The Seventh Circuit recently considered the line that is drawn between what patent law protects and what trademark law protects. The patent system seeks to encourage innovation by granting inventors a monopoly for a limited time, while trademark law, and specifically trade dress law, seek to protect consumers, and promote competition, by allowing them to associate a product design with a particular source. But where the trade dress is functional, the court recognized, it is ineligible for trade dress protection. Otherwise, it said, competition "would be unduly stifled," since trade dress protection "can be renewed in perpetuity."

This case involved fasteners made by the two companies, Flexible Steel Lacing Company ("Flexco") and Conveyor Accessories, Inc. ("CAI"), who are direct competitors. Both companies manufacture and sell conveyor belts, which are often made from rubber segments that are spliced together using fasteners to create an endless belt. While the leading edge of Flexco's fasteners had traditionally been straight-edged, in 1999, Flexco developed—and patented—a fastener whose leading edge was scalloped. This edge, which is shown in the following figure from Flexco's patent, is comprised of two "outer convex curves" (both 88) with a single "concave curve" (90) between them:

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According to Flexco, the new fastener, with its scalloped leading edge, "displaces and compresses less rubber" when it is installed, and thus reduces the wear on the conveyor belts.

As Flexco's patent was nearing expiration, however, the company began to consider whether there was anything it could do to "preserve the Scalloped Edge due to competitive threats." Then, only days before the patent expired, Flexco filed six trademark applications to preserve its ability to protect its scalloped edge design. One of these, which ultimately registered as Flexco's trade dress, described the design as "a three-dimensional configuration of the curved beveled scalloped upper edge of a metal fastener," as illustrated here:

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When Flexco discovered that CAI had launched fasteners that, as shown below, contained essentially the same leading edge—curved, beveled, and scalloped—Flexco sued CAI for trade dress infringement and unfair competition in federal court in Chicago (the Northern District of Illinois, Eastern Division).

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In its defense, CAI's principal argument was that Flexco's fasteners were functional and therefore could not be trademarked. The district court agreed, granting summary judgment to CAI, and the Seventh Circuit affirmed.

The Seventh Circuit recognized that a product feature that is functional "is ineligible for trademark protection." And while Flexco had made three principal arguments for why its trade dress should be considered merely ornamental, and not functional, the court rejected each argument.

First, Flexco argued that its utility patent was not strong evidence of functionality, asserting that unlike in the controlling Supreme Court case in this area—TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 30 (2001)—its trade dress was not "a protected element" of its patent. Specifically, Flexco argued that it was not the center beveled scallop in its design that was functional, but the two convex curves, since it was the curves that gave the fastener both its bite and its extended life. But the Seventh Circuit disagreed, concluding that the plain language of the patent indicated that it was the design of the entire leading edge, including the center scallop, that provided the claimed advantage over earlier fastener designs.

Second, Flexco argued that the utilitarian functions disclosed in its patent were limited to Flexco's two-rivet fasteners, and that the five-rivet fasteners at issue in the case did not require a center scallop. But the Seventh Circuit held, as had the district court, that its review was not limited to a particular type of fastener. Instead, the "sole question" before it was whether the design feature claimed in Flexco's trade dress registration was functional. And here, the court said, Flexco's registered trade dress claimed the center scallop of the fastener's leading edge and was not limited to two-rivet fasteners.

Third, the Seventh Circuit rejected Flexco's argument that the facts presented a "nearly identical circumstance" to that involved in McAirlaids, Inc. v. KimberlyClark Corp., 756 F.3d 307 (4th Cir. 2014). There, the Fourth Circuit found that although a feature of the product protected by trade dress was "mentioned in the patent," it was not "a protected element" of the patent. The Seventh Circuit rejected the comparison, however, stating that the patent in McAirlaids was a process patent and it neither mentioned any particular embossing "pattern" nor described the functional advantage of any particular pattern. Flexco's patent, on the other hand, was not a process patent, and it "expressly discloses the product design itself."

To make matters worse for Flexco, the Seventh Circuit went on to state that the patent's "strong evidence of functionality" was "bolstered by Flexco's own advertisements, internal communications, and statements to the USPTO." Indeed, after noting that Flexco's utility patent disclosed "the utilitarian benefits of the beveled center scallop," the court stated that Flexco acknowledged "the same benefits of its trade dress in its internal and external communications, both in sworn declarations submitted to the USPTO and in its marketing materials." Moreover, the court rejected Flexco's argument that this evidence created "factual issues" regarding functionality that "must be resolved by a jury." On the contrary, the court found, the evidence "accomplishes the opposite. Flexco's advertisements, statements to the USPTO, and the utility patent all emphasize the utilitarian features of its claimed trade dress."

This case is Flexible Steel Lacing Company v. Conveyor Accessories, Inc., 955 F.3d 632 (7th Cir. 2020).

Originally published May 8, 2020.

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