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Method for Determining Haplotype Phase Found Subject Matter Ineligible

by | Mar 17, 2021 |

In an appeal from a final rejection of a pending application, the US Court of Appeals for the Federal Circuit held that claims directed to methods for determining “haplotype phase” were correctly rejected under 35 USC § 101 as subject matter ineligible. In Re Board of Trustees of The Leland Stanford Junior University, Case No. 20-1012 (Fed. Cir. Mar. 11, 2021) (Reyna, J.)

Haplotype phase is a scientific way of describing the methodology of determining from which parent a particular allele (or gene) is inherited. The representative claim involved (i) receiving allele data, (ii) receiving pedigree data, (iii) determining an inheritance state based on the allele data, (iv) receiving transition probability data; (v) receiving linkage disequilibrium data and then- determining a haplotype phase based on the pedigree data, the inheritance state for the information described in the allele data, the transition probability data and the population linkage disequilibrium data; and storing the haplotype phase in a computer system and providing the stored haplotype phase in response to a request.

Steps (i) through (iii) were known in the art for determining haplotype phase. The crux of the improved process depended on steps (iv) and (v). The additional data provided as “linkage disequilibrium data” and “transition probability data” allegedly enable haplotype phase to be inferred in regions of the gene where “inheritance state” may be uninformative. The additional data in the claimed method resulted in an increase in the number of haplotype phase predictions made.

The examiner, and then the Patent Trial & Appeal Board, found that the claimed process was directed toward patent eligible subject matter—a mathematical algorithm. Stanford appealed.

Applying the two-step framework established by the 2014 Supreme Court decision in Alice Corp. v. CLS Bank, the Federal Circuit first determined that the claims were directed to an abstract mathematical calculation under Alice step one.

Under step two of the Alice inquiry, the Federal Circuit found that the claims did not include additional limitations that, taken as a whole, provide an inventive concept that transforms the abstract idea into patent eligible subject matter. The Court reasoned that the representative claim “recites no steps that practically apply the claimed mathematical algorithm; instead [the claim] ends at storing the haplotype phase and ‘providing’ it ‘in response to a request.'” These steps alone were not enough to transform the abstract idea into patent eligible subject matter.

Stanford argued that the claimed process was directed to patent eligible subject matter and represented an improvement on a technological process—namely, an improvement in the number of haplotype phase predictions that this mathematical algorithm could yield. The Federal Circuit was unpersuaded that the pending claims did anything other than “merely enhance[] an ineligible concept.”

The Federal Circuit concluded that the claims only recited the conventional haplotype phase algorithm and then instruct: “apply it,” similar to the claimed subject matter prohibited by the Supreme Court in Alice. Accordingly, the Court affirmed the Board’s decision.



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Doctrine of Equivalents Analysis Should Not Be Simple Binary Comparison

by | Mar 17, 2021 |

The US Court of Appeals for the Federal Circuit remanded a district court’s claim construction and grant of a defendant’s summary judgment motion of non-infringement under the doctrine of equivalents, finding that a reasonable juror could find that the accused products performed substantially the same function in substantially the same way to achieve substantially the same result as the claimed invention. Edgewell Personal Care Brands, LLC v. Munchkin, Inc., Case No. 20-1203 (Fed. Cir. Mar. 9, 2021) (Moore, J.)

Edgewell manufactures and sells the “Diaper Genie,” a diaper pail system with a replaceable cassette placed inside the pail for soiled diaper collection, forming a wrapper around the diapers. Munchkin marketed a refill cassette as compatible with Edgewell’s pails. Edgewell’s two patents at issue relate to improvements in the cassette. After claim construction, Edgewell asserted literal infringement of one patent and infringement under the doctrine of equivalents of the other patent. The district court granted Munchkin’s summary judgment motion of non-infringement against both patents. Edgewell appealed.

Edgewell’s first patent is directed to a cassette with a clearance at its bottom portion. The claim construction dispute turned on whether the claims required a clearance space after the cassette was installed. The district court construed the claim to require a space and to require that the claimed “clearance” cannot be filled by an unclaimed interfering member. The district court granted Munchkin summary judgment because Munchkin’s refill cassette had no space after the cassette was installed. The Federal Circuit reversed, explaining that an “apparatus claim is generally to be construed according to what the apparatus is, not what the apparatus does.” The Court found that without an express limitation, “clearance” should be construed to cover all uses of the claimed cassette. The Court determined that the specification and purpose of the “clearance” supported the notion that the claim does not require a clearance after insertion.

