TOP COURT FAVORS WAL-MART IN TRADE-DRESS CASE
Byline: Joanna Ramey
WASHINGTON — The Supreme Court handed Wal-Mart and the knockoff industry a victory Wednesday by making it harder for brand-name designs to qualify for a type of trademark protection.
The case, Wal-Mart Stores Inc. v. Samara Brothers Inc., has been closely watched by the apparel industry. If the court had sided with Samara, a New York manufacturer of children’s clothing, copycat designers could have seen their trade greatly curtailed.
At issue was what constitutes trade dress — the look of the product — and when it can be legally employed to block a design from being copied. The court, in a unanimous decision, said trade dress law can only be invoked when a design is readily recognized as belonging to a particular brand, or in legal parlance, carries secondary meaning.
Samara sued Wal-Mart in 1996 for selling a line of Samara-look-alike seersucker playsuits, which generated a gross profit of $1.5 million for the discount giant, according to court records. Samara prevailed in two lower courts by arguing its playsuits were so “inherently distinctive” that the design was protected by trade dress. The company was awarded $1.15 million in damages.
The broad “inherently distinctive” claim has been successfully used by other brand-name companies in lower courts in recent years and has sent a chill through the ranks of discount stores and other copycat apparel makers.
Sallie Stroud, assistant general counsel and vice president for Wal-Mart, said that until the Supreme Court ruled on Wednesday, companies like Wal-Mart had some uncertainty about their legal standing in terms of knockoffs, a description she said the company doesn’t use.
“We prefer the term fashion interpretation,” she said.
“There were virtually no guidelines,” Stroud said of the legal terrain regarding what constitutes a violation of trade dress, a protection of a design that is not always registered like a design trademark or patent is.
Bill Coston, a Washington attorney hired by Wal-Mart to handle the Samara case, said the “secondary meaning” test is more exact than one defining a product’s “inherent distinctiveness.”
In order to prove secondary meaning, a brand-name company would have to go to great lengths to prove a knockoff deliberately sought to confuse customers as to the origin of a product, Coston said. Some of the evidence that can be used to prove secondary meaning includes consumer surveys, advertising used to promote a brand and trade-press recognition, he said.
“They have to demonstrate that people associate a look with the source,” Coston said.
Moreover, Coston said, a product claiming secondary meaning would have to be on the market for a while before claiming trade dress protection, which could prove problematic for some in the fashion industry, where trends come and go quickly.
“They can’t say ‘this design is so different it will acquire secondary meaning,”‘ Coston said.
Samara attorney Stuart Riback said the children’s wear maker next plans to argue before the Second Circuit Court of Appeals — where the Supreme Court has now sent the case — that its seersucker playsuits carry secondary meaning.
Riback said it’s difficult to forecast how the court’s ruling will affect future trade-dress cases involving fashion designs.
“I don’t think you can make a blanket statement,” Riback said. “This will be a case-by-case issue going forward.”
The issue of trade dress became a hot legal protection invoked by brand-name companies in the early 1990s, when the Supreme Court put trade dress on par with other anti-copying protections like trademarks, copyrights and patents.
In writing for the court in the Wal-Mart v. Samara case, Justice Antonin Scalia equated a design receiving trade dress protection to that of product being protected on the basis of its color.
He referred to a 1995 High Court case in which a manufacturer had to show secondary meaning in order to prove its green-gold dry-cleaning pad had been illegally knocked off. The court considered the pad itself to be in the public domain. However, the manufacturer proved that its green-gold color was associated with the brand name and would be protected because it had secondary meaning.
“It seems to us that design, like color, is not inherently distinctive,” Scalia wrote.
Mark Banner, an intellectual property attorney in Chicago, said the court’s decision in the Wal-Mart v. Samara case “helps the knockoff industry.”
With the decision, Banner said, the court reined in its first trade-dress case, considered in 1992, involving competing taco restaurants. In that case, the court used “inherently distinctive” to define trade dress in terms of one eaterie copying the other’s decor. Scalia, in Wednesday’s opinion, said decor is really the equivalent of packaging, like a Coke bottle, while a product’s design has a different level of proof.
“They’ve basically said trade dress doesn’t include product design,” said Joseph Dreitler, a Columbus attorney, in analyzing the Wal-Mart v. Samara case.
However, Dreitler said, brand-name companies still have copyright and design patent protections to fall back on. Certain aspects of apparel can be copyrighted, as in the Samara case, where appliques received protection by the lower courts and that element was not part of the Supreme Court review.
“By saying that product design can’t be inherently distinctive, they are saying anyone can copy,” Dreitler said. “If someone knocks you off in three or four months you have no recourse because you aren’t able to acquire secondary meaning.”
Richard Stambul, a Los Angeles intellectual property attorney with several garment clients, said that although the brand-name apparel industry can still use the trade-dress claim in bringing cases, they may be more difficult to win.
“Trade dress will still be used as a business strategy to file lawsuits” to discourage copying, Stambul said, noting that such a strategy may do little to dissuade large companies like Wal-Mart, which has “adopted a strategy to pull out all stops in resisting these cases.”