Testimony on Trade Dress, H.R. 3163, Databases, H.R. 2652, and Domain Names

 

STATEMENT OF

MICHAEL K. KIRK
EXECUTIVE DIRECTOR

AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION

BEFORE THE

SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY

COMMITTEE ON THE JUDICIARY

UNITED STATES HOUSE OF REPRESENTATIVES

ON

H.R. 2652, THE "COLLECTIONS OF INFORMATION

ANTIPIRACY ACT"

H.R. 3163, THE "TRADE DRESS PROTECTION ACT"

AND

INTERNET DOMAIN NAME TRADEMARK PROTECTION

FEBRUARY 12, 1998

Mr. Chairman:

I am pleased to have the opportunity to present the views of the American Intellectual Property Law Association (AIPLA) on H.R. 2652, the "Collections of Information Antipiracy Act," H.R. 3163, the "Trade Dress Protection Act," and "Internet Domain Name Trademark Protection."

The AIPLA is a national bar association of nearly 10,000 members engaged in private and corporate practice, in government service, and in the academic community. The AIPLA represents a wide and diverse spectrum of individuals, companies and institutions involved directly or indirectly in the practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property.

SUMMARY

The AIPLA expressed its support for H.R. 2652 in a statement submitted in conjunction with the hearing held on that legislation on October 23, 1997. We believe that H.R. 2652 is a major step forward in providing needed protection for the database industry. At the same time, H.R. 2652 also addresses the concerns expressed by the scientific, library, and educational communities. While various stakeholders will undoubtedly find it lacking some provisions that they would like to see, H.R. 2652 is a balanced bill. We once again reviewed H.R. 2652 and our statement on it in preparation for this hearing and have found nothing which would cause us to change our expression of support.

We also support H.R. 3163. AIPLA members represent both owners and users of intellectual property, including many large and small businesses whose success or failure in the marketplace depends heavily on their ability to identify their products and services to their customers and to distinguish them from the products and services of their competitors. The ability of AIPLA members to achieve this result depends, in turn, on the protection and enforcement not only of their clients' trade and service marks, but also their trade dress. American businesses invest large sums in creating, advertising, promoting and protecting the trade dress of their products and services in order to make them identifiable to and distinguishable by the public and, where necessary, they also expend large sums in enforcing their exclusive trade dress rights against infringers. We believe that H.R. 3163 will improve the protection of trade dress by adding certainty to its registration and enforcement, therefore benefiting both consumers and businesses.

The AIPLA presented its views on the various trademark-related issues arising from the registration and use of domain names at the initial oversight hearing of this Subcommittee on November 5, 1997. As we all know, the Administration made public its "Green Paper" discussion draft entitled "A Proposal to Improve Technical Management of Internet Names and Addresses" less than two weeks ago. While AIPLA has just started reviewing and analyzing the proposals in the Green Paper, we find it a thoughtful and thought-provoking contribution. We believe it will significantly contribute to the transition of the Internet to the private sector, promote competition and international participation in the domain name system, and offer the potential to alleviate many of the problems which the Internet presents to trademark owners.

H.R. 3163, THE "TRADE DRESS PROTECTION ACT"

Background of Trade Dress Protection at
Common Law and Under the Lanham Act:
The Lack of a Statutory Basis for Registration of Trade Dress Per Se

Trade dress has been defined as "the total image of a product, including features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques. "(1) It includes -- separately or in combination -- the distinctive, source-indicating aspects of a product's packaging, labeling, coloration, design, and configuration, to the extent that, taken as a whole, those features are not functional in a utilitarian or (according to some courts) even an aesthetic sense.

Like trade and service marks, trade dress serves to indicate the source or origin of the products or services with which it is used to purchasers, prospective purchasers, users, and members of the public at large. Like trade and service marks, adequate protection and enforcement of trade dress is essential not only to the competitive success of its owners and users, but also to the public which relies upon it as an indication of source, origin, and quality in making purchasing decisions every day.

