In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2155

JAY FRANCO & SONS, INC.,

Plaintiff-Appellee,

v.

CLEMENS FRANEK,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 08 C 58—Robert M. Dow, Jr., Judge.

ARGUED MAY 24, 2010—DECIDED AUGUST 11, 2010

Before EASTERBROOK, Chief Judge, and POSNER and

EVANS, Circuit Judges.

EASTERBROOK, Chief Judge. The same year Huey Lewis

and the News informed America that it’s “Hip To Be

Square”, Clemens Franek sought to trademark the circular beach towel. His company, CLM Design, Inc.,

pitched the towel as a fashion statement—“the most

radical beach fashion item since the bikini,” declared one

advertisement. “Bound to be round! Don’t be square!”
2 No. 09-2155

proclaimed another. CLM also targeted lazy sunbathers:

“The round shape eliminates the need to constantly get

up and move your towel as the sun moves across the

sky. Instead merely reposition yourself.”

The product enjoyed some initial success. Buoyed by

an investment and promotional help from the actor

Woody Harrelson (then a bartender on the TV show

Cheers), CLM had sold more than 30,000 round beach

towels in 32 states by the end of 1987. To secure its status

as the premier circular-towel maker, the company in

1986 applied for a trademark on the towel’s round design.

The Patent and Trademark Office registered the “configuration of a round beach towel” as trademark No. 1,502,261

in 1988. But this was not enough to save CLM: Six years

later it dissolved. The mark was assigned to Franek, who

continues to sell circular towels.

In 2006 Franek discovered that Jay Franco & Sons, a

distributor of bath, bedding, and beach accessories, was

selling round beach towels. After settlement negotiations

failed, Franek sued two of Jay Franco’s customers, Target

and Walmart, for unauthorized use of his registered

trademark in violation of §32 of the Lanham Act, 15

U.S.C. §1114. Jay Franco had agreed to indemnify and

defend its customers in such suits, so it sued Franek to

invalidate his mark. (The pending suits against Target

and Walmart made the claim ripe, just as insurers can

bring declaratory-judgment suits to resolve disputes

about a policy’s scope once an insured has been sued

and asserts that the policy applies.) The district judge

consolidated the two cases, granted summary judgment
No. 09-2155 3

in Jay Franco’s favor, and dismissed the remaining claims

and counterclaims. 2009 U.S. Dist. LEXIS 20361 (N.D. Ill.

Mar. 13, 2009). Franek appeals from that judgment;

Target and Walmart are not part of the appeal.

One way to void a trademark is to challenge its distinctiveness. A valid trademark identifies the source of

the good it marks. Designs do not inherently communicate that information, so to be valid a product-design

mark must have acquired a “secondary meaning”—a link

in the minds of consumers between the marked item

and its source. See Wal-Mart Stores, Inc. v. Samara Brothers,

Inc., 529 U.S. 205 (2000); Bretford Manufacturing, Inc.

v. Smith System Manufacturing Corp., 419 F.3d 576,

578–80 (7th Cir. 2005). Cf. Two Pesos, Inc. v. Taco Cabana,

Inc., 505 U.S. 763 (1992). But this type of invalidation is

unavailable to Jay Franco. Franek (and before him CLM)

has continuously used the round-towel mark since its

1988 registration. That makes the mark “incontestable,”

15 U.S.C. §1065, a status that eliminates the need for a

mark’s owner in an infringement suit to show that his

mark is distinctive. See 15 U.S.C. §1115(b); Park ‘N Fly,

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

Unfortunately for Franek, incontestable marks are not

invincible. The Lanham Act lists a number of affirmative

defenses an alleged infringer can parry with; one is a

showing that the mark is “functional.” See §1115(b)(8);

Specialized Seating, Inc. v. Greenwich Industries, L.P., No. 07-

1435 (7th Cir. Aug. 11, 2010), slip op. 3–4 (discussing

functionality and other ways to defeat incontestable

marks). As our companion opinion in Specialized Seating
4 No. 09-2155

explains, patent law alone protects useful designs from

mimicry; the functionality doctrine polices the division

of responsibilities between patent and trademark law

by invalidating marks on useful designs. This was the

route Jay Franco pursued. The district judge agreed,

finding Franek’s mark “functional” under the definition

the Supreme Court gave that concept in TrafFix Devices,

Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32–35 (2001).

The judge got it right.

