JAY FRANCO & SONS, INC. v. FRANEK No. 09-2155.
615 F.3d 855 (2010)
JAY FRANCO & SONS, INC., Plaintiff-Appellee, v. Clemens FRANEK, Defendant-Appellant.
United States Court of Appeals, Seventh Circuit.
Decided August 11, 2010.
Mark D. Roth (argued), Attorney, Orum & Roth, Chicago, IL, for Defendant-Appellant.
Before EASTERBROOK, Chief judge, and POSNER and EVANS, Circuit Judges.
EASTERBROOK, Chief Judge.
The same year Huey Lewis and the News informed America that it's "Hip To Be Square", Clemens Franek sought to trademark the circular beach towel. His company, CLM Design, Inc., pitched the towel as a fashion statement—"the most radical beach fashion item since the bikini," declared one advertisement. "Bound to be round! Don't be square!" proclaimed another. CLM also targeted lazy sunbathers: "The round shape eliminates the need to constantly get up and move your towel as the sun moves across the sky. Instead merely reposition yourself."
The product enjoyed some initial success. Buoyed by an investment and promotional help from the actor Woody Harrelson (then a bartender on the TV show Cheers), CLM had sold more than 30,000 round beach towels in 32 states by the end of 1987. To secure its status as the premier circular-towel maker, the company in 1986 applied for a trademark on the towel's round design. The Patent and Trademark Office registered the "configuration of a round beach towel" as trademark No. 1,502,261 in 1988. But this was not enough to save CLM: Six years later it dissolved. The mark was assigned to Franek, who continues to sell circular towels.
In 2006 Franek discovered that Jay Franco & Sons, a distributor of bath, bedding, and beach accessories, was selling round beach towels. After settlement negotiations failed, Franek sued two of Jay Franco's customers, Target and Walmart, for unauthorized use of his registered trademark in violation of § 32 of the Lanham Act, 15 U.S.C. § 1114. Jay Franco had agreed to indemnify and defend its customers in such suits, so it sued Franek to invalidate his mark. (The pending suits against Target and Walmart made the claim ripe, just as insurers can bring declaratory-judgment suits to resolve disputes about a policy's scope once an insured has been sued and asserts that the policy applies.) The district judge consolidated the two cases, granted summary judgment in Jay Franco's favor, and dismissed the remaining claims and counterclaims. 2009 U.S. Dist. Lexis 20361 (N.D.Ill. Mar. 13, 2009). Franek appeals from that judgment; Target and Walmart are not part of the appeal.
One way to void a trademark is to challenge its distinctiveness. A valid trademark identifies the source of the good
Unfortunately for Franek, incontestable marks are not invincible. The Lanham Act lists a number of affirmative defenses an alleged infringer can parry with; one is a showing that the mark is "functional." See § 1115(b)(8); Specialized Seating, Inc. v. Greenwich Industries, L.P., ___ F.3d ___, ___, 2010 WL 3155922, *1 (7th Cir.2010) (discussing functionality and other ways to defeat incontestable marks). As our companion opinion in Specialized Seating explains, patent law alone protects useful designs from mimicry; the functionality doctrine polices the division of responsibilities between patent and trademark law by invalidating marks on useful designs. This was the route Jay Franco pursued. The district judge agreed, finding Franek's mark "functional" under the definition the Supreme Court gave that concept in TrafFix Devices, Inc. v. Marketing Displays, Inc.,
TrafFix says that a design is functional when it is "essential to the use or purpose of the device or when it affects the cost or quality of the device," 532 U.S. at 33, 121 S.Ct. 1255, a definition cribbed from Inwood Laboratories, Inc. v. Ives Laboratories, Inc.,
Figuring out which designs meet this criterion can be tricky. Utility patents serve as excellent cheat sheets because any design claimed in a patent is supposed to be useful. See 35 U.S.C. § 101; Brenner v. Manson,
Claim 2 sounds like Franek's advertisements, which we quoted above. The patent's specification also reiterates, in both the summary and the detailed description, that a circular towel is central to the invention because of its benefit to lazy sunbathers.
