Wal-Mart Stores, Inc. v. Samara Brothers, Inc: A Case Review

Background

This case was presented at the United States court of appeal, second circuit and heard on January 19 2000. The decision was made on March 22 the same year. The petitioner was Wal-mart Stores Inc., the largest retail chain in the United States. The respondent was Samara Brothers Inc, a designer and manufacture of a line of children clothing. Wal-mart Stores Inc (Wal-Mart in this discussion) signed a contract with a certain supplier to supply and manufacture clothing outfits with the photographs of samara products. On its part, Samara found that Wal-Mart and the retailers were offering knockoffs for sale. Samara filed a case in court inter alia accusing Wal-Mart of infringement of unregistered trade dress under section 43(a) of Lanham Act (Trade Mark Act 1946). The court ruled in favour of Samara. However, Wal-Mart was not satisfied and renewed a motion. It claimed that the petitioner had limited evidence to support the conclusion that their clothing design was subject to legal protection under section 43(a) of Trade Mark Act 1946 as a distinctive trade dress. However, the District Court denied the motion in favour of Samara Brothers. After another attempt to disapprove the decision at the second circuit failed, Wal-Mart filed this case at the supreme court of the united sates. In the current report, an analysis of the facts, ruling, argument, conclusion and application of the case has been provided.

Facts of the case

Samara brothers Inc is an incorporated company that specialised in designing and manufacturing of a line of children clothes. Wal-Mart Inc signed a contract with Judy-Philippine Inc (JPI) in which the latter would manufacture and supply outfits to Wal-Mart based on Samara garment’s photographs. In addition, the contract outlines that the supply of these items was to be under ‘Small Steps’ the Wal-Mart’s hose label. JPI went on to work, designing some 16 garments of Samara’s, making a few modifications to supply the products required under their contract with Wal-Mart Inc. On its part, Wal-Mart readily accepted the products and displayed them in their stores. The products found their way into the market, with a good number of them displayed at the stores owned and operated by Wal-Mart’s retailers. This caught the eye of Samara Brother’s Inc. On noting that both the retailers and Wal-Mart stores were selling the products (called knockoffs), it Samara Inc filed a petition at the district court arguing that its unregistered trade dress was infringed against Trademark Act 1946 section 43(a). The jury ruled in favour of the petitioner and ordered Wal-Mart to pay an amount of one million dollars as damages to Samara. Wal-Mart felt dissatisfied with the ruling and immediately filed a case renewing the motion (Feisthamel, Kelly & Sistek 2005). It argued that the evidence brought in court by Samara was insufficient to support the conclusion that Samara’s clothing designs were subject to legal protection as distinctive trade dress for the purpose of Trade Mark Act 1946 section 43(a). However, the district court decided to deny the motion renewal, thus giving Samara Inc relief. Again, Wal-Mart was dissatisfied with this decision and decided to file a petition at the courts of appeal. The court of appeal affirmed the ruling and denial for the motion, concluding that copyrights covering familiar items such as strawberries, hearts and daisies in Samara Brother’s Inc copyrights are subject to a narrow legal protection”. The court went on to argue that it was only the virtually identical copying that should result into a successful claim of infringement of similar products.

The issue/question of the case

The issues in this case surrounds the worthiness of a design to be protected under section 43(a) of the Trade Mark Act 1946. Thus, in the case, the question was “in section 46(a) of the trademark Act of 1946 action for infringement of unregistered trade dress, does a products design qualify to be distinctive and therefore legally protectable?”

Argument (rules of law considered in the case)

Under the Trade Mark (Lanham) Act of 1946, there is a provision for the registration of trademarks. In section 45 of the Act, it specifies that “…any word, symbol, name, device or combination of any of these, used or intended to be used) as in identification and distinction of the owner’s goods and services from those sold by other parties and to indicate the origin, source or owner of the products, are included in this definition…” (15 U.S C. $1127). Consequently, for any mark that is registered under section 2 of the Act, subsection USC 1052, the owner has the ability to sue any party that infringes under section 32, 15 USC s 1114. In addition, it the owner is entitled to a presumption that the mark therein is valid, as described in section 7^) 15 USC 1057(b). It ordinarily renders any unregistered mark a period of 5 years of continuous use incontestably (§ 15, 15 U. S. C. § 1065). Moreover, the Act gives a cause of action to the user for the use by any other individual or organization of the mark that is likely to cause confusion as the origin, approval or sponsorship of the owner’s products” (15 U. S. C. § 1125(a)). Thus, this final provision is the issues in the case of Wal-Mart Stores Inc., v Samara Brothers Inc, 2000.

The definition of marks that can be registered under section 2 as well as the confusion-producing elements that are considered actionable under section 43(a) of the act has been held to include trademarks and symbols. In addition, it expands to include “trade dress”. Previously, this latter category was only considered as a part of packaging (dressing) a product. Although when the Lanham Act was made in 1946 there was no inclusion of this category of trademark, subsequent arguments and rulings by the SU Court of Appeals has expanded the meaning of trade mark and the section of the law to include design of a product. For instance, it was first considered protectable under the law in the case law “Knitwaves, Inc. v. Lollytogs, Ltd., 71 F. 3d 996 (CA2 1995), in which the claim involved the design for bedroom furniture. Subsequently, this decision has been considered and held in other cases such as Ahsley furniture industries Inc v. Sangiacomo N.A Ltd 187 F 3d 366 (CA4 1999) and Stuart Hall Co., Inc. v. Ampad Corp., 51 F. 3d 780 (CA8 1995). In all these cases, the courts have often assumed that trade dress is a category that should be taken, legally and without discussion, a symbol or device for the purposes of the relevant sections of the Act. For instance, in case law “Qualitex Co. v. Jacobson Products Co., 514 U. S. 159, 162 (1995)”, it was argued that “… since people may use as a symbol or a device almost anything that has the capacity to hold, possess or carry some meaning, then this language should not be restrictive at all when read literally…”. Thus, it is worth noting that the reading, which is relevant to section 2 and section 43(a), is specifically reinforced by another subsection 43(a)(3) that has been added recently. This new subsection refers to civil actions for the infringement of trade dress under the Act for trade dress that had earlier not been included in the definition 15 U. S. C. § 1125(a)(3) (1994 ed., Supp. V).

