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.