Unlike trade and service marks, on the other hand, trade dress lacks -- and historically has always lacked -- the express statutory basis for registration, protection, and enforcement which the Lanham Act and its federal trademark statute predecessors provide. This does not mean that trade dress has not been protected by the courts; remedies for trade dress infringement are available under principles of common law, state statutes, and Section 43(a) of the Lanham Act which provides a federal right of action for misrepresentations of origin or of the qualities or characteristics of a party's goods or services.

Nevertheless, the omission of trade dress from other aspects of the Lanham Act's comprehensive statutory scheme has resulted in a number of uncertainties as to the extent to which trade dress per se can be registered like a trade or service mark. It has also resulted in many inconsistencies and even conflicts among court decisions on issues essential to the protection and enforcement of trade dress rights. Some of those uncertainties and inconsistencies have been resolved by decisions such as Qualitex Co. v. Jacobson Products Co., 514 U.S. 159 (1995) (color alone can qualify for registration under the Lanham Act). Nevertheless, many others remain.

The Need for Greater Uniformity and Predictability in Protection
and Enforcement of Trade Dress in the PTO and the Courts

With respect to registration of trade dress, the U.S. Patent and Trademark Office (PTO) has adopted the practice that, although not expressly provided for in the Lanham Act, trade dress which serves as a trade or service mark and meets the other statutory prerequisites for registration may be registered on either the Principal or Supplemental Register. This practice -- implementing decisions of the Court of Appeals for the Federal Circuit and its predecessor, the Court of Customs and Patent Appeals -- has been applied to permit the registration of a variety of forms of trade dress, especially packaging and container shapes and product configurations.

The PTO's trade dress practice has not, however, led to the resolution of all issues arising out of applications for trade dress registration -- such as, questions as to whether a particular design or coloration in fact serves as a mark or is only decorative--as to which many thorny issues of definition and application remain. In addition, the PTO's practice of registering trade dress has given rise to new issues not resolved by the existing provisions of the Lanham Act -- for example, whether an incontestable trade dress registration can be challenged on grounds such as functionality which are not enumerated for challenges to incontestable trademark registrations.(2) These questions have given rise to much past and pending litigation in the PTO and in the courts.

As to conflicts among decisions in the courts, the situation is, if anything, less uniform and clear. In the absence of a Lanham Act definition of trade dress, or at least some enumeration of criteria for determining subsidiary matters such as inherent distinctiveness and functionality, court decisions in trade dress cases have presented a patchwork of overlapping, inconsistent, and even overtly conflicting precedents. Among other things, the federal district courts and circuit courts of appeal have diverged in their interpretations of what criteria should be applied to determine distinctiveness, how functionality should be determined, which party has the burden of proof on elements of a trade dress infringement claim or defense -- and even what constitutes protectable trade dress itself.

There is no question that trade dress protection has increasingly become one of the most frequently and hotly litigated areas of intellectual property law. In this era of mass marketing, aggressive advertising, and rapidly evolving consumer communications media, amendment of the Lanham Act cannot be expected to halt or reverse that trend. Nevertheless, amendment of the Act to provide express statutory grounds for registration of trade dress, and to set forth criteria for the courts to consider in resolving trade dress disputes, should promote the salutary purposes of clarifying the scope and content of exclusive trade dress rights, encouraging registration of those rights by trade dress owners, enhancing predictability and certainty in trade dress matters for business users, and protecting the public interest in the use and protection of distinctive commercial symbols which will not lead to a likelihood of confusion.

H.R. 3163 Will Provide for Greater Predictability and
Uniformity in the Protection and Enforcement of Trade Dress

In introducing H.R. 3163, Mr. Chairman, you stated that it was intended to provide the courts, as well as the PTO, with guidance as to the relevant factors to consider in determining whether or not product designs or packaging are inherently distinctive. The goal was to make the registrability and protection of trade dress as efficient as possible for both the applicant and the examiner. H.R. 3163 also attempts to define functionality in a manner consistent with prevailing case law and to expressly state that any matter that, taken as a whole, is functional is not registrable. H.R. 3163 sets forth a non-exclusive list of factors for the PTO and the courts to consider in determining whether any given matter is functional.

