In a precedential decision, the Third Circuit Court of Appeals held that Ezaki Glico, the makers of popular stick-shaped cookies, may not bring trade dress claims against a rival snack maker that sells a similar-shaped cookie. “Trade dress is limited to features that identify a product’s source,” Judge Stephanos Bibas wrote in Ezaki Gliko Kabushiki Kaisha v. Lotte International America Co. “It does not safeguard features that are functional—that is, useful. Patent law protects useful inventions, but trademark law does not.”
Trade dress originally included only the packaging or "dressing" of a product. More recently, trademark protection has been expanded to encompass the design of a product. It is usually defined as the "total image and overall appearance" of a product, or the totality of the elements, and "may include features such as size, shape, color or color combinations, texture, graphics." Well-known examples of trade dress include the shape of Coca-Cola bottles, the three-tone chime used by NBC, and the color and shape of certain prescription drugs.
When an applicant applies to register a product design, product packaging, color, or other trade dress for goods or services, the U.S. Patent and Trademark Office (USPTO) examining attorney will often focus on two substantive issues: (1) functionality; and (2) distinctiveness. In general terms, trade dress is functional, and cannot serve as a trademark, if a feature of that trade dress is "essential to the use or purpose of the article or if it affects the cost or quality of the article." Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 165, 34 USPQ2d 1161, 1163-64 (1995). The rationale is that protection for utilitarian product features should be properly sought through a limited-duration utility patent, and not through the potentially unlimited protection of a trademark registration.
Alleged Trade Dress Infringement
Ezaki Glico, a Japanese confectionery company, has made and sold Pocky, a product line of thin, stick-shaped cookies, for more than five decades. It has two Pocky product configurations registered as trade dresses.
Starting in 1983, another confectionery company called Lotte started making Pepero, which are also stick-shaped cookies. From 1993 to 1995, Ezaki Glico sent letters to Lotte, notifying Lotte of its registered trade dress and asking it to cease and desist selling Pepero in the United States. Lotte assured Ezaki Glico that it would stop until they resolved their dispute. Although Lotte resumed selling Pepero, Ezaki Glico took no further action until 2015.
In 2015, Ezaki Glico sued Lotte in federal court for selling Pepero. Under federal law, Ezaki Glico alleged trademark infringement and unfair competition. Under New Jersey law, it alleged trademark infringement and unfair competition, in violation of both the common law and the New Jersey Fair Trade Act. The District Court granted summary judgment for Lotte, holding that because Pocky’s product configuration is functional, it is not protected as trade dress.
Third Circuit’s Decision
The Third Circuit affirmed. It agreed that because Ezaki Glico’s product design was functional, it could not bring a trade dress infringement claim.
“Trade dress protects features that serve only to identify their source. It does not cover functional (that is, useful) features. That is the domain of patents, not trademarks,” Judge Bibas wrote. “There is no real dispute that Pocky’s design is useful, so the trade dress is invalid. We will thus affirm. That’s the way the cookie crumbles.”
In reaching its decision, the Third Circuit emphasized that the core dispute involved how to define “functional.” It went on to conclude that “functional” is not the same as “essential,” but rather should be interpreted to mean “useful.”
The Third Circuit noted that “[r]eading functionality as usefulness explains how the Lanham Act fits with the Patent Act.” As Judge Bibas further explained, “If the Lanham Act protected designs that were useful but not essential, as Ezaki Glico claims, it would invade the Patent Act’s domain. Because the Lanham Act excludes useful designs, the two statutes rule different realms.” The Third Circuit also found that precedent supported its interpretation, citing that the Supreme Court described the functionality doctrine in Qualitex as protecting competition by keeping a producer from monopolizing “a useful product feature.”
Applying its definition of functionality, the Third Circuit determined Pocky’s design is useful and thus functional. “Viewed as a whole, Pocky’s trade dress is functional. The claimed features are not arbitrary or ornamental flourishes that serve only to identify Ezaki Glico as the source. The design makes Pocky more useful as a snack, and its advantages make Pocky more appealing to consumers,” Judge Bibas wrote.
Trade dress can be an effective way for companies to protect a unique design and prevent infringement or risk of confusion. However, as highlighted by the Third Circuit’s decision, it is important to verify that the trade dress will not be construed as functional, which will render the trade dress invalid.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, David Einhorn, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.