TrafFix says that a design is functional when it is “essential to the use or purpose of the device or when it

affects the cost or quality of the device,” 532 U.S. at 33, a

definition cribbed from Inwood Laboratories, Inc. v. Ives

Laboratories, Inc., 456 U.S. 844, 850 n.10 (1982). So if a

design enables a product to operate, or improves on a

substitute design in some way (such as by making the

product cheaper, faster, lighter, or stronger), then the

design cannot be trademarked; it is functional because

consumers would pay to have it rather than be indifferent toward or pay to avoid it. A qualification is that

any pleasure a customer derives from the design’s identification of the product’s source—the joy of buying

a marked good over an identical generic version because

the consumer prefers the status conferred by the mark—

doesn’t count. That broad a theory of functionality

would penalize companies for developing brands with

cachet to distinguish themselves from competitors, which

is the very purpose of trademark law. In short, a design

that produces a benefit other than source identification

is functional.
No. 09-2155 5

Figuring out which designs meet this criterion can be

tricky. Utility patents serve as excellent cheat sheets

because any design claimed in a patent is supposed to be

useful. See 35 U.S.C. §101; Brenner v. Manson, 383 U.S.

519, 528–36 (1966). For this reason, TrafFix held that

expired utility patents provide “strong evidence that the

features therein claimed are functional.” 532 U.S. at 29.

The parties in this case wrangle over the relevance of a

handful of utility patents that claim circular towels. We

need discuss only one (No. 4,794,029), which describes

a round beach towel laced with drawstrings that can be

pulled to turn the towel into a satchel. This patent’s

first two claims are:

1. A towel-bag construction comprising: a nonrectangular towel;

a casing formed at the perimeter of said towel;

a cord threaded through said casing; and

a section of relatively non-stretchable fabric of

a shape geometrically similar to that of said

towel attached with its edges equidistant

from the edges of said towel.

2. A towel-bag construction as set forth in claim 1

wherein said towel is circular in shape, whereby

a user while sunbathing may reposition his or

her body towards the changing angle of the sun

while the towel remains stationary.

Claim 2 sounds like Franek’s advertisements, which we

quoted above. The patent’s specification also reiterates,

in both the summary and the detailed description, that
6 No. 09-2155

a circular towel is central to the invention because of

its benefit to lazy sunbathers.

Franek argues that claim 2 does not trigger the TrafFix

presumption of functionality because his towel does not

infringe the ‘029 patent. He notes that claim 2 incorporates claim 1 (in patent parlance, claim 1 is “independent” and claim 2 “dependent,” see 35 U.S.C. §112) with

the added condition that the towel be circular. An item

can infringe a dependent claim only if it also violates

the independent claim incorporated by the dependent

claim. See Monsanto Co. v. Syngenta Seeds, Inc., 503 F.3d

1352, 1359 (Fed. Cir. 2007). Franek reasons that because

his towel lacks a perimeter casing, drawstring, and nonstretchable section of fabric, it does not infringe claim 1,

and thus cannot infringe claim 2. Even if his towel

could infringe claim 2, Franek maintains that the claim

is invalid because the towel-to-bag patent was sought

in 1987, two years after Franek started selling a round

beach towel, and thus too late to claim its invention.

See 35 U.S.C. §102(b); Pfaff v. Wells Electronics, Inc., 525

U.S. 55 (1998).

Proving patent infringement can be sufficient to show

that a trademarked design is useful, as it means that the

infringing design is quite similar to a useful invention. See

Raytheon Co. v. Roper Corp., 724 F.2d 951, 959 (Fed. Cir.

1983). But such proof is unnecessary. Functionality is

determined by a feature’s usefulness, not its patentability

or its infringement of a patent. TrafFix’s ruling that an

expired patent (which by definition can no longer be

infringed) may evince a design’s functionality demon-
No. 09-2155 7

strates that proof of infringement is unnecessary. If an

invention is too useless to be patentable, or too dissimilar to a design to shed light on its functions, then

the lack of proof of patent infringement is meaningful.

Otherwise it is irrelevant. A design may not infringe a

patented invention because the invention is obvious or

taught by prior art, see 35 U.S.C. §§ 102(a), 103(a), but

those and other disqualifiers do not mean that the

design is not useful. Just so here: Franek’s towel may

lack some of the components in claim 1 necessary to

infringe claim 2, but claim 2’s coverage of a circular

beach towel for sunbathing is enough to signal that a

round-towel design is useful for sunbathers. Each claim

in a patent is evaluated individually, see Altoona Publix

Theatres, Inc. v. American Tri-Ergon Corp., 294 U.S. 477,

487 (1935), each must be substantially different, see 37

C.F.R. §1.75(b); Manual of Patent Examining Procedure

§2173.05(n)(b) (8th ed., July 2010 rev.), and each is presumed valid, 35 U.S.C. §282. We must therefore presume

that the unique component in claim 2—the round shape

of the towel—is useful.

