFix, 532 U.S. at 29

(“This burden of proof gives force to the well-established rule

that trade dress protection may not be claimed for product

features that are functional.”); see also Clicks Billiards, Inc.

v. SixShooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001);

Disc Golf, 158 F.3d at 1006; Fuddruckers, Inc. v. Doc’s B.R.

Others, Inc., 826 F.2d 837, 842–43 (9th Cir. 1987).

1

“To sustain a claim for trade dress infringement, [the plaintiff] must

prove: (1) that its claimed dress is nonfunctional; (2) that its claimed dress

serves a source-identifying role either because it is inherently distinctive

or has acquired secondary meaning; and (3) that the defendant’s product

or service creates a likelihood of consumer confusion.” Clicks Billiards,

Inc. v. SixShooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001) (citing Disc

Golf, 158 F.3d at 1005 and Fuddruckers, Inc. v. Doc’s B.R. Others, Inc.,

826 F.2d 837, 841 (9th Cir. 1987)). The district court granted summary

judgment solely on the ground that Millennium’s claimed trade dress is

functional, without assessing the other two required elements. Because

functionality is the sole issue before us, we assess only that element. We

make clear, however, that our ruling does not preclude summary judgment

or partial summary judgment for Ameritox or for Millennium on either of

the other two elements if the district court concludes that such is

appropriate.

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MILLENNIUM LABS. V. AMERITOX 7

This limitation reflects a balance of considerations

affecting the competitive process and consumer benefit. 

Although Congress does not want consumers to be confused

about a product’s source, it also does not want to restrict the

availability and use of functional features that enhance the

utility of the product. TrafFix, 532 U.S. at 28–29. This free

competition allows manufacturers not only to compete with

sometimes necessary features, but also to build off the

features’ utility, creating better products. As the Supreme

Court has explained, “[t]rade dress protection must subsist

with the recognition that in many instances there is no

prohibition against copying goods and products. In general,

unless an intellectual property right such as a patent or

copyright protects an item, it will be subject to copying.” Id.

at 29. And copying can lead to “salutary effects in many

instances.” Id.

Consider the following example: a car manufacturer

places headlights at the front of the vehicle to light the road

when dark. Such lights might have some distinctive appeal

that could be identified with the first manufacturer to use

them, but having lights in the front of the vehicle to

illuminate a dark road also has a functional benefit. Once the

public understands it can purchase a vehicle that allows safe

driving at night, other manufacturers may not even be able to

compete without some similar lighting system and the

original manufacturer may gain a monopolistic stronghold on

the car market, with effective barriers to entry and

competition. The functionality limitation on trade dress

protection eliminates this problematic result. At the same

time, it is not hard to imagine variants of the car lighting

system that at some point would deserve trade dress

protection. For example, while some lighting system at the

front of the car may be functional, a car manufacturer may be

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8 MILLENNIUM LABS. V. AMERITOX

able to claim a protectable trade dress for a particular lighting

pattern such as using ten small light bulbs in a triangular

pattern instead of one big light bulb.

Here, the parties dispute whether the layout of

Millennium’s R.A.D.A.R.® Report is functional. The parties

also dispute the appropriate test to apply to determine

functionality. Interpreting the Lanham Act, the Supreme

Court has held that “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.” Inwood Labs., Inc. v. Ives

Labs., Inc., 456 U.S. 844, 850 n.10 (1982). Expanding on

this test, the Court explained further that a functional feature

is one the “exclusive use of [which]. . . would put competitors

at a significant non-reputation-related disadvantage.” 

Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 165

(1995) (citing Inwood Labs., 456 U.S. at 850 n.10); see also

TrafFix, 532 U.S. at 32–33. The Court later clarified that the

quoted passage in Qualitex was not meant to replace the test

outlined in Inwood Laboratories, but instead was meant to be

a secondary question. See TrafFix, 532 U.S. at 33 (“Where

the design is functional under the Inwood formulation there

is no need to proceed further to consider if there is a

competitive necessity for the feature.”).

In 1998, three years before TrafFix clarified the

relationship between Inwood Laboratories and Qualitex, we

outlined a four-factor functionality test: “(1) whether the

design yields a utilitarian advantage, (2) whether alternative

designs are available, (3) whether advertising touts the

utilitarian advantages of the design, and (4) whether the

particular design results from a comparatively simple or

inexpensive method of manufacture.” Disc Golf, 158 F.3d at

1006. This test has been applied most often in cases

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MILLENNIUM LABS. V. AMERITOX 9

involving utilitarian, physical devices. See, e.g., Secalt S.A.

v. Wuxi Shenxi Constr. Mach. Co., 668 F.3d 677, 685–87 (9th

Cir. 2012) (traction hoist); Talking Rain Beverage Co. v. S.

Beach Beverage Co., 349 F.3d 601, 603–05 (9th Cir. 2003)

(bike bottle). Disc Golf and the two cases on which it relied

to create its four-factor test also involved physical devices. 

158 F.3d at 1006 (Frisbee® goal); Int’l Jensen, 4 F.3d at 821

(audio speaker); Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d

512, 513(9th Cir. 1989) (cantilevered clamp).

