Lead Opinion
For the reasons given in Parts I and II of the opinion filed by Judge Morris Sheppard Arnold, the judgment of the district court is reversed and the order is vacated. Aroma-tique’s federal trademarks at issue here, Reg. Nos. 1,492,855 and 1,492,856, are can-celled. Gold Seal’s request for attorneys’ fees is denied.
This case began as an action filed in 1987 in the Chancery Court of Cleburne County, Arkansas, for infringement of Aromatique’s trade dress. It was removed to federal district court after Aromatique amended its complaint to include a count of infringement of its recently registered federal trademarks for the trade dress at issue. Gold Seal counterclaimed for cancellation of the registration. The district court merged the trial on the merits with the hearing on Aromatique’s motion for a preliminary injunction. The case was tried to the bench over ten days in September and October of 1988. Judgment in favor of Aromatique and an order enjoining Gold Seal from further infringement and awarding attorneys’ fees to Aromatique were entered in September of 1993,
I.
The trademarks at issue are the packaging of two of Aromatique’s products, “The Smell of Christmas” and “The Smell of Spring.” Aromatique first began marketing The Smell of Christmas in October, 1982, and The Smell of Spring in 1983. The Smell of Christmas is a potpourri the fragrance of which is associated with Christmastime; The Smell of Spring is a potpourri the fragrance of which is intended to evoke feelings of springtime. The packaging for both products is similar: the potpourri is packaged in pillow-shaped double cellophane bags that are closed at the top by gathering excess cellophane and tying the cellophane closed with cord tied in a square-knot bow. The small packages of The Smell of Christmas are closed with either red or green cord; the large are closed with both red and green cord. The Smell of Spring is packaged in a similar manner, but gold is its dominant color rather than red and green. The Smell of Spring is tied closed with an ecru cord. Each product has an oval label on one side of the cellophane bag: the Christmas product has a red label with gold writing and a gold border; the Spring product has a gold label with writing and border in a contrasting tone of gold. The prospective purchaser can both see and smell the potpourri, which has, according to Aromatique, aesthetic as well as olfactory appeal, by looking at the product through the transparent packaging and smelling the product through the center of the gathered cellophane.
Since 1987, both of Aromatique’s products at issue here have included a metallic gold cord tied as part of the square knot. A folded, gold-colored tag apparently hangs from the gold cord. The tag includes the company name “Aromatique” with the initial
On July 1, 1985, Aromatique filed applications with the United States Patent and Trademark Office to register the trade dress of the two products as trademarks. The PTO refused to register the marks because the they were not distinctive. In January of 1986, Aromatique submitted a brief and accompanying affidavit and exhibits arguing that the marks had acquired secondary meaning through Aromatique’s use of the marks. The PTO again refused to register the marks, but this time concluded that they were not registrable because they were primarily functional. Aromatique then argued that others marketed potpourri in different packages and that the packaging for which registration was sought was “a configuration-type mark recognized as a good source indicator and constituting registrable subject matter.” On June 21, 1988, the PTO registered the marks as Reg. Nos. 1,492,855 (for “The Smell of Christmas” trade dress) and 1,492,856 (for “The Smell of Spring” trade dress). The marks had previously been registered in several states, including Arkansas. The trademarks for the names “The Smell of Christmas” and “The Smell of Spring,” as well as trademarks for Aromatique’s name and label, were not subjects of Aromatique’s action against Gold Seal, and, therefore, of course, the court’s decision today has no effect on those marks.
Gold Seal argues that it began using its trade dress before 1985. In that year it sold a potpourri it called “Holiday Essence” in a clear, cellophane bag tied at the top with a red cord. Aromatique, through its attorneys, wrote to Gold Seal in October of 1985 asserting that Gold Seal’s trade dress was infringing Aromatique’s registered federal and state trademarks.. The letter described Gold Seal’s product and packaging as “aromatic room freshener” in a “clear plastic bag ... gathered at the neck” and tied with red cord. Affixed to the bag was a gold-colored oval label. (The PTO had at this time not yet registered Aromatique’s claimed trade dress.) Gold Seal-subsequently changed'its packaging, using for a short time fabric ribbon instead of cord, and then began again to use cord. Gold Seal also changed its label, substituting for the gold oval a circular gold label with a serrated circumference (as around a seal), bearing the legends “Natur-Scent Potpourri” and “Holiday Essence” in black ink.
In 1986, Gold Seal’s products included “Holiday Essence” and “Spring Essence.” Gold Seal continued to use the circular, serrated label with black ink, but used a green cord with a gold mylar thread woven into the cord. At trial, Sandra Horne, vice president of Aromatique, testified that she did not believe that this packaging infringed Aroma-tique’s trade dress.
In 1987, Gold Seal replaced the circular label with a label shaped like a butterfly. Holiday Essence now had a gold butterfly label with red ink; the package was closed with three cords, one green, one red, and one gold, that had been twisted together. Spring Essence used a gold butterfly label with blue ink; the package was closed with a white cord and a gold cord. Both products were dyed. By this time, Aromatique was also using gold cord to tie its packaging and had dyed its products. Holiday Essence was dyed so that most of its contents was either green or red, matching closely the green of the cord and the red of the label and cord. The potpourri was thus dyed in brighter hues of green, and red than Aromatique used to dye its potpourri. By the time of the trial, in the autumn of 1988, Gold Seal had changed Spring Essence to include a light blue cord instead of the white one, and had dyed some of its contents to match the blue ink of the label.