AIPLA believes that H.R. 3163 admirably accomplishes these purposes and will provide greater certainty in existing PTO procedures for the registration of trade dress and greater uniformity in the enforcement of trade dress. Importantly, H.R. 3163 accomplishes the stated goals by building upon existing procedures for the registration of trade dress by the PTO as well as the basic principles of existing law and precedent applicable to trade dress cases in the courts.

We believe that H.R. 3163, with certain amendments discussed below, will promote uniformity and predictability in the protection of trade dress in at least five respects: the definition of trade dress, the criteria for registration of trade dress, the criteria for determining inherent distinctiveness of trade dress, the criteria for determining functionality, and the allocation of the burden of proof of functionality in trade dress cases.

Definition of Trade Dress. During the nineteenth and early years of the twentieth centuries, trade dress was usually thought of mainly as comprising the appearance of the packaging and labeling of a product. In more recent years, and especially since enactment of the Lanham Act, trade dress protection has been expanded to include a host of other product features, including among others: package and product configurations; product designs; architectural designs; restaurant designs, layouts, and formats; artist's styles; styles of doing business; and, settings, characters, and other features of entertainment games and programs. Some courts, however, have declined to extend trade dress protection to types of subject matter which have been recognized by others, and greater uniformity and predictability in the definition of protectable trade dress would therefore be desirable.

AIPLA believes that providing trade dress protection to these and similar product-identifying features is beneficial to both trade dress users and the public. It both encourages innovation in product design and presentation and enhances the ability of purchasers and consumers to identify and distinguish among the wide variety of products on the market. On the other hand, H.R. 3163 would not extend trade dress protection to any features that do not serve a source-identifying purpose, or which are functional in connection with the products or services for which they are used.

The definition of trade dress set forth in H.R. 3163 recognizes and balances these considerations by embracing the source-identifying features of a product or service, while at the same time expressly precluding the registration of trade dress that, taken as a whole, is functional. AIPLA supports including such a definition in the Lanham Act.

Criteria for Registration of Trade Dress. For trade dress to be registrable and protectable, it must not only serve to identify the goods or services in connection with which it is used and distinguish them from those of others, it must also not, taken as a whole, be functional. In order to preserve the freedom of others to offer competing goods and services, and in recognition of the public policies embodied in the patent, copyright, and trade secret laws, any matter which, taken as a whole, is functional may not be exclusively appropriated as trade dress. Proposed new subsection 2(e)(5) and proposed amended subsection 23 (c ) of the Lanham Act make it clear that any trade dress that is functional shall not be registered either on the Principal or Supplemental Register at the PTO. Further, taken together with proposed new subsection 2(g), they make it clear that trade dress which is functional shall not be registered even if it is shown that it has become distinctive.

AIPLA believes that these criteria for registration and protection of trade dress are appropriate and endorses their incorporation into the Lanham Act.

Criteria for Determining Inherent Distinctiveness. (3) In order to be registrable as a trade or service mark on the Principal Register, the matter sought to be registered must be distinctive of the goods or services with which it is used -- that is, it must serve to indicate that they emanate from a specific, even if unknown, source or origin. If all other criteria for registration are satisfied, a trade or service mark that is inherently distinctive may be registered under the Lanham Act without a showing of acquired distinctiveness. If a mark is originally found to be merely descriptive but later becomes distinctive through use, it may be registered on the Principal Register under subsection 2(f) of the Lanham Act. If the mark has not become distinctive, but is capable of distinguishing, it may be registered on the Supplemental Register under Section 23 of the Lanham Act.

