Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

GEORGIA-PACIFIC CONSUMER PRODUCTS v. KIMBERLY-CLARK CORP. (July 28, 2011)

Georgia-Pacific has been selling toilet paper for over 100 years. About 20 years ago, it introduced a diamond-shaped embossed design on its toilet paper and rebranded it Quilted Northern. It obtained trademarks, copyrights, and utility and design patents. When Kimberly-Clark introduced a quilted design on its brand of toilet paper, Georgia-Pacific filed suit. The complaint alleged unfair competition and trademark infringement. Judge Kendall (N.D. Ill.) granted summary judgment to Kimberly-Clark, concluding that the diamond design was functional and not subject to trademark protection. Georgia-Pacific appeals.

In their opinion, Seventh Circuit Judges Kanne, Evans, and Sykes affirmed. Under the Lanham Act, a trademark registration creates a rebuttable presumption of validity. If a challenger, however, shows strong evidence of functionality, the mark holder has a heavy burden of demonstrating that the mark is not merely functional. The Supreme Court addressed functionality in TrafFix, where it stated that a 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." The Court found several TrafFix factors to be relevant: a) a description of functionality in a utility patent, b) advertising the feature, c) difficulty in creating an alternative design, and d) the effect on quality or cost. First, the Court looked to the utility patents and compared the trademarks’ "essential feature" with the utility patents’ "central advance." The parties agreed that the essential feature is the embossed diamond design. All five utility patents also point to the diamond design as the central advance. This is strong evidence of functionality. The Court found support for its conclusion when it went behind the patents' claims themselves to the specifications. The first factor, therefore, supported a finding of functionality. With regard to the second factor, the Court noted significant advertising that linked the diamond design to various utilitarian benefits. That also supports functionality. The third factor, alternative designs, does not particularly support functionality since there are numerous alternatives. The final factor is the design's effect on quality. The Court agreed with the district court that Georgia-Pacific makes numerous claims of quality enhancement based on the design. The Court thus concluded that Georgia-Pacific failed to rebut Kimberly-Clark's, strong evidence of functionality. The Court briefly discussed and rejected Georgia-Pacific claims regarding packaging design and latches.

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JAY FRANCO & SONS v. FRANEK (August 11, 2010)

In the late 1980s, Clemens Franek sought and received trademark registration status for his "radical" round beach towel. Almost 20 years later, Franek brought suit under the Lanham Act against Jay Franco & Sons for its unauthorized sale of round beach towels. Franco counterclaimed to invalidate the mark. Judge Dow (N.D. Ill.) granted summary judgment to Franco. Franek appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Evans affirmed. The Court first noted that Franek's long continuous use of the mark made it "uncontestable" – so Franek did not have to show that the mark had acquired a secondary meaning. But the mark is still susceptible to challenge on whether it is merely functional. Patent law provides protection to functional designs -- trademark law does not. The Supreme Court defined functional in TrafFix Devices as "essential to the use or purpose of the device or when it affects the cost or quality of the device." One way of identifying whether a design is useful is with reference to existing utility patents. The Court noted that the round towel’s design was quite similar to a portion of a utility patent granted for a towel-bag. The existence of the patent, under TrafFix, is strong evidence of the functionality of a circular towel. In addition, the Court noted that the Franek's own advertisements focused on the functionality of the shape -- allowing sunbathers to change position without moving the towel. The Court also rejected Franek’s argument that the design was a fashion statement. In most instances, fashion is function. What Franek wants is the exclusive use of a basic round design for a beach towel. Although a distinctive, irregular design may qualify for trademark protection, the simple circle does not.

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SPECIALIZED SEATING v. GREENWICH INDUSTRIES (August 11, 2010)

Greenwich Industries has been manufacturing standard folding chairs for more than 80 years. In 1999, it applied for a trademark registration of one particular design. The Patent and Trademark Office issued its registration in 2004. Specialized Seating also manufactures folding chairs and has one model that is almost identical to Greenwich's trademarked chair. Specialized brought suit under the Lanham Act for a declaratory judgment that its chair did not violate Greenwich's rights -- Greenwich counterclaimed for injunctive relief. Judge Holderman (N.D. Ill.) ruled in favor of Specialized, concluding both that the chair's design was functional and that Greenwich had defrauded the Patent and Trademark Office. Greenwich appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Evans affirmed. The Court applied the clear error test to the district court's finding of functionality. Although functionality happened to be the ultimate issue in the case, it is still a fact specific conclusion subject to the clear error standard of review. The Court noted the difference between patent protection and trademark protection. A purely functional design such as Greenwich's chair can be, and in fact here was, protected for a time with a patent. When the patent expires, however, that protection cannot be extended through trademark application. It is true that certain functional products can receive trademark protection, but only when a nonfunctional aspect of its design creates a distinctive appearance. All of the aspects of Greenwich's chair design are functional -- none contribute to a distinctive appearance. Having affirmed the district court's finding of functionality, the Court did not address its finding of fraud.

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