Because most of these cases have focused on physical

devices, we have questioned whether the Disc Golf fourfactor test is appropriate in cases involving aesthetic trade

dress claims for designs or layouts. See Au-Tomotive Gold,

Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1072 n.8 (9th

Cir. 2006) (“Our long-standing test for functionality largely

excluded aesthetic considerations . . . .”); Clicks Billiards,

251 F.3d at 1260 (“[The Disc Golf] factors do not translate

easily from application in the context of utilitarian product

features . . . to application in the context of services . . . .”

(citation omitted)). Instead, when assessing these aesthetic

trade dress claims, we have focused our analysis on the

Qualitex language—whether the protection of the design

would put competitors at a disadvantage. Au-Tomotive Gold,

457 F.3d at 1072–73 (“In the case of a claim of aesthetic

functionality, an alternative test inquires whether protection

of the feature as a trademark would impose a significant nonreputation-related competitive disadvantage.” (citingTrafFix,

532 U.S. at 33)); Clicks Billiards, 251 F.3d at 1261 (“[T]he

ultimate issue on functionality is whether Clicks’ ‘particular

integration of elements leaves a multitude of alternatives to

the’ pool hall ‘industry that would not prove confusingly

similar to’ its trade dress.”).

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10 MILLENNIUM LABS. V. AMERITOX

But we have clarified that this divergence between

physical and aesthetic products is not necessary. In AuTomotive Gold, we held that after Qualitex and TrafFix, “the

test for functionality proceeds in two steps.” Au-Tomotive

Gold, 457 F.3d at 1072. For the first step, “courts inquire

whether the alleged ‘significant non-trademark function’

satisfies the Inwood Laboratories definition of

functionality—‘essential to the use or purpose of the article

[or] affects [its] cost or quality.’” Id. (alteration in original)

(quoting TrafFix, 532 U.S. at 32–33) (“Step One”). We have

since incorporated this part of Inwood Laboratories into the

Disc Golf four-factor test. Id. at 1072 n.8. If the claimed

trade dress is determined to be functional under Step One,

then “the inquiry is over.” Id. at 1072. If not, the court must

proceed to the second step and address aesthetic functionality

by “inquir[ing] whether protection of the feature as a

trademark would impose a significant non-reputation-related

competitive disadvantage.” Id. (citing TrafFix, 532 U.S. at

33) (“Step Two”).

Millennium argues that Disc Golf is inapplicable and

should be abandoned. First, Millennium argues that the Disc

Golf test was used only in cases involving physical devices,

not in cases involving aesthetic formats. That argument,

however, overlooks that the Disc Golf factors reflect the

Inwood Laboratories definition of functionality—“essential

to the use or purpose of the article or if it affects the cost or

quality of the article.” See Disc Golf, 158 F.3d at 1006

(quoting Qualitex, 514 U.S. at 165). Moreover, Disc Golf did

not suggest that the four factors were applicable only to

physical devices, but held that the four factors were “[t]o

determine whether a product feature is functional.” Id. Here,

Millennium’s R.A.D.A.R.® Report layout is a product

feature.

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MILLENNIUM LABS. V. AMERITOX 11

Second, Millennium argues that the Disc Golf factors

should be reconsidered because some of the factors were

omitted from the Supreme Court’s analysis in TrafFix. This

argument is unavailing. The Supreme Court did not discredit

the Disc Golf four-factor test,see TrafFix, 532 U.S. at 32–35,

and we have held already that the test still applies after

TrafFix was decided, Au-Tomotive Gold, 457 F.3d at 1072,

1072 n.8; Talking Rain, 349 F.3d at 603.

III

We review de novo a district court’s decision to grant

summary judgment. Clicks Billiards, 251 F.3d at 1257 (citing

Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999)

(en banc)). We must determine, viewing the evidence in the

light most favorable to the nonmoving party and drawing all

reasonable inferences in its favor, whether there are any

genuine issues of material fact in dispute and whether the

district court correctly applied the relevant substantive law. 

Id. “[F]unctionality is generally viewed as an intensely

factual issue.” Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d

778, 783 (9th Cir. 2002) (citing Vuitton Et Fils S.A. v. J.

Young Enters., Inc., 644 F.2d 769, 775 (9th Cir. 1981)). 

Under the Au-Tomotive Gold two-step test, the district court

erred by granting summary judgment to Ameritox on

Millennium’s trade dress claim.

A. Step One

Under Step One, we first address whether there are

genuine issues of material fact regarding functionality. 

Millennium describes its alleged trade dress as follows: a

“graphical format” which includes “side-by-side presentation

of a bell curve on the left, and a historical plot graph on the

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12 MILLENNIUM LABS. V. AMERITOX

right”; the format uses “a combination of bold and dashed

lines on the bell curve graph and a combination of numbers

and letters on the plot graph on the right”; the report uses

“little verbiage to accent the graphical features of the

combination of charts and place[s] the combination of

graphical features within a solid border.” Millennium does

not assert that it should have a trade dress on graphed results

generally, but on the specific layout that it chose. For good

reason: “[I]n evaluating functionality as well as the other

elements of a trade dress claim, it is crucial that we focus not

on the individual elements, but rather on the overall visual

impression that the combination and arrangement of those

elements create.” Clicks Billiards, 251 F.3d at 1259

(emphasis in original). Further, “functional elements that are

separately unprotectable can be protected together as part of

a trade dress.” Fuddruckers, 826 F.2d at 842.

