Whether it is used for the appearance of a suite of furniture, or the shape of a soft drink bottle, the legal concept of “trade dress” has been used to protect a wide variety of designs that were otherwise not protectable under traditional notions of trademark or patent law.  While the legal concept of trade dress traditionally referred to the packaging and labeling of a product (see, e.g., Wal-Mart Stores, Inc. v Samara, 529 U.S. 205, 209 (2000)), Trademark Law protects more than a word, term, or name.  Instead, the Lanham Act protects a wide variety of “symbols” and “devices” that identify the source or quality of a product or service.  These non-verbal source identifiers are often grouped together as “trade dress.”  Protection is indefinite in time.
            Trade dress today goes much further than packaging, and includes the overall appearance and impression of a product, including design, size, shape, texture, color, and graphics.  (See, e.g., Mattel, Inc. v. Walking Mountain Productions¸353 F.3d 792, 808 n.13 (9thCir. 2003)).  The Supreme Court has held that “almost anything at all that is capable of carrying meaning” could be used as a “symbol” or “device” to identify the source or quality of a product.  (Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 162 (1995) (noting that courts and the Patent Office have protected shape, sound and scent as well as color)).
            In the recent Fourth Circuit case of McAirlaids, Inc. v. Kimberly-Clark Corp., 2014 U.S.App. LEXIS 11945 (4th Cir. Jun 25, 2104), the Court discussed a specific limitation that has been placed on the broad concept of trade dress, i.e., that trade dress cannot be used to protect a “functional” feature.  A functional feature is one that “is essential to the use or purpose of the device or…affects the cost or quality” of the product.  (TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 33 (2001)).
            McAirlaids products a material composed of cellulose fiber that is used in a wide variety of absorbent goods.  As the airlaid fiber is manufactured, an embossing pattern becomes imprinted on the material. The embossed design is important to adequately hold the material together, and must fall within certain general size and spacing parameters.  McAirlaids chose a “pixel” pattern for its products – rows of pinpoint-like dots on the material.  McAirlaids registered its pattern as trade dress as follows: the mark is a [three-dimensional] repeating pattern of embossed dots” used in absorbent pads.  The trademark, given registration number 4,104,123, is shown below:
McAirlaids’ Registered Trade Dress
            Kimberly-Clark began manufacturing GoodNites bed mats, an absorbent product manufactured in a different manner from McAirlaids’ pads.  However, because Kimberly-Clark used a similar dot pattern on its absorbent bed mats, McAirlaids initiated a lawsuit alleging trade-dress infringement and unfair competition under the Lanham Act.  The district court bifurcated the issues for trial:  in the first phase, the only question was whether the dot pattern on McAirlaids’ products was functional, and thus not protectable as trade dress.  The district court granted summary judgment to Kimberly-Clark, but the Fourth Circuit found genuine issues of material fact and reversed.
            The legal concept of functionality has been defined by two Supreme Court cases.  In Qualitex Co. v. Jacobson Prods., Co., 514 U.S. 159, 165, functionality was defined as a feature that “is essential to the use or purpose of the article or if it affects the cost or quality of the article.”  Later, in TrafFix, 532 U.S. at 34, functionality was further defined as “the reason the device works” or if it’s exclusive use “would put competitors at a significant non-reputation-related disadvantage.”
            The parties in this case agreed that pressurized bonding points were functional because these areas actually fused the layers of pulp into a textile-like material.  The dispute was whether McAirlaids’ chosen embossing pattern was functional.
            The Significance of Utility Patents to the Question of Functionality.  The Supreme Court emphasized that a “utility patent is strong evidence that the features therein claimed are functional.”  TrafFix, 532 U.S. at 29.  In TrafFix, the central advance of several utility patents was a “dual-spring” design that allowed outdoor signs to remain upright in windy conditions; therefore, the dual spring design was functional, and not “an arbitrary flourish.”  Id. at 34.
            The pixel pattern in McAirlaids was distinguished from TrafFix on two grounds.  First, because McAirlaids had registered its design as trade dress, its registration served as prima facie evidence that the trade dress was valid (and therefore not functional) – and in TrafFix the burden was on the trade dress claimant to prove that its dress was “not functional.”  See 15 U.S.C. § 1125(a)(3).  Thus, the burden should have been place on Kimberly-Clark to show functionality.  Second, McAirlaids’ utility patents covered a process and the resulting material, but made no mention of a particular embossing pattern.   Thus, the pixel pattern is not the “central advance” of any utility patent, and is not the same “strong evidence” of functionality as the patents in TrafFix.  See 532 U.S. at 29.
            The Appropriate Weighing of the Evidence of Functionality.  McAirlaids also argued that summary judgment of functionality was not appropriate because the district court improperly weighed the evidence of record.  The Fourth Circuit agreed with McAirlaids that it had presented sufficient evidence to create a genuine factual issue as to whether their pixel pattern was a purely aesthetic choice among many alternatives.
            The Fourth Circuit, citing to Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 1274 (Fed. Cir. 2002) looked at four factors to assess a design element’s functionality.  They are:
(1) The existence of utility patents.  As addressed above, the utility patents disclosed that many designs could be used.  Testimony established that the pixel pattern was chosen for its appearance.
(2) Advertising focusing on utilitarian advantages of the design element.  Some marketing presentations arguably touted the pixel pattern as increasing absorbency.
(3) Availability of functionally equivalent designs.  Both parties’ experts testified that many shapes could be used to fuse the layers together, and that McAirlaids had previously used an embossing design of diagonal lines which had nearly identical performance testing as the pixel pattern.
(4) The effect of the design on manufacturing.Both parties agreed that any embossing design must meet genera size and spacing specifications to successfully bond the layers of material into an absorbent pad.
In light of those factors, the Fourth Circuit determined that sufficient evidence had been presented to raise a genuine issue of material fact; and the issue of functionality should be left for a jury to weigh evidence and to make credibility determinations.
            Protection of design features through “trade dress” can be very powerful because it does not expire.  Registration of such design features as a registered mark can provide important legal benefits.  Manufacturers should consider whether their product has a non-functional feature that could be considered as “trade dress”, and whether they should protect such feature.
            Bert Andia is a registered patent attorney and his practice is focused on litigation of complex business disputes.  If you would like to discuss the availability of patent or trade dress protection or if you are involved in a dispute arising from alleged patent or trade dress infringement, please contact Bert Andia at 336-273-1600 or via email at

