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The Right To Copy ' and Use ' Unprotected Product Designs Is Alive And Well

By Thomas J. Wimbiscus, Alejandro Menchaca and Dennis P. Hackett
November 29, 2005

The Seventh Circuit has reaffirmed a competitor's right to copy and use unprotected product designs ' and clarified the ability to do so without violating the Lanham Act for “passing off” or trade dress infringement. Bretford Mfg., Inc. v. Smith System Mfg., Corp., 419 F.3d 576 (7th Cir. 2005). This article examines the legal precedent behind the right to copy and use unprotected product designs in the context of this case, and provide analysis of its impact.

The Notion of Freedom to Copy

The Supreme Court has long recognized that “if a design is not entitled to a design patent or other federal statutory protection, then it can be copied at will.” Compco v. Day-Brite Lighting, Inc., 376 U.S. 234, 238 (1964). Thus, “rivals [have a] right to reverse-engineer and copy products which they may do down to the last detail unless a feature of the product is protected by patent, copyright, or trademark law.” TraFfix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 29 (2001). This “right” rests on a public policy that competition is hindered when competitors are unduly barred from duplicating unprotected design features, as “[a]llowing competitors to copy will have salutary effects in many instances.” Id.

Despite this precedent, however, there is still a potential for liability in cases involving the copying of unpatented product designs. For example, the notion of “other federal statutory protection,” referenced in Compco, may implicate issues of copyright and trademark (“trade dress”) rights. Likewise, state laws routinely provide trademark and other protection against unfair competition, as recognized by the Supreme Court in Sears Roebuck & Co. v. Stiffel Co., 376 U.S. 225, (1964). See, Id. at 232 (“Doubtless a State may … protect businesses in the use of their trademarks, labels, or distinctive trade dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods.”).

With respect to copyright protection, the Supreme Court has held that “[t]he right to copy and to copy without attribution, once a copyright has expired, like 'the right to make an article whose patent has expired ' including the right to make it precisely the shape it carried when patented ' passes to the public.'” Dastar Corp. v. Twentieth Century Fox Flim Corp., 539 U.S. 23, 29 (2003) (quoting Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 (1964)).

With respect to trademark protection, a product design may be covered by trade dress, which ” refers to the total image of a product, including features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques.” Syndicates Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 635 (7th Cir. 1999).

Trade dress may be protected under '43(a) of the Lanham Act when it identifies the source of the product. In cases involving product designs, trade dress will be protected if the trade dress has attained “secondary meaning” ' that is, if consumers understand that the design elements signify the origin of the goods and not just its attributes. Wal-Mart Stores, Inc. v. Samara Brothers Inc., 529 U.S. 205, 215 (2000). Otherwise, it would be too easy to “dissuade rivals from using their right to reverse-engineer and copy products” that are not protected by patent, copyright, or trademark law. Bretford, 419 F.2d at 579 (quoting TraFfix Devices, 532 U.S. at 29) (emphasis added).

Thus, federal law recognizes that a right to copy unpatented product designs may exist in appropriate cases. Such a right, however, is subject to potential issues of copyright and trade dress protection ' as well as issues of state law.

Bretford ' Factual Background

In this case, the plaintiff, Bretford, manufactured and sold a line of computer tables under its CONNECTIONS trademark for use primarily by schools. The CONNECTIONS tables featured a tabletop supported by two adjustable legs. As shown below, the legs were made of two components ' a vertical post and a V-shaped component mounted on the vertical post that could slide over the vertical post to adjust the height of the tables.

[IMGCAP(1)]

In 1996, Smith System developed its FLEXLINE series of computer tables that also featured a V-shaped height adjustment system modeled after the Bretford design. Smith System used the V-shaped adjustable height leg design of the Bretford CONNECTIONS table as a basis for developing its FLEXLINE table.

