McAirlaids, Inc. v. Kimberly-Clark Corporation , 756 F.3d 307 ( 2014 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2044
MCAIRLAIDS, INC.,
Plaintiff – Appellant,
v.
KIMBERLY-CLARK CORPORATION; KIMBERLY-CLARK WORLDWIDE, INC.;
KIMBERLY-CLARK GLOBAL SALES, LLC,
Defendants – Appellees.
Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Samuel G. Wilson, District
Judge. (7:12-cv-00578-SGW-RSB)
Argued: May 13, 2014 Decided: June 25, 2014
Before DUNCAN and WYNN, Circuit Judges, and J. Michelle CHILDS,
United States District Judge for the District of South Carolina,
sitting by designation.
Vacated and remanded by published opinion. Judge Duncan wrote
the opinion, in which Judge Wynn and Judge Childs joined.
ARGUED: Frank Kenneth Friedman, WOODS ROGERS, PLC, Roanoke,
Virginia, for Appellant. Andrew G. Klevorn, KATTEN MUCHIN
ROSENMAN LLP, Chicago, Illinois, for Appellees. ON BRIEF:
Joshua F.P. Long, J. Benjamin Rottenborn, Michael J. Hertz,
WOODS ROGERS, PLC, Roanoke, Virginia, for Appellant. Jeffrey A.
Wakolbinger, KATTEN MUCHIN ROSENMAN LLP, Chicago, Illinois;
Kevin P. Oddo, LECLAIRRYAN, PC, Roanoke, Virginia, for
Appellees.
DUNCAN, Circuit Judge:
McAirlaids, Inc. filed suit against Kimberly-Clark Corp.
for trade-dress infringement and unfair competition under
§§ 32(1)(a) and 43(a) of the Trademark Act of 1946 (“Lanham
Act”), 15 U.S.C. §§ 1114(1)(a) and 1125(a), and Virginia common
law. The district court granted summary judgment in favor of
Kimberly-Clark, and McAirlaids appeals. Because questions of
fact preclude summary judgment, we vacate and remand.
I.
A.
McAirlaids produces “airlaid,” a textile-like material
composed of cellulose fiber. Airlaid is used in a wide variety
of absorbent goods, including medical supplies, hygiene
products, and food packages. To make airlaid, cellulose fiber
is shredded into “fluff pulp,” which is arranged into loosely
formed sheets. In contrast to most of its competitors,
McAirlaids fuses these fluff pulp sheets through an embossing
process that does not require glue or binders.
McAirlaids patented its pressure-fusion process, U.S.
Patent No. 6,675,702 (filed Nov. 16, 1998) (“702 Patent”), J.A.
365–78, and the resulting product, U.S. Patent No. 8,343,612(filed May 22, 2009) (“612 Patent”), J.A. 496–500. In this
process, sheets of fluff pulp pass at very high pressures
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between steel rollers printed with a raised pattern. The
rollers leave an embossing pattern on the resulting material,
and the high-pressure areas bond the fiber layers into a
textile-like product. In order for McAirlaids’s fusion process
to adequately hold together the airlaid, the embossed design
must fall within certain general size and spacing parameters.
McAirlaids has chosen a “pixel” pattern for its absorbent
products: the high-pressure areas form rows of pinpoint-like
dots on the material. McAirlaids registered this pattern as
trade dress with the U.S. Patent and Trademark Office (“PTO”)
with the following description: “the mark is a [three-
dimensional] repeating pattern of embossed dots” used in various
types of absorbent pads. U.S. Trademark Registration No.
4,104,123, J.A. 249.
B.
McAirlaids initiated this lawsuit against Kimberly-Clark in
the Western District of Virginia after Kimberly-Clark began
using a similar dot pattern on its GoodNites bed mats, an
absorbent product manufactured in a manner different from
McAirlaids’s pads.
The district court bifurcated the issues in this case. In
the first phase, the only question before it was whether the dot
pattern on McAirlaids’s absorbent products was functional, and
thus not protectable as trade dress. At this stage, the
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district court found that the dot pattern was functional. It
determined that there were no disputes of material fact because
McAirlaids’s evidence of nonfunctionality “consist[ed],
essentially of its say-so.” McAirlaids, Inc. v. Kimberly-Clark
Corp., 2013 WL 3788660, No. 7:12-cv-00578-SGW-RSB, *4 (W.D. Va.
July 19, 2013). The district court therefore granted summary
judgment in favor of Kimberly-Clark. McAirlaids appeals.
II.
We review de novo the district court’s grant of summary
judgment based on its finding of functionality. Ga. Pac.
