McAirlaids, Inc. v. Kimberly-Clark Corp., No. 13-2044 (4th Cir. 2014)

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Justia Opinion Summary

McAirlaids filed suit against Kimberly-Clark for trade-dress infringement and unfair competition under section 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 law. McAirlaids produces "airlaid," a textile-like material composed of cellulose fiber. McAirlaids fuses shredded cellulose fiber ("fluff pulp") through a patented embossing process that produces a "pixel" pattern for its absorbent products. McAirlaids filed suit against Kimberly-Clark after Kimberly-Clark began using a similar dot pattern on its GoodNites bed mates, an absorbent product manufactured in a manner different from McAirlaid's pads. On appeal, McAirlaids appealed the district court's grant of summary judgment for Kimberly-Clark. The court concluded that McAirlaids has presented sufficient evidence to raise a genuine issue of material fact regarding the functionality of its pixel-pattern. In particular, deciding whether McAirlaid's embossing pattern affects the quality of its pads requires weighing evidence and making credibility determinations. Therefore, the court vacated the district court's grant of summary judgment and remanded for further proceedings.

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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-2044 MCAIRLAIDS, INC., Plaintiff Appellant, v. KIMBERLY-CLARK CORPORATION; KIMBERLY-CLARK WORLDWIDE, INC.; KIMBERLY-CLARK GLOBAL SALES, LLC, Defendants Appellees. Appeal from the United States District Court for the Western District of Virginia, at Roanoke. Samuel G. Wilson, District Judge. (7:12-cv-00578-SGW-RSB) Argued: May 13, 2014 Decided: June 25, 2014 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. 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. DUNCAN, Circuit Judge: McAirlaids, for trade-dress §§ 32(1)(a) and Inc. filed suit infringement 43(a) of against and the Kimberly-Clark unfair Trademark Act competition of 1946 Corp. under ( 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, composed of cellulose fiber. of absorbent goods, a textile-like material Airlaid is used in a wide variety including products, and food packages. medical supplies, hygiene 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. process, sheets of fluff pulp 2 pass at very high In this pressures between steel rollers printed with a raised pattern. The rollers leave an embossing pattern on the resulting material, and the high-pressure textile-like product. areas bond the fiber layers into a 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 dots on the material. areas form rows of pinpoint-like 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 using a absorbent District similar product dot of Virginia pattern on manufactured after its in a Kimberly-Clark GoodNites manner bed began mats, different an 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 3 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 essentially of its say-so. consist[ed], 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 summary judgment 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). genuine Summary judgment is appropriate when there is no dispute as to any material fact and entitled to judgment as a matter of law. 56(a). the movant is Fed. R. Civ. P. 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, (quoting Anderson 134 v. S Ct. Liberty 1861, 1863 Lobby, Inc., (2014) 477 (per U.S. curiam) 242, 255 (1986)) (alteration in original). Functionality--the only issue presented by this case--is a question of fact that, generally put to a jury. like other factual questions, is In re Becton, Dickinson & Co., 675 4 F.3d 1368, 1372 (Fed. Cir. 2012); Clicks Billiards, Inc. Sixshooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001). v. 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. Packaging Because Corp. Am., [c]redibility evidence, facts of and are the jury determine drawing the disagreement F.3d 323, 330 of weighing legitimate not of in this require Cir. inferences those evidence to (4th the determinations, functions, whether sufficient 673 Dulaney v. a judge, case 2012). of the from the we must presents submission to a jury a 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. III. Trademark law indefinitely protects designs that identify a product with its manufacturer or source. Inc. v. Patent Marketing granting law, on Displays, the inventors other a Inc., hand, monopoly competition by trademark protecting a 23, new 28 (2001). product invention designs by or Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 164 (1995). prevents U.S. encourage[s] over functions for a limited time. doctrine 532 TrafFix Devices, The so-called functionality law, firm s 5 which seeks reputation, to promote from instead inhibiting legitimate control a useful company wants competition by product protect to feature. a allowing Id. functional a producer Therefore, feature of to when a 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. 1102 Shakespeare Co. v. Silstar Corp. of Am., 9 F.3d 1091, (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. A product feature is 15 U.S.C. § 1052(e). 