Nor does it matter that the ‘029 patent application was

filed two years after Franek began selling round towels.

As we’ve explained, a patent’s invalidity for a reason

other than uselessness says nothing about the claimed

design’s functionality. And a design patented yesterday

can be as good evidence of a mark’s functionality as

a design patented 50 years ago. Indeed, more recent

patents are often better evidence because technological

change can render designs that were functional years

ago no longer so. See Eco Manufacturing LLC v. Honeywell
8 No. 09-2155

International Inc., 357 F.3d 649, 653 (7th Cir. 2003). The

Court in TrafFix may have dealt only with expired

utility patents, but the logic it employed is not limited

to them.

To put things another way, a trademark holder cannot

block innovation by appropriating designs that undergird further improvements. Patent holders can do this,

but a patent’s life is short; trademarks can last forever,

so granting trademark holders this power could permanently stifle product development. If we found Franek’s

trademark nonfunctional, then inventors seeking to

build an improved round beach towel would be out of

luck. They’d have to license Franek’s mark or quell their

inventiveness. That result does not jibe with the purposes of patent or trademark law.

This “strong evidence” of the round towel’s functionality is bolstered by Franek’s own advertisements, which

highlight two functional aspects of the round beach

towel’s design. One, also discussed in the ‘029 patent, is

that roundness enables heliotropic sunbathers—tanners

who swivel their bodies in unison with the sun’s

apparent motion in order to maintain an even tan—to

remain on their towels as they rotate rather than exert

the energy to stand up and reposition their towels every

so often, as conventional rectangular towels require.

Franek responds that whatever its shape (goldenratio rectangle, square, nonagon) any towel can satisfy a

heliotropic tanner if it has enough surface area—the

issue is size, not shape. That’s true, and it is enough to

keep the roundness of his towel from being functional
No. 09-2155 9

under the first prong of TrafFix’s definition (“essential to

the use or purpose of the device”) but not the second. For

heliotropic sunbathers, a circle surpasses other shapes

because it provides the most rotational space without

waste. Any non-circle polygon will either limit full rotations (spinning on a normal beach towel leads to sandy

hair and feet) or not use all the surface area (a 6N tall person

swiveling on a 6N by 6N square towel won’t touch the

corners). Compared to other shapes that permit full

rotations, the round towel requires less material, which

makes it easier to fold and carry. That’s evidence that the

towel’s circularity “affects the . . . quality of the device.”

(The reduction in needed material also suggests that round

towels are cheaper to produce than other-shaped towels,

though Franek contends that cutting and hemming expenses make them costlier. We express no view on the

matter.)

But let us suppose with Franek—who opposed summary judgment and who is thus entitled to all reasonable inferences—that round towels are not measurably better for spinning with the sun. After all, other

shapes (squircles, regular icosagons) are similar enough

to circles that any qualitative difference may be lost on

tanners. Plus, the ability to rotate 180 degrees may be

an undesired luxury. Few lie out from dawn ‘til dusk

(if only to avoid skin cancer) and the daily change

in the sun’s declination means it will rise due east and

set due west just twice a year, during the vernal and

autumnal equinoxes. A towel shaped like a curved hourglass that allows only 150 or 120 degrees of rotation
10 No. 09-2155

(or even fewer) may be all a heliotropic tanner wants.

No matter. Franek’s mark still is functional.

Franek’s advertisements declare that the round towel

is a fashion statement. Fashion is a form of function. A

design’s aesthetic appeal can be as functional as its

tangible characteristics. See Qualitex Co. v. Jacobson

Products Co., 514 U.S. 159, 169–70 (1995); Wal-Mart, 529

U.S. at 214; TrafFix, 532 U.S. at 33; W.T. Rogers Co. v. Keene,

778 F.2d 334 (7th Cir. 1985); Publications International, Ltd.

v. Landoll, Inc., 164 F.3d 337 (7th Cir. 1998); Abercrombie &

Fitch Stores, Inc. v. American Eagle Outfitters, Inc., 280

F.3d 619 (6th Cir. 2002). And many cases say that fashionable designs can be freely copied unless protected

by patent law. See, e.g., Bonito Boats, Inc. v. Thunder Craft

Boats, Inc., 489 U.S. 141 (1989); Sears, Roebuck & Co. v. Stiffel

Co., 376 U.S. 225 (1964); Compco Corp. v. Day-Brite Lighting,

Inc., 376 U.S. 234 (1964); Kellogg Co. v. National Biscuit

Co., 305 U.S. 111 (1938); Singer Manufacturing Co. v. June

Manufacturing Co., 163 U.S. 169 (1896).

