Intellectual Property
December 2001 Vol. 41, No. 1
Statements or expressions of opinion or comments appearing herein are those of the editors or contributors, and not necessarily those of the association or section.
(Notice to librarians: The following issues were published in Volume 40 of this newsletter during the fiscal year ending June 30, 2001: November, No. 1; February, No. 2.)
Contents
* Another roadblock on the way to proving trade dress in product configuration: Traffix Devices, Inc. v. Marketing Displays, Inc.
* When is "notice" really notice? Service provider liability under the DMCA
By Steven L. Baron and Anne C. Brynn*, D'Ancona & Pflaum LLC
On March 20, 2001, the United States Supreme Court continued the trend it began last term in Wal-Mart Stores, Inc. v. Samara Bros. Inc., 529 U.S. 205 (2000) toward narrowing the scope of trade dress protection in product configuration. In Traffix Devices, Inc. v. Marketing Displays, Inc. (No. 99-150), the Court considered the question of the effect of an expired utility patent on a claim of trade dress infringement. Although the Court fell short of establishing a per se rule against allowing a trade dress claim to protect features of a product that had been the subject of protection under an expired utility patent, the impact of the Court's ruling will likely be to establish a nearly insurmountable burden on parties who attempt to extend their rights under trade dress law to functional features of a product formerly protected by a patent.
Facts
In TrafFix Devices, plaintiff, Marketing Displays, Inc. (MDI) had built a successful business around a spring mechanism (for which MDI held the patents) which allowed traffic sign stands to withstand strong gusts of wind. These mechanisms were not concealed on the sign stands, but were visibly incorporated into the finished MDI product. After the patents expired, TrafFix Devices, Inc. (TrafFix) copied MDI's spring mechanisms. TrafFix then visibly incorporated these spring mechanisms into their own sign stands, and marketed these sign stands under a name similar to that used by MDI.
MDI brought suit against TrafFix under the Lanham Act alleging trademark infringement, trade dress infringement, and unfair competition. On motion for summary judgment, the district court found that the name used by TrafFix to market its product ("WindBuster") did indeed infringe on the name used by MDI ("WindMaster"). The Sixth Circuit Court of Appeals affirmed the judgment, and the issues decided with respect to the trademark infringement claim were not before the court in TrafFix. Rather, the court was concerned only with the trade dress protection claim. On that issue, the district court and the Sixth Circuit decisions were at odds.
The district court granted TrafFix's motion for summary judgment on the trade dress claim. According to the district court, there was no issue of material fact as to whether MDI had secondary meaning in the design of the spring mechanism incorporated into the sign stands. Without secondary meaning in the spring mechanism, there could be no trade dress protection. 15 U.S.C. § 1125(a)(1)(A). The district court further found that even if MDI did have secondary meaning in the design of the sign stands, it had not met its burden under the Lanham Act to prove that the protection sought was not with respect to a "functional matter." See 15 U.S.C. § 1125(a)(3).
The Sixth Circuit Court of Appeals reversed on both grounds, holding that there was an issue of material fact as to whether MDI had secondary meaning in its springs, and that the district court erred in holding that the product's "functionality" was a per se bar to trade dress protection. According to the Sixth Circuit, MDI's trade dress was infringed because there were ways in which TrafFix could have incorporated the copied spring design into its sign stands while still visually distinguishing its sign stand design from MDI's without putting TrafFix at a "significant non-reputation-related disadvantage." TrafFix slip op. at 8 (citing Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165 (1995)).
In its opinion the Sixth Circuit noted the existence of a split among the circuits on the issue of whether the expiration of a utility patent on a design feature automatically extinguishes any claim of trade dress protection in the product's design. Compare Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 24d (5th Cir. 1997)(holding that trade dress protection is not foreclosed), Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277 (7th Cir. 1998)(same), and Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed Cir. 1999)(same), with Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F.3d 1498, 1500 (10th Cir. 1995)("Where a product configuration is a significant inventive component of an invention covered by a utility patent ...; it cannot receive trade dress protection"). The Supreme Court granted certiorari to resolve the conflict.