The Supreme Court applied a similar test to trade dress in Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992). The Court held that trade dress which is found to be inherently distinctive may be protected under the Lanham Act without special proof of its distinctiveness or secondary meaning. Under Two Pesos and other applicable precedents, unregistered as well as registered trade dress may be enforced against infringers on this basis.

H.R. 3163 appropriately adopts this approach with regard to trade dress. Proposed new subsection 2(g) of the Lanham Act provides for the registration of trade dress which is inherently distinctive - which is defined to exist where the relevant public is likely to identify the source of the product or service by reference to its trade dress - without the need to show that it has become distinctive under subsection 2(f) of the Lanham Act. It sets forth a non-exclusive list of factors to assist the PTO and the courts in determining whether the relevant public is likely to identify the source of the product or service by reference to its trade dress, i.e., whether it is inherently distinctive.

The issue of inherent distinctiveness and subsidiary issues, including the burden of proof of distinctiveness, in trade dress cases have long been among the most hotly debated and litigated issues in trade dress law. Even the Supreme Court's decision in Two Pesos, holding that inherently distinctive trade dress may be protected without proof of secondary meaning, did not resolve these issues, but instead led to further conflicts with respect to how inherent distinctiveness should be determined. AIPLA believes that proposed new subsection 2(g) of the Lanham Act will promote uniformity and predictability on this issue in the PTO and in the courts.

Criteria for Determining Functionality. As noted above, proposed new subsection 2(e)(5) and proposed amended subsection 23(c ) of the Lanham Act codify existing law and practice that trade dress that is functional shall not be registered. This basic principle, however, is far easier to articulate in the abstract than to apply in practice. Court decisions -- including the Supreme Court's definition of functionality in dicta in Inwood Labs, Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n. 10 (1983) ("a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article") -- offer guidance but little certainty or predictability in application. Moreover, courts in the different regional circuits (and even within a given circuit) diverge on issues such as whether product features that are merely decorative, but which yield a competitive advantage in the marketplace, should be held functional and therefore not protectable ("aesthetic functionality").

H.R. 3163 would amend section 45 of the Lanham Act to define functionality as meaning "that the matter is of such superior design for its purpose that to afford it protection under this Act would significantly hinder effective competition." In addition, section 45 of the Lanham Act would be amended to set forth a list of factors to be considered in determining whether matter sought to be protected is functional, including:

(1) whether the matter yields a competitive advantage;

(2) whether alternative designs are available; and

(3) whether the matter achieves economies in the manufacture or use of the goods or services, or affects their cost or quality.

Importantly, amended section 45 of the Lanham Act would state expressly that these enumerated factors to be considered in determining functionality shall not be exclusive of others.

AIPLA believes that the addition of an appropriate definition of functionality to section 45 of the Lanham Act could promote uniformity and predictability with respect to this basic trade dress issue both in the PTO and in the courts. We are concerned, however, that the definition proposed in H.R. 3163 at least implicitly recognizes the doctrine of aesthetic functionality. We share the view of Professor McCarthy that "The notion of 'aesthetic functionality' is an unwarranted and illogical expansion of the functionality policy, carrying it far outside the utilitarian rationale that created the policy." To the extent that there is a valid concern regarding ornamental features, this question is appropriately addressed in proposed new subsection 2(g) of the Lanham Act which requires a consideration of whether the trade dress is likely to be perceived by the relevant public as identifying the source of a product or service. The third enumerated factor in proposed subsection 2(g) of the Lanham Act directly addresses this issue. Accordingly, AIPLA would suggest inserting the word "utilitarian" in the definition of the term functional before the word "purpose" and in place of the word "competitive" in the first factor. We believe this amendment will properly focus the functionality inquiry and stop, to paraphrase Judge Nies, penalizing trademark owners for the originality, creativeness, attractiveness or uniqueness of their products and services.

