The Trademarks Law Review: USA

Overview

US trademark laws are rooted in a trademark's fundamental purpose: namely, to identify the source of a good or service offered to consumers. The laws protect the consumer association between the source of goods and services and the goods and services emanating from that source. The central goal is to avoid consumer confusion – and outright deception – in a marketplace where many different entities may offer similar or identical goods and services.

The US trademark system involves both federal and state law, and both federal and state governments provide for registration of trademarks. But registration is not a prerequisite for enforceable trademark rights. Rather, the genesis of a protectable trademark right is use of the trademark in commerce.

But mere use of a mark is insufficient to constitute 'use in commerce' that would give rise to trademark rights. The use must be in the ordinary course of business and not merely token use to establish rights.

The use must also function as a genuine identifier of source, sponsorship or affiliation for the good or service on which the mark is used. As such, the device claimed as a trademark must not be functional, ornamental, informational or generic for the goods or services. It must also not be merely descriptive of the good or service being offered under the mark, unless the party claiming trademark rights can demonstrate 'acquired distinctiveness' or 'secondary meaning' – that is, an association in the minds of consumers between the trademark and the source of the goods or services.

Registration of trademarks at both the federal and state levels grants registrants various statutory benefits not available at common law. In particular, federal registration of a mark grants the owner the right to sue infringers in federal court and collect damages for infringement. For this reason, trademark owners generally seek federal registration of their marks where possible.

A trademark owner might choose to forego federal registration where their use of the mark is expected to be temporary or geographically restricted, or where the US Patent and Trademark Office (USPTO) is likely to refuse registration because the mark is too descriptive, suggestive, informative, ornamental or similar to another entity's trademark.

Year in review

As the last year in and out of lockdowns continued to deepen consumers' reliance on internet commerce, 2021 primarily saw trademark owners and their counsel pushing the boundaries of web-based trademarks. The most publicised Supreme Court trademark decision in years, USPTO v. Booking.com BV, 140 S. Ct. 2298 (2020), engendered a flood of .COM-formative trademark applications after the court rejected the USPTO's long-standing position that generic terms plus the '.COM' top-level domain are inherently unsuitable for trademark protection. This change caused the USPTO to issue official guidance late last year in the form of Examination Guide 3-20: Generic.com Terms after USPTO v. Booking.com to advise applicants on the standards they can expect the USPTO to apply to .COM-formative marks. Critics have noted, however, that the USPTO still appears averse to .COM and other generic top-level domain trademarks: throughout the year, USPTO examiners have stalled most .COM-formative trademark applications in prosecution, and the USPTO's appellate body affirmed examiners' refusals to register other top-level domains such as .CAM and .SUCKS for their failure to function as source-identifying trademarks. The USPTO also issued a new fee schedule in 2021, raising the official fees for trademark filings, maintenance and enforcement.

Beyond these regulatory developments applicable to new brands, well-known brands enjoyed expansions to the protections afforded their famous trademarks. Coca-Cola Co cancelled a rival's US trademark registrations for 'Thums Up' and 'Limca', brand names Coca-Cola has used in India for decades. In Coca-Cola Co v. Meenaxi Enterprise, Inc, Can. No. 92064398 (TTAB 28 June 2021), Coca-Cola successfully argued that its Indian-American customers would be misled into believing they were consuming Coca-Cola's authentic product despite it being marketed primarily in India. Nike, Inc also scored an early victory in a New York federal court in Nike, Inc v. MSCHF Product Studio, Inc, 1:21-CV-01679 (EDNY 2021). Although that case ultimately settled, Nike convinced the court to issue a restraining order barring the sale of so-called 'Satan Shoes' created from modified Nike products. Nike defeated arguments that the diabolical footwear were 'works of art' entitled to First Amendment free speech protection, a defence difficult to overcome in US courts.

Legal framework

i Legislation

The Lanham Act (15 USC Section 1051 et seq.) is the backbone of federal trademark and unfair competition law in the United States. It was first enacted by Congress in 1946, and has been amended numerous times to expand and redefine trademark protection as commercial practice and technology have developed.

ii Authorities

Beyond the Lanham Act, numerous state statutes and the common law provide additional legal framework for trademarks. States have their own statutory schemes for registration of trademarks, which are broadly similar to the federal system. Trademark owners may seek both federal and state trademark registrations to ensure broad protection of their marks.