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By Bert Andia, Member/Manager, Higgins Benjamin, PLLC
          In the Greensboro area, there have been numerous news reports about the Notice of Opposition filed by Anheuser Busch LLC, claiming that the registration of “NATTY GREENE’S” will damage Anheuser Busch.  This article attempts to address some of the issues and questions that have arisen since the filing of that opposition.
What is a Notice of Opposition?        The process for obtaining registration of a trademark or service mark is fairly straightforward.  In the initial step, the Trademark Office ensures that the application has met the minimum filing requirements; if so, the application if assigned to a Trademark Examining Attorney.  The Examining Attorney reviews the application for a number of specifics, but is primarily tasked with determining whether there are any marks which conflict with the mark for which registration is sought.  In the case of NATTY GREENE’S, the Examining Attorney “searched the Office’s database of registered and pending marks and has found no conflicting marks that would bar registration” of NATTY GREENE’S.
            The Examining Attorney then approves the mark for publication in the Trademark OfficialGazette, a weekly publication of the United States Patent and Trademark Office.  The purpose of publication in the Official Gazette is to put the public on notice of the potential registration of the proposed mark, and to allow any party who believes it may be damaged by registration of the mark to file a Notice of Opposition.  On June 18, 2014, Anheuser-Busch, LLC filed its Notice of Opposition to the mark NATTY GREENE’S, claiming that registration might damage their marks;  NATTY LIGHT; FATTY NATTY; and NATTY DADDY.
            The process that follows the filing of a Notice of Opposition is an administrative proceeding conducted within the Trademark Office before a board called the Trademark Trial and Appeal Board.  Typically, a case is heard by three Administrative Trademark Judges .In an opposition proceeding, the Board may refuse to register the opposed mark, or may modify the application or registration by limiting the goods or services specified therein.  See 15 U.S.C. § 1068.
What Factors are Considered in an Opposition?        The most common ground for an opposition and the likely basis for the opposition in this case, is an allegation that consumers are likely to be confused between the respective marks of the parties.  The determination involves a consideration of a number of factors, including (1) the relationship of the parties’ goods sold under their respective marks; (2) the channels of distribution of the goods; (3) the methods of advertising and promotion of the parties; (4) the class of purchaser of the goods; and, (5) an analysis of the sound, appearance, and meaning of the marks.  Where there is doubt, the doubt must be resolved against the newcomer and in favor of the prior user.  See, e.g. TBC Corp. v. Holsa Inc., 126 F.3d 1470, 44 U.S.P.Q.2d 1315 (Fed. Cir. 1997);
            When looking at whether the marks are similar in their appearance, sound, meaning, or connotation and commercial impression, the similarity in any one of those elements may be sufficient to find a likelihood of confusion.  In re White Swan Ltd, 8 U.S.P.Q.2d 1534, 1535 (TTAB 1988)(the mark SHAKE SCATTER & GROW is not registrable in light of the registration for SHANK-N-GROW).  Similarity in the first word, prefix, or syllable is significant when evaluating likelihood of confusion.  Presto Prods., Inc. v. Nice-Pak Prods., Inc., 9 U.S.P.Q.2d 1895, 1897 (TTAB 1988)(it is often the first part of a mark which is most likely to be impressed upon the mind of a purchaser and remembered when making purchasing decisions).  Thus, the fact that both marks begin with “NATTY” weighs against the registration for NATTY GREENE’S.
            When looking at the goods that are to be sold under each of the marks, the goods need only be “related in some manner and/or if the circumstances surrounding their marketing [be] such that they could give rise to the mistaken belief that the [goods] emanate from the same source.”  Coach Servs., Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1369, 101 U.S.P.Q.2d 1713 (Fed.Cir. 2012).  The fact that both marks are to related to “beer” and likely would be sold to the same class of purchasers and encountered under similar circumstances are factors that weigh against the registration of NATTY GREENE’S. 