Burden of Proof of Functionality. A finding of functionality precludes a party from enforcing exclusive rights in alleged trade dress or obtaining relief for its infringement, but courts differ with respect to which party to a trade dress infringement action bears the burden of proving functionality. Some courts have held that proof of nonfunctionality is an element of the plaintiff's case; other courts have held that it is an affirmative defense and that the burden of proof rests on the defendant.

H.R. 3163 would provide additional uniformity and predictability on this issue by amending section 43(a) of the Lanham Act to add a new subsection (3), stating that, in an action for infringement of trade dress not registered on the Principal Register, the party asserting trade dress protection has the burden of proving that the matter sought to be protected is not functional. This proposed addition would follow the majority view as to burden of proof obligations in actions for the infringement of unregistered trade dress. AIPLA believes this change will also provide greater certainty and we endorse it.

Technical Amendments. Proposed new subsection 2(e)(5) of the Lanham Act would preclude registration on the Principal Register of "any matter that, as a whole, is functional." We note, however, that the proposed amendment to subsection 23(c ) of the Lanham Act would expressly permit registration on the Supplemental Register of "any matter that is not functional." Likewise, the proposed new definition of trade dress in section 45 of the Lanham Act provides that "trade dress shall not be registered or protected under this Act if it is functional." These two provisions of  H.R. 3163 might be read as more restrictive than the corresponding provision of proposed new subsection 2(e)(5) of the Lanham Act quoted above, and might be interpreted to preclude registration or protection (even with appropriate disclaimers) of trade dress which includes functional features but which, overall, is source-identifying. This potential problem could be obviated if the phrase "as a whole" were inserted before the word "is" in both instances.

Proposed new subsection 2(g) of the Lanham Act provides for registration of trade dress without the need to show that it has become distinctive if the "relevant public" is likely to identify the source of the product or service by reference to its trade dress. While the phrase "relevant public" is proposed here and is used elsewhere in the Lanham Act (e.g., paragraph (3) of section 14), the third enumerated factor for determining inherent distinctiveness set forth in proposed new subsection 2(g) of the Lanham Act refers to the "public." We believe that this reference to the "public" in the third factor should also be to the "relevant public."

Similar to the point made with regard to the proposed definition of trade dress, both the definition of functionality and the list of enumerated factors appear to speak more directly to trade dress used for products than for services. We would therefore suggest adding on page 4 of H.R. 3163 the phrase ", characteristics, or qualities" after the word "design" in line 12 and after the word "designs" in line 19 and the phrase, "provision" after the word "manufacture" in line 22.

By not including the term "trade dress" as a type of "mark" in section 45 of the Lanham Act, it is conceivable, if not likely, that a court will conclude that one or another section of the Lanham Act is inapplicable to trade dress. On the other hand, simply adding the term "trade dress" as a type of "mark" could lead to the implication that there was an intent to exclude other unmentioned subject matter which could serve as a mark. To avoid this problem yet insure that trade dress would receive the full protection of the Lanham Act, we would suggest that a statement be included in Section 45 that references in the Lanham Act to marks are applicable to trade dress.

THE ADMINISTRATION'S GREEN PAPER: A PROPOSAL TO IMPROVE TECHNICAL MANAGEMENT OF INTERNET NAMES AND ADDRESSES

Late last month, the Administration released its much awaited Green Paper prepared under the leadership of Ira Magaziner. The Green Paper sets forth a number of proposals to improve the administration and maintenance of the domain name system and to establish effective procedures for addressing domain name registration and disputes. The AIPLA applauds this comprehensive and thoughtful proposal and will submit detailed written comments upon completing its study of the proposal. We have only a few preliminary comments at this time.

At the hearing conducted by this Subcommittee this past November, we suggested that any effort to design the Internet of the future should include:

  • greater involvement by a more diverse and truly representative constituency of affected parties in all of the various Internet areas
  • a recognition that the private sector is best equipped to administer and maintain the domain name system
  • a need for stewardship by the United States government in creating the framework for Internet governance during the transition to the private sector, and
  • a recognition that any new framework for the domain name system must address the legitimate concerns of trademark owners.