As to issues of international trademark registration, the United States enacted the Madrid Protocol Implementation Act 2002 (15 USC Section 1141), and has been a member of the Madrid Protocol system since the law took effect in 2003. The United States has also signed the Paris Convention for the Protection of Intellectual Property and the TRIPS Agreement.

The US administrative authority that governs registration of federal trademarks is the USPTO. States have their own trademark offices that govern issues of registration of state trademarks.

The Trademark Trial and Appeal Board (TTAB) is the authoritative body within the USPTO that decides issues of trademark registrability. The TTAB hears ex parte proceedings when a party challenges a USPTO trademark examiner's refusal to registration of a mark, as well as inter partes proceedings to adjudicate one party's challenge to another party's claimed trademark rights.

Federal district courts also have authority under the Lanham Act to decide issues of trademark registrability. Although federal courts have original jurisdiction over any action arising under the Lanham Act pursuant to 28 USC, Section 1338, multiple state courts have decided that this jurisdiction is not exclusive. That is, state courts have parallel jurisdiction to hear claims under the Lanham Act. State courts generally follow relevant federal precedent, and the legal standards under the state and federal trademark laws are often substantively identical with some variance based on geographical scope.

iii Substantive law

Federal and state laws provide for the registration of trademarks, and they generally have the same criteria to determine whether a mark is registrable.

But registration is not a prerequisite to trademark protection. Common law trademark rights arise the moment a mark is used in commerce and continue until the mark has been abandoned. Unregistered marks only enjoy protection in the (1) geographical areas in which the mark has been actually used and (2) geographical areas where there has been sufficient market penetration of the mark such that the trademark owner has a reputation and goodwill entitled to protection from confusion among the relevant consuming public.

The scope of protection afforded to a trademark is related to the inherent strength of the mark. The strongest trademarks are fanciful: the mark could be a coined term that has no meaning other than its meaning assigned as a trademark, or there could be no direct meaning of the term relevant to the goods or services to which it is affixed. By contrast, weak trademarks merely describe the goods or services to which they are affixed. Even weak trademarks can grow stronger through the nature and extent of their use, promotion and commercial success. For example, years of extensive advertising and sales may result in a widespread consumer recognition of a merely descriptive trademark, which expands the trademark owner's right to exclude others from using the mark even if it is otherwise 'weak'.

Registration of marks

Trademark owners apply to the USPTO for federal registration of their marks. Applications may be filed on a use basis or an intent-to-use basis. But the USPTO will not issue a trademark registration until the applicant has submitted a declaration of use of the mark in commerce and proof of use is filed and accepted. There is a limited exception to this rule for registrations based on a non-US registration under international conventions, although foreign entities still must submit proof of use between the fifth and sixth years after the issue date of the registration. Other parties may also petition to cancel the registration based on abandonment by non-use after the three-year statutory presumption of abandonment has passed from the date of registration.

If a trademark owner is actually using the mark in commerce at the time of application for federal registration, they may file an application for registration on the basis of use. This application is assigned to a USPTO trademark examiner who oversees the prosecution of the application. If the examiner does not raise any objections to the application as filed, no third parties file extensions of time to oppose and no oppositions are lodged against the application, then registration should issue between 12 and 18 months after the application is filed.

If the examiner determines there are issues impacting registrability of the applied-for mark, the USPTO issues office actions to inform the applicant of those issues and invite the applicant to respond. Such office actions may delay acceptance of the application and its publication for opposition.

The USPTO also allows applications for trademark registration based on an applicant's bona fide intent to use the mark in commerce. Prosecution of those applications is generally similar to use-based applications, except the applicant need not file a statement of use until they begin actually using the mark in commerce. If the statement of use is not filed and accepted before the examiner approves the mark for publication, the USPTO will issue a notice of allowance after the opposition period closes. The applicant then has six months to file (1) a declaration of use and proof of use or (2) a request for an extension of time to make such a filing. Applicants may seek up to five six-month extensions of time to file statements of use.

The fees associated with filing a new trademark application are US$350 per class using the regular Trademark Electronic Application System (TEAS) form and US$250 using the TEAS Plus form (in which the applicant selects the goods and services listing from existing entries in the USPTO Trademark Identification Manual). The USPTO does not accept paper trademark filings. The USPTO requires that all foreign-domiciled trademark applicants be represented by an attorney who is licensed to practice law in the United States.

