The US Court of Appeals for the Seventh Circuit affirmed a district court grant of summary judgment in favor of a defendant finding that a bag's design and shape was functional because the claimed design features affect the product quality. Arlington Specialties, Inc. v. Urban Aid, Inc., Case No. 14-3416, (7th Cir., Jan. 27, 2017) (Hamilton, J.).
Arlington Specialties sells personal care kits containing toiletries. The kits are called "Minimergency Kits" and come in small fabric bags designed to look like men's dopp kits.
Urban Aid also sells personal care kits. When Arlington found out about the personal care kits sold by Urban Aid, it filed a complaint claiming that the shape and design of Arlington's bag were protected trade dress and that Urban Aid's bag caused a likelihood of confusion. Urban Aid moved for summary judgment, arguing that Arlington's trade dress was generic, that it was functional, that it lacked secondary meaning, and that Urban Aid's design caused no likelihood of confusion. After the district court agreed that Arlington's trade dress was functional and not protectable, Arlington appealed.
In its 2001 decision in TrafFix and in its 1992 decision in Two Pesos, the Supreme Court of the United States explained that a product feature is functional if (1) it is essential to the use or purpose of the article, or (2) it affects the cost or quality of the article. Even if a product feature does not satisfy that definition, it can still be functional if it is a "competitive necessity"—that is, if its exclusive use would put competitors at a significant non-reputation-related disadvantage.
On appeal, Arlington argued that summary judgment could be affirmed only if its competitors had to use its claimed trade dress to compete. However, the Supreme Court has rejected the exclusive reliance argument and has held that a feature is functional when it "affects the cost or quality of the device." Arlington further argued that even though its bags had functional elements, these elements were chosen for their aesthetic appeal rather than for their functional qualities.
The Seventh Circuit affirmed the district court's grant of summary judgment, concluding that the "undisputed evidence shows that the claimed design features affect product quality, so we need not consider the availability of alternative designs for competitors." Arlington's arguments focused on whether the claimed trade dress had "less utility" than alternatives. The Court rebuffed that argument, explaining that "focusing on that question would be contrary to our precedent and sound interpretations of the Lanham Act, offering unlimited monopolies for useful design features." The Court further found that Arlington's argument would "encourage peculiar arguments by trade-dress plaintiffs criticizing their own products." Under prior case law, the right question "is whether the design feature affects product quality or cost or is 'merely ornamental.'"
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