Mcairlaids, Inc. v. Kimberly-Clark Corp.

• Decision Date: 25 June 2014
• Docket Number: No. 13–2044.,13–2044.
• Citation: 756 F.3d 307
• Parties: McAIRLAIDS, INC., Plaintiff–Appellant, v. KIMBERLY–CLARK CORPORATION; Kimberly–Clark Worldwide, Inc.; Kimberly–Clark Global Sales, LLC, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

756 F.3d 307

McAIRLAIDS, INC., Plaintiff–Appellant,

v.KIMBERLY–CLARK CORPORATION; Kimberly–Clark Worldwide, Inc.; Kimberly–Clark Global Sales, LLC, Defendants–Appellees.

No. 13–2044.

United States Court of Appeals,Fourth Circuit.

Argued: May 13, 2014.

Decided: June 25, 2014.

ARGUED:Frank Kenneth Friedman, Woods Rogers, PLC, Roanoke, Virginia, for Appellant. Andrew G. Klevorn, Katten Muchin Rosenman LLP, Chicago, Illinois, for Appellees. ON BRIEF:Joshua F.P. Long, J. Benjamin Rottenborn, Michael J. Hertz, Woods Rogers, PLC, Roanoke, Virginia, for Appellant. Jeffrey A. Wakolbinger, Katten Muchin Rosenman LLP, Chicago, Illinois; Kevin P. Oddo, LeClairRyan, PC, Roanoke, Virginia, for Appellees.

Before DUNCAN and WYNN, Circuit Judges, and J. MICHELLE CHILDS, United States District Judge for the District of South Carolina, sitting by designation.

Vacated and remanded by published opinion. Judge DUNCAN wrote the opinion, in which Judge WYNN and Judge CHILDS joined.

DUNCAN, Circuit Judge:

McAirlaids, Inc. filed suit against Kimberly–Clark Corp. for trade-dress infringement and unfair competition under §§ 32(1)(a) and 43(a) of the Trademark Act of 1946 (“Lanham Act”), 15 U.S.C. §§ 1114(1)(a) and 1125(a), and Virginia common law. The district court granted summary judgment in favor of Kimberly–Clark, and McAirlaids appeals. Because questions of fact preclude summary judgment, we vacate and remand.

I.

A.

McAirlaids produces “airlaid,” a textile-like material composed of cellulose fiber. Airlaid is used in a wide variety of absorbent goods, including medical supplies, hygiene products, and food packages. To make airlaid, cellulose fiber is shredded into “fluff pulp,” which is arranged into loosely formed sheets. In contrast to most of its competitors, McAirlaids fuses these fluff pulp sheets through an embossing process that does not require glue or binders.

McAirlaids patented its pressure-fusion process, U.S. Patent No. 6,675,702 (filed Nov. 16, 1998) (“702 Patent”), J.A. 365–78, and the resulting product, U.S. Patent No. 8,343,612 (filed May 22, 2009) (“612 Patent”), J.A. 496–500. In this process, sheets of fluff pulp pass at very high pressures between steel rollers printed with a raised pattern. The rollers leave an embossing pattern on the resulting material, and the high-pressure areas bond the fiber layers into a textile-like product. In order for McAirlaids's fusion process to adequately hold together the airlaid, the embossed design must fall within certain general size and spacing parameters.

McAirlaids has chosen a “pixel” pattern for its absorbent products: the high-pressure areas form rows of pinpoint-like dots on the material. McAirlaids registered this pattern as trade dress with the U.S. Patent and Trademark Office (“PTO”) with the following description: “the mark is a [three-dimensional] repeating pattern of embossed dots” used in various types of absorbent pads. U.S. Trademark Registration No. 4,104,123, J.A. 249.

B.

McAirlaids initiated this lawsuit against Kimberly–Clark in the Western District of Virginia after Kimberly–Clark began using a similar dot pattern on its GoodNites bed mats, an absorbent product manufactured in a manner different from McAirlaids's pads.

The district court bifurcated the issues in this case. In the first phase, the only question before it was whether the dot pattern on McAirlaids's absorbent products was functional, and thus not protectable as trade dress. At this stage, the district court found that the dot pattern was functional. It determined that there were no disputes of material fact because McAirlaids's evidence of nonfunctionality “consist[ed], essentially of its say-so.” McAirlaids, Inc. v. Kimberly–Clark Corp., 2013 WL 3788660, No. 7:12–cv–00578–SGW–RSB, *4 (W.D.Va. July 19, 2013). The district court therefore granted summaryjudgment in favor of Kimberly–Clark. McAirlaids appeals.

