Federal Circuit Invalidates Apple’s iPhone Trade Dresses as Functional. On May 18, 2015, the Court of Appeals for the Federal Circuit reversed a judgment of the Northern District of California that Samsung had diluted Apple’s iPhone trade dresses. Apple Inc. v. Samsung Electronics Co., Ltd. et al, 786 F.3d 983, 996 (Fed. Cir. 2015). Applying Ninth Circuit law, the Federal Circuit held that the trade dresses are functional and therefore not protectable.
Apple had claimed both registered and unregistered trade dress protection for its iPhone products. The asserted trade dresses included elements such as the rectangular shape of the phones and the use of colorful square icons with rounded edges in the user interface. Apple bore the burden of proving that its unregistered trade dress was non-functional, while Samsung bore the burden of production in showing that the registered trade dress was functional.
The decision is a significant one for what is often known as “product configuration” trade dress. The Federal Circuit explained that trade dress protection for the “physical details and design of a product” must be limited to those trade dresses that are “nonfunctional.” Id. at 991. The Court noted that a product feature need only have some utilitarian advantage to be considered functional and that a trade dress, taken as a whole, is functional if it is “in its particular shape because it works better in this shape.” Id. (emphasis added).
In deciding that Apple had failed to prove the nonfunctionality of its unregistered trade dress, the Federal Circuit applied the Ninth Circuit’s four-part test from Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998): “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.” 786 F.3d at 992. With respect to utilitarian advantage, the Federal Circuit explained that, under applicable Ninth Circuit standards, “the party with the burden must demonstrate that the product feature serves no purpose other than identification.” Id. (emphasis in original). The Court then pointed out that Samsung had cited “extensive evidence in the record that showed the usability function of every single element in the unregistered trade dress.” Id. at 993. With respect to the second Disc Golf factor, Apple had raised examples of claimed alternative designs, but its showing was insufficient because it failed to prove that they “offer exactly the same features” as the asserted trade dress. Id. Likewise, with respect to the third Disc Golf factor, the Federal Circuit explained that “if a seller advertises the utilitarian advantages of a particular feature, this constitutes strong evidence of functionality.” Id. After describing the substance of Apple’s iPhone advertisements, the Court observed that “Apple fails to show that, on the substance, these demonstrations of the user interface on iPhone’s touch screen . . . were not touting the utilitarian advantage of the unregistered trade dress” Id. at 994. Finally, with respect to the fourth Disc Golf factor, the Federal Circuit found that Apple cited no applicable record evidence showing that its unregistered trade dress was not relatively simple or inexpensive to manufacture. Id. In short, the Federal Circuit held that Apple failed to prove nonfunctionality for the unregistered trade dress on any of the Disc Golf factors.
Turning to Apple’s registered trade dress, the Federal Circuit first explained the significance of a federal trademark registration in the context of functionality analysis. As it noted, a federal registration constitutes prima facie evidence of non-functionality and therefore shifts the burden of production to the defendant to adduce evidence of functionality. Id. at 995. Once this presumption is overcome, however, the registration “loses its legal significance on the issue of functionality.” Id. The Court then found that that each of the elements claimed by the registered trade dress, including the design details in each of the icons on the iPhone’s home screen, were functional. Id. Apple argued that Samsung had improperly disaggregated the registered trade dress into individual elements in analyzing functionality. In rejecting the point, the Federal Circuit observed that Apple could not explain how the arrangement it chose for these functional elements could negate their functionality. Id. Thus, the Court concluded that the uncontested evidence demonstrated the functionality of the registered trade dress and held that it was unprotectable as a matter of law.