Analysis
The Lanham Act affords trade dress protection to a person where another uses or incorporates into its own product "any word, term name, symbol, or device ... which is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods." 15 U.S.C. § 1125(a)(1)(A). A device itself may communicate the origin or sponsorship of goods and may thus have secondary meaning, meeting the threshold requirement for trade dress protection. But as the statute makes clear, this protection is limited to matters that are non-functional. 15 U.S.C. § 1125(a)(3). At issue in TrafFix is whether a product feature's functionality forecloses the possibility that trade dress and utility patent protection can ever subsist in the same product feature.
The Supreme Court reversed the Sixth Circuit's decision in favor of MDI, thus permitting TrafFix' visible incorporation of the spring mechanism at issue into its sign stands. The Supreme Court criticized the Sixth Circuit for assessing the functionality of a product by asking only "whether the particular product configuration is a competitive necessity." Under this formulation of "functionality," trade dress protection can inhere in a design element eligible for utility patent protection if a competitor could alter or disguise the design element while remaining competitive. The Supreme Court rejected this formulation: "reward[ing] manufacturers for their innovation in creating a particular device ... is the purpose of the patent law and its period of exclusivity." TrafFix, slip op. at 11. Allowing for trade dress protection in such a situation would effectively give MDI "the practical equivalent of [a renewed] utility patent." Id.
The TrafFix Court opted for a more expansive 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, slip op. at 8, citing Qualitex Co. v. Jacobson Products, Co. 514 U.S.159, 165 (quoting Inglewood Laboratories, Inc. v. Inves Laboratories, Inc., 456 U.S. 844, 850 n. 10 (1982)). Under this formulation of functionality, no trade dress protection can exist in a product feature where a competitor would incur additional production costs to manufacture an equivalent altered product not infringing on the trade dress of the copied feature, or where the manufacture of an equivalent altered product is not possible. Where this formulation of functionality is inapposite because the functionality at issue is aesthetic (i.e. is design patent rather than utility patent material), a further inquiry must be made to determine whether the feature is one "the exclusive use of which would put competitors at a significant non-reputation-related disadvantage." If exclusive use of the feature would put competitors at a significant non-reputation-related disadvantage, the feature is considered "functional" and is not afforded trade dress protection.
It is the person asserting trade dress protection who bears the burden of proving that the matter sought to be protected is non-functional. 15 U.S.C. at § 1125(a)(3). This burden becomes more onerous when the expired utility patent claimed the contested features, whether actually or under the doctrine of equivalents. As the Court points out, "the disclosure of a feature in the claims of a utility patent constitutes strong evidence of functionality..." This presumption can be overcome by showing, for instance, "that [the feature] is merely an ornamental, incidental, or arbitrary aspect of the device." In this case, the Court held that even if the visible portion of the spring mechanism gave secondary meaning to the sign stands, this was not in itself enough to afford MDI trade dress protection. Because the spring mechanism at issue would have been claimed by the prior expired patent under the doctrine of equivalents, MDI was unable to overcome the presumption that the spring mechanism was functional.
The future: can patent and trade dress rights co-exist?
While the Court declined to find that a person is per se prohibited from claiming trade dress protection on a product feature where there exists a prior expired utility patent on that same feature, this case makes clear that it will be the rare situation where patent and trade dress protection can subsist in the same product feature. Extending trade dress protection to a "functional" item undermines the limitations on protections afforded through patent law, which, in turn, undermines competition and creates monopolistic industries.