The second patent is directed to a cassette with a cover that includes a “tear-off” section. The district court’s construction of an annular cover was of a single, ring-shaped cover. Munchkin’s cassettes each include a two-part cover, and the district court granted Munchkin’s motion for summary judgment of non-infringement. Although the Federal Circuit agreed with the claim constructions, the Court found that the district court erred in granting summary judgment to Munchkin under the doctrine of equivalents for claim element vitiation on the basis that “annular cover” and “tear-off” limitations §§would be rendered meaningless.

The vitiation doctrine ensures that applying the doctrine of equivalents “does not effectively eliminate a claim element in its entirety.” The Federal Circuit found that the district court erred in evaluating this element as a binary choice—single-component structure versus a multi-component structure. Instead, the Court explained that the district court should have evaluated the evidence to determine whether a reasonable juror could find that the accused products perform substantially the same function, in substantially the same way, achieving substantially the same result as the corresponding claim elements. Edgewell’s expert opined that Munchkin’s products performed the [...]

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Can’t Camouflage Express Trademark Contract Terms

by | Mar 17, 2021 |

Addressing a range of trademark licensing issues, including discretionary approval, exculpatory contract clauses and third party beneficiary standing, the US Court of Appeals for the Federal Circuit affirmed a lower court’s grant of summary judgment to the US Army, finding that the Army abided by the terms of a trademark licensing agreement with a brand management company that sold clothing bearing the Army logo. Authentic Apparel Grp., LLC v. United States, Case No. 20-1412 (Fed. Cir. Mar. 4, 2021) (Lourie, J.)

In a 2010 licensing agreement, the Army granted Authentic Apparel, a brand management company that licenses merchandise, a non-exclusive license to manufacture and sell clothing bearing the Army’s trademarks in exchange for royalties. The licensing agreement gave the Army sole and absolute discretion on whether to approve any products and marketing materials bearing the Army’s trademarks. The licensing agreement also included exculpatory clauses exempting the Army from liability for exercising this discretion. From 2011 to 2014, Authentic submitted 500 requests for product approval, and the Army disapproved of only 41. After a series of late or unpaid royalty payments, Authentic sent notice that it would not pay 2014 royalties. The Army then terminated the license to Authentic. In 2015, Authentic and its chairman, Ron Reuben, sued the US government for breach of contract of the licensing agreement. The alleged breaches included denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to certain Army recreation programs, delay of approval for a financing agreement for a footwear line, and denial of approval for advertising featuring the actor Dwayne “The Rock” Johnson. The Court of Federal Claims granted summary judgment to the US government and dismissed Reuben as a co-plaintiff for lack of standing. Authentic appealed.

The two main issues on appeal were whether Authentic provided sufficient evidence to show there was a genuine dispute of material fact that the Army breached the terms of its contract or any implied duty of good faith, and whether Reuben was a third party beneficiary to have standing as a plaintiff to the suit.

As to the first issue, the Federal Circuit affirmed the lower court’s grant of summary judgment for the government because Authentic was unable to provide sufficient evidence that the Army breached the trademark licensing agreement. The Court found that:

The contracting parties contemplated the terms of the contract and voluntarily decided to include express language of broad discretionary approval and exculpatory clauses exempting liability for disapproval, and therefore they should be held to the express terms for which they bargained.

The Army did not act unreasonably or violate its duty of good faith and fair dealing in exercising its discretion because it did approve more than 90% of Authentic’s products.

Authentic’s argument that the Army’s discretion was too broad and restricted Authentic’s use of the trademarks to solely “decorative purposes” was without merit because (1) the Court was not evaluating the validity of the trademarks here, (2) Authentic still [...]

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First-to-File Rule Requires That Action Could Have Been Brought in Transferee Forum

by | Mar 11, 2021 |

After issuing a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, the US Court of Appeals for the Federal Circuit denied a subsequent mandamus petition to compel transfer after that district court denied the transfer. In re SK hynix Inc., Case No. 21-114 (Fed. Cir. Feb. 25, 2021) (Taranto, J.) (non-precedential). The Federal Circuit found that the doctrine of forum non conveniens and the first-to-file rule did not establish a basis for transfer because the action could not have initially been brought in the transferee forum and the patentee’s prior filings in that forum did not give consent for subsequently filed actions.