Both Bretford and Smith System sold their respective tables through independent dealers, who submitted bids to school district customers. In 1997, the Dallas Independent School District (DISD) issued a request for bids to supply 300 computer worktables. The bid specified the Bretford table as a reference, but also allowed equivalent substitutes. The DISD awarded the contract to a dealer that had bid the project to supply Smith System's FLEXLINE computer tables. After award of the contract, the DISD requested a sample of the proposed Smith System table. The district court found that Smith System used a Bretford V-shaped leg in putting together the sample of the product. All of the tables that Smith System supplied to the DISD were labeled as Smith System tables ' and contained V-shaped legs manufactured by Smith System's subcontractor. The DISD was satisfied with the tables manufactured by Smith System.

Proceedings Before the District Court

In January 1998, Bretford filed suit alleging, among other things, trade dress infringement and reverse passing off in violation of Section 43(a) of the Lanham Act (15 U.S.C. '1125(a)). Bretford contended that Smith System infringed its trade dress rights in the V-shaped leg and that Smith System engaged in reverse passing off (when Smith System incorporated a Bretford V-shaped leg on the sample table Smith System showed to the DISD). In support of its claim of trade dress infringement, Bretford argued that it had used the design exclusively for seven years during which time it spent $4 million in promoting such products. Bretford further cited Smith System's copying as evidence of both trade dress (ie, as “strength of the mark”) and likelihood of confusion ' two elements necessary to prove trade dress infringement.

Smith System responded that it was free to copy the V-shaped design, as it was not protected by patent, copyright, or entitled to trade dress protection under '43(a) of the Lanham Act. As to the claim of trade dress infringement, Smith System contended that there could be no trade dress because the V-shaped legs did not serve as an identifier of source and the design was merely “functional.” Smith System also argued there could be no likelihood of confusion here, as the sophisticated customers knew the source of the tables ' and did not care about the source of their component parts.

The district court granted summary judgment, finding that there was no trade dress infringement and noted that there was no likelihood of confusion as to the source of the tables. However, the district court held that Smith System was vicariously liable for the actions of one of its agents who willfully “passed off” a set of Bretford legs as Smith System legs in the sample provided to the DISD. The court awarded Bretford its lost profits, along with enhanced damages, attorneys' fees, costs and prejudgment interest.

Through a series of briefings, however, Smith System successfully convinced the district court to reverse its prior award of treble damages, deny an award of punitive damages, and then reverse the liability award itself. The district court also vacated the award of attorneys' fees to Bretford and, later awarded Smith System its attorneys' fees and costs.

In reversing its prior finding of “passing off,” the district court cited Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). In Dastar, the Supreme Court held that in '43(a) of the Lanham Act, “origin” means “the producer of the tangible product sold in the marketplace.” 539 U.S. at 31. The district court agreed with Smith System that Dastar limited trade dress protection to the finished goods sold in the marketplace ' and not merely to component parts. Under Dastar, Smith System was thus the “origin of goods” sold to the DISD, and thus there was no “false designation of origin” under the Lanham Act. The court found that the DISD was not concerned with the producer of every component that made up the computer table, only that Smith System was the origin of the final product.

Proceedings Before the Seventh Circuit

Bretford appealed the case to the U.S. Court of Appeals for the Seventh Circuit. In its appeal, Bretford asserted that the district court erred in dismissing its claims of trade dress infringement and passing off. Again, Bretford relied heavily on Smith System's alleged wrongful copying.