Domain names may pose registrability and other trademark issues. The Anti-Cybersquatting Consumer Protection Act 1999 (15 USC, Section 1125(d)) addresses cybersquatting by creating a private cause of action by a trademark owner against a domain name registrant who has a bad faith intention to profit from the mark. It is also possible to bring an in rem action against domain names that consist essentially of counterfeits of marks. From a trademark perspective, domain names are like other trade names in that they can be protectable as trademarks to the extent they are used as trademarks – rather than a mere URL being used as a unique identifier of a web address. The US Supreme Court has held that adding a top-level domain identifier such as '.com' to an otherwise generic term is capable of having source-identifying significance and therefore eligible for trademark protection. That is, even though generic terms are incapable of designating source and cannot be trademarks, '[generic term].com' is capable of functioning as a trademark and is registrable if no other grounds for refusal exist.

Social media handles (e.g., @username) and hashtags (#) follow the same pattern as trade names and domain names: they are only protectable as trademarks to the extent they are used as trademarks. That is, if the social media username or hashtag is being used in commerce to identify the source of a good or service, the owner may claim trademark rights in it. But unlike the addition of a top-level domain identifier, adding internet-based symbology such as the @ or # signs does not render an otherwise unregistrable term potentially registrable.

i Secondary meaning and inherent registrability

There is an infinite range of words, phrases, designs, symbols and trade dress that are inherently registrable. The core requirement is that the mark function as an identifier of source for the goods or services with which it is used.

An applied-for mark is not inherently registrable if, in relation to the goods or services identified in the application, it is merely descriptive, primarily a surname, primarily geographically descriptive or fails to function as a source identifier by virtue of being ornamental, informational, generic or functional in the context in which it is used. Consequently, what is registrable as to one set of goods or services may not be registrable for another.

Marks that are merely descriptive may be registered on the basis of secondary meaning. Owners of such trademarks may submit evidence of advertising expenditures, extensive use of the mark in commerce or other indicators of high consumer recognition of the mark to buttress their arguments that they have acquired distinctiveness. Five years' continuous, commercially significant and substantially exclusive use creates a presumption of acquired distinctiveness.

ii Prior rights

Prior trademark rights may also provide a basis for precluding registration or cancelling a registration.

Prior use of a trademark, even at common law and limited to a geographic market, provides grounds for opposing an application or cancelling a registration if the junior (that is, later in time) user's trademark is confusingly similar to the senior user's mark in connection with the same or related goods or services.

But trademark rights are not necessarily perpetual: they can be extinguished. If this occurs, the senior user may not rely on prior rights to challenge the registration of a junior user's mark. This can occur in several ways, the most common of which are: (1) abandonment, with non-use for three consecutive years giving rise to a presumption of abandonment; (2) naked licensing, so that the mark no longer functions to identify the senior user as the source of the goods or services; and (3) assignment in gross, where the mark is separated from the commercial goodwill associated with it and no longer functions as the owner's source identifier.

Abandonment is the primary means by which trademark rights expire, because it is the natural end point to cessation of use of the mark in commerce. Once a mark has been legally abandoned, subsequent use cannot retroactively cure the abandonment or resuscitate the senior user's rights. Instead, new trademark rights arise starting on the date of the resumed use.

iii Inter partes proceedings

Inter partes proceedings in the USPTO proceed before the TTAB. The TTAB generally follows the Federal Rules of Civil Procedure and the Federal Rules of Evidence with some exceptions. The TTAB has codified its rules in the Trademark Trial and Appeal Board Manual of Procedure (TBMP). Because TTAB proceedings are limited only to questions of trademark registrability, the TTAB's rules are designed to follow a speedy and efficient timeline and provide for almost entirely on-paper proceedings in lieu of the live testimony or argument available in court.

Oppositions and cancellations are the most common inter partes proceedings. The party challenging the other's trademark rights takes the role of the plaintiff, and the party seeking to maintain its trademark rights takes the role of the defendant. Other than the terminology used, the proceedings largely mirror litigation in federal or state court: the plaintiff must (1) establish standing to bring the proceeding, (2) establish grounds for opposition or cancellation of the registration and (3) initiate the proceeding timely.

The TTAB also hears concurrent use registration proceedings, also known as concurrent use proceedings. In such proceedings the TTAB adjudicates whether one or more applicants to otherwise confusingly similar marks is entitled to a 'concurrent registration'. A concurrent registration is a restricted registration that has conditions and limitations fixed by the TTAB, such as a restriction of rights to a limited geographical market such that it will not give rise to a likelihood of confusion with marks in other geographical markets.

iv Appeals

TTAB decisions are appealable and appeals are heard in the Court of Appeals for the Federal Circuit or a US federal district court.

