Opinion ID: 3038368
Heading Depth: 3
Heading Rank: 1

Heading: trademark law and aesthetic functionality

Text: [1] A trademark is a “word, name, symbol, or device” that is intended “to identify and distinguish [the mark holder’s] goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods.” 15 U.S.C. § 1127. A valid, registered trademark entitles the holder to prevent others from using the mark where (1) “such use is likely to cause confusion, or to cause mistake or deceive,” 15 U.S.C. § 1114(1)(a) (so-called “trademark infringement”), or (2) “such use . . . causes dilution of the distinctive quality of the mark,” 15 U.S.C. § 1125(c)(1) (socalled “trademark dilution”). The principal role of trademark law is to ensure that consumers are able to identify the source of goods. Qualitex, 514 U.S. at 164. Protecting the source-identifying role of trademarks serves two goals. First, it quickly and easily assures a potential customer that this item—the item with the mark—is AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA 9521 made by the same producer as other similarly marked products. At the same time, the law helps “assure a producer that it (and not an imitating competitor) will reap the financial, reputation-related rewards associated with a desirable product.” Id.; see also Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 873 (9th Cir. 1999). [2] A functional product feature does not, however, enjoy protection under trademark law. See Qualitex, 514 U.S. at 164. The Supreme Court has instructed that a feature is functional if it is “essential to the use or purpose of the article [or] affects [its] cost or quality.” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n.10 (1982). The Inwood Laboratories definition is often referred to as “utilitarian” functionality, as it relates to the performance of the product in its intended purpose. Thus, “[t]he functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature.” Qualitex, 514 U.S. at 164. Extending the functionality doctrine, which aims to protect “useful” product features, to encompass unique logos and insignia is not an easy transition. Famous trademarks have assumed an exalted status of their own in today’s consumer culture that cannot neatly be reduced to the historic function of trademark to designate source. Consumers sometimes buy products bearing marks such as the Nike Swoosh, the Playboy bunny ears, the Mercedes tri-point star, the Ferrari stallion, and countless sports franchise logos, for the appeal of the mark itself, without regard to whether it signifies the origin or sponsorship of the product. As demand for these marks has risen, so has litigation over the rights to their use as claimed “functional” aspects of products. See, e.g., Vuitton et Fils S.A. v. J. Young Enters., Inc., 644 F.2d 769 (9th Cir. 1981) (reversing and remanding for trial a district court determination that the Louis Vuitton logo and trademarked purse material were functional); Boston Prof. Hockey Ass’n, Inc. v. Dallas Cap & 9522 AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA Emblem Mfg., Inc., 510 F.2d 1004 (5th Cir. 1975) (holding that reproductions of professional hockey franchise’s logo sold alone are not “functional” and can be protected); Ford Motor Co. v. Lloyd Design Corp., 184 F. Supp. 2d 665 (E.D. Mich. 2002) (holding that a car maker’s trademarks are not functional aspects of defendant’s car accessories). The results reached in these various aesthetic functionality cases do not easily weave together to produce a coherent jurisprudence, although as a general matter courts have been loathe to declare unique, identifying logos and names as functional. To understand how the concept of functionality applies to the case before us, broad invocations of principle are not particularly helpful. Instead, we find it useful to follow the chronological development and refinement of the doctrine. The doctrine of aesthetic functionality is often traced to a comment in the 1938 Restatement of Torts: When goods are bought largely for their aesthetic value, their features may be functional because they definitely contribute to that value and thus aid the performance of an object for which the goods are intended. Restatement of Torts § 742, comment a (1938) (see Restatement 3d of Unfair Competition, § 17 (1995)). Two examples of products with aesthetic functional features were offered, with very little comment—a heart-shaped candy box and a distinctive printing typeface. Nearly fifteen years later, the doctrine blossomed in Pagliero v. Wallace China Co., an action by Wallace China, a manufacturer of vitrified china, to prohibit a competitor from using a series of decorative patterns and a corresponding list of names. See 198 F.2d 339 (9th Cir. 1952). Neither the patterns nor the names were covered by registered trademarks or patents; instead, Wallace claimed secondary meaning, priAU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA 9523 marily that customers associated the patterns with Wallace, due to extensive advertising and a reputation for quality. Id. at 342. In ruling on Wallace’s claim, we loosely echoed the 1938 Restatement in articulating the line between aesthetic appeal and functionality: [W]here the features are “functional” there is normally no right to relief. “Functional” in this sense might be said to connote other than a trade-mark purpose. If the particular feature is an important ingredient in the commercial success of the product, the interest in free competition permits its imitation in the absence of a patent or copyright. On the other hand, where the feature or, more aptly, design, is a mere arbitrary embellishment, a form of dress for the goods primarily adopted for purposes of identification and individuality and hence, unrelated to basic consumer demands in connection with the product, imitation may be forbidden where the requisite showing of secondary meaning is made. Under such circumstances, since effective competition may be undertaken without imitation, the law grants protection. Id. at 343 (internal citations