As to the issue of trade dress infringement, the Seventh Circuit framed the question as, “whether Smith System is entitled to copy Bretford's design.” Bretford Mfg., Inc. v. Smith System Mfg. Corp., 419 F.3d 576, 578 (7th Cir. 2005) (emphasis added). In rejecting Bretford's allegations of trade dress infringement, and recognizing that Smith System had a right to “freely” copy the V-shaped design (noting that it was not otherwise patented or copyrighted), the Seventh Circuit stated:

Bretford has no evidence that the leg design prompts “Bretford” in buyers' minds. There are no surveys and no evidence of actual confusion. Both Bretford and Smith System sell through distributors and field representatives to sophisticated buyers who know exactly where their goods are coming from. … In the end, all Bretford has to go on is the fact that it was the only maker of such tables for 8 years and spent more than $ 4 million to promote sales. If that were enough to permit judgment in its favor, new entry would be curtailed unduly by the risk and expense of trademark litigation, for every introducer of a new design could make the same sort of claim. “Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants based on alleged inherent distinctiveness.” Wal-Mart, 529 U.S. at 213.

Bretford, 419 F.3d at 579 (partial emphasis added).

As to the question of alleged “passing off,” the Seventh Circuit framed the issue as “whether it was nonetheless wrongful for Smith System to use Bretford components in a sample table shown to the [DISD].” Id. at 578. The court first noted that, under Dastar, “the injury must be a trademark loss ' which is to say, it must come from a misrepresentation of the goods' origin.” Id. at 580. In Dastar, the infringement defendant “had the right (so far as the Lanham Act is concerned) to incorporate into its videos footage taken and edited by others, provided that it manufactured the finished product and did not mislead anyone about who should be held responsible for shortcomings.” Id. In other words, and as the court explained, “[n]o one makes a product from scratch, with trees and iron ore entering one end of the plant and a finished consumer product emerging at the other.” Id. The Lanham Act “does not condemn the way in which products are made.” Id. at 581.

Rather, as the court stated:

[T]he right question, Dastar holds, is whether the consumer knows who has produced the finished product. In the Dastar case that was Dastar itself, even though most of the product's economic value came from elsewhere; just so when Smith System includes components manufactured by others but stands behind the finished product. The portion of '43(a) that addresses reverse passing off is the one that condemns false designations of origin. “Origin” means, Dastar holds, “the producer of the tangible product sold in the marketplace.” 539 U.S. at 31. As far as Dallas was concerned, the table's “origin” was Smith System, no matter who made any component or subassembly.

Id.

Fairness is Not the Standard
Under Federal Law

In closing, the Seventh Circuit noted that “[m]uch of Bretford's argument takes the form that it is just “unfair” for Smith System to proceed as it did …” The court went on to say, however:

Businesses often think competition unfair, but federal law encourages wholesale copying, the better to drive down prices. Consumers rather than producers are the objects of the law's solicitude. … Once Bretford sold its goods, it had no control over how customers used their components: the Lanham Act does not include any version of the “derivative work” right in copyright law. See, 17 U.S.C. '106(2).

Id.

The court then affirmed the dismissal of Bretford's asserted state law violations for lack of cited support in law.

Implications

Bretford is thus instructive for analyzing cases involving copying of a product design. First, a product design may be protected in a number of ways, such as patents, copyrights, and trade dress. Second, trade dress protection itself may present issues for counsel, including whether the design serves as an identifier of source or whether there exists a likelihood of confusion by the purchaser. Absent such protection, competitors may freely copy and use that product design, provided that they do so without wrongful misrepresentation or other unfair competition. In fact, such copying is often beneficial for consumers. Third, in such case, a manufacturer may use components obtained from other sources in its own finished products as long as that use does not constitute a false designation of origin or misrepresentation.

Conclusion

Copying is a valid and salutary part of competition. Federal law recognizes that, in appropriate cases, the “right to copy” goods serves to enhance competition and benefit the consumer ' by allowing greater availability of products and lower prices. So far as the Lanham Act is concerned, in cases of product designs, a lawful right to copy even substantial component parts may exist where the goods are not patented or copyrighted ' and not the object of misrepresentation.