The text found in section 43(a) of the Lanham Act does not provide adequate guidance as to the circumstances that may lead unregistered trade dress to be protected under the law. However, section 43(a)(3) requires that the producer provide evidence that the alleged infringement of trade mark, symbol or trade dress is not functional. In addition, this section of the law shows that it is likely to cause confusion with the product for which a legal protection has been sought. In section 43(a), there is nothing that requires, explicitly, a producer of goods to indicate that the trade dress is distinctive. This is unlike in the case of symbols and designs. However, decisions by American courts over time have come to universally imposed a requirement that trade dress be considered distinctive. This is because without distinctiveness, a trade dress may not cause confusion with the origin, an approval or a sponsorship of the product or goods. Moreover, courts have held that the term “distinctiveness” is an explicit prerequisite for the registration of a trade dress as provided by section 2 of the Act. Courts have argued and universally imposed recognition of trade dress by arguing that the general principles that disqualify a mark from being registered under section 2 of the Act are also applicable partly in determining whether there is reason to consider an unregistered mark protectable under the law…” (Two Pesos, Inc. v. Taco Cabana, Inc., 505 U. S. 763, 768 (1992)).

In differentiating between those marks that have inherent distinctiveness and those that have secondary distinctiveness can be found within the Act itself. For instance, in section 2 of the Act, there is a requirement that registration of a mark be granted for any trademark that allows a simple way of distinguishing the products of the owner from those of others. It is subject to a number of exceptions. In addition, section 2 of the Act provides that nothing in the chapter has the capacity to prevent a mark be registered if it is used by an applicant after it has become distinctive with the goods the applicants offers in the market. Again, this provision is limited to exceptions. It implies to the mark that has not inherently been distinctive but has gained secondary status due to the exceptional use by the applicant. However, it is also worth noting that there is nothing under section 2 of the Act that demands for the conclusion that every form or category of marks necessarily includes some of the symbols or marks by which the goods sold by the applicant can be disguised from those sold by other parties.

Courts have held that aspects such as colour and design have some meaning when determining whether a mark is distinctive. However, there have been cases where these aspects of a mark have not been considered as distinctive by themselves. It appears that colour and design are not inherently distinctive. Courts have held that for a colour and design to be considered when determining the distinctiveness of a mark, there must be conditions. For instance, there must be enough evidence to support the argument that the original intension of putting that particular design or colour to the mark of the product was to ensure that it is differ from those of the others in the market.

Decision

The court of Appeals, in a unanimous decision that was read by Justice Antonin Scalia, held that in section 43(a) of the Lanham Act 1946, an action for infringement of an unregistered trade dress, a trade design is distinctive. Therefore, it is legally protectable but only when it shows the presence of some evidence that it has developed secondary meaning even if it is not inherently distinctive. The court went on to argue that the fact that a product design serves a purpose other than that of identification of its source renders in inherent distinctiveness. It also renders it problematic and need for an application for an inherent distinctiveness. Thus, the court ruled in favour of the petitioner.

Conclusion

The task of determining whether a symbol, mark or object is distinctive under the law has been a point of debate in American law (Feisthamel, Kelly & Sistek 2005). In fact, courts have made several decisions to ensure that a trade dress is protectable, even in cases where an argument would arise to disqualify the trade dress from being protectable. It appears that during the enactment of the Lanham Act in 1946s, trade dress has not surfaced a court issue, thus omitting it from the definition of a trades mark. As subsequent court decisions have upheld its recognition, there has been a universal recognition of trade dress, even the unregistered, as a right of the owner. Courts have always attempted to deviate from the rulings done in previous court decisions.

Therefore, in an attempt to evaluate the distinctiveness of a mark under section 2 of the Act, American courts have had to hold that “…there are two ways through which a mark can be distinctive”. First, if the intrinsic nature of a mark serves to identify a given source, then that mark is inherently distinctive. In this context, courts have always applied the classic test that was first put forward by Justice Friendly. In his ruling, Justice Friendly argued that word marks that are arbitrary, fanciful or suggestive should be considered inherently distinctive. Secondly, courts have argued that a mark can be acquired or obtained with its distinction (thus distinctiveness) even if it is not inherently distinctive, if that particular mark has developed some secondary meaning. According to courts, a secondary meaning occurs when the primary significance of the mark is for the identification of the source of the product/good rather than the product, which in this case is in the minds of the public (Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 851, n. 11 (1982)).

References

Feisthamel, K, Kelly A & Sistek, J, 2005, “Trade Dress: Best Practices for the Registration of Product Configuration Trade Dress with the USPTO,” American Journal of law, vol 23, pp 345-357.