We will be discussing two recent cases during our weekly SoCal IP Institute meeting on Monday, February 13, 2012. The first is a 9th Circuit case involving trade dress and the second is a Trademark Trial and Appeal Board (TTAB) case seeking cancellation of a certification mark.  Brief synopses are presented below.

Secalt S.A. v. Wuxi Shenxi Constr. et al., Case No. 20-17007, 11-15066 (9th. Cir. Feb. 7, 2012) (attached). Tractel manufactures and sells a traction hoist, typically used for construction and external maintenance of buildings.  Jiangsu, a Chinese competitor, manufactures a very similar hoist.  Tractel brought suit claiming that Jiangsu’s hoists infringed their trade dress.  The complaint was based upon trade dress infringement under the Lanham Act, federal unfair competition and related stat law trade dress and unfair competition claims.  The district court granted a summary motion by Jiangsu finding that Tractel failed to demonstrate that the alleged trade dress was nonfunctional.  The district court also awarded fees and costs to Jiangsu as an “exceptional” case under the Lanham Act.

In order to support a claim for trade dress infringement of an overall product configuration, “the entire design must be nonfunctional.”  Leatherman Tool Grp. v. Cooper Indus., 199 F.3d 1009, 1012 (9th Cir. 1999).  Tractel claimed that the configuration of parts met at right angles to give a “cubist” appearance and that the fins added to the exterior of the motor were intended to be “modern.”  The 9th Circuit found, citing Leatherman, that these elements that may or may not be purely for appearance do not save the otherwise functional nature of the arrangement of parts.  Instead, the entire configuration of parts must be nonfunctional.  Clearly, this was not the case.

Tractel also argued that the district court should have considered the Disc Golf factors:

(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.

Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998).

The 9th Circuit considered each factor and found that Tractel had not overcome its burden to show that the design was nonfunctional.

The 9th Circuit then considered the district court’s grant of attorney’s fees and costs as an exceptional case.  Because Tractel did not provide any reasonable ground to support its trade dress claim, even after two years of discovery.  At the point the summary judgement motion was filed, the 9th Circuit reasoned, it should have been well aware that it would be unable to prevail on the claim.  The failure of proof, coupled with Tractel’s insistence on asserting its claim moved this case, the 9th Circuit reasoned, from a mere failure to prevail to an exceptional case.  However, the attorney’s fees were remanded for confirmation that they were “reasonable” because the district court failed to make a finding on that issue.  A portion of the costs were also remanded as unreasonable or unsubstantiated.

Swiss Watch Int’;. v. Swiss Watch Indus., Cancellation No. 92046786 (TTAB Jan. 30, 2012 (attached).  Swiss Watch Int’l. (Int’l.) sought cancellation of the “SWISS MADE” and “SWISS” certification marks owned by the Federation of Swiss Watch Industry (Federation). These marks were to be used on goods certified by Int’l. as having a geographic origin in Switzerland.  Int’l. sought cancellation based upon a likelihood of confusion with their own marks (applications pending for “SWISS WATCH INTERNATIONAL” and “SWISS LEGEND”), alleged misrepresentations that led to registration, fraud on the U.S. Patent and Trademark Office, a lack of legitimate control over the marks, because Federation failed to police the use of the mark, because Federation discriminates in granting use of its mark and because the marks SWISS and SWISS MADE have become generic.

The TTAB dealt with some evidentiary issues and then moved on to the substance of the dispute.  Federation was tasked by the Swiss government with ensuring that manufacturers of watches and clocks claiming to be “Swiss,” actually satisfy a number of requirements, including that their products are actually made in Switzerland.  The first claim was that Federation allows the mark to be used in ways other than as certifications.  Examples included use by “Wenger Swiss Military” and “Swiss Army” among others.  The TTAB pointed out that this is not using the mark, but using each of those parties individual marks.  The TTAB addressed the allegedly large-scale failure of Federation to police the mark by stating that it was clear from the evidence that Federation has undertaking large-scale efforts to confirm that entities adhere to its standards.  While not complete or perfect, Federation’s control was adequate.

Int’l.’s next argument is, essentially, that it disagrees with Federation’s requirement that the watch movement be cased and inspected in Switzerland.  The TTAB pointed out that disagreement with the certification standards has nothing to do with the Board.  It is not the Board’s purpose to cast judgment upon the requirements for certification, but merely to confirm that the third party has standards and adheres to them.  The TTAB also dismissed the argument that the marks had become generic.  To the contrary, the “Swiss” watch carried significant positive public perception and, though used by some non-Swiss companies, that was not diminished in its meaning for quality and geographic origin.  The argument that Federation committed fraud in procuring the registration was based upon the failure of the standards document submitted in the application to use the phrase “Swiss Made.”  Instead it used the word “Swiss.”  The TTAB found this argument unpersuasive.  Accordingly, the petition to cancel the two Federation registrations was denied on all grounds.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, February 13, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.