Consumer Prods., LP v. Von Drehle Corp., 618 F.3d 441, 445 (4th
Cir. 2010). Summary judgment is appropriate when “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). It is an “axiom that in ruling on a motion for summary
judgment, ‘[t]he evidence of the nonmovant is to be believed,
and all justifiable inferences are to be drawn in his favor.’”
Tolan v. Cotton, 134 S Ct. 1861, 1863 (2014) (per curiam)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)) (alteration in original).
Functionality--the only issue presented by this case--is a
question of fact that, like other factual questions, is
generally put to a jury. In re Becton, Dickinson & Co., 675
4
F.3d 1368, 1372 (Fed. Cir. 2012); Clicks Billiards, Inc. v.
Sixshooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001). “A
genuine question of material fact exists where, after reviewing
the record as a whole, a court finds that a reasonable jury
could return a verdict for the nonmoving party.” Dulaney v.
Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012).
Because “[c]redibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge,” we must
determine whether the evidence in this case “presents a
sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a
matter of law.” Liberty Lobby, 477 U.S. at 255, 251–52.
III.
Trademark law indefinitely protects designs that “identify
a product with its manufacturer or source.” TrafFix Devices,
Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28 (2001).
Patent law, on the other hand, “encourage[s] invention by
granting inventors a monopoly over new product designs or
functions for a limited time.” Qualitex Co. v. Jacobson Prods.
Co., 514 U.S. 159, 164 (1995). The so-called “functionality
doctrine prevents trademark law, which seeks to promote
competition by protecting a firm’s reputation, from instead
5
inhibiting legitimate competition by allowing a producer to
control a useful product feature.” Id. Therefore, when a
company wants to protect a functional feature of a product
design, it must turn to patent law rather than trademark law.
Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 161 (4th Cir.
2012). It also follows that proof of a design element’s
functionality is a complete defense in a trademark-infringement
action. Shakespeare Co. v. Silstar Corp. of Am., 9 F.3d 1091,
1102 (4th Cir. 1993). Although the functionality doctrine
originated in the common law, it has now been incorporated into
the Lanham Act, which prohibits registration of trade dress that
is “as a whole . . . functional.” 15 U.S.C. § 1052(e).
A product feature is functional--and therefore not
protectable as a trademark or trade dress--“if it is essential
to the use or purpose of the article or if it affects the cost
or quality of the article.” Qualitex, 514 U.S. at 165(citation and internal quotation marks omitted). In other
words, a feature is functional if “it is the reason the device
works,” or its exclusive use “would put competitors at a
significant non-reputation-related disadvantage.” TrafFix, 532
U.S. at 34, 32 (citations and internal quotation marks omitted).
On appeal, the parties agree that the pressurized bonding
points are themselves functional because these areas actually
fuse the layers of fluff pulp into a textile-like material. The
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parties, however, dispute whether McAirlaids’s chosen embossing
pattern is functional. McAirlaids argues that the district
court erred by misapprehending the significance of its utility
patents under TrafFix and by failing to consider the facts in
the light most favorable to McAirlaids, the nonmoving party. We
address each contention in turn.
A.
In TrafFix, the Supreme Court emphasized that a “utility
patent is strong evidence that the features therein claimed are
functional.” 532 U.S. at 29. In that case, Marketing Displays,
Inc. (“MDI”) created a mechanism to hold outdoor signs upright
in windy conditions, and MDI brought suit for trademark
infringement against TrafFix Devices, a competitor that copied
its signs’ “dual-spring design.” Id. at 25–26. MDI’s dual-
spring mechanism was the “central advance” of several expired
utility patents, which were of “vital significance in resolving
the trade dress claim.” Id. at 29–30. Given the utility
patents and other evidence of functionality, the Court concluded
that the dual-spring mechanism was functional rather than “an
arbitrary flourish.” Id. at 34. The Court then held that it
need not “speculat[e] about other design possibilities” because
it had already established that the design feature “is the
reason the device works.” Id. at 33–34.
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The parties dispute the proper application of TrafFix to
the present case. Kimberly-Clark argues that McAirlaids’s pixel
pattern is analogous to the dual-spring mechanism in TrafFix,
and thus not protectable as trade dress. McAirlaids, however,
argues that TrafFix is inapplicable. Although TrafFix is
certainly instructive, we agree with McAirlaids that it can be
distinguished on two grounds.