Appeals taken to the Federal Circuit are decided only on the record established before the TTAB. The Federal Circuit does not hear new evidence or consider new claims.

Conversely, appeals taken to a US district court allow for both new evidence and the opportunity for the parties to raise new claims. For example, following an inter partes cancellation proceeding, an appellant to a district court could add a claim for trademark infringement and introduce new survey or expert evidence to support such a claim.

Civil litigation

i Forums

Trademark litigation, including civil actions for federal or state trademark infringement, unfair competition, false advertising, dilution, passing off and other causes of action sounding in trademark may be brought in either federal or state courts.

There are strategic advantages to litigating in either forum. For example, federal court litigation grants the potential to secure nationwide relief, access to broad subpoena powers and extensive precedent. State courts, on the other hand, may have greater subject matter expertise with ancillary state law claims brought in tandem with trademark infringement, as well as a greater familiarity with the local market and other conditions affecting the likelihood of confusion analysis.

ii Pre-action conduct

Trademark plaintiffs should exercise reasonable diligence prior to the commencement of an action for infringement. The relative priority dates of the disputed marks, the identities of the real parties in interest and the strengths and weaknesses of the infringement claim and potential counterclaims should all be investigated. Absent clear evidence of actual confusion, a pre-litigation consumer survey or pilot survey may be advisable to test whether there exists a likelihood of confusion.

Although there is no requirement to do so, plaintiff parties usually send a cease and desist demand letter to accused infringers. These letters serve a dual purpose, both to put the accused infringer on notice that they are believed to be infringing and potentially to resolve the parties' conflict without litigation. The trademark owner may also use pre-action letters in an effort to establish that continued use of the disputed trademark should be considered wilful and entitle the owner to enhanced damages. But such letters also provide accused infringers with standing to sue for a declaratory judgment of non-infringement. This can be a significant strategic consideration where it is possible to bring litigation in more than one forum.

iii Causes of action

The Lanham Act provides for causes of action for infringement of both registered and unregistered marks, as well as both famous and non-famous marks. If the mark is registered, the owner may sue for infringement under Section 32 of the Lanham Act (15 USC, Section 1114), and whether the mark is registered or unregistered the owner may sue under Section 43(a) (15 USC, Section 1125(a)). Section 43(a) of the Lanham Act provides a federal cause of action for unfair competition based on trademark infringement, which is essentially a claim for passing off. Both trademark owners and their exclusive licensees may bring claims under Section 43(a). If the mark is famous, the owner may sue for dilution under Section 43(c) (15 USC, Section 1125(c)).

The relevant test for violation of the Lanham Act (as well as nearly all causes of action sounding in trademark) is whether the defendant's trademark use gives rise to a likelihood of confusion as to the source, sponsorship or affiliation between it and the plaintiff. The 'likelihood' of confusion must be a probability and not a mere possibility, and the determination is made by balancing various factors. There are a number of balancing tests used in the various federal circuits that evaluate different factors or weigh them differently. But nearly all of them consider the degree of similarity between the marks and the degree of relationship between the goods and services bearing the marks to be the most important to the analysis. Other factors most often considered are: the strength of the mark; the degree of actual confusion and evidence of likelihood of confusion, such as surveys; the conditions in which the goods or services bearing the mark are purchased; the sophistication of the purchasers; overlap in trade channels and classes of customers; and the intent of the junior user in adopting the disputed mark.

Trademark registration provides for numerous evidentiary presumptions in litigation, including presumptions of the mark's validity, ownership and the exclusive right to use of the mark for the goods or services identified in the certificate of registration. These presumptions are rebuttable for the first five years after the date of issue. After five years, Section 15 of the Lanham Act (15 USC, Section 1065) provides a procedure by which the exclusive right to use a registered trademark in commerce can become incontestable. Once a trademark has been deemed incontestable, the owner's presumptions of validity, ownership and the exclusive right to use of the mark are no longer subject to challenge. But incontestable trademarks are still vulnerable to cancellation on other grounds, such as genericness or abandonment.

The Anti-Cybersquatting Consumer Protection Act of 1999, codified as Section 43(d) of the Lanham Act (15 USC, Section 1125(d)) provides for a claim of cybersquatting that may be brought in federal court. Cybersquatting claims may also be resolved under the various dispute resolution procedures established under ICANN.

iv Conduct of proceedings

Civil actions for trademark infringement or other causes of action sounding in trademark are commenced by the filing and service of a complaint in accordance with 15 USC, Sections 1114 and 1121.