Because of Horne’s admission that Gold Seal’s products of 1986 do not infringe Aro-matique’s trade dress, the accused products are limited to Gold Seal’s Holiday Essence and Spring Essence sold after 1986. Similarly, the testimony and pleadings excluded from the set of accused products Gold Seal’s other similarly packaged products such as “Wisteria Essence” and “Mulberry Essence,” which were admitted into evidence at trial.
II.
A.
Trade dress is the “total image of a product, the overall impression created, not the individual features.” Woodsmith Publishing Co. v. Meredith Corp.,
In order to form the basis for an action under the Lanham Act, a trade dress must satisfy three criteria: 1) it must be distinctive; 2) it must be nonfunctional; and 3) there must be a likelihood that it will be confused with the accused product. Two Pesos, Inc. v. Taco Cabana, Inc., — U.S. -, -,
The difference between trade dress and trademark is no longer of importance in determining whether trade dress is protected by federal law. Trade dress, regardless of whether it is registered, is protectable under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). See Two Pesos, supra, — U.S. at -,
There is an important difference, however, between registered trademarks and
B.
A distinctive trademark is one that is capable of identifying the source of goods because it is either inherently distinctive or, if not inherently distinctive, has acquired distinctiveness by acquiring secondary meaning. Prior to the decision of the Supreme Court in Two Pesos, some courts had held that an unregistered trade dress must show that it had acquired secondary meaning even if the dress was in fact inherently distinctive before it could be the subject of an action for ra-fringement under Section 43(a). See In re DC Comics, Inc.,
Aromatique registered the dress at issue here as trademarks. In the course of the proceedings before the PTO, Aromatique first attempted to register its trade dress without a showing of secondary meaning. The PTO refused registration because the marks were not inherently distinctive. Aro-matique responded to that refusal by arguing that its marks could be registered under Section 2(f) of the Lanham Act, 15 U.S.C. § 1052(f), because its marks had acquired secondary meaning. Aromatique presented evidence to support its claim.
The marks at issue cannot be inherently distinctive as a matter of law. The submission of evidence under Section 2(f) to show secondary meaning, in either ex parte proceedings (such as an application to register a trademark) or subsequent oppositions, amounts to a concession that the mark sought to be registered is not inherently distinctive. Yamaha Int’l Corp. v. Hoshino Gakki Co.,
It follows, then, that the relevant presumption to which Aromatique is entitled, as the owner of marks registered under Section 2(f), is not the presumption that the marks are inherently distinctive, but rather that the marks had acquired distinctiveness. In a case involving a registered trademark where acquired distinctiveness (i.e., secondary meaning) is an issue, the timing of the effectiveness of that presumption is crucial. Distinctiveness became an issue in the ex parte proceedings before the PTO once the applications for the marks had been rejected for lack of distinctiveness and the applicant had presented evidence of secondary meaning. The PTO resolved the issue in Aroma-tique’s favor when it registered the marks. Aromatique’s marks, therefore, may be presumed to have acquired secondary meaning only as of June 21, 1988. See Harsco Corp. v. Electrical Sciences, Inc.,
Aromatique first alleged that Gold Seal was infringing the marks at issue here in a letter sent to Gold Seal in 1985. The description in Aromatique’s complaint, which corresponds to the description in the 1985 letter, made clear that it alleged infringement dating back to 1985; an amendment to the complaint made on the eighth day of trial specifies that Aromatique included among the accused products all of Gold Seal’s Holiday Essence and Spring Essence products. Thus, Aromatique has alleged that Gold Seal used as early as 1985 a trade dress the same as or similar to the dress Aromatique registered under Section 2(f) in 1988. In this action, therefore, Aromatique is not entitled to the presumption that its trade dress had acquired secondary meaning, and the trial court’s conclusion that the asserted marks are valid because Gold Seal failed to rebut the presumption of secondary meaning is clearly erroneous. Even if Aromatique were entitled to the presumption of secondary meaning, however, Gold Seal would still prevail because it presented sufficient evidence to overcome such a presumption.
In order to establish secondary meaning, the user of a mark, or, here, a dress, must show that by long and exclusive use in the sale of the user’s goods, the mark has become so associated in the public mind with such goods that the mark serves to identify the source of the goods and to distinguish them from those of others. Co-Rect Prods., Inc. v. Marvy! Advertising Photography, Inc.,
The evidence Aromatique presented apparently satisfied the PTO because the Office eventually allowed the marks to be registered. The trial court found that secondary meaning was established (or the presumption
In determining whether there is secondary meaning, “the chief inquiry is whether in the consumer’s mind the mark has become associated with a particular source.” Co-Rect Prods., supra,
The existence of secondary meaning of a mark may be inferred from evidence of deliberate copying of that mark, Harlequin Enter. v. Gulf & Western Corp.,
As part of its applications submitted to the PTO Aromatique submitted articles, testimonial letters from many of its retailers, evidence of advertising, and evidence of the success of Aromatique’s products as evidence from which the PTO was to infer that its trade dress had acquired secondary meaning. At trial, Aromatique offered additional articles, further evidence of Aromatique’s commercial success, and testimony, including anecdotal evidence, to bolster its claim of secondary meaning. Gold Seal sought to limit and discredit this evidence, and presented evidence of third party use of similar trade dress.