First, the burden of proof is different. In TrafFix, the
dual-spring mechanism in question was not registered as trade
dress with the PTO. Therefore, under the Lanham Act, MDI had
the “burden of proving that the matter sought to be protected
[wa]s not functional.” 15 U.S.C. § 1125(a)(3). In this case,
however, McAirlaids’s pixel pattern was properly registered as
trade dress. J.A. 32. Its registration serves as prima facie
evidence that the trade dress is valid, and therefore
nonfunctional. 15 U.S.C. § 1057(b); Christian Louboutin S.A. v.
Yves Saint Laurent Am. Holdings, 696 F.3d 206, 224 (2d Cir.
2012). The presumption of validity that accompanies registered
trade dress “has a burden-shifting effect, requiring the party
challenging the registered mark to produce sufficient evidence”
to show that the trade dress is invalid by a preponderance of
8
the evidence. 1 Retail Servs., Inc. v. Freebies Publishing, 364
F.3d 535, 542 (4th Cir. 2004). Therefore, Kimberly-Clark--the
party challenging a registered mark--has the burden of showing
functionality by a preponderance of the evidence in this case,
whereas in TrafFix, MDI--the party seeking protection of an
unregistered mark--had the burden of proving nonfunctionality.
Second, the utility patents in TrafFix protected the dual-
spring mechanism, which was the same feature for which MDI
sought trade-dress protection. See TrafFix, 532 U.S. at 30. In
contrast, McAirlaids’s utility patents cover a process and a
material, but do not mention a particular embossing pattern as a
protected element. J.A. 365–78, J.A. 496–500. The Court in
TrafFix acknowledged that “a different result might obtain” when
“a manufacturer seeks to protect arbitrary, incidental, or
ornamental aspects of features of a product found in the patent
claims, such as arbitrary curves in the legs or an ornamental
pattern painted on the springs.” TrafFix, 532 U.S. at 34. In
such a case, the court must “examin[e] the patent and its
1
“If sufficient evidence . . . is produced to rebut the
presumption, the presumption is neutralized and essentially
drops from the case.” Retail Servs., 364 F.3d at 543 (citation
and internal quotation marks omitted); see also Ga.-Pac.
Consumer Prods., LP v. Kimberly-Clark Corp., 647 F.3d 723, 727
(7th Cir. 2011).
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prosecution history to see if the feature in question is shown
as a useful part of the invention.” Id.Here, McAirlaids’s patents cover a production process and a
material, while the trade dress claimed is a particular pattern
on the material that results from the process. Unlike in
TrafFix, therefore, the pattern is not the “central advance” of
any utility patent. See 532 U.S. at 30. Neither of
McAirlaids’s patents refer to a particular embossing pattern.
Both patents reference line-shaped as well as point- or dot-
shaped pressure areas, but the patents also directly acknowledge
that embossing studs of different shapes can be used, including
lines, pyramids, cubes, truncated cones, cylinders, and
parallelepipeds. J.A. 365, 374–77, 499. In fact, the diagrams
of the 702 Patent show hexagonal shapes rather than circles.
J.A. 368, 372. Therefore, while McAirlaids’s patents do provide
evidence of the dots’ functionality, they are not the same
“strong evidence” as the patents in TrafFix. See 532 U.S. at
29.
Because the facts of this case are different from those
presented to the Supreme Court in TrafFix, TrafFix’s holding
about alternative designs is inapplicable here. As we have
noted, TrafFix instructed that courts need not consider the
availability of design alternatives after the functionality of a
design element has been established. 532 U.S. at 33–34. As the
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Federal Circuit has observed, however, TrafFix did not hold that
“the availability of alternative designs cannot be a legitimate
source of evidence to determine whether a feature is functional
in the first place.” Valu Engineering, Inc. v. Rexnord Corp.,
278 F.3d 1268, 1276 (Fed. Cir. 2002). Thus, TrafFix did not
alter our precedents that look to the availability of
alternative designs when considering, as an initial matter,
whether a design affects product quality or is merely
ornamental. See, e.g., Tools USA & Equipment Co. v. Champ Frame
Straightening Equipment Inc., 87 F.3d 654, 659 (4th Cir. 1996).
Therefore, when we address the alleged factual disputes below,
we consider evidence of alternative designs.
B.
Next, McAirlaids argues that the district court improperly
weighed the evidence in the record when it determined that the
pixel pattern is functional. Kimberly-Clark contends that the
record clearly indicates that McAirlaids selected its pixel
pattern due to functional considerations and that the embossing
design affects the pads’ strength, absorbency, and elongation
(i.e., stretchiness). McAirlaids counters that it has presented
sufficient evidence to create a genuine factual question as to
whether their selection of a pattern was a purely aesthetic
choice among many alternatives. We agree.
