IP News

Converse has been a strong player in the casual shoe market since the pre-cursor to Chucks were first introduced in 1917. The shoe was later re-named for Charles “Chuck” Taylor — a basketball player, and the original spokesperson for the shoe. According to Converse, the trademarked elements of the Chuck design have remained unchanged since 1932. Converse claims to have used the trade dress since 1932. Converse, Inc. v. ITC, 128 U.S.P.Q.2d 1538, 1541. However, it did not register the trade dress with the United States Patent and Trademark Office (USPTO) until 2013. Id. at 1542.

Since the 1930s, the popularity of the shoe has waxed and waned. In the early 2000s Nike purchased Converse, and gave Chucks a financial push. The shoe was reintroduced in a variety of colors and prints, and also expanded into international markets. Converse claims it has sold over a billion pairs of the shoes. It has since focused more time and energy on policing and protecting its brand. Between 2008 and 2014 Converse reportedly sent over 180 cease and desist letters, and has instituted numerous trademark litigations against individual companies. These efforts have seemed to pay off, because since Nike acquired the brand for $305 million dollars, annual sales for Converse increased to nearly $2 billion dollars in 2016.

History of the Instant Action

In 2014 Converse brought lawsuits against some 31 companies for trademark infringement, dilution and unfair competition in the U.S. District Court for the Eastern District of New York for allegedly copying the Chuck design. Separately, Converse also filed an ITC action requesting a general exclusion order which would have prohibited third parties from importing shoes with any of its protected design features. New Balance Athletics Inc., (New Balance), Skechers U.S.A., Inc., (Skechers), and Hu Liquidation, LLC, (Highline) later joined as “Intervenors.” In the Matter of Certain Footwear Products, USITC, 337-TA-936 (2016) (the action covered three U.S. trade dress registrations, No. 3,258,103 (the '103 Registration) for the three-dimensional tread on the outsole of the shoe, No. 1,588,960 (the '960 Registration) for the three-dimensional design on the sole of the shoe, and No. 4,398,753 (the '753 Registration) for a design featuring two-stripes on the midsole toe cap, and diamond and line toe bumper). Most of the original civil lawsuits settled very quickly, but a few dragged, and the separate ITC action quickly became a hot topic among trademark practitioners.

In 2015, an Administrative Law Judge (ALJ) with the ITC found that all three of Converse's registrations were being infringed, and recommended that the exclusion order be granted. Upon review in 2016, the ITC affirmed in part and reversed in part. Notably, it recognized the '103 Registration and the '960 Registration, but invalidated the '753 Registration because it lacked “secondary meaning,” and found that Converse did not have any common law rights in the design for the period before its (invalidated) registration was issued. Converse then appealed the ITC ruling to the CAFC, indicating that the ITC's ruling would “destroy an iconic American brand and reward copiers.” Converse, Inc. v. ITC, Case No. 16-2497, Dkt. No. 73, at 6 (Fed. Cir. Aug 16, 2016).

What Constitutes Protectable Trade Dress?

In the United States, only the non-functional elements of trade dress enjoy protection. Product design (a form of trade dress which can include shoe design) cannot be inherently distinctive under the Supreme Court holding in Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, (2000). In order to demonstrate that trade dress has sufficient distinctiveness, the owner must demonstrate that the design has “secondary meaning.” Secondary meaning exists when “in the minds of the public, the primary significance of a [trademark] is to identify the source of the product rather than the product itself.” Id. at 211 (internal citations omitted). Plainly, this means that a consumer would associate a product design with a certain company, much the same way they would a more traditional trademark such as a logo.

How Is Secondary Meaning Demonstrated ?

Secondary meaning is demonstrated through a variety of evidence, including: 1) the amount and length of time a particular trade dress has been advertised; 2) (unsolicited) media coverage of a product; 3) amount of sales and number of customers;(4) proof of intentional infringement by others; 5) the length of time the trade dress was used; 6) exclusivity of the use, as well as; 7) consumer surveys/ consumer testimony demonstrating that the relevant public associates a mark with the source of a particular product. Under the Lanham Act, after trade dress has been successfully registered with the USPTO, it is presumed to be valid and it is further presumed that it has secondary meaning. 15 U.S.C. §§1057(b), 1115(a).

What Test Did the ITC Use to Determine Secondary Meaning in the Converse Case?

To determine whether the Chuck design had acquired secondary meaning the CAFC held that the factors to consider are: “(1) association of the trade dress with a particular source by actual purchasers (typically measured by customer surveys); (2) length, degree, and exclusivity of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) intentional copying; and (6) unsolicited media coverage of the product embodying the mark.” Converse, Inc. v. ITC, 128 U.S.P.Q.2d 1538, 1545 (Fed. Cir. 2018).

The CAFC further noted that in the 2016 ruling the ITC had viewed Converse's “length, degree, and exclusivity of use” as separate factors, but in reality “[a]ll six factors are to be weighed together in determining the existence of secondary meaning” on remand. Id. at 1546. It further clarified that the most relevant period of “substantially exclusive and continuous use” that weighed in favor of the mark owner having acquired “secondary meaning” was five years' time. Id. at 1547. In sum, when evaluating factor two of the test above, the ITC should rely principally on uses within the last five years. Id.

Presumption of Secondary Meaning

Converse had argued that its registrations gave it a presumption that its marks had acquired “secondary meaning,” both before, and after the trade dress was registered. Intervenors argued that this presumption was forward looking only — i.e., only after the registration was issued was the presumption valid. The CAFC sided with the Intervenors, because Converse was unable to identify any authority for the position that the presumption was backward looking. Id. at 1544. Thus, Converse is not entitled to the presumption of “secondary meaning” for all putative infringements that Converse alleges, from before the trade dress was registered. Id. The CAFC further held that on remand, the ITC would need to evaluate whether these prior uses by competitors were “substantially similar” to Converse's registered mark, something it had not previously done. Id. at 1547 (internal citations omitted). This review would help determine whether the Intervenors' product designs were in fact infringing.

Analysis

While the recent decision was not a clear win for any of the parties (and included a forceful dissent/concurrence from Judge O'Malley arguing that the majority opinion ignores critical procedural facts and statutory authority), it gave Converse a second shot on remand to show that it acquired “secondary meaning” before Intervenors started selling their putatively infringing products. Id. at 1544.

Perhaps trademark owners should view this decision as a reminder that trade dress registrations need to be considered once it is clear that the owner intends to claim and police those rights, and that any potential infringements must be addressed swiftly in order to avoid any argument of waiver. Converse has fought this battle for the past four years across a variety of legal forums, while also facing a slew of cancellation proceedings before the TTAB for some of its other registrations. Time will tell whether the ITC will ultimately find that Converse has obtained “secondary meaning” in its trade dress using the clarified standard, but until then the parties are left wondering whether, and in what way, they have overstepped.

*****

Christine E. Weller is a staff attorney in the Intellectual Property Department of Pepper Hamilton LLP, resident in the Philadelphia office.