Trade Dress Watch - the value of trade dress litigation is on the rise Q3 2013

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The value of trade dress litigation is on the rise. While in the past the primary value of trade dress litigation rested in the ability of the plaintiff to enjoin competition (except possibly in cases of counterfeit goods), recent cases suggest otherwise.

Juries in California and Texas recently made awards of US$8.1 million and US$5.86 million in two cases involving trade dress infringement. The issue in Mixed Chicks v. Sally Beauty Supply was a hair care product line targeting multi-ethnic customers with naturally curly hair under the trademark MIXED CHICKS. The line was packaged in cylindrical, translucent, plastic bottles with clear pumps and cylindrical, translucent, plastic jars showing the color of the product within. In 2009, Sally Beauty Supply, the world’s largest retailer of professional beauty supplies, offered Mixed Chicks the opportunity to sell its line in Sally Beauty stores, but Mixed Chicks declined and continued to sell its products through its website and salons. In 2011, Sally Beauty introduced its own product line for individuals with naturally curly hair: MIXED SILK. Mixed Chicks claimed the Sally Beauty line infringed its trademark and trade dress rights, contending that the shapes of the MIXED SILK bottles and jars, along with such similarities as fonts, colors and the translucent pumps, were likely to cause confusion among consumers.

The jury awarded Mixed Chicks US$8.1 million in damages, finding Sally Beauty had willfully infringed Mixed Chicks’ trademark and trade dress rights. The award included US$7.275 million in punitive damages under California law and about US$840,000 in actual damages. Before Mixed Chicks moved for an attorneys’ fees award, the parties settled for US $8.5 million. Notably, the US$7.275 million dollar punitive award was more than three times the actual damages limit allowed under Section 35 of the Lanham Act; the court saw fit to award punitive damages under the California unfair competition laws, which have no such cap.

In Clearline Technologies v. Cooper B-Line, the plaintiff sold trapezoidal rooftop support blocks in the color black featuring a horizontal reflective yellow stripe. The defendant, Cooper, sold similarly shaped rooftop support blocks, also in the color black and also with a horizontal reflective yellow stripe, although the yellow stripes were placed differently. Clearline contended that Cooper’s competing rooftop support products infringed two aspects of its trade dress: the yellow reflective stripe and the yellow-and-black color scheme. Clearline also introduced evidence that Cooper had sent samples of Clearline’s products to its manufacturer, seeking to make a product that would “look similar” and “still have all of the same features” as Clearline’s.

A Texas jury found that Cooper had willfully infringed Clearline’s trade dress rights in the ‘yellow and black’ combination trade dress, but not in the ‘yellow reflective stripe’ trade dress. The parties filed cross motions for judgment after the jury verdict, and the court affirmed that Clearline’s yellow and black trade dress was protectable, but that the yellow reflective stripe trade dress alone was not protectable due to its apparent functional nature. The court also upheld an injunction against Cooper, confirming that Cooper’s products were infringing. However, the court noted that, while the facts support a conclusion that Cooper’s particular use of black and yellow would likely cause confusion, all black and yellow color schemes were not necessarily infringing. This clarified that Clearline was not entitled to a broad injunction barring Cooper from using any black and yellow color scheme for its products.

As to damages, the jury awarded Clearline US$5.86 million. The court upheld this award, tacking on post-judgment and pre-judgment interest, while denying Clearline’s plea for treble damages for Cooper’s willful infringement (which would have increased the award to almost US$13 million).

As Mixed Chicks and Clearline illustrate, trade dress litigation can lead to significant damages awards, especially in cases between market competitors where there is evidence of willful infringement. Mixed Chicks reminds us to always include state and common law claims when litigating trade dress cases: this was the avenue to the most substantial portion of the damages award. The lesson from Clearline is to diversify your trade dress claims as much as possible – while one of Clearline’s claims was found functional, the other was not and led the way to victory.

Companies would do well to scrutinize their trade dress (and evaluate the benefits of registering it with the USPTO), monitor their competition and deploy an enforcement strategy to the fullest extent available.