Monday, June 19, 2006

Citable No. 31: TTAB Sustains Opposition to Two Product Design Marks as Functional and Non-Distinctive, but Dismisses Fraud Claims

In its first product design trade dress decision since 2004, the Board sustained an opposition to registration of two product designs (shown below) for plugs for closing 55-gallon steel drums, finding the designs to be de jure functional, and, if not functional, lacking in secondary meaning. The Board , however, rejected Opposer American Flange's fraud claim that was predicated on allegedly false statements made by Applicant Rieke to the PTO during prosecution of the subject applications. American Flange & Mfg. Co. v. Rieke Corp., 80 USPQ2d 1397 (TTAB 2006). [Decision subsequently withdrawn: American Flange & Manufacturing Co., Inc. v. Rieke Corporation, 90 USPQ2d 1127 (TTAB 2009).]

First, the Board concluded from the application language that Rieke's designs comprise a substantially hexagonal base and a butterfly-shaped grip. The threaded portion shown in dashed lines is not part of the first design, nor is the circular flange that receives the threads part of the second design. To seal a drum, the flange remains secured in place in the top of the drum while the plug is screwed into the flange by applying torque to the butterfly grip. Opposer American Flange markets a plug that provides two loops (rather than a butterfly grip) to allow turning of the plug.

The two major hurdles to registration of a product design are functionality and distinctiveness. I so wrote in 2004 in a paper entitled "Trade Dress and the TTAB: If Functionality Don't Get You, Nondistinctiveness Will," which may serve as a useful backdrop to this discussion. Applicant Rieke tripped over both hurdles and lost this TTABattle between "the two leading U.S. producers of drum closures."

Functionality: The Board spent nearly half of its 61-page decision on the issue of functionality. It applied the CCPA's time-honored Morton-Norwich four-factor test, first noting that Opposer must make a prima facie showing of functionality, at which point the ultimate burden shifts to the Applicant to show nonfunctionality. See Valu Engineering Inc. v. Rexnord Corp., 61 USPQ2d 1422, 1429 (Fed. Cir. 2002).

The Board analyzed separately the two components of Rieke's design: the hexagonal base and the butterfly-shaped grip. It concluded that the hexagonal base is functional in light of a utility patent "disclosing the utilitarian advantages of the design" and Rieke's advertising "touting the advantages and the limited availability of functionally equivalent designs." The fact that there are "no significant alternative functionally equivalent designs" was a factor "strongly" favoring Opposer. Although the hexagonal design is more costly to manufacture than other designs, "the increased cost appears to be quite minimal." Balancing the factors, the Board found this portion of the designs to be functional.

As to the butterfly-shaped grip, however, the Board sided with Applicant Rieke, finding that there are "numerous alternative designs which would work equally well." The patent evidence did not support Opposer's position, nor was there any significant evidence of boastful advertising. And there was no evidence that the butterfly grip is either cheaper or more efficient to manufacture. Thus American Flange failed to make a prima facie case of functionality.

Having found one feature of Rieke's design to be functional, the Board concluded that the design as a whole cannot be registered.

Secondary Meaning: Assuming arguendo that Rieke's design is not de jure functional, the Board considered Applicant's Section 2(f) claims. Again, the Board observed that Opposer has the initial burden to establish a prima facie case of nondistinctiveness, and then the burden of persuasion shifts to Applicant.

Applicant Rieke relied on its evidence of "sales volume, advertising expenditures, long use, declarations indicating recognition of the mark, and a survey." American Flange contended that Rieke's use has not been exclusive, that its "canned" declarations are of little value, and that its survey actually supports a finding of nondistinctiveness.

The Board pointed out that, although Rieke's sales and advertising figures appear to be significant, sales alone are of little probative value in this type of case, and Rieke did not make clear whether its advertising was directed to the specific product and marks at issue. Nor did Rieke show that it had promoted its marks -- in fact, the only relevant advertising evidence of record touts the functional advantages of the hexagonal base.

Although Rieke alleged use of its marks since 1940, it claimed substantially exclusive use for only the past ten years. However, in trade dress cases, an applicant faces a "heavy burden," and the mere statement of at least five years of use is not generally accepted by the USPTO. In addition, the record indicated that others have used the marks for significant periods, including one company for 20 years.

The declaration evidence was somewhat ambiguous as to whether the declarants "truly viewed either the hexagonal base or the butterfly grip as a source indicator," and thus was of "limited probative value."

As to the survey, the Board found it seriously defective. Moreover, "the reported results which are most defensible, in fact, show that applicant's mark has not acquired distinctiveness."

"To show acquired distinctiveness, it is not sufficient to show that the applicant is the party 'most commonly associated with' the product design. Rather, the applicant must show that the product design identifies a single source, that is, that the public has come to expect that every plug having the appearance of applicant's plug to be from applicant, even though it does not bear the RIEKE mark."

To the question of "how many different companies make" products having the subject design, only 19% thought only one company did so. That is "far short of the level necessary to show applicant's mark has acquired distinctiveness, even if the result was otherwise reliable." Even that 19% figure would have to be reduced by the number of respondents who did not identify Rieke as the sole maker, and also further reduced for "noise." Likewise, responses to the question of whom respondents "most associate" with the plug were useless because the question did not address acquired distinctiveness.

Therefore, the Board found the survey to be "not probative of acquired distinctiveness." In fact, the results "indicate the absence of acquired distinctiveness, if they indicate anything at all."

Considering all the evidence, the Board ruled that Rieke had failed to establish secondary meaning by a preponderance of the evidence.

Fraud: Finally, the Board addressed Opposer American Flange's fraud claim. Flange asserted that Rieke had "presented evidence selectively in an effort to mislead the Trademark Office," including the failure to provide certain government specifications and the misleading presentation of customer declarations.

The Board, however, noted that Flange failed, in its Notice of Opposition, to specify what statements were fraudulent. Therefore, the Board dismissed the fraud claims "for failure to allege fraud with sufficient particularity."

Nonetheless, the Board took time to review the fraud issue in some detail. If first noted that in their briefs the parties referred to "inequitable conduct" rather than fraud. "This suggests that both parties may be equating fraud in the procurement of a trademark registration with a breach of duty to disclose in patent matters. The two are very different in concept and application."

"In the patent context the applicant or its attorney has 'an almost fiduciary-like duty of full disclosure.' The concept of 'fraud' in the trademark registration context is more akin to fraud in other fields of law."

To be fraudulent, the statement in question: (1) must be false; (2) must be made with knowledge that it is false; and (3) must be material to the examining attorney's decision to approve the application." "The standard of proof is the rigorous clear-and-convincing-evidence standard and it is strictly applied." It is sometimes said the fraud must be proven "to the hilt."

"In similar cases where the Board has found fraud it is generally crystal clear that the statement in question is false. Usually the applicant or registrant effectively admits that the statement is false, or the record otherwise clearly established that the relevant statement is false."

Here, the Board found ambiguity, not the necessary clarity. It was not clear that the government specifications were called for by the PTO or were even relevant, and the consumer declarations were presented in good faith. Thus the Board found the evidence insufficient to show that Rieke had the requisite fraudulent intent.

TTABlog comment: It goes without saying that this case requires a thorough reading. [Perhaps the sound of a steel drum band playing in the background would put the reader in the right frame of mind.]

Text Copyright John L. Welch 2006.


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