In support of its claim to registrability under Section 2(f) Aromatique submitted copies of advertisements of its potpourri and other products. In each of the advertisements, the identifying names and marks Aromatique, Smell of Christmas (or Spring), and the woodblock A are prominently displayed. These marks were present on the oval label on the depicted packages, as well as in the advertising copy. In none of the advertisements is the dress depicted without such identifying marks. The advertisements submitted with the application cannot establish secondary meaning because they do not separate the claimed dress of the products from the other marks that serve to identify the products as those of Aromatique. Applica
The amount Aromatique spent on advertising and promoting its products, moreover,' less than $250,000, is probably too low to accord it much probative value. See Cicena, supra,
The articles submitted with the applications and introduced at trial are also insufficient to support a claim of secondary meaning of the asserted trade dress. The articles do not distinguish between the trade dress and Aromatique’s other marks. Indeed, most of the articles do not depict the trade dress, and none adequately describes it. Furthermore, as I have said, in order to be the basis for an inference of secondary meaning, the articles must in some way indicate a connection in the minds of consumers between the trade dress and Aromatique. Some of the articles seem to have been published in trade journals or the business press. Such articles are not likely to be read by ordinary consumers and do not necessarily reflect the minds of consumers with respect to the necessary connection between Aroma-tique and its claimed marks.
Aromatique also submitted to the PTO thirty-two letters apparently from retail stores or distributors that sold Aromatique’s products. Gold Seal demonstrated that these letters should be given little or no weight as evidence of secondary meaning for several reasons. First, the letters are from distributors or retailers of Aromatique’s products, and are, therefore, at best only indirect evidence of any connection in the minds of consumers between the trade dress and Aromatique. See Trademark Manual of Examining Procedure § 1212.02(c) (2d ed. 1993). Second, the letters are merely copies, in some cases simply photocopies with the blank spaces filled in, of a form letter provided by Aromatique. As in the Application of Mogen David, “[i]n substance, they amounted to hardly more than a carte blanche approval of that which had been formulated by a party naturally and understandably desirous of serving its own interest.”
At trial and as part of its applications Aromatique presented evidence of the sudden and substantial success of its Spring
Gold Seal successfully rebutted any presumption of distinctiveness by showing that the evidence submitted to the PTO was inadequate to support a finding of distinctiveness. It is clear, too, that the evidence Aromatique presented at trial, including the evidence it had submitted to the PTO, is not sufficient to support Aromatique’s claim that its trade dress has acquired secondary meaning.
C.
Protecting trademarks protects the public and fosters fair competition. Truck Equip. Serv. Co. v. Fruehauf Corp.,
Every trademark, by definition, performs a function, namely that of identifying the source of the goods bearing the mark. A feature or design is functional under our analysis, therefore, if it performs some function other than identifying the source of goods. We have adopted the following test for functionality:
If the particular feature is an important ingredient in the commercial success of the product, the interests in free competition permits [sic] its imitation in the absence of a patent or copyright. On the other hand, where the feature or, more aptly, design, is a mere arbitrary embellishment, a form of dress for the goods primarily adopted for purposes of identification and individuality and, hence, unrelated to basic consumer demand in connection with the product, imitation may be forbidden where the requisite showing of secondary meaning is made. Under such circumstances, since effective competition may be undertaken without imitation, the law grants protection.
Prufrock, supra,
Aromatique’s witnesses testified that the trade dress Aromatique sought to protect was the combination of natural-looking potpourri packaged in a pillow-shaped, doubled cellophane bag whose opening was gathered and tied with cords with a hanging tag attached thereto. Aromatique does not claim that any one of these features is protectable; it is, instead, the combination that is at issue. The parties do not dispute, indeed Aroma-tique’s witnesses at times emphasized, that the packaging of Aromatique’s products is central to its commercial success. Aroma-tique’s witnesses testified that the appeal of its potpourri is both aesthetic and olfactory: consumers want to see and smell the potpourri before they purchase it. To this end, clear cellophane wrapped in a manner that allows the fragrance of the enclosed product to escape is essential. Furthermore, both
There can be no doubt that the cellophane bag is functional and lacks arbitrary embellishment, especially where a product is sold in part on the basis of its aesthetic appeal. Aromatique argues, however, that double bagging, i.e., putting one bag inside another, is arbitrary. The evidence demonstrates otherwise: the oils that both parties use to scent the potpourri are corrosive to many substances, apparently including cellophane. A double bag increases the shelf life of the potpourri. The outer bag may also perform another function as well: it protects the label which is placed on the outer wall of the inner bag. At a distance of several feet, moreover, according to testimony, one cannot determine whether a package of potpourri is double-bagged. The pillow-like shape of the bags is merely the consequence of using ordinary, unprotectable cellophane bags, and cannot be said to be an arbitrary embellishment. Double-bagging, therefore is both functional and, even if nonfunctional, incapable of functioning as an indicator of source of goods.
The fragrance of the potpourri is part of its appeal. The aperture created by gathering the cellophane bags and tying them closed allows the fragrance to escape while keeping the potpourri in the bags. Testimony indicated that tying the bags closed was a functional feature of the trade dress. A heat-sealed bag, for example, would not allow the fragrance to escape as readily as a tied bag. The method of closing the bags is functional, therefore, and not an arbitrary embellishment.
