In a recent decision, McAirlaids, Inc. v. Kimberly-Clark
Corporation, — F.3d — (4th Cir. 2014), the Fourth
Circuit reversed and remanded a summary judgment order after
finding there were triable issues regarding whether a dot pattern
for absorbent pads is functional. This decision reflects the
ongoing struggle with how to apply the Supreme Court's holding
in Traffix Devices v. Marketing Displays and distinguish
between functional and non-functional trade dress when a utility
patent is involved.
McAirlaids made absorbent pads for medical or hygienic use that
contain the pixel-embossed dot pattern shown below:
McAirlaids owned a federal registration for the above pattern
based on acquired distinctiveness and filed suit in the Western
District of Virginia against Kimberly-Clark for trade-dress
infringement and unfair competition after Kimberly-Clark began
using a similar dot pattern on its GoodNites bed mats.
Even though McAirlaids owned a utility patent for the absorbent
pads, it asserted that its dot pattern was ornamental and did not
serve a utilitarian function. In Traffix, the Supreme
Court held that the presence of a utility patent is strong evidence
of functionality. Accordingly, Kimberly-Clark argued that
McAirlaids' utility patent was strong evidence that the dot
pattern was functional and thus not protectable as trade dress. The
district court agreed and granted summary judgment to
Kimberly-Clark. McAirlaids appealed.
On appeal, the Fourth Circuit distinguished this case from
Traffix, finding that while McAirlaids's utility
patents covered the manufacturing process and materials of the
absorbent pads, a question of fact remained as to whether the
patents pertained to the dot pattern. Further, the Fourth Circuit
held that the existence of a utility patent is only one of several
factors that the district court should have considered in
evaluating the functionality of the dot pattern. In that regard,
the district court failed to properly weigh McAirlaids' trade
dress registration, which is prima facie evidence that the trade
dress is non-functional. Also, McAirlaids had presented evidence of
alternative "functionally equivalent" designs to show
that no matter which dot pattern was used, the functionality of the
pads was the same, thus making its specific dot pattern
non-functional trade dress.
In light of these factual disputes regarding functionality, the
Fourth Circuit reversed the lower court's summary judgment
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Finjan is particularly instructive in the trade secret context because information transferred electronically can still embody highly valuable info even if the information is not transcribed in a physical medium.
Current patent reform efforts in Congress center around two pieces of legislation. One, pending in the House of Representatives is sponsored by Rep. Bob Goodlatte (R-VA) (H.R. 9, known as the "Innovation Act").