Does it Matter that Natty Greene’s Is The Name of a Historical Figure?      Some people have attempted to argue that because Natty Greene’s trademark is based on a historical figure, i.e. Nathanael Greene, that is cannot be confusing with NATTY LIGHT in which the word “NATTY” is a slang term for “Natural.”
            The answer may best be answered by an analogy that demonstrates that someone cannot use his own name if that name is confusingly similar to a registered trademark.  In the case of E&J Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657 (E.D.Cal. 1989), aff’d, 955 F.2d 1327, amended by 967 F.2d 1280 (9th Cir. 1990).  Ernest and Julio Gallo sued the Gallo Cattle Company for trademark infringement of, among other things, their trademark GALLO for wine, prepared meat products, and cheese.  The Gallo Cattle Company was operated by Joseph Gallo, a brother of Ernest and Julio Gallo and a person that spent his career in farming.  Joseph started the Gallo Cattle Company and began making cheese under the trademark “Joseph Gallo.”
            The court found that there was substantial evidence of actual consumer confusion.  The court weighed the other factors relevant to “confusion” and determined that Joseph Gallo could not use his own name as a trademark to sell cheese.  The court pointed out that surnames, when used as trademarks, are inherently weak trademarks.  Such marks only become strong after they become well known to the community through extensive use, significant advertising, and public recognition.  The GALLO mark was found to have secondary meaning and to be a strong mark.
            This type of analysis demonstrates that it doesn’t matter who NATTY GREENE’S is named after.  The issue is whether it is confusing to consumers in light of the use of NATTY LIGHT.
 Does it Matter That NATTY GREENE’S is Primarily Local?          Some people have argued that there is not a likelihood of confusion because NATTY GREENE’S is a small brewery specializing in craft beers; therefore, people would not confuse NATTY LIGHT (a mass-produced and mass-marketed beer) with NATTY GREENE’S.
            One of the factors to consider when analyzing ”likelihood of confusion” is the “quality” of the junior user’s product (in this case, NATTY GREENE’S product).  Court’s recognize that a difference in the products’ quality may affect the likelihood of confusion.  When the senior user and the junior user have products that are similar, comparable quality that supports the consumers’ belief that the products emanate from the same source and thus contribute to consumer confusion.  Morningside Group, Ltd. v. Morningside Capital Group, L.L.C., 182 F.3d 133, 142, 51 U.S.P.Q.2d 1183 (2d Cir.1999).  A marked difference in quality, on the other hand, may reduce the likelihood of confusion.
            A related factor in the “likelihood of confusion” analysis examines the sophistication of typical consumers and the level of care they exercise when purchasing the products at issue.  Sports Auth. v. Prime Hospitality Corp., 89 F.3d 955, 965, 39 U.S.P.Q.2d 1511 (2d Cir. 1996).  The courts generally consider that consumers exercise greater care in purchasing expensive products than in purchasing cheap products and purchasers of expensive products are less likely to be confused.  Id. 
            In reviewing these factors regarding quality and “sophistication of consumers,” there is no clear indication that either of these factors will weigh heavily in the ultimate determination.  However, if NATTY GREENE’S can demonstrate that its consumers look for a higher quality product, these factors are potentially in favor of NATTY GREENE’S.
Who will Win?            The last survey reviewed by this author demonstrated that only 5% of oppositions filed eventually go to a hearing.  While much of this case will depend on the quality of the evidence presented, I am fearful that NATTY LIGHT may be able to prove that it has a strong mark, and may be able to provide some survey evidence that confusion is likely.  If they do that, I believe that NATTY GREENE’S will be denied their registration.