The stewardship by the United States government during the transition should include the development of an international framework for the creation and registration of new generic top level domains (gTLDs) and the formulation of a fair and efficient binding conflicts resolution policy both for existing and new gTLDs.

We are pleased that the Green Paper is largely consonant with these broad principles, although the Green Paper falls short of squarely committing the United States government to take such a stewardship role in this area. While the AIPLA appreciates that political and other considerations may make the United States government reluctant to do so, there is simply no substitute for proactive and sustained United States leadership in this area. This is increasingly apparent because domain name disputes transcend international boundaries, thereby creating prickly jurisdictional, enforcement, and other issues alluded to in the Green Paper.

Consequently, the United States government should take an active role in pursuing harmonization of intellectual property laws relating to the tension between trademarks and domain names and in designing and implementing an effective international dispute resolution scheme. One suitable forum to address these issues is the World Intellectual Property Organization which has preliminarily explored some of these issues. Another possible forum could be the World Trade Organization which has shown its effectiveness in the intellectual property area. While this will undoubtedly be a long term undertaking, it is essential that it begin now and, at the same, not delay the transition of the domain name system to the private sector. In the meantime, we agree with the recommendation in the Green Paper that a special group should be formed promptly to assess the impact on intellectual property rights, and the overall efficacy of adding new gTLDs, domain name application criteria, and dispute resolution procedures to the domain name system. As indicated in the Green Paper, such a study could provide valuable input on harmonization. The AIPLA will participate in any way we can.

Let me now turn to a few more specific preliminary observations as to some aspects of the Green Paper that more directly affect the interests of trademark and other intellectual property owners.

AIPLA notes with approval the proposal in the Green Paper that a non-profit corporation with a board of directors equitably representing all Internet stakeholders could be formed to manage the technical functions of the domain name system. AIPLA believes that the board of directors must include representatives of intellectual property interests, especially trademark owners. Conceivably, such representatives could come from a special group formed through the combined efforts of the AIPLA, the American Bar Association's Section on Intellectual Property Law and Standing Committee on Computers and Technology, and the International Trademark Association.

We also agree with the proposition in the Paper that competition in gTLD space is better fostered by having multiple registries and registrars, with the registry and registrar functions separated. However, we believe that a careful study should be undertaken to determine whether the particular registry-registrar model, and the recommendation for "up to five new gTLDs," best promote competition and Internet stability, and best accommodate intellectual property and other interests. In our view, this study should be undertaken before new gTLDs are created and dispersed among multiple registries and registrars rather than afterwards as proposed in the Green Paper.

We also agree with the proposal in the Green Paper that all domain name applications contain sufficient information so as to minimize the difficulties presently experienced by trademark owners in pursuing domain name registrants whose activities may infringe or dilute their marks.

Finally, we concur with the proposal that efficient searchable domain name data bases should be established. In this regard, we reiterate our strong support for the development and use of a searchable, telephone directory-type system for domain names and the corresponding development of a centralized world-wide database of trademarks and domain names that could be correlated to one another.

As we indicated, we are currently studying the Green Paper and its many thought-provoking proposals. We would be happy to share our conclusions with this Subcommittee as it continues its oversight of this critical area.

CONCLUSION

We again commend you, Mr. Chairman, for holding this hearing on these important issues which impact the creators and users of intellectual property. We look forward to working with you and the other members of the Subcommittee to craft appropriate legislative solutions.

1. John H. Harland Co v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir. 1983), cited in Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 764 n.1 (1992).

2. This issue is addressed by H.R. 1661, 105th Congress, 1st Session.

3. H.R. 3163 does not use the term "inherently distinctive," but that term has been used in many court decisions, including Two Pesos Inc. v. Taco Cabana Inc., 505 U.S. 763 (1992), to characterize trade dress which can be protected without proof of acquired distinctiveness or "secondary meaning."