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. With no ruling after eight months (while the case continued to move forward), SK hynix sought mandamus from the Federal Circuit to compel the district court to transfer the case. The Federal Circuit declined to transfer the case and instead stayed the district court proceedings until the district court ruled on the transfer motion. The district court then denied the transfer motion, rejecting SK hynix’s arguments that the doctrine of forum non conveniens and the first-to-file rule required transfer to the Central District of California. The district court also advanced the Markman hearing and trial dates. SK hynix again sought mandamus from the Federal Circuit to compel transfer and requested a stay of the district court proceedings because of the advanced Markman and trial dates.

Applying Fifth Circuit law, the Federal Circuit denied the mandamus petition, concluding that SK hynix had not shown that the district court clearly abused its discretion in denying the transfer motion. On the forum non conveniens issue, the Court found no clear abuse in the district court’s determination that SK hynix did not meet the threshold conditions for transfer under 28 USC § 1404(a), namely that the action “might have been brought” in the Central District of California or that, in the alternative, all the parties had consented to that venue for the action. As to the “might have been brought” inquiry, the Court found that the district court properly focused on whether the action might have been brought against SK hynix America, a domestic entity subject to the venue requirements of 28 USC § 1404(b) and headquartered in the Northern District of California, rather than SK hynix, a foreign entity not subject to the same venue requirements. The Court also found that SK hynix did not differentiate between the foreign and domestic SK hynix entities in its transfer motion. This was not an action that might have been brought against SK hynix in the Central District of California because SK hynix America lacked sufficient presence there to confer venue under [...]

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The Steep Price of Not Being Exceptional

by | Mar 11, 2021 |

Addressing the appropriate standard for determining what makes a trademark case sufficiently exceptional to warrant an award of attorney fees, the US Court of Appeals for the Seventh Circuit upheld the denial of a renewed motion for attorneys’ fees under the Octane Fitness standard. LHO Chicago River, LLC v. Rosemoor Suites, LLC, Case No. 20-2506 (7th Cir. Feb.19, 2021 (Kanne, J.)

Some say that imitation is the highest form of flattery—but not in the world of trademarks. And certainly not according to LHO Chicago River. In 2014, LHO rebranded one of its Chicago hotels as “Hotel Chicago.” Two years later, Rosemoor did the same to its hotel on the west side of Chicago. LHO sued Rosemoor for trademark infringement (among other claims). Ultimately, LHO dropped the lawsuit after an unsuccessful motion for preliminary injunction. Rosemoor’s quest for attorneys’ fees, however, lived on.

Rosemoor’s initial request for attorneys’ fees amounted to $500,000. According to Rosemoor, the case was exceptional as defined by the Lanham Act and therefore justified reimbursement of its attorneys’ fees. Rosemoor’s first request was denied. Rosemoor appealed, arguing that the district court’s denial of attorneys’ fees was based on an incorrect standard as to what makes a trademark case exceptional. The renewed request for attorneys’ fees totaled $630,000. Once again Rosemoor was left to cover its own fees, and once again it appealed, but to no avail.

In denying Rosemoor’s initial request for attorneys’ fees, the district court used the “abuse-of-process” standard as explained in Burford v. Accounting Practice Sales. According to Rosemoor, the district court should have used the standard articulated in Octane Fitness v. ICON Health & Fitness to determine whether the case was exceptional. The Seventh Circuit agreed with Rosemoor regarding the appropriate standard, but did not agree that the case was exceptional.

Under Octane, “a case can be ‘exceptional’ if the court determines, under the totality of the circumstances, that it ‘stands out from others with respect to [1] the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or [2] the unreasonable manner in which the case was litigated.'” Relevant considerations for a party’s litigating position “include ‘frivolousness’ and ‘objective unreasonableness.'”

The Seventh Circuit determined that the district court did not abuse its discretion in deciding that the case was not exceptional and did not warrant fee shifting. The Court explained that LHO’s preliminary injunction pleading was not “frivolous or unreasonable,” LHO provided evidence of actual customer confusion, the disputed mark was “not plainly unworthy of protection,” LHO provided evidence of the mark’s secondary meaning, and Rosemoor failed to show that LHO engaged in exceptional litigation misconduct.

Practice Note: When the post-litigation dust settles, practitioners should help their clients evaluate whether their case truly is exceptional within the meaning of the Lanham Act and would thus warrant an award of attorneys’ fees. Appealing a disappointing judgment without strong “exceptional” grounds may end up costing more than it is worth.