As noted above, the four functionality factors are

“(1) whether the design yields a utilitarian advantage,

(2) whether alternative designs are available, (3) whether

advertising touts the utilitarian advantages of the design, and

(4) whether the particular design results from a comparatively

simple or inexpensive method of manufacture.” Disc Golf,

158 F.3d at 1006. “No one factor is dispositive; all should be

weighed collectively.” Id. We must consider, viewing the

evidence in the light most favorable to Millennium, whether

a jury could conclude that the R.A.D.A.R.® Report’s specific

visual layout is non-functional.

We conclude that, on the first factor, genuine issues of

materialfact remain regardingwhether Millennium’s claimed

trade dress has any utilitarian advantage. Here, Millennium

used its marketing department and graphic designers to create

a “presentable product,” and to “distinguish” Millennium

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MILLENNIUM LABS. V. AMERITOX 13

“from its competitors.” In response to Ameritox’s motion for

summary judgment, Millennium also offered the declaration

of Jennifer Strickland, Millennium’s Director of Clinical

Strategy, who said that the elements of the “graphical format

are aesthetic and non-functional.” A jury could conclude

that, although placing the graphs on the same page serves the

function of allowing easy and facile review of the medical

results, the alleged trade dress—the side-by-side placement

of the graphs and other features, such as minimal text—is

merely aesthetic, not functional. The first factor thus weighs

against summary judgment for Ameritox.

As to the second factor, a jury could conclude that many

alternative designs were available. To give a few examples:

There could be side-by-side graphs arranged in opposite

order. There could be one graph above the other. There

could be pie charts instead of the charts used. One could

fashion many such examples. The second factor, too, weighs

against summary judgment for Ameritox.

Turning to the third factor, there is some question whether

Millennium actually advertised the functionality of its

report’s format. Though Millennium’s website promoted the

R.A.D.A.R.® Report, a reasonable jury could find that the

advertisements focused on the benefits of the “graphed

results” rather than on the benefits of the specific layout. For

that reason, the third factor weighs against summary

judgment for Ameritox.

Finally, we conclude that the fourth factor is at most

neutral. Jennifer Strickland’s declaration noted that “[t]he

addition of the graphical format to Millennium’s

R.A.D.A.R.® Report has not resulted in a costs savings,” but

“has resulted in an increase in costs.”

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14 MILLENNIUM LABS. V. AMERITOX

Looking at the four Disc Golf factors together, and

viewing the evidence in the light most favorable to

Millennium, we conclude that the district court erred in

granting summary judgment to Ameritox. The key point is

that even if a comparison of results is functional, this could

be presented in many ways, and the precise format used by

company asserting trade dress is not necessarily functional. 

A reasonable jury could conclude that Millennium’s trade

dress is not functional under Step One of the Au-Tomotive

Gold two-step test.

B. Step Two

Because Millennium’s claimed trade dress is not

functional as a matter of law under Step One, we next assess

whether it is functional as a matter of law under Step

Two—“whether protection of the feature as a trademark

would impose a significant non-reputation-related

competitive disadvantage.” Au-Tomotive Gold, 457 F.3d at

1072 (citing TrafFix, 532 U.S. at 33). Even assuming that a

document describing the results of urine analysis could be

considered aesthetically functional, “aesthetic functionality

has been limited to product features that serve an aesthetic

purpose wholly independent of any source identifying

function.” Id. at 1073. Here, Millennium’s chosen design for

its test results was, at least in part, crafted to distinguish the

R.A.D.A.R.® Report from its competitors, and not simply to

attract consumers. Because Millennium has presented

evidence that the graphical format served in part a sourceidentifying function, we conclude that Millennium has

presented enough evidence to allow a jury to assess the

question of aesthetic functionality.

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MILLENNIUM LABS. V. AMERITOX 15

IV

We also reverse the district court’s decision to grant

summary judgment on Millennium’s California unfair

competition claim. The district court relied on Cleary v.

News Corp., 30 F.3d 1255, 1262–63 (9th Cir. 1994), which

clarified that trade dress infringement claims under the

Lanham Act and unfair competition claims under California

Business and Professions Code section 17200 are inextricably

linked. Because we hold that summary judgment was not

appropriate on Millennium’s trade dress claim, we hold the

same for its unfair competition claim.

V

We reverse the district court’s grant of summary

judgment in favor of Ameritox on Millennium’s claim of

trade dress infringement under the Lanham Act and unfair

competition under California Business and Professions Code

section 17200, and we remand for further proceedings. 

Although it is functional to have a system to portray test

results, there is a genuine fact issue whether the precise

manner in which Millennium presented its results was

functional.

REVERSED and REMANDED.

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