In the

United States Court of Appeals

For the Seventh Circuit

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No. 03-2704

ECO MANUFACTURING LLC,

Plaintiff-Appellee,

v.

HONEYWELL INTERNATIONAL INC.,

Defendant-Appellant.

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Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:03-CV-0170-DFH—David F. Hamilton, Judge.

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ARGUED SEPTEMBER 4, 2003—DECIDED DECEMBER 31, 2003

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Before FLAUM, Chief Judge, and EASTERBROOK and

MANION, Circuit Judges.

EASTERBROOK, Circuit Judge. Eco Manufacturing proposes to make a thermostat similar in appearance to

Honeywell’s well-known circular, convex model with a

round dial. Honeywell’s model (which it calls “The Round”)

is on the left, Eco’s on the right:
2 No. 03-2704

After receiving Honeywell’s demand that it cease and

desist, Eco filed this action seeking a declaratory judgment

that its product would not infringe Honeywell’s intellectual-property rights. Honeywell’s round thermostat formerly was protected by two patents—a utility patent

(No. 2,394,920) that lasted between 1946 and 1963, and

a design patent (No. D176,657) that expired in 1970.

Honeywell then sought a trademark registration for the

shape of this product. The Patent and Trademark Office

denied that application, concluding that the shape is

functional and thus cannot serve as a trademark. In re

Honeywell Inc., 187 U.S.P.Q. 576 (T.T.A.B. 1975), affirmed,

532 F.2d 180 (C.C.P.A. 1976). Honeywell tried again a

decade later and fared better. This time the agency ruled in

its favor, In re Honeywell Inc., 8 U.S.P.Q. 2d 1600 (T.T.A.B.

1988), and allowed the registration to be published for

opposition. Emerson Electric objected; before this was

resolved, however, Emerson and Honeywell reached a

settlement and the mark’s registration became final in

1990. It is this registration (No. 1,622,108) that, according

to Honeywell, prevents any other firm from selling a round

thermostat as long as Honeywell continues to make and sell

its own product.
No. 03-2704 3

Honeywell filed a counterclaim seeking equitable relief.

This appeal is from the district court’s order declining to

issue a preliminary injunction that would block Eco from

bringing its product to market. 2003 U.S. Dist. LEXIS 11384

(S.D. Ind. June 20, 2003). Like the Trademark Trial and

Appeal Board in 1975, the district court concluded that the

shape of Honeywell’s thermostat is functional—or, to be

precise, that the likelihood of such a finding after a trial on

the merits is sufficiently high, and damages are sufficiently

easy to calculate if Honeywell turns out to win in the end,

that Eco should be allowed to sell its competing product

while the litigation proceeds. A product’s appearance (often

called its “trade dress”) can serve as a trademark to the

extent that design identifies the product’s maker. See 15

U.S.C. §1127; Wal-Mart Stores, Inc. v. Samara Brothers,

Inc., 529 U.S. 205 (2000); Qualitex Co. v. Jacobson Products

Co., 514 U.S. 159 (1995); Two Pesos, Inc. v. Taco Cabana,

Inc., 505 U.S. 763 (1992); W.T. Rogers Co. v. Keene, 778 F.2d

334 (7th Cir. 1985). But a functional aspect of the design

cannot be trademarked, even if it also (at least before

competition breaks out) identifies the product’s source. In

the district court’s view, TrafFix Devices, Inc. v. Marketing

Displays, Inc., 532 U.S. 23 (2001), treats the grant of a

utility patent as showing that the patented feature is

functional. After the patent expires, the covered elements

of the design are available to all. See Sears, Roebuck & Co.

v. Stiffel Co., 376 U.S. 225 (1964); Kellogg Co. v. National

Biscuit Co., 305 U.S. 111 (1938). Cf. Dastar Corp. v. Twentieth Century Fox Film Corp., 123 S. Ct. 2041 (2003). Only

“arbitrary, incidental, or ornamental aspects” (TrafFix, 532

U.S. at 34) of the patented product remain available for

trademark use, the district court concluded, and the

circular shape of Honeywell’s thermostat is not just filigree.

A spherical section is no more usable as a trademark than

a cube or tetrahedron would be.
4 No. 03-2704

Honeywell’s lead argument in this court is that it does not

matter whether, or to what extent, the thermostat’s shape

is functional. That is so, Honeywell submits, because the

trademark registration became incontestable in 1996,

before Eco brought a competing product to market. Once a

mark has been used for five years following registration, it

becomes “incontestable”. 15 U.S.C. §1065. Incontestability

is “conclusive evidence of the validity of the registered mark

and . . . the registrant’s exclusive right” to use the mark in

commerce. 15 U.S.C. §1115(b). See Park ‘N Fly, Inc. v.