Thomas J. Wimbiscus Alejandro (Alex) Menchaca Dennis Hackett http://www.mhmlaw.com/

The Seventh Circuit has reaffirmed a competitor's right to copy and use unprotected product designs ' and clarified the ability to do so without violating the Lanham Act for “passing off” or trade dress infringement. Bretford Mfg., Inc. v. Smith System Mfg., Corp. , 419 F.3d 576 (7th Cir. 2005). This article examines the legal precedent behind the right to copy and use unprotected product designs in the context of this case, and provide analysis of its impact.

The Notion of Freedom to Copy

The Supreme Court has long recognized that “if a design is not entitled to a design patent or other federal statutory protection, then it can be copied at will.” Compco v. Day-Brite Lighting, Inc. , 376 U.S. 234, 238 (1964). Thus, “rivals [have a] right to reverse-engineer and copy products which they may do down to the last detail unless a feature of the product is protected by patent, copyright, or trademark law.” TraFfix Devices, Inc. v. Marketing Displays, Inc. , 532 U.S. 23, 29 (2001). This “right” rests on a public policy that competition is hindered when competitors are unduly barred from duplicating unprotected design features, as “[a]llowing competitors to copy will have salutary effects in many instances.” Id.

Despite this precedent, however, there is still a potential for liability in cases involving the copying of unpatented product designs. For example, the notion of “other federal statutory protection,” referenced in Compco, may implicate issues of copyright and trademark (“trade dress”) rights. Likewise, state laws routinely provide trademark and other protection against unfair competition, as recognized by the Supreme Court in Sears Roebuck & Co. v. Stiffel Co. , 376 U.S. 225, (1964). See, Id. at 232 (“Doubtless a State may … protect businesses in the use of their trademarks, labels, or distinctive trade dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods.”).

With respect to copyright protection, the Supreme Court has held that “[t]he right to copy and to copy without attribution, once a copyright has expired, like 'the right to make an article whose patent has expired ' including the right to make it precisely the shape it carried when patented ' passes to the public.'” Dastar Corp. v. Twentieth Century Fox Flim Corp. , 539 U.S. 23, 29 (2003) (quoting Sears, Roebuck & Co. v. Stiffel Co. , 376 U.S. 225, 230 (1964)).

With respect to trademark protection, a product design may be covered by trade dress, which ” refers to the total image of a product, including features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques.” Syndicates Sales, Inc. v. Hampshire Paper Corp. , 192 F.3d 633, 635 (7th Cir. 1999).

Trade dress may be protected under '43(a) of the Lanham Act when it identifies the source of the product. In cases involving product designs, trade dress will be protected if the trade dress has attained “secondary meaning” ' that is, if consumers understand that the design elements signify the origin of the goods and not just its attributes. Wal-Mart Stores, Inc. v. Samara Brothers Inc. , 529 U.S. 205, 215 (2000). Otherwise, it would be too easy to “dissuade rivals from using their right to reverse-engineer and copy products” that are not protected by patent, copyright, or trademark law. Bretford, 419 F.2d at 579 (quoting TraFfix Devices, 532 U.S. at 29) (emphasis added).

Thus, federal law recognizes that a right to copy unpatented product designs may exist in appropriate cases. Such a right, however, is subject to potential issues of copyright and trade dress protection ' as well as issues of state law.

Bretford ' Factual Background

In this case, the plaintiff, Bretford, manufactured and sold a line of computer tables under its CONNECTIONS trademark for use primarily by schools. The CONNECTIONS tables featured a tabletop supported by two adjustable legs. As shown below, the legs were made of two components ' a vertical post and a V-shaped component mounted on the vertical post that could slide over the vertical post to adjust the height of the tables.

[IMGCAP(1)]

In 1996, Smith System developed its FLEXLINE series of computer tables that also featured a V-shaped height adjustment system modeled after the Bretford design. Smith System used the V-shaped adjustable height leg design of the Bretford CONNECTIONS table as a basis for developing its FLEXLINE table.