Aromatique claims that the size and shape of the gathered cellophane forming a flower when the cellophane is tied closed is an arbitrary embellishment. I disagree. The “flowered” top is clearly the result of tying the cellophane closed (instead of, for example, stapling it or sealing it), and must be one of the most common, and least arbitrary, shapes in packaging: every Christmas fruit basket and liquor bottle wrapped in cellophane or plastic that is tied closed has a similarly shaped “flower.” Protecting this feature of Aromatique’s trade dress would unduly impair competition.
Aromatique uses cord to close its packages. Evidence admitted at trial shows that Aromatique, Gold Seal, and their competitors use either ribbon or cord to close packages of potpourri. To allow Aromatique to exclude all others from using cord would unduly impair competition. Indeed, Aroma-tique did not believe that Gold Seal’s 1986 packaging, which used green cord with a gold mylar thread, infringed its trade dress. Although it cannot prevent others from using cords, Aromatique might have a protectable trademark in the colors of its cords. See Master Distribs., Inc. v. Pako Corp.,
Viewed as a whole, Aromatique’s asserted trade dress is clearly functional. The dress is not an arbitrary embellishment adopted for purposes of identification and individuality. Instead, the combination of all of the features of the dress, except the size and shape of the label (which may be separately protected trademarks that are not at issue here), are important ingredients in the commercial success of Aromatique’s products. Under our definition of functionality in Pru-frock, the trade dress is functional and, therefore, may not be protected.
D.
The trade dress at issue here is invalid for two independent reasons: it is not distinctive and it is functional. Aromatique has no right under federal trademark laws to exclude others from using the trade dress asserted here. It need not be decided, therefore, whether there is a likelihood that Gold Seal’s products will be confused with those of Aromatique.
The marks at issue here are neither registrable nor protectable. The federally registered marks should be canceled pursuant to Section 37 of the Lanham Act, which gives courts the power to order the cancellation of registered marks. 15 U.S.C. § 1119. Aro-matique has no property rights in invalid marks. Because the marks are not distinctive and are functional, Aromatique may not exclude others from using those marks.
III.
Because the asserted trade dress is invalid, Gold Seal’s claims for attorneys’ fees must be addressed. Gold Seal asks us to award it its attorneys’ fees under Sections 35 (now Section 35(a)) and 38 of the Lanham Act. 15 U.S.C. §§ 1117 (current version § 1117(a)) & 1120. Section 35 allows a court to award attorneys’ fees to the prevailing party “in exceptional cases.” Section 38 of the Lan-ham Act makes a person who procured the registration of a trademark by fraudulent means hable for any damages sustained as a consequence of that fraud. 15 U.S.C. § 1120. The only damages that Gold Seal seeks is recovery of its attorneys’ fees.
A.
The issue of whether attorneys’ fees are available as damages under Section 38 has not been satisfactorily resolved in this circuit. We recently suggested, in a footnote, that we doubted that costs could - be recovered under that section. Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc.,
In Fleischmann the Supreme Court distinguished between the English Rule of damages and the American Rule. The English Rule is that costs, including attorneys’ fees, are awarded to the prevailing party in an action as a “necessary appendage” to the judgment. 3 W. Blaekstone, Commentaries on the Laws of England 399 (1768). That rule had its origins in the thirteenth century in the Statute of Gloucester, 6 Edw. I., c. 1, which provided that the successful plaintiff could recover the costs of his suit, including fees. It was not until the sixteenth century that a defendant could recover costs and fees, 23 Hen. VIII, c. 15, although in one particular ease a thirteenth-century defendant had been awarded his costs in an action involving wardship in chivalry (one of the feudal incidents of tenure). Statute of Marl-bridge, 52 Hen. Ill, c. 6; see generally 3 W. Blaekstone, Commentaries, supra, at 399-401.
In the light of the Supreme Court’s most recent interpretation of a fee-shifting statutory provision, Fogerty, supra, — U.S. at -,
The Court’s conclusion in Fogerty is particularly relevant here for two reasons. First, as the Court noted, the fee-shifting provision of the law of copyright is more closely related to the fee-shifting provisions in the areas of trademarks and patents than to similar provisions in other areas of the law. Fogerty, supra, — U.S. at - n. 12,
The conclusion that fees are not included within damages awarded under Section 38 is, moreover, consonant with the more general tenor of the law of trademark: As discussed above in Part U.A., a plaintiff may well have common-law and state trademark rights in a mark that is fraudulently registered, because a mark need not be federally registered to form the basis of a cause of action under state law or the Lanham Act. Aromatique might, indeed, have had such rights in the marks at issue here if the marks were distinctive, nonfunctional, and otherwise enforceable. Thus, if we held that Section 38 required an award of fees, we might then require the anomalous result that a plaintiff with valid state and federal common-law trademarks could owe fees to a defendant
Courts have defined the characteristics of exceptional cases with adjectives suggesting egregious conduct by a party. We have held that an exceptional case is one in which the plaintiff’s action was groundless, unreasonable, vexatious, or pursued in bad faith. Hartman v. Hallmark Cards, Inc.,
B.