The chief difficulty is distinguishing between designs

that are fashionable enough to be functional and those

that are merely pleasing. Only the latter group can be

protected, because trademark law would be a cruel joke

if it limited companies to tepid or repugnant brands

that discourage customers from buying the marked

wares. We discussed this problem at length in Keene. See

also Eco Manufacturing, 357 F.3d at 654; Schwinn Bicycle

Co. v. Ross Bicycles, Inc., 870 F.2d 1176, 1188–91 (7th Cir.

1989). The Supreme Court broached the subject in

Qualitex when it discussed the functionality of the green-
No. 09-2155 11

gold color of a dry cleaning pad. Unwilling to say that

the pad required a green-gold hue or was improved by

it, the Court still thought that the color would be functional if its exclusive use by a single designer “would put

competitors at a significant non-reputation-related disadvantage.” 514 U.S. at 165. This is a problem for Franek’s

round-towel mark.

Franek wants a trademark on the circle. Granting a

producer the exclusive use of a basic element of design

(shape, material, color, and so forth) impoverishes other

designers’ palettes. See, e.g., Brunswick Corp. v. British

Seagull Ltd., 35 F.3d 1527 (Fed. Cir. 1994) (black color

of boat engines is functional because it is compatible

with boats of many different colors). Qualitex’s determination that “color alone, at least sometimes, can meet the

basic legal requirements for use as a trademark” (514 U.S.

at 166), means that there is no per se rule against this

practice. See also Thomas & Betts Corp. v. Panduit Corp., 138

F.3d 277, 299 (7th Cir. 1998). The composition of the

relevant market matters. But the more rudimentary and

general the element—all six-sided shapes rather than

an irregular, perforated hexagon; all labels made from

tin rather than a specific tin label; all shades of the

color purple rather than a single shade—the more likely

it is that restricting its use will significantly impair competition. See, e.g., Keene, 778 F.2d at 343; Lorillard v.

Pride, 28 F. 434 (C.C.N.D. Ill. 1886); Saint-Gobain Corp. v.

3M Co., 90 U.S.P.Q. 2d 1425 (T.T.A.B. 2007). Franek’s

towel is of this ilk. He has trademarked the “configuration

of a round beach towel.” Every other beach towel manufacturer is barred from using the entire shape as well
12 No. 09-2155

as any other design similar enough that consumers are

likely to confuse it with Franek’s circle (most regular

polygons, for example).

Contrast Franek’s mark with the irregular hexagon at

issue in Keene or the green-gold hue in Qualitex. Those

marks restrict few design options for competitors. Indeed,

they are so distinctive that competitors’ only reason to

copy them would be to trade on the goodwill of the

original designer. Cf. Service Ideas, Inc. v. Traex Corp., 846

F.2d 1118, 1123–24 (7th Cir. 1988) (purposeful copying of

a beverage server’s arbitrary design indicated a lack of

aesthetic functionality). That’s not so here. A circle is the

kind of basic design that a producer like Jay Franco

adopts because alternatives are scarce and some consumers want the shape regardless of who manufactures

it. There are only so many geometric shapes; few are

both attractive and simple enough to fabricate cheaply.

Cf. Qualitex, 514 U.S. at 168–69 (functionality doctrine

invalidates marks that would create color scarcity in a

particular market). And some consumers crave round

towels—beachgoers who prefer curved edges to sharp

corners, those who don’t want to be “square,” and those

who relish the circle’s simplicity. A producer barred

from selling such towels loses a profitable portion of the

market. The record does not divulge much on these

matters, but any holes in the evidence are filled by the

TrafFix presumption that Franek’s mark is functional,

a presumption he has failed to rebut.

Franek chose to pursue a trademark, not a design

patent, to protect the stylish circularity of his beach
No. 09-2155 13

towel. Cf. Kohler Co. v. Moen Inc., 12 F.3d 632, 647 (7th

Cir. 1993) (Cudahy, J., dissenting) (calling Franek’s mark

a “horrible example[]” of a registered trademark that

should have been a design patent). He must live with

that choice. We cannot permit him to keep the indefinite

competitive advantage in producing beach towels this

trademark creates.

If Franek is worried that consumers will confuse

Jay Franco’s round beach towels with his, he can imprint

a distinctive verbal or pictorial mark on his towels. See

Publications International, 164 F.3d at 343; Keene, 778 F.2d

at 347–48. That will enable him to reap the benefits of

his brand while still permitting healthy competition in

the beach towel market.

AFFIRMED

8-11-10