Apple's trade dress disrobed by court

On Monday, the U.S. Court of Appeals for the Federal Circuit vacated $382 million of the $930 million in damages awarded to Apple against Samsung. The court found that Apple's claimed trade dress - which covers the look of the iPhone itself as well as the layout of the icons on the iPhone home screen - is functional and therefore not protectable. Apple Inc. v. Samsung Electronics Co. Ltd. et al., 14-1335 (Fed. Cir. May 18, 2015).

In April 2011, Apple sued Samsung alleging that Samsung's smartphones infringed and diluted various patents and trade dresses of Apple's iPhone 3G and 3GS products. Apple asserted unregistered trade dress in the shape of the iPhone and the overall appearance of the home screen when the device is on. Apple's registered trade dress, U.S. Trademark Registration No. 3,470,983, claims design details in each of the 16 icons on the iPhone's home screen framed by the iPhone's rounded rectangular shape with silver edges and a black background, shown below.

In August 2012, a jury found that numerous Samsung smartphones infringed and diluted Apple's patents and trade dresses, and awarded Apple over $1 billion in damages. Following the verdict, the district court ordered a partial retrial on damages. The jury in the retrial awarded Apple approximately $930 million in damages, and Samsung appealed.

The Federal Circuit reversed the jury's findings that Samsung smartphones infringed and diluted Apple's trade dresses since they were not protectable. Accordingly, the court vacated the portion of the jury's damages awards attributable to the trade dress infringement, and remanded for further proceedings.

The court also affirmed the jury's verdict on the design patent infringements, the validity of two utility patent claims, and the damages awarded for the design and utility patent infringements.

Commentary

Trade dress refers to elements of a product's packaging or configuration that serve to identify the source of the product and are not functional. Examples of trade dress include the shape of a Coca-Cola bottle or the shape and plume of a Hershey's Kiss candy. Here, Apple asserted as trade dress the product configuration of its iPhone, including the rounded rectangular shape and icons on the screen.

Trade dress and trademark protection guard consumers against confusion as to the source of a product; consumers seeing trade dress can rely on it to know that the product originates from a certain source. This consumer protection policy contrasts with the real property-like protections of other forms of intellectual property like copyright and patent. Since their purpose is to protect consumers, trade dress rights must be balanced against the need for competition. Only the nonfunctional details and design of a product - i.e., those that are source identifying - may be protected by trade dress. In this way, parties cannot use trade dress protection as a back door to monopolize functional elements of a product's design.

In general, 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. A product feature only needs to have some utilitarian advantage to be considered functional. It is more difficult to claim product configuration trade dress than product packaging trade dress.

Here, the Federal Circuit found both Apple's registered and unregistered trade dresses to be functional. Apple failed to meet its burden to show that its unregistered trade dress was nonfunctional. While Apple's trade dress registration provided prima facie evidence of nonfunctionality, Samsung overcame that presumption, and Apple could not meet its burden to show the trade dress was non-functional.

Functionality Test

The Federal Circuit analyzed four factors to determine that Apple's iPhone trade dress was functional and therefore not protectable:

1. Whether the design yields a utilitarian advantage. While Apple claimed that the iPhone design pursued beauty, Samsung offered evidence that the design yielded a utilitarian advantage. For example: The rounded corners improve pocketability and durability; a flat clear surface facilitates touch operation; the bezel protects the glass from impact; and icons communicate to the user that, if they hit the icon, certain functionality will occur. The court found that the trade dress as a whole was nothing other than the assemblage of functional parts.

2. Whether alternative designs are available. Although Apple submitted evidence of numerous alternative designs, it failed to show that any of the alternatives offered exactly the same features as its trade dress.

3. Whether advertising touts the utilitarian advantages of the design. Apple's iPhone advertisements largely focused on demonstrating the simplicity of using the product due to the product design. Accordingly, the court found that Apple touted the utilitarian advantages of the features of its claimed trade dress, strongly suggesting that the trade dress was functional.

4. Whether the particular design results from a comparatively simple or inexpensive method of manufacture. Apple claimed that it encountered manufacturing challenges in designing the iPhone. However, the court determined those challenges resulted from making the iPhone durable, and not from the design itself, weighing against a finding that Apple's trade dress is nonfunctional.

After analyzing these factors, the Federal Circuit found that Apple's claimed design features of the iPhone were functional, and therefore not protectable as trade dress. Accordingly, the court vacated the portion of the damages award against Samsung attributable to the alleged trade dress infringement.

Jocelyn M. Belloni and Sharoni S. Finkelstein are associates in K&L Gates LLP's San Francisco office.