Gold Seal alleges that Aromatique’s conduct was exceptional because that conduct was fraudulent. Gold Seal argues that that conduct was fraudulent for two separate but related reasons. First, Aromatique’s letters to Gold Seal demanding that Gold Seal cease and desist its infringement of Aromatique’s trade dress falsely asserted that the trade dress had been federally registered. An applicant’s false claim that a mark is a federally registered trademark may improperly discourage competitors from using a mark that they in fact have a right to use and may thereby enable an applicant to assert that its use of the mark is substantially exclusive. It is, therefore, the rule that “[t]he improper use of a registration notice in connection with an unregistered mark, if done with intent to deceive the purchasing public or others in the trade into believing that the mark is registered, is a ground for denying the registration of an otherwise valid mark.” Copelands’ Enter. v. CNV, Inc.,
Gold Seal also argues that Aromatique’s conduct was fraudulent because of false statements made to, and facts withheld from, the PTO during Aromatique’s applications for registration of the marks at issue in this case. Aromatique, according to Gold Seal, deliberately misled the PTO by submitting affidavits alleging its long and exclusive use of the trade dress when it knew that its use was neither long nor exclusive. For example, in support of its claim that its trade dress had acquired secondary meaning, Aromatique informed the PTO that it had successfully dissuaded others from using the trade dress by sending letters demanding that competitors cease using the dress and by successfully suing competitors. Aroma-tique did not reveal that at least one of those letters (the letter to Gold Seal) falsely claimed that the dress had already been federally registered. Nor did Aromatique ever reveal that a court had denied a motion for preliminary injunction in one of the actions it filed to enforce its rights in part because the “evidence presented clearly showed that there are many other companies which have introduced a similar Christmas potpourri in cellophane packages.” Aromatique, Inc. v. The Gift Box, No. B-C-86-113, slip op. at 2 (E.D.Ark. Dec. 16, 1986). That case was subsequently settled. Aromatique’s failure to inform the PTO of its false claims that its trade dress had been federally registered may also constitute fraud on the PTO, or gross negligence and reckless disregard of the law, from which an intent to deceive the PTO may be inferred. Copelands’ Enter., supra, at 1568 & n. 6.
Aromatique defended its actions in part by asserting that an applicant for a trademark owes no duty of candor to the PTO. This is plainly wrong. See Copelands’ Enter., supra,
Aromatique cites Rosso & Mastracco, Inc. v. Giant Food Inc. for the proposition that an applicant is not required to disclose to the PTO the existence of other users of a mark if those other users began to use the mark after the applicant had used the mark (i.e., if they were junior users).
On October 23,1985, Aromatique’s counsel, who was also handling the applications for the registration of the trade dress at issue in this ease, wrote to Gold Seal demanding that Gold Seal cease and desist its infringement of Aromatique’s trade dress:
Based on an examination of a sample of your product, we note for example that you are marketing an aromatic room freshener in a clear plastic bag containing a potpourri visible through the walls of the bag. The bag is gathered at the neck and is tied with red-colored rope cord. The bag when filled measures approximately the same dimensions in width, height and thickness as those of our client.
Our client is the owner of federal and state trademark registrations on such trade dress including Arkansas Registration No. 260-85 and Arkansas Registration No. 261-85 covering our client’s trade dress for its Christmas fragrance and for its spring fragrance....
Plaintiffs Trial Exhibit L (emphasis added). Two years later, Aromatique’s attorneys again wrote to Gold Seal, repeating the allegation that Gold Seal was infringing Aroma-tique’s “federal and state trademark registrations.”
The meaning of these letters is plain: Aro-matique was attempting to dissuade Gold Seal from infringing its trade dress in part by asserting that the trade dress was federally registered. There can be no doubt that Aromatique’s counsel knew that the claim that the dress was federally registered was false: Aromatique, through its counsel, had filed the applications for registration and had received, prior to sending the first letter, notice that the applications had been rejected because the claimed marks were not distinctive. Aromatique suggests somewhat tentatively in a footnote in its initial brief submitted to this court that the false statements in the letters might have been inadvertent because Aromatique’s marks for the product names “The Smell of Christmas” and “The Smell of Spring” had been registered in March of 1985. But there was no testimony presented at trial to support this interpretation. The first letter, moreover, specifically describes the packaging that is alleged to infringe and is alleged to be federally registered; neither letter makes reference to rights in “The Smell of Christmas” or “The Smell of Spring.” The conclusion that the letters were written with the intent to mislead Gold Seal into believing that the asserted trade dress was federally registered is inescapable.
The actions Aromatique took to acquire and enforce rights in the trade dress at issue here are indeed beyond the pale of acceptable behavior. Aromatique’s failure to inform the PTO that it had improperly asserted that its trade dress was federally registered in October of 1985 constitutes fraud on the PTO. Its false claims of federal registration constitute fraud against Gold Seal. Gold Seal did in fact change its packaging after receiving Aromatique’s first letter; Aroma-tique supported its assertion of secondary meaning by telling the PTO in January of 1986 that parties that had been informed of Aromatique’s rights in its trade dress had ceased using that dress. Aromatique’s claim of secondary meaning, therefore, was based in part on its fraudulent assertion to Gold Seal that its dress was federally registered.
IV.
For the reasons given, I would not only reverse the judgment of the trial court, vacate the order, and cancel the federal trademarks at issue, but would also award attorneys’ fees to Gold Seal and remand this case to the district court for a determination of Gold Seal’s attorneys’ fees incurred as a result of Aromatique’s suit, including the fees incurred on this appeal.
Notes
. Section 33(a) was amended in 1988, after the conclusion of the trial. I do not believe that the change in language in that section affects the outcome of this case.
Concurrence Opinion
concurring.
I concur in the court’s judgment. I join parts I, II, and IIIA of the opinion filed by Judge Morris Sheppard Arnold. I write separately to explain why, in my view, Gold Seal is not entitled to attorney fees.