Both Bretford and Smith System sold their respective tables through independent dealers, who submitted bids to school district customers. In 1997, the Dallas Independent School District (DISD) issued a request for bids to supply 300 computer worktables. The bid specified the Bretford table as a reference, but also allowed equivalent substitutes. The DISD awarded the contract to a dealer that had bid the project to supply Smith System's FLEXLINE computer tables. After award of the contract, the DISD requested a sample of the proposed Smith System table. The district court found that Smith System used a Bretford V-shaped leg in putting together the sample of the product. All of the tables that Smith System supplied to the DISD were labeled as Smith System tables ' and contained V-shaped legs manufactured by Smith System's subcontractor. The DISD was satisfied with the tables manufactured by Smith System.

Proceedings Before the District Court

In January 1998, Bretford filed suit alleging, among other things, trade dress infringement and reverse passing off in violation of Section 43(a) of the Lanham Act (15 U.S.C. '1125(a)). Bretford contended that Smith System infringed its trade dress rights in the V-shaped leg and that Smith System engaged in reverse passing off (when Smith System incorporated a Bretford V-shaped leg on the sample table Smith System showed to the DISD). In support of its claim of trade dress infringement, Bretford argued that it had used the design exclusively for seven years during which time it spent $4 million in promoting such products. Bretford further cited Smith System's copying as evidence of both trade dress (ie, as “strength of the mark”) and likelihood of confusion ' two elements necessary to prove trade dress infringement.

Smith System responded that it was free to copy the V-shaped design, as it was not protected by patent, copyright, or entitled to trade dress protection under '43(a) of the Lanham Act. As to the claim of trade dress infringement, Smith System contended that there could be no trade dress because the V-shaped legs did not serve as an identifier of source and the design was merely “functional.” Smith System also argued there could be no likelihood of confusion here, as the sophisticated customers knew the source of the tables ' and did not care about the source of their component parts.

The district court granted summary judgment, finding that there was no trade dress infringement and noted that there was no likelihood of confusion as to the source of the tables. However, the district court held that Smith System was vicariously liable for the actions of one of its agents who willfully “passed off” a set of Bretford legs as Smith System legs in the sample provided to the DISD. The court awarded Bretford its lost profits, along with enhanced damages, attorneys' fees, costs and prejudgment interest.

Through a series of briefings, however, Smith System successfully convinced the district court to reverse its prior award of treble damages, deny an award of punitive damages, and then reverse the liability award itself. The district court also vacated the award of attorneys' fees to Bretford and, later awarded Smith System its attorneys' fees and costs.

In reversing its prior finding of “passing off,” the district court cited Dastar Corp. v. Twentieth Century Fox Film Corp. , 539 U.S. 23 (2003). In Dastar, the Supreme Court held that in '43(a) of the Lanham Act, “origin” means “the producer of the tangible product sold in the marketplace.” 539 U.S. at 31. The district court agreed with Smith System that Dastar limited trade dress protection to the finished goods sold in the marketplace ' and not merely to component parts. Under Dastar, Smith System was thus the “origin of goods” sold to the DISD, and thus there was no “false designation of origin” under the Lanham Act. The court found that the DISD was not concerned with the producer of every component that made up the computer table, only that Smith System was the origin of the final product.

Proceedings Before the Seventh Circuit

Bretford appealed the case to the U.S. Court of Appeals for the Seventh Circuit. In its appeal, Bretford asserted that the district court erred in dismissing its claims of trade dress infringement and passing off. Again, Bretford relied heavily on Smith System's alleged wrongful copying.

