If a federally registered trademark has been in continuous and substantially exclusive use for five years – and if the trademark owner files the appropriate “Declaration” in the Trademark Office – the mark becomes “incontestable” and, henceforth, is immune from attack on most grounds. Note the use of the word “most” in the preceding sentence. “Incontestable” is NOT synonymous with “invincible,” a fact that three trademark owners have recently learned, much to their chagrin.
(Jay Franco & Sons Inc. v. Clemens Franek; Specialized Seating Inc. v. Greenwich Industries LP; and Georgia-Pacific Consumer Products LP v. Kimberly-Clark Corp.)
Franek was – we’re disclosing the results here – the owner of an incontestable trademark registration in respect of “beach towels.” The subject towels are round. The registration was for a simple circle, identified as “a configuration of a round beach towel.”
Franek advertised these towels as “the most radical beach fashion item since the bikini.” Use of the towel avoided the necessity of repositioning the towel as the sun moved across the sky, “[i]nstead merely reposition yourself.” (Apparently, these people never heard of skin cancer.)
Franek, finding that Franco was supplying round beach towels to Wal-Mart and Target, sued for trademark infringement. Franco responded by seeking a declaratory judgment that the Franek trademark registration was invalid because the subject mark was “functional.”
In its attack, Franco relied on a third-party patent for a circular beach towel equipped with a peripheral drawstring which, when pulled, converted the towel into a satchel. The patent taught that the circular shape allowed the user to “reposition … toward the changing angle of the sun while the towel remains stationary.” Franek pointed out – to no avail – that its towel did not infringe the patent. “Functionality is determined by a feature’s usefulness, not its patentability or its infringement of a patent.” Franek also argued that a towel of any shape could satisfy the needs of what the court termed a “heliotropic sunbather.” Not good enough. A circle “is the most efficient way to meet this need … and therefore affects the cost or quality of the device.” Bye, bye trademark. The court told Franek it should have protected its “invention” by design patent.
On the same day, the court shot down Specialized Seating’s incontestable registration on an “X-frame” folding chair, holding that disclosure of elements of the trademark owner’s design in utility patents was “strong evidence of functionality.” “It looks the way it does in order to be a better chair, not in order to be a better way of identifying who made it (the function of a trademark).”
Shortly thereafter, another court wiped out – pun intended – four incontestable trademark registrations, owned by Georgia-Pacific, covering a “quilted diamond design” on embossed toilet paper. “A design that serves a functional purpose does not become nonfunctional solely because of the possibility of numerous alternative designs.”
As decided by the Seventh Circuit Court of Appeals, “a trademark holder cannot block innovation by appropriating designs that undergird further improvements. Patent holders can do this, but a patent’s life is short; trademarks can last forever, so granting trademark holders this power could permanently stifle product development.” Georgia-Pacific may have lost its trademark rights, but hopefully the unblocked innovation will result in improved toilet paper in the future.
THE LESSON TO BE LEARNED: A trademark may be incontestable, but if it is functional, it’s not valid.