omitted). Applying that test, the china patterns were deemed “functional” because the “attractiveness and eye-appeal” of the design is the primary benefit that consumers seek in purchasing china. Id. at 343-44. Thus, Wallace’s designs were not “mere arbitrary embellishment,” but were at the heart of basic consumer demand for the product and could not be protected as trademarks. Almost thirty years later, Pagliero was revived in a Ninth Circuit case involving an effort by the International Order of Job’s Daughters to preclude a jewelry maker from selling jewelry bearing the Job’s Daughters insignia. See Interna9524 AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA tional Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980). Because the defendant’s products bearing the Job’s Daughters mark were sold “on the basis of their intrinsic value, not as a designation of origin or sponsorship,” the defendant argued that they were functional under Pagliero. Id. at 918. The court acknowledged that a “name or emblem” could, in some cases, “serve simultaneously as a functional component of a product and a trademark,” and accordingly called for a “close analysis of the way in which [the defendant] is using the Job’s Daughters insignia.” Id. at 917-19. The court observed that Job’s Daughters had submitted no evidence that the defendant’s use of the mark either caused confusion as to source or was likely to do so and suggested that the emblem did not designate a source at all.4 Accordingly, the Job’s Daughters insignia, as used by the defendant, was unprotected. Id. at 920. Job’s Daughters, with its collective mark, was a somewhat unique case and its broad language was soon clarified and narrowed. In Vuitton, we confronted bare counterfeiting of Louis Vuitton handbags with minor alterations to the familiar LV logo and fleur-de-lis insignia. 644 F.2d at 774. Not unlike 4 The marks at issue in Job’s Daughters were “collective marks,” which are trademarks “used by the members of a cooperative, an association, or other collective group or organization, . . . and include[ ] marks indicating membership in a union, an association, or other organization.” 15 U.S.C. § 1127. This explains, in part, why there was no likelihood of confusion. Because the Job’s Daughters insignia was sold by numerous unlicensed jewelers, the possibility that consumers might think that it denoted source was insubstantial. Accord Supreme Assembly, Order of Rainbow for Girls v. J.H. Ray Jewelry Co., 676 F.2d 1079, 1083 (5th Cir. 1982) (“[T]here is no historical custom or practice—either as to fraternal jewelry or Rainbow jewelry—that would provide a reasonable basis for buyers of Rainbow jewelry to assume that such jewelry can only be manufactured with Rainbow’s sponsorship or approval . . . [and] most fraternal associations exercise little control over the manufacture of jewelry bearing their fraternal emblems.”). AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA 9525 Auto Gold here, the defendant argued that, under Pagliero and Job’s Daughters, its use of the Vuitton marks was functional because the marks were “related to the reasons consumers purchase [the] product” and that without using the marks, it could not compete with Vuitton in selling Louis Vuittonmarked purses. We rejected these arguments. Id. at 773. First, the defendant’s use of the Vuitton marks was not functional in a utilitarian sense. Id. at 776-77 (“Vuitton luggage without the distinctive trademark would still be the same luggage. It would carry the same number of items, last just as long, and be just as serviceable.”). Significantly, in Vuitton, we emphatically rejected the notion that “any feature of a product which contributes to the consumer appeal and saleability of the product is, as a matter of law, a functional element of that product.” Id. at 773. Indeed, “a trademark which identifies the source of goods and incidentally services another function may still be entitled to protection.” Id. at 775. Under Vuitton, the mere fact that the mark is the “benefit that the consumer wishes to purchase” will not override trademark protection if the mark is source-identifying. Id. at 774. With Vuitton, aesthetic functionality was dealt a limiting but not fatal blow; the case was remanded for trial. Id. at 776. Since Vuitton, the Ninth Circuit has not directly revisited aesthetic functionality in the context of unique sourceidentifying trademarks. Several oft-quoted cases involving trade dress claims have criticized the doctrine. See Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1260 (9th Cir. 2001) (“Nor has this circuit adopted the ‘aesthetic functionality’ theory, that is, the notion that a purely aesthetic feature can be functional.”); First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1382 n.3 (9th Cir. 1987) (“In this circuit, the ‘aesthetic’ functionality test has been limited, if not rejected, in favor of the ‘utilitarian’ functionality test.”) (citations omitted).5 Although a leading commentator described Clicks Bil- 5 At least one earlier case explicitly excluded the application of Pagliero in the trade dress context, without comment as to its application outside 9526 AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA liards as “appear[ing] to mark the final end of the Ninth Circuit’s fifty year flirtation with the aesthetic functionality theory,” 1 McCarthy on Trademarks and Unfair Competition § 7:80 (4th ed.), the doctrine, albeit restricted over the years, retains some limited vitality. The Supreme Court has yet to address aesthetic functionality as it applies to logos and insignia, in contrast to product features. The Court has, however, outlined the general contours of functionality and aesthetic functionality. As noted earlier, in Inwood Laboratories, the Court offered a simple definition of functionality: “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.” 