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Knowledge of Patent, Evidence of Infringement Are Necessary, but Not Sufficient, to Establish Willfulness

by | Mar 11, 2021 |

Addressing claim construction, enablement, damages and willfulness, the US Court of Appeals for the Federal Circuit found that evidence of a defendant’s knowledge of the asserted patent and proof of infringement were, by themselves, legally insufficient to support a finding of willfulness. Bayer Healthcare LLC v. Baxalta Inc., Case No. 19-2418 (Fed. Cir. Mar. 1, 2021) (Stoll, J.)

Bayer owns a patent on certain recombinant forms of human factor VII (FVIII), a protein that is critical for blood coagulation. Recombinant FVIII is useful as a treatment for coagulation disorders, primarily Hemophilia A. Natural FVIII has a short half-life, making therapeutic administration expensive and inconvenient. Adding polyethylene glycol (a process known as PEGylating) to FVIII at random sites was found to increase the protein’s half-life but reduce its function. Bayer invented FVIII that is PEGylated in a specific region (the B-domain) so that it retains its function and maintains the longer half-life.

After Baxalta developed a PEGylated FVIII therapeutic, Adynovate®, Bayer sued Baxalta for infringement of its patent. During claim construction, the district court construed the claim preamble “an isolated polypeptide conjugate” to mean “a polypeptide conjugate where conjugation was not random,” finding that Bayer had disclaimed conjugates with random PEGylation. The district court also construed “at the B-domain” to mean “attachment at the B-domain such that the resulting conjugate retains functional FVIII activity,” rejecting Baxalta’s proposal of “at a site that is not any amine or carboxy site in FVIII and is in the B-domain” because Bayer had not disclaimed PEGylation at amine or carboxy sites. Before trial, Baxalta moved for clarification of the term “random” in the construction of the preamble, but the district court “again” rejected Baxalta’s argument that Bayer defined “random” conjugation as “any conjugation at amines or carboxy sites.”

Before trial, Baxalta moved to exclude the testimony of Bayer’s damages expert regarding his proposed reasonable-royalty rate. The expert had defined a bargaining range and proposed to testify that the royalty rate should be the midpoint of the range based on the Nash Bargaining Solution. The district court permitted the expert to testify as to the bargaining range but excluded the opinions regarding the midpoint as insufficiently tied to the facts of the case.

After trial, the district court granted Baxalta’s pre-verdict motion for judgment as a matter of law (JMOL) of no willful infringement. Subsequently, the jury returned a verdict that the claims were infringed and not invalid for non-enablement, and awarded damages based on an approximately 18% royalty rate for the period for which the parties had presented sales information. Baxalta moved for JMOL or a new trial on infringement, enablement and damages. Bayer moved for pre-verdict supplemental damages for the period between the presented sales data and the date of judgment, and for a new trial on the issue of willfulness. The district court denied all of Baxalta’s motions and Bayer’s motion for new trial, but granted Bayer’s motion for supplemental damages, applying the jury’s ~18% rate to sales data for the later period. [...]

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Click Fraud: Predicate to False Designation of Origin

by | Mar 11, 2021 |

The US Court of Appeals for the Fifth Circuit affirmed that pay-per-click advertisers may be liable under the Lanham Act for “click fraud.” WickFire, LLC v. Laura Woodruff et al., Case No. 17-50340 (5th Cir. Feb. 26, 2021) (Owen, J.)

WickFire and TriMax Media are advertisers that compete in the pay-for-performance search engine marketing business, also known as pay-per-click marketing. In this type of marketing, every time a user clicks on an advertisement, the advertiser pays the search engine (i.e., Google) a small fee. If the user makes a purchase on the merchant’s site, the merchant pays the advertiser a commission. When a pay-per-click campaign runs smoothly, the advertiser pays a small amount for a click, the click results in a sale, and the commission to the advertiser is more than the advertiser paid for the click.

WickFire filed a lawsuit against TriMax, alleging that TriMax violated Section 43 of the Lanham Act by committing “click fraud” through repeatedly clicking on WickFire’s ads without any intent to make a purchase, and created false advertisements that were made to appear as though they belonged to WickFire, among other state law claims. Section 43(a) of the Lanham Act prohibits a person from making, “in connection with any goods or services,” a “false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . is likely to cause confusion . . . as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities.” WickFire alleged that the ads included a trademark and links to a WickFire website designed to aggregate coupons for online merchants.

