Amster Rothstein and Ebenstein, LLP - Intellectual Property Law

ARE Law Trademark Alert: “And That’s the Way the Cookie Crumbles:” The Third Circuit Reminds us that Functional Designs are not Protectable by Trade Dress and Copying is Okay Where There Are no Protectable Rights

October 14, 2020
Author(s): Douglas A. Miro, Chester Rothstein

We spend so much of our lives hearing that “copying” is a bad thing. 
Sometimes it takes a simple case to remind us that in the business world, unless someone has a protectable intellectual property right, copying is fair game. In fact, copying is a good thing – it both promotes competition and lets sellers “compete and build on one another’s inventions,” thus improving quality and lowering consumer costs. 
The October 8, 2020 decision by the Third Circuit affirming the district court’s grant of summary judgment finding no trade protection is such a case. Ezaki Glico Kabushiki Kaisha et al. v. Lotte International America Corp. et al., No. 19-3010 (3d Cir. Oct. 8, 2020). 
The facts are relatively straightforward. Ezaki and Lotte both make competing cookie sticks, the “Pocky” and the “Pepero.” As seen below, the cookie sticks are essentially identical:
          Ezaki’s “Pocky”                    Lotte’s “Pepero”
Ezaki has two federal trademark registrations covering its product configuration (i.e., its “trade dress”), both including a written description of the cookies as: “an elongated rod comprising biscuit or the like, partially covered with chocolate.” The federal trade dress registration puts others, like Lotte, on notice that Ezaki’s cookie stick design is a source indicator, and that if others use a design confusingly similar, they will infringe Ezaki’s registered trade dress. 
There was a long history between the parties before the litigation, but that’s not important here. Ultimately, Ezaki got fed up and sued Lotte for trade dress infringement. 
Given the similarity of the designs, there is little debate as to whether Lotte’s Pepero cookie stick falls within the scope of Ezaki’s registered trade dress. But even a registered trade dress is susceptible to challenge. 
To defend itself, Lotte countered that the trade dress is invalid because it is functional. As a matter of law, “[t]he functionality doctrine keeps trademarks from usurping the place of patents” and can be used as a defense against any trade dress--registered or not registered. See 15 U.S.C. § 1052(e)(5) (stating that the Trademark Office cannot register any mark that “comprises any matter that, as a whole, is functional”). 
In finding Ezaki’s cookie stick design functional, the Third Circuit provided a refreshingly straightforward opinion clearly explaining the legal limitations of trade dress law with respect to functional designs. 
The Third Circuit made clear that a design is “functional” if it is “useful.” Perhaps recognizing it was in trouble, Ezaki argued that a sentence from the Supreme Court’s Qualitex decision should be read to instruct that functionality should be narrowly construed to apply only to designs that are “essential”—not just “useful.” Dispensing that argument, the Third Circuit noted that “[i]f the Lanham Act protected designs that were useful but not essential . . . it would invade the Patent Act domain.” 
Turning to the substance of the case, the Third Circuit found Ezaki’s cookie stick design functional for the following reasons:
The Third Circuit also noted that Ezaki itself promoted the convenient design of the cookie stick, thus touting its utilitarian advantages. 
Lastly, Ezaki, like many facing a functionality defense, argued that there are alternative designs available thus making its design non-functional. The Third Circuit quickly shot down that argument noting that “even when there are alternatives, the evidence can still show that a product design is functional.” 
The Third Circuit opinion ended by succinctly summarizing the entire case in one paragraph. It merits repeating here in its entirety:
Though Ezaki Gilco created Pocky, it cannot use trade dress to keep competitors from copying it. 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. 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.
We will continue to monitor the law of trade dress. In the meantime, feel free to contact us or another attorney at the firm.
Chester Rothstein and Doug Miro are partners, and Benjamin Charkow is an associate at Amster, Rothstein & Ebenstein LLP. Their practices focuses on all facets of intellectual property law, including trademark law. For further information, please contact [email protected], [email protected] and [email protected].

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