The International Trade Commission ("ITC") has
recently found in an Initial Determination that Converse's
"Chuck Taylor" midsole shoe design is entitled to trade
dress protection, and that several of the accused shoe designs sold
by Wal-Mart, Skechers, New Balance, and Highline infringed
Converse's trade dress. Weighing heavily in favor of the
Administrative Law Judge's ("ALJ") Initial
Determination that the midsole design was protectable was the fact
that Converse had a federal trademark registration for a
combination of elements that made up its claimed "midsole
design."
This initial favorable decision for Converse may increase use of
the ITC as a forum for deciding trademark disputes, given the
ITC's authority to issue limited or general exclusion orders
and cease and desist orders. The ALJ's November 17, 2015
Initial Determination was made public December 17, 2015.
Converse's Allegations and Midsole Design
Registration
Converse owns three federal trademark registrations covering design
elements of its "Chuck Taylor" shoes. One covers the
"midsole design" (U.S. Reg. No. 4,398,753), while the
other two cover more complete versions of the shoes (U.S. Reg. No.
4,065,482 for the high top, and U.S. Reg. No. 4,062,112 for the low
top).
The ITC Complaint concerned Converse's alleged rights in the
midsole design, specifically the combination of a toe bumper and
toe cap, plus either an upper stripe and/or a lower stripe.
Converse's U.S. Reg. No. 4,398,753 specifically claims: (a) the
design of the two stripes on the midsole of the shoe, (b) the
design of the toe cap, (c) the design of the multi-layered toe
bumper featuring diamonds and line patterns, and (d) the relative
position of these elements to each other.
Converse's ITC Complaint also concerned its alleged rights in
the "outsole" (bottom of shoe) design. However, the
outsole design was only at issue with respect to certain defaulting
respondents that did not contest Converse's allegations. Of the
original group of more than 30 respondents, 21 had entered into
private settlements with Converse and several others had defaulted
or been terminated from the investigation prior to the issue of the
ALJ's Initial Determination. Only four respondents, Wal-Mart,
Skechers, New Balance and Highline, were actively participating in
the investigation at the time of the decision.
The ALJ's Decision
The Initial Determination found there was a violation of Section
337 with respect to Converse's federal trademark registrations,
but not as to the asserted common law trade dress. The ALJ first
determined that Converse's registered trade dress was
protected. To be protectable under trademark law, trade dress such
as Converse's shoe design must be both nonfunctional and
distinctive (i.e., has acquired "secondary
meaning").
In narrowly finding that the midsole design had acquired secondary
meaning, the ALJ noted that four of the relevant factors weighed in
Converse's favor, specifically, the degree and manner of use;
length of use; the degree and manner of sales, advertising and
promotional activities; and evidence of deliberate copying. One
factor weighed against Converse: survey evidence regarding whether
actual purchasers associate the trade dress with a particular
source. Two factors, the exclusivity of use and the effectiveness
of the effort to create secondary meaning, were neutral.
Although the ALJ found that most of the factors weighed in favor of
finding secondary meaning, the ALJ explained that "[b]ecause
the factor that weighs against secondary meaning provides the
'strongest and most relevant' evidence, the outcome here is
a close call". The survey evidence showed that only 21.5
percent of consumers associated the midsole design with Converse,
which the ALJ found was insufficient to support secondary
meaning.
What did weigh heavily in Converse's favor was that it had a
federal trademark registration for its shoe design that the ALJ was
required to show deference. The ALJ did not afford such deference
to the common law trademarks, and found that Converse did not meet
its burden to show that those trademarks were protectable. The ALJ
also found that the registered trademarks were nonfunctional.
Having determined that Converse's registered trade dress was
protected, the ALJ then addressed whether each of the accused
designs by Wal-Mart, Skechers, Highline and New Balance infringed
Converse's trade dress. The ALJ found two of Skechers'
product lines, one of Wal-Mart's product lines, five of
Highline's product lines, and two of New Balance's product
lines to be infringing. The ALJ found several other of the accused
product lines to be non-infringing.
Conclusion
The ALJ's decision is an important but narrow victory for
Converse. It is also only the first of what could be several in
this dispute, as the ruling will now be reviewed by the Commission.
If upheld, the respondents may appeal to the Federal Circuit. If
ultimately upheld on appeal, the ruling could lead to a sweeping
order barring the importation of the infringing footwear. The
decision may also serve to increase interest among brand owners
regarding the ITC as an alternate forum for adjudicating trademark
disputes where damages are not at issue.
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