Fighting Fakes

Courts Are Providing Increased Protection For Those Who Create Products And Packaging.
Magazine Contributor
8 min read

This story appears in the February 1996 issue of Entrepreneur. Subscribe »

Since 1905, family-owned Frank Brunckhorst Co. has been selling its meats, cheeses, hot dogs and condiments under the name Boar's Head. Proudly identifying its products with a logo of a boar's head in a circle or an oval, the company has developed a network of distributors and expanded over the past decade from its original New York market to retail stores nationwide. So imagine the owners' surprise in April 1994 when a major beer company rolled out a new beer brand bearing a similar logo and the name "Boar's Head Red."

There had been no confusion 10 years earlier when the same brewer, G. Heileman Brewing Co. Inc., introduced a Blue Boar line under its Weinhard's label. The new red beer, though, had customers asking Brunckhorst distributors when they'd gone into the beer business.

Brunckhorst sued the beer manufacturer-and won. In December 1994, a New York U.S. District Court ordered G. Heileman to stop using the Boar's Head Red name and logo.

The law has long protected copyrights, patents and trademarks from infringement, whether through inadvertently adopting a registered name or deliberately trying to catch a ride on the owner's hard-earned reputation. In recent years, courts have become even more diligent about protecting the rights of those who establish, use and defend a patent or trademark. They have also expanded the concept of "trade dress," which concerns a product's overall look. In many cases, these concepts overlap as the court determines whether one company has infringed on the "intellectual property" rights of another.

Last August, for instance, a federal jury in New York ordered chain retailer Express Inc. to pay $1.2 million in damages to Banff Ltd., a small Fairfield, New Jersey, clothing company, for "knocking off" one of Banff's most popular sweaters.

In 1991, Banff began marketing a version of the traditional cableknit fisherman's sweater, with a cowl neck and flowers crocheted on the lacy yoke. It was featured in Glamour magazine and sold at Bloomingdale's. The next season, the Express retail chain rolled out approximately 40,000 nearly identical sweaters and sold almost all of them for about half Banff's price.

"It was pretty blatant," says Parker Bagley, a New York City attorney with Brumbaugh, Graves, Donohoe & Raymond, who represented Banff. "The jury could tell [Express] had copied it virtually stitch for stitch." The award essentially required Express to turn over all profits from sales of the sweaters. Bagley notes it was the first time a clothing design has been protected as an "inherently distinctive trade dress."

Steven C. Bahls is dean of Capital University Law School in Columbus, Ohio, where he teaches courses in entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

Protected By Law

Laws protecting intellectual property are designed to enable creators to enjoy the fruits of their labors. Patents protect inventions, copyrights protect literary and artistic materials, while trademarks protect names and symbols that represent a product or service-provided the trademark owner actually uses the mark.

Trade dress, a more subtle concept, essentially means it's illegal to copy the way a competitor's product looks if doing so is likely to confuse consumers. The term doesn't even appear in the Lanham Act, the federal law that became the basis for most copyright and trademark laws. The Lanham 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 that companies may not copy the "total image" of a competitor's product-the pattern of size, shape, color, texture or graphics-especially when the public associates that particular image with a certain product and is likely to be confused when the image appears on a competing product.

While patents and copyrights expire after a given number of years, trademarks never expire. Neither does a product's trade dress, if it's sufficiently distinctive. In some cases, however, it's difficult to distinguish a product's trade dress from the product itself-which means newcomers may never be able to enter the field without infringing on rights that don't expire. For instance, under copyright law, Mickey Mouse would have entered public domain in 2002, so anyone could profit from the image. However, the Disney Co. convinced a court that Mickey Mouse was a company trademark, so unless the law changes, Mickey will always belong to the company.

Courts have developed certain standards for determining when a product's style is protected by law. First, the trade dress must be inherently distinctive, so customers think of the company in question when they see that design. Common, basic shapes aren't enough. The more distinctive the shapes, colors and designs, the more defensible the trade dress.

Second, the trade dress cannot be part of the function of the product, such as a waffle weave on a paper towel that makes the towel more absorbent or a foil wrapper that keeps an ice cream bar from melting.

Finally, courts consider the likelihood of confusion. They look at the infringer's intent and the similarity of products, designs, target markets, retail outlets and advertising media.

Current Trends

In general, the trend is for courts to provide more and more protection for the rights of the creator. In March 1995, the U.S. Supreme Court ruled that even the color of a product may qualify as legally protected trade dress if that color has become specifically associated in the public's mind with a particular company.

"A trademark's ultimate function is to indicate the source of products in the marketplace," says Maxine Lans Retsky, an intellectual property attorney in Chicago. "Trademarks enable your customers and potential customers to identify your company as the source of your products." Accordingly, business owners have often argued that the law should protect the color of their products because it serves the critical function of indicating the source, even without accompanying shapes, words or symbols. Courts frequently rejected that argument, noting the limited number of available colors and the difficulty of determining which exact shades should be protected.

Then Qualitex Co. sued a competitor over their use of green-gold dry-cleaning pads that looked identical to the pads the company had been using exclusively for almost

40 years. After the trial court ruled in Qualitex's favor and the appeals court reversed the decision, the Supreme Court decided to put an end to years of inconsistent rulings. In a unanimous decision, the court ruled that there is no legal rule preventing color by itself from serving as a trademark. Since Qualitex's green-gold color identified the source of the pads and served no function in the dry-cleaning process, it was allowed to serve as a trademark.

This doesn't mean color will always be protected. "For certain products, uniformity of color is a benefit to consumers," Retsky says. "For example, it would be confusing to have the same drug come in different colors because color is used to identify drugs."

On the other hand, the results of another recent case lean toward allowing newcomers to ride on an established brand's coattails. Conopco Inc., marketer of Vaseline Intensive Care Lotion, sued to stop the marketing of a private-label look-alike lotion. Conopco had just reformulated its product and retooled its image with a new bottle and a $35 million ad campaign when the Benjamin Ansehl Co. launched a private-label lotion in a similarly shaped bottle in the same blue, green and yellow colors arranged in a similar layout.

Although the trial court favored Conopco, the Federal Circuit Court overturned the decision. "It's a decision many view as a fairly strong defeat for national manufacturers," Retsky says. The circuit court noted the house brand clearly displayed the retailer's own widely recognized trademark and invited consumers to compare the product with Vaseline Intensive Care Lotion. Accordingly, the chance that consumers would be confused about the source of the product is slim. This case, though, is probably not the last word we'll hear on the subject.

What's The Lesson For Business Owners?

Check carefully before adopting a trademark or packaging style to make sure you're not infringing on someone else's. It's expensive to establish recognition, and you wouldn't want to have to start over.

After a thorough search, consider registering your trademark. It's not required by law and it can cost about $1,000, but registering helps you build a case in the event someone infringes on your mark.

Make your packaging as distinctive as possible. In designing your package, make sure it doesn't create customer confusion about whose is whose. If you're interested in selling a product with packaging similar to one already on the market, check for existing patents.

Police your trademark. In yet another recent case, the makers of a baby carrier lost a trade dress lawsuit because they waited nine months before objecting. You put a lot of money into your trademark and trade dress, so stand up for your rights.


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