Judge Arnold has ably described, in part IIIA of his opinion, the general principles that apply to a claim for attorney fees under 15 U.S.C. § 1117. I respectfully differ with Judge Arnold, however, about the result of this case. For several reasons, I believe fees are not appropriate.
First, Gold Seal sought attorney fees not as a claim accompanying its own infringement action but in response to Aromatique’s infringement action. In Hartman v. Hallmark Cards, Inc.,
Second, Gold Seal sought attorney fees not for the conduct of Aromatique’s principals but rather for the pre-litigation conduct of Aromatique’s attorneys. Of course, an attorney is an agent of his or her client, but I believe an award of fees on this basis would not be prudent. Claims for attorney fees under § 1117(a) are best analyzed by focusing on the trademark infringement itself. See, e.g., Moore Business Forms, Inc. v. Ryu,
Third, even if I were predisposed to award § 1117(a) attorney fees to a prevailing defendant based on the conduct of a plaintiffs attorneys, I would conclude that the conduct here does not make this case “exceptional.” Because that term is inherently vague, there is unlikely to be widespread agreement on its application unless an infringement action is either clearly garden-variety, see, e.g., Badger Meter, Inc. v. Grinnell Corp.,
For these reasons, I would deny Gold Seal’s claim for attorney fees.
Dissenting Opinion
dissenting.
I respectfully dissent.
It is regrettable, indeed astounding, that the court today rewards Gold Seal’s studied and extensive imitation of Aromatique’s trade dress. Stronger words than imitation could, in truth, well be applied to Gold Seal’s conduct.
The court today rejects the district court’s factual findings that Aromatique’s trade dress is distinctive, and holds that as a matter of law it is not distinctive. Distinctiveness, as the court recognizes, is a factual question. Op. at p. 868 (citing Prufrock, Ltd. v. Lasater,
The court today looks only to the most general lesson of Anderson. The court ignores the rule that where there are two permissible views of the evidence, the factfin-der’s choice cannot be clearly erroneous “even when the district court’s findings do not rest on credibility determinations, but are based instead on physical or documentary evidence or inferences from other facts.”
The rationale for deference to the original finder of fact is not limited to the superiority of the trial judge’s position to make determinations of credibility. The trial judge’s major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judge’s efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources.
The district court must weigh testimony of expert witnesses. Hoefelman v. Conservation Comm’n,
[Wjhen a trial judge’s finding is based on his decision to credit the testimony of one of two or more witnesses, each of whom has told a coherent and facially plausible story that is not contradicted by extrinsic evidence, that finding, if not internally inconsistent, can virtually never be clear error.
I.
The district court found that Aromatique’s trade dress was distinctive, as it had acquired secondary meaning, and that a likelihood of confusion was created. The court today states that “the marks at issue cannot be inherently distinctive,” and that Gold Seal’s copying “cannot support an inference of secondary meaning,” thus making a wholesale substitution of its own views for the district court’s detailed findings of fact. Slip op. at 9, 12.
The court today correctly observes that a trade dress is distinctive if it “has acquired distinctiveness by acquiring secondary meaning.” Slip op. at 8. Attempts to copy or imitate the trade dress, consumer association of the dress to a source, sales success, advertising expenditures, media coverage about the product, and the length of exclusivity of use of the trade dress should be considered in determining whether the trade dress has acquired secondary meaning, and therefore deserves protection. Thompson Medical Co. v. Pfizer Inc.,
The error of the court’s approach today is best demonstrated by considering the district court’s specific findings regarding Gold Seal’s imitation of Aromatique’s trade dress:
(a)Gold Seal presented its products in pillow-shaped packages decorated with gold foil labels and contained in double-cellophane bags gathered at the top in a “flower.” Gold Seal used identical or nearly identical textured gold and colored tie cords, and prominently displayed the words “Heber Springs” on the label.
(b) Gold Seal ... used the identical words on its packages to warn about the oil and promotion of fragrance oil. The warning language was from Aroma-tique’s 1985 flat hang tag and the fragrance promotional language was from Aromatique’s 1986 folding hang tag.
(c) Gold Seal purchased the same type of polypropylene cellophane bags from the same vendor that supplies Aroma-tique instead of another form of cellophane bag, such as polyethylene, which is cheaper.
(d) Gold Seal used the same type of red and green cords made from polypropylene fiber in the identical shades of color as Aromatique’s cords and purchased the cords from the same vendor as Aromatique.
(e) When Aromatique added a gold metallic string to its packages in 1987, it did so in part to distinguish its packages from Gold Seal’s. Gold Seal copied that change and added the same type of metallic string to its packages.
(f) When Gold Seal changed from the large round serrated label to the butterfly label in 1987, Gold Seal purchased the butterfly label from the same supplier that had helped design and supply labels for Aromatique. The labels for “The Smell of Christmas”.are red and gold while the labels for “Holiday Essence” are gold and red. While the labels for “The Smell of Spring” are gold, the labels for “Spring Essence” are gold and blue.
(g) The bottle Gold Seal used for its refresher oil was identical in shape, size, and color to the bottle Aromatique used. The label of Gold Seal’s bottle was black and gold while the label used by Aromatique was brown and gold. Gold Seal packaged the bottle in a box that was identical in shape and size to the box used by Aromatique.
(h) After Aromatique began applying a wash dye to some of the natural elements in its Christmas and Spring products, Gold Seal began dyeing its products.