The defendant may answer the complaint or file a motion to dismiss. There are numerous grounds for dismissal of a trademark suit, including lack of personal jurisdiction over the defendant, improper venue and failure to adequately plead required elements of the claim. If an answer is filed, the defendant may also file and serve counterclaims. Common counterclaims in an infringement suit include a declaratory judgment of non-infringement, cancellation of the plaintiff's registration or even infringement of the defendant's trademark if the defendant believes it can establish priority over the plaintiff. Note that prior proceedings in the TTAB may impact the litigation: the US Supreme Court has held that issues decided in the TTAB may serve as a basis to bar relitigation in federal court.

Once the answer and any counterclaims are filed and responded to, the district court will schedule an initial case management conference with the parties to set the case schedule and weigh in on preliminary issues. Each district – and oftentimes each individual judge within a given district – may have its own rules for early case management and scheduling.

Prior to beginning discovery, the parties will make initial disclosures to each other in which they identify those persons believed to have knowledge of the matters at issue, the location of the documents relevant to those issues, damages calculations (if known) and insurance coverage.

Fact discovery will typically include interrogatories, requests for production of documents, requests for admissions and deposition testimony. Recipients of discovery requests may object to them on various grounds, including that the requests are burdensome, oppressive, duplicative of prior requests, ambiguous, disproportional to the needs of the case or would run afoul of attorney–client privilege or the work product doctrine.

There is also generally an opportunity for expert discovery concurrent with or after the conclusion of fact discovery. Expert discovery is commonly offered by: survey experts who design and conduct consumer surveys related to consumer or purchaser perception and opine on the results; industry and marketing experts who opine about what is standard or customary in the industry; technical experts who address whether or not a product configuration or package design is functional; damages experts who opine as to their assessment of appropriate damages amounts and types arising from the infringement; and linguistic experts who opine as to the genesis or meaning of the trademarked terms.

Parties have an opportunity to move for summary judgment of one or more claims on the basis that there is no material issue of fact related to the claim and the party is entitled to judgment as a matter of law. If summary judgment is not sought, or if the court determines there are issues of material fact with regard to one or more claims, the parties proceed to trial. Trial may be conducted with or without a jury, depending on the parties' demands and the nature of the relief sought. At trial, the parties have the opportunity to introduce evidence and present argument.

After entry of judgment, the losing party has the opportunity to file an appeal. Findings of fact will be upheld on appeal if they are supported by substantial evidence. Conclusions of law are not afforded such deference, and appellate courts will review them de novo. Because determinations of a likelihood of consumer confusion involve findings of both law and fact, the degree of scrutiny the appellate court applies will depend on the circuit to which the case is appealed.

Proceedings before the TTAB follow a nearly identical pattern to proceedings before federal courts, with some notable exceptions. The biggest difference is that TTAB proceedings are almost entirely on paper: no live testimony occurs in a TTAB proceeding, although the parties may request a final oral argument. In addition, the TTAB is only capable of determining questions of trademark registrability, so a mark's real-world marketplace context may not be considered or given the weight it might be in federal court.

v Remedies

Parties may seek multiple remedies for trademark infringement or unfair competition.

For owners of registered trademarks, the most common forms of relief sought are monetary damages and injunctive relief. Monetary recovery commonly takes the form of disgorgement of the infringer's profits gained as a result of the infringement and, to the extent not duplicative, the plaintiff's actual damages resulting from the infringement. Enhanced damages are also available under the Lanham Act in limited circumstances, such as for wilful infringement, repeated infringement and counterfeiting.

The Lanham Act also provides for attorneys' fees to be awarded to the successful party when the case presents 'exceptional circumstances'. The most common 'exceptional circumstances' are bad faith, advancing frivolous arguments, attempting to deceive the court or otherwise engaging in misconduct the court finds egregious.

Injunctive relief is also available under the statute. Injunctions may be mandatory or prohibitory. Mandatory injunctive relief can include an order to (1) recall all goods bearing the infringing mark, (2) undertake corrective advertising to ameliorate the likelihood of confusion resulting from the infringement or (3) the publishing of disclaimers of an affiliation between the parties and their respective offerings. Prohibitory injunctive relief is more common, and most often takes the form of an order for the defendant to refrain from the conduct that forms the basis of the complaint.