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 (citation of and the article. internal Qualitex, quotation marks 514 U.S. omitted). at In 165 other words, a feature is functional if it is the reason the device works, or its exclusive use would put competitors significant non-reputation-related disadvantage. at a TrafFix, 532 U.S. at 34, 32 (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. 6 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. 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. 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. 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. The Court then held that it need not speculat[e] about other design possibilities because it had already established reason the device works. that the Id. at 33 34. 7 design feature is the 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. argues that TrafFix is inapplicable. McAirlaids, however, 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. evidence that nonfunctional. J.A. 32. the Its registration serves as prima facie trade dress is valid, and therefore 15 U.S.C. § 1057(b); Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, 696 F.3d 206, 224 (2d Cir. 2012). The presumption of validity that accompanies registered trade dress has a burden-shifting effect, requiring the party challenging the registered mark to produce sufficient evidence to show that the trade dress is invalid by a preponderance of 8 the evidence. 1 Retail Servs., Inc. v. Freebies Publishing, 364 F.3d 535, 542 (4th Cir. 2004). Therefore, Kimberly-Clark--the party challenging a registered mark--has the burden of showing functionality by a preponderance of the evidence in this case, whereas in TrafFix, MDI--the party seeking protection of an unregistered mark--had the burden of proving nonfunctionality. Second, the utility patents in TrafFix protected the dualspring mechanism, which was sought trade-dress protection. the same feature for which See TrafFix, 532 U.S. at 30. MDI In contrast, McAirlaids s utility patents cover a process and a material, but do not mention a particular embossing pattern as a protected element. J.A. 365 78, J.A. 496 500. The Court in TrafFix acknowledged that a different result might obtain when a manufacturer seeks to protect arbitrary, incidental, or ornamental aspects of features of a product found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs. such a case, the court must TrafFix, 532 U.S. at 34. examin[e] 1 the patent and In its If sufficient evidence . . . is produced to rebut the presumption, the presumption is neutralized and essentially drops from the case. Retail Servs., 364 F.3d at 543 (citation and internal quotation marks omitted); see also Ga.-Pac. Consumer Prods., LP v. Kimberly-Clark Corp., 647 F.3d 723, 727 (7th Cir. 2011). 9 prosecution history to see if the feature in question is shown as a useful part of the invention. Id. Here, McAirlaids s patents cover a production process and a material, while the trade dress claimed is a particular pattern on the material that results from the process. Unlike in TrafFix, therefore, the pattern is not the central advance of any utility patent. See 532 U.S. at 30. Neither of McAirlaids s patents refer to a particular embossing pattern. Both patents reference line-shaped as well as point- or dotshaped pressure areas, but the patents also directly acknowledge that embossing studs of different shapes can be used, including lines, pyramids, parallelepipeds. cubes, truncated cones, J.A. 365, 374 77, 499. cylinders, and In fact, the diagrams of the 702 Patent show hexagonal shapes rather than circles. J.A. 368, 372. evidence of Therefore, while McAirlaids s patents do provide the dots functionality, they are strong evidence as the patents in TrafFix. not the same See 532 U.S. at 29. Because the facts of this case are different from those presented to the Supreme Court in TrafFix, TrafFix s holding about noted, alternative TrafFix designs instructed is inapplicable that courts here. need not As we consider have the availability of design alternatives after the functionality of a design element has been established. 10 532 U.S. at 33 34. As the Federal Circuit has observed, however, TrafFix did not hold that the availability of alternative designs cannot be a legitimate source of evidence to determine whether a feature is functional in the first place. Valu Engineering, Inc. v. Rexnord Corp., 278 F.3d 1268, 1276 (Fed. Cir. 2002). Thus, TrafFix did not alter the our precedents that alternative designs when whether design look affects a ornamental. to considering, product as an quality availability initial or of matter, is merely See, e.g., Tools USA & Equipment Co. v. Champ Frame Straightening Equipment Inc., 87 F.3d 654, 659 (4th Cir. 1996). Therefore, when we address the alleged factual disputes below, we consider evidence of alternative designs. B. Next, McAirlaids argues that the district court improperly weighed the evidence in the record when it determined that the pixel pattern is functional. record clearly indicates Kimberly-Clark contends that the that McAirlaids selected its pixel pattern due to functional considerations and that the embossing design affects the pads strength, absorbency, and elongation (i.e., stretchiness). McAirlaids counters that it has presented sufficient evidence to create a genuine factual question as to whether their selection of a choice among many alternatives. pattern was We agree. 