II.

We review de novo the district court's grant of summary judgment based on its finding of functionality. Ga. Pac. Consumer Prods., LP v. Von Drehle Corp., 618 F.3d 441, 445 (4th Cir.2010). Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). It is an “axiom that in ruling on a motion for summary judgment, ‘[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.’ ” Tolan v. Cotton, ––– U.S. ––––, 134 S.Ct. 1861, 1863, 188 L.Ed.2d 895 (2014) (per curiam) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) (alteration in original).

Functionality—the only issue presented by this case—is a question of fact that, like other factual questions, is generally put to a jury. In re Becton, Dickinson & Co., 675 F.3d 1368, 1372 (Fed.Cir.2012); Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1258 (9th Cir.2001). “A genuine question of material fact exists where, after reviewing the record as a whole, a court finds that a reasonable jury could return a verdict for the nonmoving party.” Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir.2012). Because “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge,” we must determine whether the evidence in this case “presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, 477 U.S. at 255, 251–52, 106 S.Ct. 2505.

III.

Trademark law indefinitely protects designs that “identify a product with its manufacturer or source.” TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001). Patent law, on the other hand, “encourage[s] invention by granting inventors a monopoly over new product designs or functions for a limited time.” Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 164, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995). The so-called “functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm's reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature.” Id. Therefore, when a company wants to protect a functional feature of a product design, it must turn to patent law rather than trademark law. Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 161 (4th Cir.2012). It also follows that proof of a design element's functionality is a complete defense in a trademark-infringement action. Shakespeare Co. v. Silstar Corp. of Am., 9 F.3d 1091, 1102 (4th Cir.1993). Although the functionality doctrine originated in the common law, it has now been incorporated into the Lanham Act, which prohibits registration of trade dress that is “as a whole ... functional.” 15 U.S.C. § 1052(e).

A product feature is functional—and therefore not protectable as a trademark or trade dress—“if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” Qualitex, 514 U.S. at 165, 115 S.Ct. 1300 (citation and internal quotation marks omitted). In other words, a feature is functional if “it is the reason the device works,” or its exclusive use “would put competitors at a significant non-reputation-related disadvantage.” TrafFix, 532 U.S. at 34, 32, 121 S.Ct. 1255 (citations and internal quotation marks omitted).

On appeal, the parties agree that the pressurized bonding points are themselves functional because these areas actually fuse the layers of fluff pulp into a textile-like material. The parties, however, dispute whether McAirlaids's chosen embossing pattern is functional. McAirlaids argues that the district court erred by misapprehending the significance of its utility patents under TrafFix and by failing to consider the facts in the light most favorable to McAirlaids, the nonmoving party. We address each contention in turn.

A.

In TrafFix, the Supreme Court emphasized that a “utility patent is strong evidence that the features therein claimed are functional.” 532 U.S. at 29, 121 S.Ct. 1255. In that case, Marketing Displays, Inc. (“MDI”) created a mechanism to hold outdoor signs upright in windy conditions, and MDI brought suit for trademark infringement against TrafFix Devices, a competitor that copied its signs' “dual-spring design.” Id. at 25–26, 121 S.Ct. 1255. MDI's dual-spring mechanism was the “central advance” of several expired utility patents, which were of “vital significance in resolving the trade dress claim.” Id. at 29–30, 121 S.Ct. 1255. Given the utility patents and other evidence of functionality, the Court concluded that the dual-spring mechanism was functional rather than “an arbitrary flourish.” Id. at 34, 121 S.Ct. 1255. The Court then held that it need not “speculat[e] about other design possibilities” because it had already established that the design feature “is the reason the device works.” Id. at 33–34, 121 S.Ct. 1255.

The parties dispute the proper application of TrafFix to the present case. Kimberly–Clark argues that McAirlaids's pixel pattern is analogous to the dual-spring mechanism in TrafFix, and thus not protectable as trade dress. McAirlaids, however, argues that TrafFix is inapplicable. Although TrafFix is certainly instructive, we agree with McAirlaids that it can be distinguished on two grounds.

First, the burden of proof is different. In TrafFix, the dual-spring mechanism in question was not registered as trade dress with the PTO. Therefore, under the Lanham Act, MDI had the “burden of proving that the matter sought to be protected [wa]s not functional.” 15 U.S.C. § 1125(a)(3). In this case, however, McAirlaids's pixel pattern was properly registered as trade dress. J.A. 32. Its registration serves as prima facie evidence that the trade dress is valid, and therefore nonfunctional. 15 U.S.C. § 1057(b); ...