Dollar Park and Fly, Inc., 469 U.S. 189 (1985).

The words “incontestable” and “exclusive” sound more

impressive than the legal rights that the Lanham Act actually conveys, however. Section 1065 says that even “incontestable” marks must yield to prior users, and that the

protection dissipates if the mark becomes generic. Moreover, and more to the point, §1065 says that a claim based

on an incontestable mark may be defeated “on a ground for

which application to cancel may be filed at any time under

paragraphs (3) and (5) of section 1064 of this title”. Section

1064(3) provides that a mark may be cancelled if it is,

or becomes, functional. Thus incontestability does not avoid

the question whether the thermostat’s round shape is

functional.

As Honeywell sees things, however, resort to the functionality proviso in §1064(3) is anachronistic. Congress added

that particular language to the Lanham Act in 1998, two

years after registration No. 1,622,108 passed the five- year

mark that made it incontestable. See §201(b) of Pub. L.

105-330, 112 Stat. 3064 (effective Oct. 30, 1998). To apply

a 1998 law to a mark that became incontestable in 1996

would be retroactive, Honeywell insists. New legislation is

presumptively non-retroactive, see Landgraf v. USI Film

Products, 511 U.S. 244 (1994), and Congress did not

designate §201(b) as one of those rare enactments with

retroactive effect.
No. 03-2704 5

This line of argument assumes that recognition of a

functionality defense changed the law. Courts that had

addressed the subject before 1998 were divided on the

question whether functionality was a ground of cancellation

despite its absence from the statutory text. Compare

Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863 (8th Cir.

1994) (yes), with Shakespeare Co. v. Silstar Corp., 9 F.3d

1091 (4th Cir. 1993) (no). The Supreme Court had not spoken—though it later, in TrafFix, raised the possibility that

functionally is a constitutionally required limitation on

trade dress protection, lest patent protection effectively be

of unlimited duration. 532 U.S at 35. See also Shakespeare,

9 F.3d at 1099 (Niemeyer, J., dissenting). (Because patent

law prohibits any unauthorized manufacture or use of the

patented product, the product’s shape necessarily will

denote its origin while the patent lasts; and if this link

between form and origin in turn creates trademark protection, then the patent’s term lasts indefinitely.) To the

extent that Congress codified rather than changed the

governing rules, no retroactivity issue arises. We need not

decide what the pre-1998 law required, however, because

Honeywell misconceives what it means for a statute to be

retroactive.

A law is retroactive when it alters the legal consequences

of completed acts. See Jahn v. 1-800-FLOWERS.com, Inc.,

284 F.3d 807 (7th Cir. 2002). Changing the rules governing

future behavior, by contrast, is a prospective application.

This is why, “[w]hen the intervening statute authorizes or

affects the propriety of prospective relief, application of the

new provision is not retroactive.” Landgraf, 511 U.S. at 273.

Honeywell does not want damages or any other remedy on

account of conduct that predated Pub. L. 105-330. It wants

prospective relief. Applying the 1998 law to Eco’s conduct in

2003 and beyond is entirely prospective. Honeywell invokes

the language of “vested rights,” but statutes are malleable.

All Honeywell ever has had to go on is a statutory rule; it
6 No. 03-2704

did not have a contract or a license or a judgment—and

even a judgment may be modified prospectively when the

law underlying it is amended. Compare Plaut v. Spendthrift

Farm, Inc., 514 U.S. 211 (1995) (judgments specifying the

consequences of past conduct are unalterable), with Miller

v. French, 530 U.S. 327, 341-50 (2000) (prospective relief

may change as statutory foundation changes), and Robertson v. Seattle Audubon Society, 503 U.S. 429 (1992) (same).

Shortly after Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991), Congress changed the

statute of limitations to reopen the opportunity to litigate

certain securities claims (see 15 U.S.C. §78aa-1); and,

though the Court held in Plaut that this change could not

be applied to cases that had been finally dismissed before

the amendment, it made clear the propriety of applying the

law to litigation in progress or yet to be commenced, even

though this meant that some claims were revived after the

(original) statute of limitations had run. Likewise Congress

could repeal the Lanham Act without infringing anyone’s

rights, or abolish the difference between incontestable

and other marks, or increase to 25 years the time before

a mark has the benefits of incontestability. The actual

change worked by §201(b) of Pub. L. 105-330 was more

modest, and as we have stressed may not have been a

change at all.