The case went to trial, and a jury found for WickFire with respect to the state law claims and the false advertising claim (although it did not award any damages for violation of the Lanham Act). The jury determined that TriMax misrepresented WickFire as the source of advertisements by placing ads containing identifying information distinct to WickFire in a manner that was likely to cause confusion. TriMax filed for judgment as a matter of law and for a new trial. The district court denied the motions and entered judgment. TriMax appealed.

On appeal, TriMax alleged that WickFire’s Lanham Act claim was foreclosed by the Supreme Court’s decision in Dastar v. Twentieth Century Fox. The Fifth Circuit disagreed. The Court explained that WickFire was not concerned with protecting an original idea, as Fox attempted to do in Dastar. Instead, WickFire was trying to protect the genuineness of its brand.

TriMax next argued that it was entitled to judgment as a matter of law because the jury did not have a legally sufficient evidentiary basis to find for WickFire. The Fifth Circuit thought otherwise, holding that it did not need to decide whether the evidence was sufficient as a matter of law because the jury did not award WickFire damages to the claim. The Court noted that since the jury found that there were no damages, WickFire [...]

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Corresponding Structure Necessary to Support ‘Module’ Claim Element

by | Mar 11, 2021 |

In determining whether a claim element invoked 35 USC § 112, ¶ 6, the US Court of Appeals for the Federal Circuit concluded that “module” was a nonce term and required sufficient corresponding structure in the patent specification to avoid indefiniteness under 35 USC § 112, ¶ 2. Rain Computing, Inc. v. Samsung Electronics Co., Ltd., Case Nos. 20-1646, -1656 (Fed. Cir. Mar. 2, 2021) (Moore, J.)

Rain sued Samsung for infringement of a patent directed to a method for delivering software application packages to user terminals over a network. The claims at issue included an element that recited a “user identification module configured to control access [to] software application packages.” The district court determined that the “user identification module” was a means-plus-function term subject to 35 USC § 112, ¶ 6, but that the specification disclosed sufficient corresponding structure such that the term was not indefinite. Rain appealed the judgment of non-infringement.

Reviewing de novo, the Federal Circuit first addressed whether the claim language invoked § 112, ¶ 6. While there is a rebuttable presumption that ¶ 6 does not apply to claims lacking “means” language, the Court noted that “module” does not provide any indication of structure and is a well-known substitute for “means.” No other claim language, including the “user identification” prefix, imparted any structure onto the term. For purposes of claim construction, the specification also did not impart any structure to the claimed user identification module. Rain argued that amendments and examiner arguments during prosecution were proof of sufficient structure, and that, as the examiner noted, a means-plus-function term cannot be nested within a method claim. The Federal Circuit disagreed, noting that the examiner’s statement that a means-plus-function claim element cannot be nested within a method step was simply incorrect as a matter of law. Thus the Court found that “user identification module” was a means-plus-function claim term.

Citing to its 2015 en banc ruling in Williamson v. Citrix Online, the Court turned to the term’s construction under §112, ¶ 6, applying the same two-step process it used just a few weeks earlier in Synchronoss Technologies v. Dropbox. In the first step, the Court simply used the district court’s undisputed finding that the function was “to control access to . . . software packages to which the user has a subscription.” In the second step, the Court attempted to identify corresponding structure in the specification. Here the Court noted that structure in a specification corresponds only if there is a clear link or association, and that the specification must also disclose an actual algorithm when the function is performed by a general-purpose computer.

The Federal Circuit concluded that the district court erred in finding that the disclosure of a storage device provided sufficient structure, explaining that such devices are nothing more than general purpose computers not capable of performing the access control function without specialized software—an algorithm. Rain’s patent specification disclosed no such algorithm, without which the “user identification module” lacked sufficient structure. Thus [...]

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Ahoy There: If License Terms Not Clearly Intended to Be a Condition Precedent, It’s a Covenant

by | Mar 4, 2021 |

The US Court of Appeals for the Federal Circuit held that the US Court of Federal Claims erred by failing to consider defendant’s non-compliance with the terms of an implied license, vacating the claims court’s finding of non-infringement and remanding the case for a calculation of damages. Bitmanagement Software GmbH v. U.S., Case No. 20-1139 (Fed. Cir. Feb. 25, 2021) (O’Malley, J.) (Newman, J., concurring).