456 U.S. at 850 n. 10 (citing Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 122 (1938)). More recently, in Qualitex, the Court considered whether a color (a distinctive green-gold used on dry cleaning press pads) could be protected as a trademark. Observing that color alone can meet the basic legal requirement for a trademark, namely that it acts “as a symbol that distinguishes a firm’s goods and identifies their source,” the Court concluded that the use of color as a trademark is not per se barred by the functionality doctrine. Qualitex, 514 U.S. at 165-66 (“And, this latter fact—the fact that sometimes color is not essential to a product’s use or purpose and does not affect cost or quality—indicates that the doctrine of ‘functionality’ does not create an absolute bar to the use of color alone as a mark”). The green-gold color of the dry cleaner pads served a trademark (i.e., source-identifying) function. Additionally, the use of some color on the pads served a non-trademark function— namely, to “avoid noticeable stains.” Id. at 166. The Court of trade dress. See Fabrica Inc. v. El Dorado Corp., 697 F.2d 890, 895 (9th Cir. 1983) (noting “this court has specifically limited application of the Pagliero functionality test to product features and has refused to apply the test to cases involving trade dress and packaging”). AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA 9527 underscored, however, that functionality protects against a competitive disadvantage “unrelated to recognition or reputation.” Id. at 169. Accordingly, because “the [district] court found ‘no competitive need in the press pad industry for the green-gold color, since other colors are equally usable,’ ” functionality did not defeat protection. Id. at 166.6 The Court’s most recent explication of aesthetic functionality is found in a case surprisingly not cited by the parties— TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001). In TrafFix, a company that held an expired patent for a dual-spring road sign design argued that the visible appearance of the design constituted protectable trade dress. In considering whether the dual spring mechanism was a functional aspect of the product, the Court clarified Qualitex’s emphasis on competitive necessity and the overall test for functionality. Rather than paraphrase the decision, and to be absolutely clear, we quote extensively from the passages that set out the appropriate inquiry for functionality. The Supreme Court emphasized that Qualitex did not displace the traditional Inwood Laboratories utilitarian definition of functionality. “ ‘[I]n general terms, a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.’ ” TrafFix, 532 U.S. at 32 (quoting Qualitex, 514 U.S. at 165); see also Inwood Labs., 456 U.S. at 850 n.10. The Court noted that Qualitex “expand[ed] upon” the Inwood Laboratories definition, by observing that “a functional feature is one the ‘exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage.’ ” TrafFix, 532 U.S. at 32 (quoting Qualitex, 514 U.S. at 165) (alteration in original). 6 In contrast, an example of an aesthetic product feature the protection of which would hinder legitimate competition is the use of color to signify the type of medication in pills—the question addressed in Inwood Laboratories. See 456 U.S. at 853 (noting that “[s]ome patients commingle medications in a container and rely on color to differentiate one from another”). 9528 AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA The Court explained the interplay between these two statements of functionality. If a feature is functional under Inwood Laboratories, the inquiry ends and the feature cannot be protected under trademark law. Id. As the Court elaborated, “there is no need to proceed further to consider if there is a competitive necessity for the feature.” Id. at 33. Thus, in TrafFix, once the dual-spring mechanism met the traditional functionality test by making the signs more wind resistant, “there [was] no need to proceed further to consider if there is competitive necessity for the feature” and likewise no need “to engage . . . in speculation about other design possibilities.” Id. at 33. By contrast, the Court went on to suggest that “[i]t is proper to inquire into a ‘significant non-reputation-related disadvantage’ in cases of aesthetic functionality, the question involved in Qualitex.” Id. The Court described aesthetic functionality as “the central question [in Qualitex], there having been no indication that the green-gold color of the laundry press pad had any bearing on the use or purpose of the product or its cost or quality.” Id.7 As to functionality, we read the Court’s decision to mean that consideration of competitive necessity may be an appropriate but not necessary element of the functionality analysis. If a design is determined to be functional under the traditional test of Inwood Laboratories there is no need to go further to consider indicia of competitive necessity, such as the availability of alternative designs. Accord Valu Eng’g, Inc. v. Rex- 7 The Court’s treatment of Qualitex in TrafFix has caused some consternation among commentators. See, e.g., 1 McCarthy on Trademark and Unfair Competition § 7.80 (4th ed.) (describing as “amazing and incomprehensible” the statement in TrafFix “that in the 1995 Qualitex case, ‘aesthetic functionality was the central question.’ ”); Jerome Gilson, Trademark Protection and Practice § 2A.04[5][b] (2006) (“The Supreme Court was incorrect in TrafFix to declare that aesthetic functionality was the ‘central question’ in the Qualitex case. The central question in Qualitex was whether color alone could serve as a valid trademark.”). AU-TOMOTIVE GOLD v. VOLKSWAGEN OF AMERICA 9529 nord Corp., 278 F.3d 1268, 1275-76 (Fed. Cir. 2002). However, in the context of aesthetic functionality, such considerations may come into play because a “functional feature is one the ‘exclusive use of [which] would put competitors at a significant non-reputation related disadvantage.’ ” TrafFix, 532 U.S. at 32 (quoting Qualitex, 514 U.S. at 165); see also Dippin’ Dots, Inc. v. Frosty Bites Distrib., L.L.C., 369 F.3d 1197, 1203 (11th Cir. 2004); Eppendorf-Netheler-Hinz GMBH v. Ritter GMBH, 289 F.3d 351, 356 (5th Cir. 2002).