Thus we arrive at the question whether the shape of

Honeywell’s thermostat is so clearly non-functional that the

district judge abused his discretion by failing to enjoin Eco’s

competing model. We put the question this way because, on

an appeal from the denial of interlocutory relief, appellate

review is deferential. The district court was on solid ground

to observe that, after TrafFix,

[a] utility patent is strong evidence that the features therein claimed are functional. If trade dress

protection is sought for those features the strong
No. 03-2704 7

evidence of functionality based on the previous

patent adds great weight to the statutory presumption that features are deemed functional until

proved otherwise by the party seeking trade dress

protection. Where the expired patent claimed the

features in question, one who seeks to establish

trade dress protection must carry the heavy burden

of showing that the feature is not functional, for

instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.

523 U.S. at 29-30. Because Honeywell bears a “heavy

burden,” it is hard to say at this interlocutory stage that the

district judge abused his discretion in finding that the

burden had not been discharged.

This is not to say that it would be impossible for

Honeywell to carry its burden. TrafFix gave “an ornamental, incidental, or arbitrary aspect of the device” as a

for-instance, and not as an exclusive means to show nonfunctionality. The hood ornament on a Mercedes, or the four

linked rings on an Audi’s grille, would exemplify “an ornamental, incidental, or arbitrary aspect of the device” that

could survive as a trademark even if they once had been

included within a patented part of the auto. Honeywell

suggests a different way: Technological change. The

transistor was not invented until 1947, the year after

Honeywell’s utility patent issued. The innards of “The

Round” were a complex electro-mechanical linkage. The

circular casing and dial may have been related in a functional way to the operating parts. Today many thermostats

are solid-state devices controlled by integrated circuits

equivalent to thousands of transistors; Eco’s model even

dispenses with mercury as an element of the temperature

sensor. Thus what was once functional may half a century

later be ornamental. Passage of time diminishes a utility

patent’s significance. And there are plenty of other ways to
8 No. 03-2704

package the necessary controls, as Honeywell reminds us

with this illustration:

Eco responds that “The Round” may be functional simply

because some consumers prefer its look, and portions of the

district court’s opinion imply agreement with this submission. Aesthetic appeal can be functional; often we value

products for their looks. See Qualitex, 514 U.S. at 169-70.

Yet an understanding of “aesthetic functionality” as broad

as Eco’s would destroy protection of trade dress, as we

remarked in Keene. It would always be possible to show

that some consumers like the item’s appearance; then the

corner jewelry store could emulate the distinctive Tiffany

blue box, which would lose its ability to identify origin.

“Beauty lies in the eye of the beholder” therefore cannot by

itself establish functionality of trade dress. Perhaps,

however, a more complete record may show that consumers’
No. 03-2704 9

desire for circular thermostats comes from more than

familiarity with a shape that Honeywell made famous.

After all, Honeywell did not invent the circle (or the wheel).

It is not hard to think of three ways in which a round

thermostat could be functional, at least in principle. First,

rectangular objects may clash with other architectural or

decorative choices. Just as a building designed by Ludwig

Mies van der Rohe demands controls made from regular or

semi-regular polyhedra, so a building designed by Frank

Gehry could not tolerate boxy controls. Second, round

thermostats (and other controls) may reduce injuries, especially to children, caused by running into protruding sharp

corners. Third, people with arthritis or other disabilities

may find it easier to set the temperature by turning a large

dial (or the entire outer casing of the device) than by

moving a slider or pushing buttons on boxes. The record

does not contain much along any of these lines, but they are

sufficiently plausible to disable Honeywell from prevailing

at this preliminary stage, given the burden it bears as a

result of the expired patents. Although the three possibilities we have mentioned do not show that roundness is

“essential” to a thermostat, that’s not required. TrafFix

rejected an equation of functionality with necessity; it is

enough that the design be useful. The Justices told us that

a feature is functional if it is essential to the design or it

affects the article’s price or quality. 532 U.S. at 33.

Thus the district court did not abuse its discretion in

holding that Eco may go forward with a round thermostat—at its own risk, of course, should the decision come

out otherwise on the merits. Although we have not endorsed

all of the district court’s legal analysis, it would be pointless

to remand for another hearing on interlocutory relief. The

case should proceed expeditiously to final decision; another

“preliminary” round would waste everyone’s time. It would

be especially inappropriate to direct the district judge to
10 No. 03-2704

issue a preliminary injunction when issues other than

functionality remain to be addressed. Eco contends, for

example, that Honeywell bamboozled the Patent and

Trademark Office when seeking registration during the

1980s, and material deceit would scotch this enforcement

action whether or not the trade dress is functional. We do

not express any view on that issue, or any ultimate view

about functionality; it is enough to say that the record

compiled to date adequately supports the district judge’s

interlocutory decision.

AFFIRMED

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-31-03