Franek argues that claim 2 does not trigger the TrafFix presumption of functionality because his towel does not infringe the '029 patent. He notes that claim 2 incorporates claim 1 (in patent parlance, claim 1 is "independent" and claim 2 "dependent," see 35 U.S.C. § 112) with the added condition that the towel be circular. An item can infringe a dependent claim only if it also violates the independent claim incorporated by the dependent claim. See Monsanto Co. v. Syngenta Seeds, Inc.,
Proving patent infringement can be sufficient to show that a trademarked design is useful, as it means that the infringing design is quite similar to a useful invention. See Raytheon Co. v. Roper Corp.,
Nor does it matter that the '029 patent application was filed two years after Franek began selling round towels. As we've explained, a patent's invalidity for a reason other than uselessness says nothing about the claimed design's functionality. And a design patented yesterday can be as good evidence of a mark's functionality as a design patented 50 years ago. Indeed, more recent patents are often better evidence because technological change can render designs that were functional years ago no longer so. See Eco Manufacturing LLC v. Honeywell International Inc.,
To put things another way, a trademark holder cannot block innovation by appropriating designs that under-gird 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. If we found Franek's trademark nonfunctional, then inventors seeking to build an improved round beach towel would be out of luck. They'd have to license Franek's mark or quell their inventiveness. That result does not jibe with the purposes of patent or trademark law.
This "strong evidence" of the round towel's functionality is bolstered by Franek's own advertisements, which highlight two functional aspects of the round beach towel's design. One, also discussed in the '029 patent, is that roundness enables heliotropic sunbathers—tanners who swivel their bodies in unison with the sun's apparent motion in order to maintain an even tan—to remain on their towels as they rotate rather than exert the energy to stand up and reposition their towels every so often, as conventional rectangular towels require.
Franek responds that whatever its shape (golden-ratio rectangle, square, nonagon) any towel can satisfy a heliotropic tanner if it has enough surface area—the issue is size, not shape. That's true, and it is enough to keep the roundness of his towel from being functional under the first prong of TrafFix's definition ("essential to the use or purpose of the device") but not the second. For heliotropic sunbathers, a circle surpasses other shapes because it provides the most rotational space without waste. Any non-circle polygon will either limit full rotations (spinning on a normal beach towel leads to sandy hair and feet) or not use all the surface area (a 6′ tall person swiveling on a 6′ by 6′ square towel won't touch the corners). Compared to other shapes that permit full rotations, the round towel requires less material, which makes it easier to fold and carry. That's evidence that the towel's circularity "affects the ... quality of the device." (The reduction in needed material also suggests that round towels are cheaper to produce than other-shaped towels, though Franek contends that cutting and hemming expenses make them costlier. We express no view on the matter.)
But let us suppose with Franek—who opposed summary judgment and who is thus entitled to all reasonable inferences— that round towels are not measurably better for spinning with the sun. After all, other shapes (squircles, regular icosagons) are similar enough to circles that any qualitative difference may be lost on tanners. Plus, the ability to rotate 180 degrees may be an undesired luxury. Few lie out from dawn `til dusk (if only to avoid skin cancer)
Franek's advertisements declare that the round towel is a fashion statement. Fashion is a form of function. A design's aesthetic appeal can be as functional as its tangible characteristics. See Qualitex Co. v. Jacobson Products Co.,
The chief difficulty is distinguishing between designs that are fashionable enough to be functional and those that are merely pleasing. Only the latter group can be protected, because trademark law would be a cruel joke if it limited companies to tepid or repugnant brands that discourage customers from buying the marked wares. We discussed this problem at length in Keene. See also Eco Manufacturing, 357 F.3d at 654; Schwinn Bicycle Co. v. Ross Bicycles, Inc.,
Franek wants a trademark on the circle. Granting a producer the exclusive use of a basic element of design (shape, material, color, and so forth) impoverishes other designers' palettes. See, e.g., Brunswick Corp., v. British Seagull Ltd.,
Contrast Franek's mark with the irregular hexagon at issue in Keene or the greengold hue in Qualitex. Those marks restrict few design options for competitors. Indeed, they are so distinctive that competitors' only reason to copy them would be to trade on the goodwill of the original designer. Cf. Service Ideas, Inc. v. Traex Corp.,
Franek chose to pursue a trademark, not a design patent, to protect the stylish circularity of his beach towel. Cf. Kohler Co. v. Moen Inc.,
If Franek is worried that consumers will confuse Jay Franco's round beach towels with his, he can imprint a distinctive verbal or pictorial mark on his towels. See Publications International, 164 F.3d at 343; Keene, 778 F.2d at 347-48. That will enable him to reap the benefits of his brand while still permitting healthy competition in the beach towel market.
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