After three years, you've established a market niche for your specially designed widgets. Then it happens: A retail chain brings out a line of widgets that looks suspiciously like yours, right down to its design. You can already picture your market share dwindling. But what can you do?
Call your lawyer. Even if your product has no patent or registered trademark, a court can protect your right to the product's design and overall look under the "trade dress" theory. This is a more subtle concept than that of patents, which protect inventions, and copyrights, which protect literary and artistic materials. It's also different from the trademark concept, which protects the names and symbols that represent a product or service. Under the legal theory of trade dress, it's illegal to copy the way a competitor's product looks if doing so is likely to confuse customers.
Although the term doesn't appear in the Lanham Act, the federal law that provides the basis for copyright and trademark law, court decisions have provided some protection to business owners. The reasoning? One provision of the act makes it illegal to use any "false description or representation" in connection with products or their containers. Courts have interpreted this provision to mean companies may not copy the total image of a competitor's product, including its size, shape, color, texture or graphics--especially when those elements have more to do with the product's image than with its function. The key question is whether the public is likely to be confused about the source of the product.
Consider a case decided last December by the 2nd U.S. Circuit Court of Appeals. For years, Samara Brothers, a small clothing company based in Edison, New Jersey, has manufactured a line of children's garments for spring and summer. In hopes of building brand loyalty, the company uses consistent design elements throughout the line. These include full-cut bodies; bold appliqu? integrated into large collars and pockets; and three-dimensional ornamentation such as bibs or fringe. Liking the look, a Wal-Mart buyer sent photographs of 16 Samara garments to a manufacturer and ordered large quantities of copies to be sold under Wal-Mart's house brand.
Samara sued over a trade dress infringement. Finding that Wal-Mart had willfully infringed on Samara's rights, the trial court ordered the retailer to stop selling the clothing and awarded more than $1.1 million in damages. On appeal, the 2nd U.S. Circuit Court upheld the judgment, declaring that Wal-Mart's marketing of the copies was willful piracy with an intent to deceive consumers. (The appeals court did return the case for a narrower definition of which design elements could not be copied.)
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.
What Courts Consider
U.S. law attempts to balance the benefit to consumers of unbridled competition with the right of innovators not to have their creative efforts stolen. Accordingly, there's no guarantee your product's look will be protected. In trade dress cases, it's up to the originator of the product to prove that its design is inherently distinctive, so customers think of your company when they see that design. The more distinctive the shapes, colors and designs, the more defensible the trade dress claim. You also have to show that the design elements in question aren't part of the product's function. Finally, you have to prove customers are likely to be confused about where the product came from.
In many situations, the likelihood of customer confusion decides the case. Makers of generic products are able to get away with knockoffs because they state clearly on the label that this product should be "compared to" the name-brand version. Courts have ruled that when the products are displayed side by side with similar shapes and colors on the packages and the lower-priced generic invites consumers to compare their product to a given brand-name product, consumers know they're looking at a cheap imitation and can choose accordingly.
Guarding Your Design
As with trademarks, the key to protecting your trade dress from usurpers is vigilance. Owners of trademarked names and symbols must watch out for publications and advertisements using their brand name as if it were a household word. For instance, anyone who publishes an article or story that uses the brand name Kleenex as if it were interchangeable with the generic term "facial tissue" can expect a letter from the Kimberly Clark Co. pointing out the error and requesting more precision in the future. When a brand-name product becomes a household word, the company loses the rights to protect its name from generic use by competitors.
You should also look out for competing products that are confusingly similar to yours--and take action immediately to stop their sale. That's what Columbia Sportswear Co. of Portland, Oregon, does, constantly and aggressively. In February, the company announced it had settled trade dress infringement actions against three companies. Two had supplied chain retailers with boots that were substantial copies of popular Columbia lines. The companies agreed not to purchase additional quantities nor ship them to retailers. Another company agreed to stop selling a pullover windbreaker that copies a Columbia parka.
"We'll continue to pursue companies that infringe upon our trade dress rights," says Timothy Boyle, Columbia's president and CEO. The company instructs its employees, distributors and sales representatives to identify knockoffs and report them promptly to headquarters, where lawyers get busy filing lawsuits. Over the past six years, Columbia has forced more than 50 companies to stop selling imitations of its outdoor clothing and footwear.
Contrast what happened when Hermes International, maker of upscale French handbags, sued four retail stores for selling handbags that duplicated its versions. Sales staff at the stores told shoppers that although the bags were copies, they couldn't be distinguished from thousand-dollar Hermes handbags. Under normal circumstances, a court might have declared a trade dress infringement. However, the U.S. District Court for the Southern District of New York noted two of the stores had been selling these knockoffs for 40 years, with no objection from Hermes. One had sold nearly $2.5 million worth of imitation Hermes merchandise. The court ruled that the delay in objecting was inexcusable and that it would be unfair to allow these stores to amass a fortune selling knockoffs before demanding a share of the take in damages.
So what should your policy be? If you want to protect your product's trade dress, identify what design elements make it distinctive--then police them zealously.