*882 (i) Gold Seal had a spring scent made by Inter-Continental Fragrances in Houston as a “knock off’ of the oil Aroma-tique used to create the fragrance in “The Smell of Spring.”
These key findings demonstrate Gold Seal’s persistent pattern of imitating Aroma-tique’s trade dress, as well as the distinctiveness of Aromatique’s trade dress. Evidence in the record supports each of these findings, and the court today makes no argument to the contrary. It is most significant that after Aromatique’s notification in 1985, Gold Seal ceased many of the practices. However, the district court’s findings reflect that in 1987 Gold Seal returned to using not only the red and green cords it had used before receiving Aromatique’s notice, but also added the metallic gold cord Aromatique had begun using, and began to use a similar label on the package. It was these later acts that led to the filing of this suit. In addition, although there are other manufacturers in the decorative fragrance industry, only Gold Seal’s packages are virtually identical to those of Aromatique. Despite this pattern of findings, the court today ignores Anderson and substitutes its own findings.
In considering factors relevant to the determination of secondary meaning, the district court also found that the evidence of Aromatique’s national magazine advertisements, television exposure, and skyrocketing sales all supported its finding that Aroma-tique’s trade dress had acquired secondary meaning. The court today quibbles with the district court’s finding that Aromatique spent in excess of $562,000, but concedes that Aro-matique spent up to $250,000 in promotional and advertising expenses between February 1, 1982, and July 31,1988. The court’s statement that the amount Aromatique spent “is probably too low to accord it much probative value” demonstrates that the court is making its own findings of fact. See slip op. at 14. The court imposes its own view regarding what amount of money spent on advertising and promotion is sufficient to support an inference of secondary meaning, and further finds that $250,000 is too little to indicate secondary meaning. The court also ignores Aromatique’s phenomenal rise in sales, from approximately $239,000 in 1982 to almost $9.5 million in 1988, which strongly indicates that Aromatique’s products acquired secondary meaning. The court makes no effort to apply the clearly erroneous standard to these findings. Cf. Cicena Ltd. v. Columbia Telecommunications Group,
Another factor a court should consider in determining whether the trade dress deserves protection is the likelihood of confusion. The district court held that just as Gold Seal’s intent to copy the overall appearance of Aromatique’s products gives rise to an inference of secondary meaning, such intent also implies a likelihood of confusion. Gold Seal’s founder, Mr. Bufford, testified about his company’s efforts to “compete” with Aromatique. He admitted copying the wording on Aromatique’s package.
The district court also considered additional evidence of likelihood of confusion, including: the strength of Aromatique’s mark, the similarity with Gold Seal’s marks, Gold Seal’s intent to pass off its goods as Aromatique’s products, the type of product, conditions of purchase, competitive proximity and incidence of actual confusion. The district court found numerous incidents of actual confusion by retailers and the public as strong evidence of a likelihood of confusion. For example, a retailer of Gold Seal testified that one customer who had purchased an Aromatique product at another retailer attempted to re
The court today states that consumer surveys and testimony may be the only direct evidence of secondary meaning, and that no such evidence had been presented during the trial or to the patent office. This statement directly contradicts factual findings, as outlined above, that retailers testified as to actual confusion of consumers, and to the likelihood of confusion. The court today recognizes that secondary meaning may be inferred from evidence of deliberate copying, but fails to acknowledge the district court’s clear findings of Gold Seal’s imitation of Aro-matique’s trade dress and the resulting likelihood of confusion.
By completely overlooking the district court’s detailed findings in support of its conclusion that Gold Seal’s imitation, evidence of actual confusion, media coverage, and advertising expenses all indicated that Aromatique’s trade dress has acquired secondary meaning and its finding of a likelihood of confusion, the court today ignores the teachings of Anderson that when there are two permissible views of the evidence, the factfinder’s choice cannot be clearly erroneous.
II.
The court today also finds Aromatique’s packaging to be functional, and therefore unprotected. Purely functional packaging, such as a cardboard box or glass jar, is unprotected. See In re Water Gremlin Co., 635 F.2d- 841, 844 (C.C.P.A.1980) (protecting container designed to provide access to lead sinkers). In general, functionality requires that a design “cannot practically be duplicated through the use of other designs.” Restatement (Third) of Unfair Competition § 17, cmts. a & b (Tent.Draft No. 2 1990). A feature is essential and therefore functional “only if the feature is dictated by the functions to be performed.” Stormy Clime Ltd. v. ProGroup, Inc.,
Our cases make clear that functionality or nonfunctionality is a question of fact to be reviewed under a clearly erroneous standard. Prufrock, Ltd. v. Lasater,
Today the court makes no effort to review the findings of the district court bearing upon nonfunctionality, but simply makes its own findings of fact. Indeed, the court today does not even refer to the findings of the district court with respect to the functionality issue, nor to the conclusions the district court reached based upon those findings. The district court specifically found that Aromatique had shown through expert and lay witnesses that there are numerous other ways to package potpourri or decorative room fragrances, factoring in expense, visibility and aroma, and that upholding the protection of the combination of the elements composing Aroma-tique’s trade dress would not hinder competition in the potpourri decorative fragrance industry. These findings go directly to the determinative issue with respect to functionality, namely “whether protection against imitation will hinder the competitor in competition.” Truck Equip.,
Moreover, the court exhaustively makes its own findings of fact on the several specific features of the trade dress, rather than considering the total image or the overall impression created. By dwelling in detail on the separate features- of the trade dress rather than on the whole dress and the overall
As the district court recognized, but the court today largely ignores, functional elements that are separately unprotectable can be collectively protected as part of the trade dress. Computer Care v. Service Sys. Enters., Inc.,
The record supports the finding of non-functionality under the principles in Pru-frock, which states:
[W]here the feature or ... design is a mere arbitrary embellishment, a form of dress for the goods primarily adopted for purposes of identification and individuality and, hence, unrelated to consumer demands in connection with the product, imitation may be forbidden where the requisite showing of secondary meaning is made.