Other enforcement proceedings

Although civil litigation before a district court or the TTAB between private parties is the most common means to enforce trademark rights, it is not the only available means. Trafficking in goods or services with knowing use of a counterfeit trademark is also a criminal offence pursuant to the Trademark Counterfeiting Act of 1984 (18 USC, Section 2320).

US Customs and Border Control also has a role in blocking importation of infringing goods. Owners of registered trademarks may record the registration with Customs, and Customs may thereafter prohibit entry of goods bearing an infringing mark. Trademark owners may also file an action in the US International Trade Commission seeking an order to block entry of infringing goods into the United States.

Outlook

A number of recent cases have the potential to make significant changes in US trademark law.

Romag Fasteners, Inc v. Fossil, Inc, 140 S. Ct. 1492 (2020) put to rest a long-standing Circuit split as to whether proof of wilful trademark infringement is a precondition to a mark owner's recovery of the infringer's profits. Prior to Romag, six circuits required wilfulness to award profits for a trademark infringement claim, whereas the other six circuits did not require a showing of wilfulness. Taking a close textual reading of the Lanham Act, the Supreme Court noted that there is no language specifying a wilfulness requirement to award profits for infringement claims brought under 15 USC, Section 1117(a), or misleading use of trademarks brought under 15 USC, Section 1125(a), whereas there is express language requiring wilfulness to award profits for dilution claims brought under 15 USC, Section 1125(c). Accordingly, the court was unwilling to impose a requirement of wilfulness to recover the infringer's profits. This decision extends to all circuits the opportunity to recover profits for infringement whether or not a wilfulness showing has been made.

Ohio State University v. Redbubble, Inc, 989 F.3d 435 (6th Circuit 2021) tests how the Lanham Act can be applied to direct infringement cases in the context of online marketplaces. The defendant is one of many online marketplaces for print-on-demand products: independent artists upload images to the website's online marketplace, and customers can place orders for custom items bearing the images. Redbubble never takes title to the products, nor does it design, manufacture or handle the products, but items purchased through its website arrive in packaging bearing the Redbubble logo. These businesses have been both a boon and a bane to trademark owners. On the one hand, they facilitate an inexpensive means to produce and distribute an array of items bearing their marks; at the same time, they facilitate unlicensed use of trademarks and the sale of unauthorised or counterfeit goods. Usually hands-off online marketplaces like Redbubble have been able to dodge liability for trademark infringement occurring on their platforms because they are not held to be 'using' the trademarks. But the Ohio State University v. Redbubble, Inc court found that Redbubble was more than just a passive facilitator of sales and was in fact 'using' the plaintiff's registered trademarks by bringing trademark-infringing products into being. This case signals that trademark owners do have recourse against purported 'hands-off' e-commerce platforms for trademark infringement occurring in their online marketplaces, and likely indicates an increase of trademark litigation in that space, particularly if Redbubble seeks Supreme Court review of this decision.

Ezaki Glico Kabushiki Kaisha v. Lotte Int'l America Corp, 986 F.3d 250 (3rd Circuit 2021), as amended (10 March 2021) tested the principle that a product design need not be 'essential' for it to be 'functional' and thus ineligible for trade dress protection. The parties both make thin, stick-like cookies with one side dipped in chocolate or flavoured cream, sold under the global brands 'Pocky' and 'Pepero'. When the senior user brought suit for trade dress infringement of its stick-like dipped cookie design, the district court found the design was functional and therefore not subject to trade dress protection. The Third Circuit affirmed and provided additional guidance for the trade dress functionality analysis; namely, that the key enquiry is whether the product design is useful, not whether the design is essential for the product to work. The senior user argued that the Supreme Court's decision in Qualitex Co v. Jacobson Products Co, 514 US 159 (1995) meant that only essential features were 'functional'. But the Third Circuit disagreed and found that useful designs belong in the realm of patents, not trademark, because trademark law is meant to protect arbitrary or ornamental flourishes that serve only to identify source. There existed a utility patent for the stick-like dipped cookie design, and the court noted various useful aspects of the design to the sharing, holding, eating and packing of the snack. The case has been appealed to the Supreme Court and could further narrow the scope of trade dress protection.

No major legislative initiatives with respect to trademark law appear to have traction in Congress, but it can be expected that litigation will continue to refine the scope of rights for US trademark holders. Particularly given the various shelter-in-place orders and other restrictions arising from the continued covid-19 pandemic, trademark litigation in the e-commerce and online advertising spaces is expected.

Footnotes

1 David R Eberhart is a partner and Andrew M Levad is an associate at O'Melveny & Myers LLP.

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