This decision reinforces the division between various arms of intellectual property law. Because protection under a utility patent and trade dress protection are, for all intents and purposes, mutually exclusive, lawyers will have to advise their clients carefully to choose between the two for each feature of a new product. A patentee may want to add some purely arbitrary or ornamental features to an invention and emphasize those features in the promotion of the product to try to develop secondary meaning. Or, a patentee might choose not to patent certain borderline "functional" features of its products, hoping that secondary meaning will be established in these features in dissemination of the product. This is obviously a risky approach because it leaves this potentially valuable design feature prone to being copied with no remedy to the designer. Furthermore, the mere fact that the feature was not covered by a utility patent does nothing to diminish whatever functional elements a judge might find in the design. If there is no patent on the feature, a judge should not extend trade dress protection to it merely because the inventor labored over the product.
Perhaps a better approach to meeting the burden of proof as to non-functionality would be to apply for either a copyright or a design patent on the product feature. Because a copyright cannot inhere in functional artistic elements, it is easily complemented by trade dress protection. While design patents are not as trade dress friendly as copyrights, neither are they as inimical to subsequent trade dress protection as are utility patents. If a copyright or design patent is granted on the feature, the burden to prove non-functionality would shift to the adverse party to show the feature's functionality.
Conclusion
The Supreme Court's decision in Traffix Devices, along with the Court's decision last term in Wal-Mart Stores, Inc., clearly suggests a trend toward limiting the scope of trade dress claims in a product's configuration. Patentees who want to extend their rights beyond the life of their patents should proceed with caution as they approach the intersection of these two cases.
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*Ms. Brynn is a second year law student and is currently working as a summer associate at D'Ancona & Pflaum LLC.
When is "notice" really notice? Service provider
liability under the DMCA
By David Loundy, Copyright 2001
The U.S. District Court of Appeals for the Fourth Circuit has just reversed a lower court in a decision of interest to anyone representing Internet service providers or those who work at addressing on-line infringements. ALS Scan, Inc. v. RemarQ Communities, Inc., No 00-1351 (4th Cir. February 06, 2001), available at http://www. Loundy.com/CASES/ALS_v_RemarQ.html, involved a company that produces and distributes adult-oriented photographs, and a company that provides the Usenet news service to end users, and provides Usenet news as a private label service to other service providers.
Two of the newsgroups carried on RemarQ's service are devoted to the plaintiff's works--"alt.als" and "alt.binaries.pictures.erotica.als." The majority of the messages contributed to these newsgroups consisted of digital image files of the Plaintiff's works, many still containing the copyright notices. The newsgroups themselves bear the ALS name, a registered trademark of the Plaintiff. The volume of the infringing works posted by unknown individuals to these newsgroups totaled over ten thousand works over the course of several months.
ALS sent a cease and desist letter to RemarQ invoking the "notice and take down" provision of the Digital Millennium Copyright Act (Title II of the "DMCA") requiring that the newsgroups be removed immediately from RemarQ's system. The letter stated that the newsgroups "were created for the sole purpose of violating our Federally filed Copyrights and Tradename. These newsgroups contain virtually all Federally copyrighted images. ... Your servers provide access to these illegally posted images and enable the illegal transmission of these images across state lines." The letter also provided URLs where the service provider could view the Plaintiff's copyright information and see identifying material on the models contained in the scanned images.
RemarQ replied that the notice was not compliant with the DMCA, as it did not "specify with particularity" the posted messages that contained the Plaintiff's copyrighted works, as required by the statute. In other words, the service provider asked for a notice that identified the thousands of infringing messages individually. Without such notice, RemarQ argued, the DMCA's "safe harbor" provision protects the service provider from liability for infringing works carried on the provider's system.
The Fourth Circuit, citing the DMCA, wrote that the safe harbor provision applies as long as the service provider can show that: (1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement; (2) it receives no financial benefit directly attributable to infringing activity; and (3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving from the copyright holder a notification conforming with requirements of [17 U.S.C.] § 512(c)(3).