The district court’s finding that many of the features were nonutilitarian is consistent with testimony at trial about the arbitrariness of the “flower,” the double-bagging, and the knotted cord. For example, the crowned top of the flower required careful and close attention, which increased the cost of the package and required extra room in the shipping container. Aromatique used cord which required deliberate and careful tying by hand. The cord was drawn in a square knot, leaving a small opening to allow the aroma of the potpourri to escape. Experts explained that the collocation of these nonutilitarian elements created the “Aromatique look,” and described the arrangement as protectable because a distinctive commercial impression was created. Therefore, I do not believe the district court clearly erred when it found that Aromatique’s trade dress was nonfunctional, although it may have incidental utilitarian attributes. Furthermore, I believe the district court correctly found it is nonfunctional because alternative designs are available to achieve the same utilitarian ends. See In re Morton-Norwich Prods., Inc.,
The court today states that the flowered top that results when the double-cellophane bags are tied closed, “must be one of the most common, and least arbitrary, shapes in packaging.” Op. at 874. The court states that “every Christmas fruit basket and liquor bottle wrapped in cellophane or plastic that is tied closed has a similarly shaped ‘flower.’ ” Id. at 874. I have searched the record in vain for evidence of fruit baskets and liquor bottles, but have found none. The court also believes that protecting the flower, double-bagging, and the knotted cord would impair
The court today rests its legal conclusion in large part on the statement in Prufrock that trade dress is functional if it serves as “an important ingredient in the commercial success of the product.”
However, the facts in Prufrock, as well as the cases upon which it relies and decisions from other circuits, support a more narrow interpretation than that which the court today gives the aesthetic functionality issue. Courts and commentators alike have cautioned that a broad reading of this aesthetic functionality language would eviscerate the protection afforded by a trademark. See, e.g., Vuitton et Fils S.A. v. J. Young Enters., Inc.,
Moreover, the facts in Prufrock show that this language was not central to that court’s analysis. There, the district court found the defendant infringed upon the plaintiffs restaurants’ trade dress. The district court, however, had defined the protected dress to include the concept of “a full-service restaurant, serving down home country cooking, in a relaxed and informal atmosphere, with a full-service bar” and featuring an open kitchen.
Aromatique, however, is not attempting to monopolize the concept of scented room fresheners or potpourri. In sharp contrast to Prufrock, this case involves the copying of packaging which, incidentally, is specifically designed to be cut open and thrown away when the product is used. Nothing in Pru-frock or Truck Equipment, upon which the court relied in Prufrock, requires protection for aesthetic functionality in mere packaging. Prufrock considered trade dress necessary to a “country cooking” restaurant part of its core concept, and Truck Equipment involved copying the design of the product, a semitrailer. See Prufrock,
The language in Prufrock, including portions quoted by the court today, see op. at 873, points to a distinction between the product itself and the packaging. Here, the packaging, intended to be discarded, exists simply to facilitate the sale of the product, enhancing identification and individuality. Other circuits, including the Ninth Circuit which authored Bliss, from which this court quoted in Truck Equipment and later Prufrock, have explicitly recognized a distinction between protection of a product and its packaging. See, e.g., Fabrica Inc. v. El Dorado Corp.,
III.
The court today goes far beyond merely holding that Gold Seal’s challenged products do not infringe those of Aromatique. The court could have simply decided that whatever the extent of Aromatique’s property interest in its trade dress, Gold Seal’s products did not infringe on that interest. Instead, the court concludes that Aromatique’s federal registered marks should be cancelled.
The court’s reasoning simply does not support such a sweeping remedy. According to the court today, Aromatique’s trade dress consists of:
A potpourri packaged in pillow-shaped double cellophane bags that are closed at the top by gathering excess cellophane and closing it with cord (red and/or green and gold for Christmas and gold and ecru for Spring) tied in a square-knot bow with an oval label (red and gold for Christmas and gold alone for Spring).
Op. at 870. The court concludes that those portions of Aromatique’s dress which Gold Seal appropriated were functional and not distinctive. In concluding that no infringement occurred, the court explicitly relies on the fact that Gold Seal used a label that differed significantly from Aromatique’s. Op. at 871. The court today never even suggests that the color, size, shape and appearance of Aromatique’s label is functional or not distinctive. Similarly, the court purports to decline reaching protectability of the ecru-colored cord on Aromatique’s Smell of Spring. Yet, the court holds that Aroma-tique “may not exclude others from using [its] marks,” including apparently the aesthetic details of its labeling and cord. Op. at 875.
Since collections of features incorporating otherwise unprotected elements may warrant protection, see Qualitex,
. The district court also found that Bufford entered Aromatique's warehouse without authorization in July 1984 and was seen looking for information pertaining to fragrance oil. Bufford also attempted to determine the price Aroma-tique paid for its supplies, and was unhappy when he was not told.
. Gold Seal did not ask this court to cancel the state trademarks.