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By Peter D. Isakoff, Associate Attorney, Higgins Benjamin, PLLC
On November 21, 2011, the Australian Parliament passed the Tobacco Plain Packaging Act 2011, requiring tobacco products to be sold in plain packaging without any trademarked logos.  Australia’s legislation comes as a result of studies showing that cigarette packaging plays an important role in promoting smoking and encouraging young people to try cigarettes.  This legislation deals an expensive blow to cigarette manufacturers who have a substantial investment in their trademarks and packaging.  Will other countries follow a similar path?

After passage of the Australian legislation, Philip Morris Asia immediately filed a Notice of Arbitration against the Australian government, claiming that Australia’s plain packaging legislation is an indirect expropriation of Philip Morris Asia’s intellectual property and good will.  Philip Morris Asia’s arbitration, filed with the United Nations Commission on International Trade Law, seeks the suspension of the plain packaging law and compensation for the loss of the use of its trademarks.

Since past arbitral tribunals have been unclear as to what exactly constitutes indirect expropriation of trademark rights, Philip Morris Asia’s claim raises an important issue in international investment law: what exactly constitutes indirect expropriation?  Past arbitral tribunals have considered a variety of factors in indirect expropriation cases, including the effect of a state action on foreign investors and the purpose behind the state action.  Here, two factors that merit special consideration as to whether the Tobacco Plain Packing Act 2011 constitutes indirect expropriation are: i) whether the law substantially deprives Philip Morris Asia of the economic use and enjoyment of its intellectual property and good will; and (ii) whether the law was reasonably predictable to Philip Morris Asia as a foreign investor.

First, since Philip Morris Asia can still sell tobacco products in Australia, it may have to prove that it has been completely deprived of its profit-making ability.  Philip Morris Asia’s strongest argument for indirect expropriation under this factor would be that its sales in Australia under the new legislation will fall below the point of any profitability.  Philip Morris Asia has offered this argument in its preliminary Notice of Claim.  The success of this claim would depend on expert analysis of the cigarette market in Australia regarding the extent to which trademarks and branding impact tobacco sales.

As to the second factor, Philip Morris Asia would have to prove that Australia’s legislation was not predicable to foreign investors.  Although Australia is the first country to implement plain packaging legislation, it can argue that this concept has a long-standing background.  The Toxic Substances Board of New Zealand’s Health Department first recommended plain packaging for cigarettes in 1989.  Additionally, a Canadian parliamentary committee recommended its legislature pass plain packaging legislation in 1994.  In 2010, the European Commission proposed a revision to Directive 2001/37/EC that would include plain packaging requirements, and in recent years similar proposals have occurred in France, Turkey, and the United Kingdom.