As to the issue of trade dress infringement, the Seventh Circuit framed the question as, “whether Smith System is entitled to copy Bretford's design.” Bretford Mfg., Inc. v. Smith System Mfg. Corp. , 419 F.3d 576, 578 (7th Cir. 2005) (emphasis added). In rejecting Bretford's allegations of trade dress infringement, and recognizing that Smith System had a right to “freely” copy the V-shaped design (noting that it was not otherwise patented or copyrighted), the Seventh Circuit stated:

Bretford has no evidence that the leg design prompts “Bretford” in buyers' minds. There are no surveys and no evidence of actual confusion. Both Bretford and Smith System sell through distributors and field representatives to sophisticated buyers who know exactly where their goods are coming from. … In the end, all Bretford has to go on is the fact that it was the only maker of such tables for 8 years and spent more than $ 4 million to promote sales. If that were enough to permit judgment in its favor, new entry would be curtailed unduly by the risk and expense of trademark litigation, for every introducer of a new design could make the same sort of claim. “Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants based on alleged inherent distinctiveness.” Wal-Mart, 529 U.S. at 213.

Bretford, 419 F.3d at 579 (partial emphasis added).

As to the question of alleged “passing off,” the Seventh Circuit framed the issue as “whether it was nonetheless wrongful for Smith System to use Bretford components in a sample table shown to the [DISD].” Id. at 578. The court first noted that, under Dastar, “the injury must be a trademark loss ' which is to say, it must come from a misrepresentation of the goods' origin.” Id. at 580. In Dastar, the infringement defendant “had the right (so far as the Lanham Act is concerned) to incorporate into its videos footage taken and edited by others, provided that it manufactured the finished product and did not mislead anyone about who should be held responsible for shortcomings.” Id. In other words, and as the court explained, “[n]o one makes a product from scratch, with trees and iron ore entering one end of the plant and a finished consumer product emerging at the other.” Id. The Lanham Act “does not condemn the way in which products are made.” Id. at 581.

Rather, as the court stated:

[T]he right question, Dastar holds, is whether the consumer knows who has produced the finished product. In the Dastar case that was Dastar itself, even though most of the product's economic value came from elsewhere; just so when Smith System includes components manufactured by others but stands behind the finished product. The portion of '43(a) that addresses reverse passing off is the one that condemns false designations of origin. “Origin” means, Dastar holds, “the producer of the tangible product sold in the marketplace.” 539 U.S. at 31. As far as Dallas was concerned, the table's “origin” was Smith System, no matter who made any component or subassembly.

Id.

Fairness is Not the Standard
Under Federal Law

In closing, the Seventh Circuit noted that “[m]uch of Bretford's argument takes the form that it is just “unfair” for Smith System to proceed as it did …” The court went on to say, however:

Businesses often think competition unfair, but federal law encourages wholesale copying, the better to drive down prices. Consumers rather than producers are the objects of the law's solicitude. … Once Bretford sold its goods, it had no control over how customers used their components: the Lanham Act does not include any version of the “derivative work” right in copyright law. See, 17 U.S.C. '106(2).

Id.

The court then affirmed the dismissal of Bretford's asserted state law violations for lack of cited support in law.

Implications

Bretford is thus instructive for analyzing cases involving copying of a product design. First, a product design may be protected in a number of ways, such as patents, copyrights, and trade dress. Second, trade dress protection itself may present issues for counsel, including whether the design serves as an identifier of source or whether there exists a likelihood of confusion by the purchaser. Absent such protection, competitors may freely copy and use that product design, provided that they do so without wrongful misrepresentation or other unfair competition. In fact, such copying is often beneficial for consumers. Third, in such case, a manufacturer may use components obtained from other sources in its own finished products as long as that use does not constitute a false designation of origin or misrepresentation.

Conclusion

Copying is a valid and salutary part of competition. Federal law recognizes that, in appropriate cases, the “right to copy” goods serves to enhance competition and benefit the consumer ' by allowing greater availability of products and lower prices. So far as the Lanham Act is concerned, in cases of product designs, a lawful right to copy even substantial component parts may exist where the goods are not patented or copyrighted ' and not the object of misrepresentation.



Thomas J. Wimbiscus Alejandro (Alex) Menchaca McAndrews Held & Malloy Dennis Hackett http://www.mhmlaw.com/

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