The court pointed out, however, that the purpose of the statute is to immunize the "innocent" service provider from liability. When the service provider has knowledge that its system is being used to infringe, the balance of interests then changes to require some effort on the service provider to investigate the claims of the copyright holder. Judge Niemeyer, who authored the court's opinion, pointed out that the statute specifically states that only "substantial compliance" with the notice requirements is necessary, and only a representative list of infringements must be provided so as to reasonably identify where the infringements may be found on the provider's system. The court found the notice suitable under the DMCA, stating that:
This subsection specifying the requirements of a notification does not seek to burden copyright holders with the responsibility of identifying every infringing work--or even most of them--when multiple copyrights are involved. Instead, the requirements are written so as to reduce the burden of holders of multiple copyrights who face extensive infringement of their works. Thus, when a letter provides notice equivalent to a list of representative works that can be easily identified by the service provider, the notice substantially complies with the notification requirements.
The court held that by providing information on the newsgroups' nature, the information on the models and the copyrights, and by pointing out that most of the works were marked with the Plaintiff's copyright notice and trademarks, the notice was adequate to comply with the statutory provisions. Thus, by failing to respond to an adequate notice, the service provider was no longer eligible for the safe harbor provision of the DMCA. The appellate court limited its holding to a finding that the statutory protections did not protect RemarQ, and the court sent the case back to the district court for an analysis of whether or not RemarQ had any other defenses that would protect it from a finding of infringement.
While this case dealt specifically with Usenet News, it could easily be interpreted expansively to other cases that involve "homogenous" infringements such as fan sites. The court did not address the issue of "collateral damage" caused by the removal of the newsgroups that contained works that were not infringements of the Plaintiff's rights, but perhaps that is because the court did not address whether the groups had to be removed or only filtered. The court merely held that the service provider cannot remain willfully ignorant, especially in light of the statute's provisions allowing a remedy for the right-holder of wrongfully removed material.
Striving to meet the needs of members, ISBA expanded its free e-mail case law update service to 12,000 members. The e-mail update service provides members with a digest of every Illinois Appellate and Supreme Court decision as soon as that decision is available on the Reporter of Decision's Web site. The service also includes a link directly to the case on the Reporter's website.
Adrienne Albrecht, a lawyer and an ISBA member in Kankakee, writes the Illinois case law digests and Michael Robinson, a lawyer and ISBA member in Springfield, digests Seventh Circuit cases for a similar ISBA service.
All case digests are categorized into civil or criminal matters and then further classified into specific areas of the law. The case name, number and name of the Judge penning the opinion are also provided. Below is an example of one recent digest:
Civil
Administrative law sovereign immunity
1st Dist. Alden Nursing Center-Lakeland, Inc., v. Patla No. 1-99-3268
(October 23, 2000) 1st div. (MCNULTY).
<http://www.state.il.us/court/2000/1993268.htm>
Trial court and administrative hearing officer lacked jurisdiction to hear claims by nursing homes that claimed underpayments for public aid patients should be offset against overpayments made by State. Only Court of Claims has jurisdiction to hear issue of claimed underpayments by virtue of sovereign immunity.
<A HREF="http://www.state.il.us/court/2000/1993268.htm"> Alden Nursing Center-Lakeland, Inc., v. Patla</A>
The ISBA believes that practicing lawyers will find this service invaluable because it brings the cases directly to their computer screens.
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Copyright Office e-mail newsletter, NewsNet, available
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Technical amendments to copyright regulations announced (66 FR 34372)
The Copyright Office has completed its annual review of Copyright Office regulations and has adopted nonsubstantive amendments to clarify, update, and correct the text of the regulations. As part of this review, the Office removed sections 211.5(f) and 201.15 because their regulatory authority had either expired or been repealed by the Semiconductor Chip Protection Act of 1984, as amended, and the Work Made for Hire and Copyright Corrections Act of 2000. The Office also added a section on limited purpose addresses for certain time-sensitive communications and made other changes to correct minor errors.
Copyright Basics available online in Spanish
"Copyright Basics," which is Circular 1, is now available online in Spanish. Visit the Copyright Office Web site at www.loc.gov/copyright/circs/circ1-espanol.html to read
"Fundamentos Básicos del Derecho de Autor."
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