Gateway spots victory in cow trade dress suit

In Gateway Inc v Companion Products Inc, the US Court of Appeals for the Eighth Circuit has upheld the plaintiff's claim that the defendant's spotted cow toy, designed to sit on, among other things, computer monitors, infringed the cow-spotted trade dress the plaintiff applies to its advertising, promotional products, packaging and stores.

In 1992 computer company Gateway Inc registered a black and white cow-spot design for computers and peripherals as a trademark. From 1991 through 2001, Gateway spent more than $1.3 billion worldwide on advertising and promotional items. Those items included a Gateway plush cow sold at certain Gateway retail stores.

Companion Products Inc (CPI), a Colorado company, sells stuffed toys trademarked as STRETCH PETS, which wrap around the edges of computer monitors and cases, as well as televisions. It developed a stuffed animal named Cody Cow that featured black and white spots. CPI presented the toy to Gateway as part of a business proposal with a note that "our initial sample was a black and white cow designed with Gateway in mind".

Gateway rejected CPI's offer and informed the company that it had a registered trademark for its cow-spot design in relation to computers. CPI sold its product anyway and Gateway sued.

The US District Court for the District of South Dakota upheld Gateway's trademark and trade dress infringement claims, and granted injunctive relief. CPI appealed but the US Court of Appeals for the Eighth Circuit upheld the district court's grant of injunctive relief on the basis of trade dress infringement.

To prevail on a claim of trade dress infringement, Gateway had to demonstrate that:

• its trade dress is inherently distinctive or has acquired distinctiveness through secondary meaning;
  
  
• its trade dress is non-functional; and
  
  
• the imitation of its trade dress would result in a likelihood of confusion in consumers' minds as to the source of the product.

The Eighth Circuit held that "Gateway's extensive, ten-year advertising campaign to raise the public's recognition of Gateway's mark resulted in consumers associating the black and white cow spots with Gateway's computer products". Therefore, the mark had the required level of distinctiveness.

Next, it stated that:

"Gateway's trade dress clearly reflects characteristics that are non-functional. Black and white cow spots are an arbitrary embellishment that serve only to distinguish Gateway computers from computers produced by other manufacturers."

Addressing the third prong of the trade dress infringement test, Gateway produced a nationwide survey in which 39% of the respondents erroneously believed that Gateway manufactured or sponsored Cody Cow. The court reasoned that "CPI and Gateway are in close competitive proximity" and that "both parties attract people who own computers and who purchase computer accessories". As a result, confusion among consumers as to the origin of the Cody Cow product was likely.

As Gateway prevailed on its trade dress claim, the court declined to rule on the issue of whether the district court was correct to grant Gateway judgment under the Lanham Act on its claim for trademark infringement.

Douglas Wood, Reed Smith, New York