Both the Trademark Trial and Appeal Board (TTAB) and U.S. courts have been hard at work again this year on the topic of functionality. In the courts especially, judges seem to be grappling with the proper interpretation of the doctrines of utilitarian and aesthetic functionality for the second year in a row. Two important decisions seem to have clarified the functionality analysis in the courts for now, but a Federal Circuit ruling on the Board’s interpretation of the utilitarian functionality doctrine demonstrates that judges are still uncertain about where to draw the line between trademark-eligible subject matter and functional features.

A fix for functionality

One of the most notable recent developments on aesthetic functionality came from the Ninth Circuit in Fleischer Studios v. A.V.E.L.A., a case that had the trademark bar up in arms at last year’s Annual Meeting. In its February 2011 decision, the Ninth Circuit Court of Appeals had ruled that Fleischer didn’t adequately show it held the copyright to the well-known Betty Boop character and that A.V.E.L.A did not infringe Fleischer’s trademark because its use of Betty Boop to sell merchandise was functional.

That analysis is what The Trademark Reporter author and speaker in today’s Annual Review of U.S. Federal and TTAB Developments session, Theodore Davis of Kilpatrick Townsend & Stockton, refers to as a “defensive functionality” approach. This means the court was addressing claims that what the defendant did was not actionable because it was functional, rather than focusing on whether the plaintiff’s use of the mark was functional. INTA and many others argue the latter interpretation is proper.

A similar analysis was applied by the U.S. District Court for the Eastern District of Virginia in August 2010, when it ruled in Rosetta Stone v. Google that using trademarks as keywords to identify relevant sponsored links is a functional use, and that Google is therefore protected from infringement claims under the doctrine of functionality.

INTA attacked this analysis in its amicus curiae brief to the Fourth Circuit Court of Appeals. But within the last year, both rulings have been replaced to the great relief of trademark owners and practitioners. The Ninth Circuit in August last year withdrew its original opinion in the Fleischer case and issued a new one that made no mention of aesthetic functionality. And in the Rosetta Stone case, the Fourth Circuit Court of Appeals struck down the district court’s functionality analysis, stating clearly that “the functionality doctrine simply does not apply in these circumstances.”

While those rulings have put some fears about a recent expansion of the functionality doctrine to rest for now, the Second Circuit Court of Appeals is still set to rule in Christian Louboutin v. Yves Saint Laurent, another closely watched case involving the interpretation of the functionality doctrine. The district court in that case ruled that a red sole on a shoe is functional and cannot be trademarked. Although Davis says this is a proper application of the functionality doctrine, he remains critical of the opinion. Says Davis: “My criticism is that it seems to be adopting a bright line rule that color can never function as a trademark in the fashion industry.”

TTAB and functionality

John Welch of Lando & Anastasi, who will be covering developments at the TTAB during today’s case law review session, will also be focused on functionality, particularly with respect to one recent case that Welch says “reopens a whole can of worms.”In In re Becton Dickinson and Company, a divided panel of the Federal Circuit affirmed a TTAB decision refusing registration of a closure cap for blood collection tubes. The panel focused on how much of a design must be functional for it to be ineligible for trademark protection, and took two different approaches. The divide highlights the uncertainty about where to draw the line between patent and trademark protection. “The question is where to draw the line for purposes of Section 2(e)(5): how significant must these non-functional features or elements be to avoid the verdict that the design is functional ‘as a whole’?” says Welch.

Dilution and fraud

Welch will also highlight the Board’s recent approach to dilution, which he says is front and center there lately. “For the first 12 years of the dilution statute there were two cases where the Board found dilution, and in the last six months there have been three,” says Welch. One noteworthy case involved watch maker Rolex, which failed to prove dilution because it did not adequately show that the rival mark would have changed the marketing power of ROLEX. “That was interesting because the mark had never been used, so I don’t know how they would have proven that,” notes Welch. He adds: “The dilution statute has been around for years and years and nobody knows what to do with it still. It’s inconsistent and shows the TTAB is really struggling with how to apply it.”

As for proving fraud at the TTAB—perhaps the hottest topic at the Board in recent years—since In re Bose Welch says such claims are dead in the water. “In the 32 months since Bose not a single fraud claim has been upheld,” says Welch. “It’s hard to get them to even look at the issue now.”

But that doesn’t mean fraud pleadings are less frequent. “People still plead it all the time because it’s an effective tool. It causes all kinds of heartache,” adds Welch. A claim of fraud can cause personal as well as professional angst, so the accusations continue despite the Board’s refusal to acknowledge them. Welch says he’d like to see the Board impose a rule to “stamp down” on such behavior. “They should pass a rule where if you plead fraud, an interlocutory attorney must participate in the settlement conference so they can kick it out right there,” says Welch.

Goats on a roof

In one of the more bizarre TTAB cases this year, Robert Doyle petitioned the Board to cancel two registrations comprising live goats on a grass roof. He claimed the marks negatively affected him because “many establishments in the classes to which Registrant’s mark apply have, because of Registrant’s marks, refrained from placing goats on their grass roofs, as a result of which Petitioner has been, and will continued (sic) to be, damaged in that Petitioner has been, and will continue to be, unable to satisfy his desire to take photographs of goats on grass roofs.”

The Board dismissed the petition, and Al Johnson’s Swedish Restaurant’s goats remain paparazzi-free.

Source: John Welch, TTABlog