Philip Morris Asia’s strongest argument is that when it initially entered the Australian market, plain packaging legislation was not reasonably predictable, even if the likelihood of such regulation later became apparent.  Philip Morris Asia could also argue that, because plain packaging legislation was debated for several decades without implementation, it expected that countries would not enact such regulations.

The pending arbitration case also has implications for Bilateral Investment Treaties in general.  In April 2011, Australia announced in a Trade Policy Statement that it will no longer pursue investor-state dispute resolution clauses in international treaties.  In its Trade Policy Statement, Australia openly alluded to Philip Morris Asia’s arbitration case as a catalyst for this policy reform when it stated “[t]he Government has not and will not accept [investor-state dispute resolution] provisions that limit its capacity to put health warnings or plain packaging requirements on tobacco products.”

Pending the outcome of Philip Morris Asia’s arbitration case, other nations could follow Australia’s lead for future Bilateral Investment Treaties.  Consequently, Philip Morris Asia’s arbitration case will be influential not only in defining when indirect expropriation occurs, but also in shaping the future of Bilateral Investment Treaties as a mechanism for international business dispute resolution.

As of publication of this blog post, a decision has not yet been rendered in the above-referenced arbitration case. 

This blog post is based on an article by Peter Isakoff published in Volume 3, Issue 2 of The Global Business Law Review (Peter D. Isakoff, Defining the Scope of Indirect Expropriation for International Investments, 3 Global Bus. L. Rev. 189 (2013)).  The full article can be found at:

If you would like to discuss a dispute arising in the context of business litigation, please contact Peter Isakoff at (336) 273-1600 or


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Trade Secrets Misappropriation Claims Against Non-Employees Survive Motion to Dismiss

By:  John Bloss, Member, Higgins Benjamin, PLLC

The North Carolina Business Court continues to be a battleground for disputes involving alleged misappropriations of trade secrets.  These lawsuits typically target disloyal former employees, but in a recent opinion, the Business Court allowed claims against non-employee defendants to move forward.

The plaintiff in Koch Measurement Devices, Inc. v. Armke, 2013 NCBC 48 (Oct. 14, 2013), is a wholesaler of high-end “beer growlers”—collectible glass jugs typically used to transport draft beer out of craft breweries. Koch sued its former web designer and web host, Michael Walsak, and Tote Glass, Inc., a company in which Walsak held an interest, alleging that Walsak and Tote had conspired with Koch’s former (and now-deceased) President to divert Koch’s assets, business opportunities, and trade secrets to Tote.  In particular, Koch’s complaint alleged that Walsak and Tote misappropriated confidential information including Koch’s customer lists, the ordering habits and history of Koch’s customers, and Koch’s pricing and inventory management strategies; diverted Koch’s inventory to Tote; imported growlers from Koch’s German supplier; used Koch’s glass decorator; used the same pricing schedule as Koch; stole Koch’s largest client; and removed Koch’s website from the web.

Business Court Chief Judge Jolly first ruled that the absence of any former employee of Koch as a defendant did not prevent Koch from maintaining the action, since Koch made “sufficient allegations . . . concerning the coordinated efforts of [Koch’s former President], Walsak, and Tote to, in essence, steal Koch’s business to allow this action to continue without the presence of [the former President].”  Judge Jolly then evaluated each of the causes of action asserted by Koch—misappropriation of trade secrets, unfair and deceptive trade practices, constructive trust, unjust enrichment, conversion, breach of contract, and civil conspiracy—and determined that each stated a claim for which relief could be granted.  The Court held that Koch had identified its allegedly misappropriated trade secrets with sufficient specificity, distinguishing Washburn v. Yadkin Valley Bank & Trust Co., 190 N.C. App. 315 (2008), in which the Court of Appeals upheld dismissal of a complaint that generally described the trade secret at issue at “business methods; clients, their specific requirements and needs and other confidential information pertaining to Yadkin’s business.”

If you would like to discuss a trade-secret misappropriation issue contact John Bloss at (336) 273-1600 or
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Can You Protect Your Slogan?