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When assessing a design element’s functionality, courts
often look at (1) the existence of utility patents, (2)
advertising focusing on the utilitarian advantages of a design,
(3) the availability of “functionally equivalent designs,” and
(4) the effect of the design on manufacturing. Valu
Engineering, 278 F.3d at 1274 (citing In re Morton-Norwich
Prods., Inc., 671 F.2d 1332, 1340–41 (C.C.P.A. 1982)). We thus
review the evidence relating to these factors, taken in the
light most favorable to McAirlaids, as the nonmoving party,
noting at the outset that the PTO already determined that
McAirlaids’s embossing pattern is not functional by registering
it as trade dress. 2 J.A. 32.
McAirlaids’s fiber-fusion process and resulting material
are patented; however, as we have pointed out, the patents do
not extend to any specific embossing pattern or the shapes used
therein. See J.A. 365–78, J.A. 496–500. Patents for other
nonwoven products specify that dot-shaped patterns are preferred
for embossed bonding, but such patents also indicate that many
designs can also be used. E.g., J.A. 212.
2
This case is not an anomaly--the PTO regularly registers
embossing patterns on nonwoven products as ornamental,
nonfunctional trade dress. E.g., U.S. Trademark Registration
No. 1,968,976, J.A. 568; U.S. Trademark Registration No.
1,924,873, J.A. 576; U.S. Trademark Registration No. 2,988,862,J.A. 588.
12
McAirlaids officials, including the engineer who selected
the company’s pixel pattern, have stated under oath that the
pattern was chosen “[b]ecause it looked nice” and “[w]e liked
it.” J.A. 320. Yet the company has arguably touted the
pattern’s functional attributes. In one marketing presentation,
McAirlaids described its pads’ “unique bonding pattern” as
increasing absorbency, J.A. 184, and images of McAirlaids’s
pixel pattern appeared on an advertisement referring to “German
engineering,” J.A. 208.
McAirlaids executives and both parties’ experts testified
that the company could have used many shapes for the high-
pressure areas that fuse the fibrous layers together: squares,
triangles, wavy or straight lines, hearts, flowers, and so on.
J.A. 351–52, 1427, 1478–80, 1666–68. In fact, McAirlaids
formerly produced airlaid imprinted with an embossing design of
intersecting diagonal lines, known as the “Harschur” pattern.
J.A. 252. During the three-year period when it produced airlaid
with both the pixel and the Harschur patterns, McAirlaids
conducted quality control tests on each type of absorbent pad,
measuring their weight, thickness, tensile strength, and
elongation. The pads’ performance tests for three measures--
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weight, thickness, and tensile strength--were nearly identical. 3
Although the elongation figures varied, both measurements were
within the normal range for absorbent pads. 4
Despite the wide variety of available shapes and patterns,
the parties agree that any embossing design would be “[s]ubject
to the suitable matching of cellulose fiber length, compression
elements spacing, and sufficient compression forces to cause
[]fiber fusion.” J.A. 507; see also J.A. 792, Appellee’s Br. at
29. In other words, an embossing design must meet general size
and spacing specifications to successfully bond the layers of
fluff pulp. J.A. 1373–76.
In light of the foregoing, we determine that McAirlaids has
presented sufficient evidence to raise a genuine issue of
material fact regarding the functionality of its pixel pattern.
In this particular case, deciding whether McAirlaids’s embossing
3
There was a one percent difference in the tensile strength
of the two patterns. The parties agree that this difference is
not statistically significant. J.A. 1466-68; 1559; 1669–71.
4
Kimberly-Clark also presented evidence from tests
conducted on their own absorbent products, which are made using
a similar fiber-bonding process. However, the scientific
validity of these tests is disputed for two reasons. First, the
tests were conducted on a single day by a student intern without
supervision. J.A. 1745–51. Second, the products tested may
have come from different foreign manufacturing facilities, so
there is no proof that the products were identical but-for their
embossing patterns. J.A. 814–15, 1754, 1767. Even Kimberly-
Clark’s expert agreed that the samples used “were not rigorously
prepared for testing.” J.A. 1701.
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pattern affects the quality of its pads requires weighing
evidence and making credibility determinations. These are
functions for a jury, not the judge. See Liberty Lobby, 477
U.S. at 255. In sum, there remains a dispute of material fact
as to whether a specific embossing pattern is “the reason the
device works” or “merely an ornamental, incidental, or arbitrary
aspect of the device.” TrafFix, 532 U.S. at 34, 30. Therefore,
summary judgment was inappropriate.
IV.
For the foregoing reasons, we vacate the judgment of the
district court and remand for further proceedings.
VACATED AND REMANDED
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