Bitmanagement Software filed suit against the US government for infringement of its copyrighted graphics-rendering software, BS Contact Geo. The claims court found that Bitmanagement had established a prima facie case of copyright infringement based on the US Navy’s copying of the software onto all computers in the Navy Marine Corps Intranet, but found that the Navy was not liable for infringement because Bitmanagement had granted the Navy an implied license to make such copies. Bitmanagement appealed, arguing that:

  • The claims court erred in finding an implied-in-fact license between the parties.
  • An implied-in-fact license was precluded as a matter of law.
  • Even if an implied-in-fact license existed, the claims court erred by failing to consider whether the Navy had complied with the terms of the license.

The Federal Circuit did not disturb the claims court’s findings with respect to the existence of an implied license authorizing the Navy to make copies of Bitmanagement’s software.

The Federal Circuit further declined to apply its preclusion rule as set forth in Seh Ahn Lee, i.e., that “the existence of an express contract precludes the existence of an implied-in-fact contract dealing with the same subject matter,” because the Navy and Bitmanagement never actually entered into an express contract with one another. Rather, both parties entered into express contracts with a third party, Planet 9, through which they intentionally chose to conduct their business. The express contracts “do not capture or reflect the discussions that occurred between the Navy and Bitmanagement directly,” nor do they cover the topic of the implied license between the parties, “i.e., the license to copy BS Contact Geo onto all Navy computers.”

With respect to Bitmanagement’s claim that the Navy failed to comply with the terms of the implied license, the Court considered whether a term requiring the Navy’s use of Flexera, a license-tracking software, was a condition that limited the scope of the license, or merely a covenant. The Court explained that a term of a license is presumed to be a covenant—addressable only in contract—rather than a condition, unless it is clear that the term was intended to be a condition precedent. Accepting the lower court’s factual findings that “Bitmanagement agreed to [the] licensing scheme because Flexera would limit the number of simultaneous users of BS Contact Geo, regardless of how many copies were installed on Navy computers,” the Court found that the required use of Flexera was a condition of the license. The Court found there was no reason Bitmanagement would have entered into an implied license that allowed mass copying of its software without the use of Flexera because, absent [...]

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Colorful Non-Functionality Argument Misses the (Design) Mark

by | Mar 4, 2021 |

Addressing the functionality of colors in design marks, the US Court of Appeals for the Second Circuit reversed the district court’s entry of judgment for a trademark owner on its unfair competition and trademark claims, ruling that where color is used as an indicator of size or parts matching, it is functional and does not qualify as trade dress. Sulzer Mixpac AG v. A&N Trading Co., Case No. 19-2951 (2d Cir. Feb. 18, 2021) (Pooler, J.)

Sulzer Mixpac and A&N Trading are competitors that manufacture and supply mixing tips, which dentists use to create impressions of teeth for dental procedures. Mixpac obtained trademarks for the colors yellow, teal, blue, pink, purple and brown (collectively, the Candy Colors) as applied to mixing tips. Mixpac filed suit against A&N, claiming unfair competition; common law trademark infringement; and trademark infringement, trademark counterfeiting and false designation of origin under the Lanham Act. A&N countersued, claiming that Mixpac’s use of the Candy Colors on mixing tips was functional and therefore not entitled to trademark protection. The district court concluded that Mixpac’s use of the Candy Colors was non-functional (based in part on the increased cost of adding color to the mixing tips, and noting that other competitors used clear tips), and entered judgment and a permanent injunction in favor of Mixpac. A&N appealed.

The Second Circuit reversed, explaining that the district court erred by failing to apply the Louboutin three-part aesthetic functionality test to Mixpac’s marks. Under the Louboutin test, to determine whether a design feature is non-functional and thus entitled to trademark protection, courts look to whether the design feature (1) is “essential to the use or purpose” of the product, (2) “affects the cost or quality” of the product, and (3) has a significant effect on competition. A&N argued that the mixing tips’ color coding helps users identify useful product characteristics, such as diameter, and that it aids users in selecting the correct tip. Applying the Louboutin test in the first instance and citing trial testimony, the Second Circuit concluded that the colors signify diameter, which assists users when selecting the proper cartridge, as the colors “enable users to quickly match the proper mixing tip with the proper cartridge, and (citing Louboutin) thereby ‘improve[] the operation of the goods.'”

Practice Note: In trade dress cases, be sure to apply the Louboutin three-part aesthetic functionality test. Failure to do so may lead to reversal on appeal. In this case, the Second Circuit noted that “[t]he district court erred because it did not apply this test when it considered only that Mixpac’s use of the Candy Colors adds to manufacturing costs and that other companies use different or no colors.”



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