11 a purely aesthetic When often assessing look at a (1) design the element s existence functionality, of utility courts patents, (2) advertising focusing on the utilitarian advantages of a design, (3) the availability of functionally equivalent designs, and (4) the effect Engineering, 278 of the F.3d at design 1274 on manufacturing. (citing In re Valu Morton-Norwich Prods., Inc., 671 F.2d 1332, 1340 41 (C.C.P.A. 1982)). We thus review the in light most noting at evidence relating favorable the outset to to these McAirlaids, that the PTO factors, as the taken nonmoving already the party, determined that McAirlaids s embossing pattern is not functional by registering it as trade dress. 2 McAirlaids s J.A. 32. fiber-fusion process and resulting material are patented; however, as we have pointed out, the patents do not extend to any specific embossing pattern or the shapes used therein. See J.A. 365 78, J.A. 496 500. Patents for other nonwoven products specify that dot-shaped patterns are preferred for embossed bonding, but such patents also indicate that many designs can also be used. E.g., J.A. 212. 2 This case is not an anomaly--the PTO regularly registers embossing patterns on nonwoven products as ornamental, nonfunctional trade dress. E.g., U.S. Trademark Registration No. 1,968,976, J.A. 568; U.S. Trademark Registration No. 1,924,873, J.A. 576; U.S. Trademark Registration No. 2,988,862, J.A. 588. 12 McAirlaids officials, including the engineer who selected the company s pixel pattern, have stated under oath that the pattern was chosen [b]ecause it looked nice and [w]e liked it. J.A. 320. Yet the company has arguably touted the pattern s functional attributes. In one marketing presentation, McAirlaids described unique increasing absorbency, its pads J.A. 184, and bonding images of pattern as McAirlaids s pixel pattern appeared on an advertisement referring to German engineering, J.A. 208. McAirlaids executives and both parties experts testified that the company could have used many shapes for the high- pressure areas that fuse the fibrous layers together: squares, triangles, wavy or straight lines, hearts, flowers, and so on. J.A. 351 52, 1427, 1478 80, 1666 68. In fact, McAirlaids formerly produced airlaid imprinted with an embossing design of intersecting diagonal lines, known as the Harschur pattern. J.A. 252. with both During the three-year period when it produced airlaid the pixel and the Harschur patterns, McAirlaids conducted quality control tests on each type of absorbent pad, measuring elongation. their weight, thickness, tensile strength, and The pads performance tests for three measures-- 13 weight, thickness, and tensile strength--were nearly identical. 3 Although the elongation figures varied, both measurements were within the normal range for absorbent pads. 4 Despite the wide variety of available shapes and patterns, the parties agree that any embossing design would be [s]ubject to the suitable matching of cellulose fiber length, compression elements spacing, []fiber fusion. 29. and sufficient compression forces to cause J.A. 507; see also J.A. 792, Appellee s Br. at In other words, an embossing design must meet general size and spacing specifications to successfully bond the layers of fluff pulp. J.A. 1373 76. In light of the foregoing, we determine that McAirlaids has presented sufficient evidence to raise a genuine issue of material fact regarding the functionality of its pixel pattern. In this particular case, deciding whether McAirlaids s embossing 3 There was a one percent difference in the tensile strength of the two patterns. The parties agree that this difference is not statistically significant. J.A. 1466-68; 1559; 1669 71. 4 Kimberly-Clark also presented evidence from tests conducted on their own absorbent products, which are made using a similar fiber-bonding process. However, the scientific validity of these tests is disputed for two reasons. First, the tests were conducted on a single day by a student intern without supervision. J.A. 1745 51. Second, the products tested may have come from different foreign manufacturing facilities, so there is no proof that the products were identical but-for their embossing patterns. J.A. 814 15, 1754, 1767. Even KimberlyClark s expert agreed that the samples used were not rigorously prepared for testing. J.A. 1701. 14 pattern evidence affects and the making quality of credibility its requires determinations. functions for a jury, not the judge. U.S. at 255. pads weighing These are See Liberty Lobby, 477 In sum, there remains a dispute of material fact as to whether a specific embossing pattern is the reason the device works or merely an ornamental, incidental, or arbitrary aspect of the device. TrafFix, 532 U.S. at 34, 30. Therefore, summary judgment was inappropriate. IV. For the foregoing reasons, we vacate the judgment of the district court and remand for further proceedings. VACATED AND REMANDED 15