In a landmark decision destined to cause significant reverberations in the apparel industry, the United States Supreme Court reversed and remanded Wal-Mart Stores Inc. v. Samara Bros, Inc. (Spring 2000 Quarterly “Trade Dress For Product Designs”) and held that product designs can never qualify for trade dress protection by virtue of inherent distinctiveness and can only be protectable trade dress upon a showing of secondary meaning.1 It also advised courts , when in doubt as to whether the trade dress at issue is a product design or a product’s packaging, to require plaintiffs to demonstrate the existence secondary meaning.
The Supreme Court, in a rather terse opinion, held that product designs primarily serve an aesthetic purpose, as opposed to a source identifying purpose, and stressed the interests of the consumer, reasoning: “The fact that product design almost invariably serves purposes other than source identification not only renders inherent distinctiveness problematic; it also renders application of an inherent-distinctiveness principle more harmful to other consumer interests. Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants based upon alleged inherent distinctiveness. . . . Consumers are aware of the reality that, almost invariably, even the most unusual of product designs–such as a cocktail shaker shaped like a penguin–is intended not to identify the source, but to render the product itself more useful or more appealing.” The Court proceeded to hold that Samara’s product design for its seersucker children’s outfits could not be inherently distinctive and the case was remanded to the lower court to determine if Samara’s product design has acquired a secondary meaning with the consuming public. Samara must now meet the vigorous evidentiary requirements attendant to a showing of secondary meaning, including presenting evidence of consumer recognition of the design through professional survey evidence (a very expensive endeavor), advertising expenditures, sales figures, unsolicited media coverage of the design, competitors attempts to infringe the design, and length and exclusivity of the design’s use.
The Supreme Court distinguished an earlier trade dress decision, Two Pesos, Inc. v. Taco Cabana, Inc.2 In Two Pesos, the Supreme Court held that the overall look of a Mexican restaurant’s decor was protectable trade dress since the decor was inherently distinctive. Justice Scalia reasoned that the decor of a restaurant is not a product design but is more akin to a product’s packaging, which is entitled to trade dress protection based on inherent distinctiveness. Although Justice Scalia conceded that the difference between a product design and a product’s packaging will be difficult to determine in many cases, he stated in the opinion that such a dilemma would be much less difficult than that of having to decide if a product design, which is created for aesthetic purposes, is inherently distinctive. The Court gave the example of the Coca-Cola bottle: is this the product design or is it the product’s packaging? Justice Scalia advised that in such situations, when the court is presented with a close case as to whether something should be classified as a product design or a product’s packaging “courts should err on the side of caution and classify ambiguous trade dress as product design, thereby requiring secondary meaning” since there is a “great consumer benefit in requiring a demonstration of secondary meaning.” This comment is perhaps the most surprising aspect of the decision. The Supreme Court has not only required owners of product designs to establish secondary meaning in order to obtain trade dress protection, it also has directed lower courts to require a showing of secondary meaning in cases where there is some doubt as to the trade dress classification.
This decision will have repercussions in almost all trade dress cases, many of which will now feature argument regarding the classification of the trade dress. Defendants should now attempt to classify the plaintiff’s claimed trade dress as a product design, or, at the very least, argue that the case presents a close question between classifying the design at issue as a product design or a product’s packaging which, as mandated by Wal- Mart, requires that the plaintiff meet the difficult burden of establishing secondary meaning. There is also another classification of trade dress , not mentioned by the Supreme Court, which does not appear to fall into either the product design category or the product packaging category and could be seriously affected by Wal – Mart: non-word design marks. How do we distinguish between a product design and a design mark which does not feature a word? For instance, is the Nike checkmark, or “swish” (appearing on the sides of its sneakers) a product design since it is embedded in the product itself, or is it a source designating mark which does not primarily serve an aesthetic purpose? What about the I-ZOD alligator appearing on shirts; is this a source identifying mark protectable merely by showing that the mark is inherently distinctive, or is it analogous to Knitwaves , Inc. v. Lollytogs. Ltd. 71 F.3d 996 (2d Cir. 1995) which classified a squirrel design on a sweater as a product design and required the existence of secondary meaning? Prior to Wal – Mart , the Second Circuit dealt with this question by simply determining whether the design was intended to be used primarily for source identification purposes, not aesthetic purposes, and whether consumers would likely understand the non-word mark as an indicator of the product’s source. If so, the mark was protectable trade dress, without the need for a secondary meaning demonstration. This test was used by the Second Circuit in Wal – Mart and reversed by the Supreme Court. Thus, Justice Scalia’s rather narrow view of trade dress law and his direction that lower courts should err on the side of caution in close cases and require a showing of secondary meaning will create an increased burden on companies seeking protection of legitimate non-word marks used to designate source.
Wal–Mart will affect, most significantly, lesser-known companies whose products are not as popular as those of established companies with international operations. It can be assumed that Nike, Coca-Cola and I-ZOD will be able to demonstrate wide consumer recognition of the “swish”, the Coke bottle and the alligator with little problem. This is not the case for the small and medium sized companies or where a new product line, bearing a new non-word mark, is introduced. Thus, a “knock off” company will now have a lower legal bar to hurdle even though it slavishly copies another’s product design, product’s packaging or non-word mark. The Supreme Court’s decision signifies a shift in the recent trend protecting legitimate companies against copiers. It also underscores the need for companies to take steps to obtain intellectual property protection at the point a new product design is created, including using the “TM” symbol, and, most importantly, featuring the design prominently in advertising and promotional material, signifying the company’s intent to use the design as a source identifier.