Bretford Mfg., Inc. v. Smith System Mfg. Corp., 03-3932.

• Decision Date: 08 August 2005
• Docket Number: No. 03-3932.,03-3932.
• Parties: BRETFORD MANUFACTURING, INC., Plaintiff-Appellant, v. SMITH SYSTEM MANUFACTURING CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

419 F.3d 576

BRETFORD MANUFACTURING, INC., Plaintiff-Appellant, v. SMITH SYSTEM MANUFACTURING CORPORATION, Defendant-Appellee.

No. 03-3932.

United States Court of Appeals, Seventh Circuit.

Argued December 3, 2004.

Decided August 8, 2005.

Alan Unikel (argued), Bart A. Lazar, Seyfarth & Shaw, Chicago, IL, for Plaintiff-Appellant.

Alejandro Menchaca (argued), Thomas J. Wimbiscus, McAndrews, Held & Malloy, Chicago, IL, for Defendant-Appellee.

Before FLAUM, Chief Judge, and EASTERBROOK and WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge.

Bretford makes a line of computer tables that it sells under the name Connections™. Since 1990 many of these tables have featured one rather than two legs on each end. The leg supports a sleeve attached to a V-shaped brace, making it easy to change the table's height while keeping the work surface stable. Although the sleeve and brace together look like a Y, Bretford calls it the V-Design table, and we employ the same usage. This illustration, from Bretford's web site, shows the idea:

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Between 1990 and 1997 Bretford was the only seller of computer tables with a V-shaped height-adjustment system. It sold about 200,000 V-Design tables during that period. Smith System, one of Bretford's competitors, decided to copy the sleeve and brace for its own line of computer tables. Smith System made its initial sales of the knockoff product to the Dallas school system in 1997, and this trademark litigation quickly followed.

Invoking § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), Bretford contends that the V-shaped design is its product's trade dress, which Smith System has infringed. It also contends that Smith System engaged in "reverse passing off" when it incorporated some Bretford hardware into a sample table that it showed purchasing officials in Dallas. The parties waived their right to a jury trial, and the district court held evidentiary hearings and issued opinions over a number of years. Although at one point the judge found Smith System liable and awarded damages in Bretford's favor, he reversed course in light of Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000), and Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). See 286 F.Supp.2d 969 (N.D.Ill.2003) (final decision in Smith System's favor). The appeal presents two principal questions: whether Smith System is entitled to copy Bretford's design, and, if yes, whether it was nonetheless wrongful for Smith System to use Bretford components in a sample table shown to the Dallas buyers.

Section 43(a) provides:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which — (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

. . .

(3) In a civil action for trade dress infringement under this Act for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.

The Supreme Court held in Wal-Mart that the phrase "word, term, name, symbol, or device, or any combination thereof" includes distinctive aspects of a product's appearance, commonly known as trade dress. The Court added, however, that a product's physical design can not be deemed inherently distinctive, so that to prevail under § 43(a) the producer must demonstrate "secondary meaning" — in other words, that consumers understand the design elements to signify the goods' origin and not just its attributes. Otherwise, the Court thought, it would be too easy to use the expense and risk of litigation to dissuade rivals from using their right to reverse-engineer and copy products, which they may do down to the last detail unless a feature of the product is protected by patent, copyright, or trademark law. See, e.g., TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 29, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001); Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964). Trademark law is designed to reduce the costs customers incur in learning who makes the product, and this also helps sellers obtain rewards from producing goods of consistent quality, for consumers will find it easier to find and buy goods with which they have been satisfied in the past. So when trade dress implies the product's origin it is protected as a trademark (unless it also is functional); but when consumers value the feature for its own sake rather than as a badge of origin, it may be copied freely.

The district court found that V-shaped legs do not signal Bretford as a source. The record supports this conclusion; indeed, Bretford has no evidence that the leg design prompts "Bretford" in buyers' minds. There are no surveys and no evidence of actual confusion. Both Bretford and Smith System sell through distributors and field representatives to sophisticated buyers who know exactly where their goods are coming from.

Many buyers ask for tables with V-shaped legs, and Bretford insists that this shows that they want its Connections™ furniture; quite the contrary, this form of specification does more to imply that the leg design is functional than to show that anyone cares who makes the table. In the end, all Bretford has to go on is the fact that it was the only maker of such tables for eight years and spent more than $4 million to promote sales. If that were enough to permit judgment in its favor, new entry would be curtailed unduly by the risk and expense of trademark litigation, for every introducer of a new design could make the same sort of claim. "Consumers should not be deprived of the benefits of competition with regard to the utilitarian and esthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants based on alleged inherent distinctiveness." Wal-Mart, 529 U.S. at 213, 120 S.Ct. 1339.

Originators such as Bretford may receive protection via design patents, and strictly aesthetic features of products may be copyrighted. "The availability of these and other protections greatly reduces any harm to the producer that might ensue" from limiting trademark protection to features that have acquired secondary meaning. Wal-Mart, 529 U.S. at 214, 120 S.Ct. 1339. Bretford did not obtain...