Failure to prove non-functionality in trade dress case is expensive for losing plaintiff

United States of America

In Secalt SA v Wuxi Shenxi Construction (Nos 10-17007 and 11-15066, February 7 2012), the US Court of Appeals for the Ninth Circuit has affirmed the district court’s grant of summary judgment in favour of the defendant and its finding of exceptionality.

Secalt SA and Tractel Inc (collectively Tractel) manufacture and sell a traction hoist, typically used for commercial building projects and tasks such as window washing. The Tractel hoist is commonly affixed to suspended platforms that, by means of a motor, are powered up and down stationary wire ropes. Tractel claimed a protectable trade dress in certain elements of its hoist design, including:

  • a cube-shaped gear box with horizontal fins;
  • a cylindrical motor housing mounted in an off-set position on the cubed-shaped gear box so as to partially overhang the box edge;
  • a cylindrical motor housing including vertical lower fins and a smooth upper cover with a control descent lever and a top cap supported by rectangular legs;
  • a rectangular control box positioned over the cube-shaped gear box, including controls; and 
  • a rectangular frame.

Tractel discovered that Jiangsu Shenxi Construction Machinery Co, a Chinese competitor, exhibited a similar looking hoist at a Las Vegas trade show. It brought suit in Nevada federal court alleging trade dress infringement, federal unfair competition and related state claims. Tractel claimed that the overall exterior appearance of its hoist had a “cubist” look and was non-functional. Tractel argued that the fins were “flashy” and that its hoist had more “rectangular look” than that of its competitors. Tractel’s only evidence in support of its non-functionality arguments was a design patent issued to a third party. There was no registration. Jiangsu sought summary judgment, contending that Tractel had failed to establish that its alleged trade dress was non-functional. The district court granted summary judgment, found the case to be exceptional, and awarded attorney's fees to Jiangsu.

The Ninth Circuit affirmed the liability determination.

The Ninth Circuit first confirmed that functionality is a question of fact, and that the trade dress plaintiff had the burden of proving that the matter sought to be protected was not functional. The Ninth Circuit next agreed that Tractel’s hoist could be distinguished from competitive hoists. However, that was not the issue. The appellate court, like the lower court, found no evidence that the appearance of Tractel’s hoist was non-functional. To the contrary, the Ninth Circuit cited the testimony of one of Tractel’s distributors, a hoist industry professional, that every feature of the Tractel design was important to the hoist’s function. As to the design patent, the Ninth Circuit stated that courts have “uniformly held” that evidence of a plaintiff’s design patent, without more, is insufficient to prove non-functionality. Here, Tractel had no connection with the third-party patented design or designer. Even if Tractel had owned the design patent, there was no fact issue for trial because there was no other evidence of non-functionality.

The absence of any meaningful evidence of non-functionality also caused the Ninth Circuit to affirm the award of attorney’s fees to Jiangsu. The court stated that, if Tractel had provided “some legitimate evidence” of non-functionality, the case would likely have not been exceptional. However, given that discovery occurred for almost two years, a substantial number of documents had been exchanged and multiple depositions had been taken, Tractel had plenty of opportunity to obtain such evidence. While Tractel was not found to have acted in bad faith, its continued prosecution of the trade dress claim without meaningful evidence of non-functionality was found to be unreasonable. Although there remained an issue of cost, the attorney’s fees were in excess of $700,000. 

Tractel learned the hard lesson that it can be very expensive to fail to provide evidence of non-functionality as a trade dress plaintiff.

Stephen M Schaetzel, McKeon Meunier Carlin & Curfman, Atlanta

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