By:  Bert Andia, Member, Higgins Benjamin, PLLCYou’ve come up with a great new slogan that you want to print on t-shirts, sweatshirts, coffee cups and other products.  Now you want to know how to stop others from using that same slogan.  You think you remember hearing that Pat Riley had gotten a copyright on the word “THREEPEAT” before his team won the NBA Championship for a third consecutive time?  How was that possible?
There are two possible ways you might think about to protect a slogan – copyright and trademark.  A copyright protects works of authorship.  A trademark is a distinctive word or phrase that is affixed to an article to identify a single source for the goods.
The issue regarding copyright protection for a slogan or word is straightforward – the answer is NO.  Federal copyright law and the common law only provide copyright protection to “original” works of authorship.  The term “original” is not specifically defined, but is recognized as calling for “independent creation” and not novelty.   Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 910 (2d Cir. 1980); E. Mishan & Sons, Inc. v. Marycana, Inc., 662 F. Supp. 1339 (S.D.N.Y. 1987): Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49 (2d Cir.), cert. denied, 298 U.S. 669, 80 L. Ed. 1392, 56 S. Ct. 835 (1936)(L. Hand, J.).
There are, however, admittedly “independent creations” that are deemed too trivial or insignificant to support copyright protection because they lack a minimal standard of “creativity.”  The minimum amount of creativity is illustrated by the Copyright Office Regulations under the 1909 Copyright Act, which provided that “[w]ords and short phrases such as names, titles, and slogans” are not subject to copyright.  That regulation continues to the present day.  Under that rationale, a word or phrase – no matter how original – cannot be protected by copyright.
A brief review of the trademark database reveals that it is most likely that Pat Riley did not obtain copyright protection, but instead registered a trademark in the word “THREEPEAT.”  United States Registration No. 4,051,757 issued on November 8, 2011 to Riles & Company, Inc. for the mark “THREEPEAT” for use on “hats; jackets; [and] shirts.”
Obtaining trademark registration for the word THREEPEAT was not accomplished without some difficulty.  The law recognizes that not every word or slogan functions as a trademark.  The Trademark Office will refuse to register subject matter that is merely a decorative feature that does not function as a trademark (because it does not distinguish the applicant’s goods).  The decorative feature may be words, designs, or slogans.  For example, the Trademark Office refused to register “YOU ARE SPECIAL TODAY” as a trademark for ceramic plates and refused to register “DAMN I’M GOOD” as a trademark for bracelets.  The slogans were seen as conveying a message rather than indicating the source of the goods.  In re Original Red Plate Co., 223 USPQ 836 (TTAB 1984); Damn I’m Good, Inc. v. Sakowitz, Inc., 514 F.Supp. 1357 (S.D.N.Y. 1981).  With respect to clothing, the Trademark Office recognized that consumers recognize small designs or discrete wording as trademarks if placed, for example, on the pocket area of a shirt; however, consumers do not typically perceive larger designs or slogans when such matter is displayed, for example, on the upper half of a shirt.
Based on that same rationale, the Trademark Office would not have registered “THREEPEAT”
because the mark was merely a decorative or ornamental feature of the goods.
However, the inquiry does not end there.  Usually, the Trademark Office will then inquire as to whether the slogan has been used in commerce and has become distinctive.  This is called “secondary meaning”; the question is whether the slogan transcends the literal meaning of the words and is now associated by consumers with the source of the goods.  Typically, this can be shown by demonstrating five years of continuous use in commerce or by significant sales and advertising with the slogan.
Pat Riley was able to register his slogan because, in part, he demonstrated that he had been using the slogan as a trademark for over twenty years (note that the application was filed in 2010, and that Coach Riley claims to have coined the phrase after the Los Angeles Laker had won championships in 1987 and 1988).
Thus, protection of a slogan through common law or federal trademark law will largely depend on whether you can demonstrate that the mark has acquired significance in the minds of consumers through either continuous use for more than five years or though significant advertising of the slogan.
For more information on how to protect your copyright and trademarks contact Bert Andia at Higgins Benjamin PLLC (336)273-1600.

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