Those seeking to protect their product designs as trade dress again need to heed the warning sign: "Danger-United States Supreme Court Ahead." In Traffix Devices, Inc. v. Marketing Displays, Inc., the Supreme Court held that the functional design features of a product cannot be protected as trade dress. More significantly, the Supreme Court has created an almost irrebuttable presumption that such design features are functional if they were previously covered by a utility patent.

In Traffix Devices, the plaintiff (Marketing Displays) had established a successful business in the manufacture and sale of outdoor sign stands that used a "dual-spring" design to keep the signs upright despite adverse wind conditions. Indeed, Marketing Displays' sign stands were alleged to be recognizable to buyers and users "because the dual-spring design was visible near the base of the sign." This dual-spring design had been covered by two utility patents that subsequently expired.

After the utility patents expired, the defendant (TrafFix Devices) sold sign stands with a visible spring mechanism that looked like Marketing Displays' dual-spring design. This was not surprising since TrafFix Devices had sent Market Displays' sign stand abroad to have it copied. This situation was further complicated by the use of similar names to market the respective stands: "WindBuster" for TrafFix Devices' stand, "WindMaster" for Marketing Displays' stand.

Marketing Displays sued TrafFix Devices for trademark infringement (based on the similar names), trade dress infringement (based on the copied dual-spring design) and unfair competition; TrafFix Devices counterclaimed for antitrust. After cross-motions for summary judgment, Marketing Displays prevailed on its trademark claim and was held not liable on the antitrust counterclaim. However, the District Court (Eastern District of Michigan) ruled against Marketing Displays on the trade dress claim on alternative grounds: (1) Marketing Displays could not establish "secondary meaning" for the dual-spring design (i.e., it had not acquired distinctiveness); and (2) this design was functional.

The Sixth Circuit reversed the District Court's trade dress ruling. Regarding functionality, the Sixth Circuit suggested the District Court incorrectly looked only to the dual-spring design when evaluating the trade dress and observed it took "little imagination to conceive of a hidden dual-spring mechanism or a tri or quad-spring mechanism that might avoid infringing [Marketing Displays'] trade dress." According to the Sixth Circuit, it was not sufficient that allowing exclusive use of a particular feature (such as the dual-spring design) as trade dress would "hinde[r] competition somewhat." Rather, "[e]xclusive use of a feature must put competitors at a significant non-reputation-related disadvantage before trade dress protection is denied on functionality grounds."

The Sixth Circuit in Traffix Devices was not the first to rule on whether the existence of an expired utility patent precluded trade dress protection in the product's design. The Fifth and Seventh Circuit, as well as the Court of Appeals for the Federal Circuit, had previously held it did not. Only the Tenth Circuit in Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F.3d 1498 (1995) had held that trade dress protection was precluded.

The Supreme Court sided with the Tenth Circuit and reversed. The Supreme Court acknowledged that "a design or package which acquires [secondary meaning]" could be protectable as trade dress. However, the Supreme Court then referred to its recent decision in Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205 (2000) in saying "we [are] careful to caution against misuse or over-extension of trade dress" because "product design almost invariably serves purposes other than source identification." In particular, the Supreme Court observed that "trade dress protection must subsist with the recognition that in many instances there is no prohibition against copying goods and products" in the absence of a patent or copyright.

The Supreme Court held that a prior utility patent had a "vital significance in resolving the trade dress claim" because it was "strong evidence" that those features were functional. This meant that if the "expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device."

Since the dual-spring design was covered by expired utility patents, "the rule we have explained bars the trade dress claim, for [Marketing Displays] did not, and cannot, carry the burden of overcoming the strong evidentiary inference of functionality based on the disclosure of the dual-spring design in the claims of the expired patents." Indeed, once functionality was established, that ended any inquiry by the Supreme Court into whether the dual-spring design had acquired distinctiveness (i.e., secondary meaning), including whether competitors should have explored alternative designs to hide the springs as suggested by the Sixth Circuit.

The Supreme Court left open a window, abet a small one, for protecting such design features if they were "arbitrary, incidental, or ornamental aspects of [a product] found in the patent claims, such as arbitrary curves in the legs or an ornamental pattern painted on the springs." In determining whether such features were or were not functional, the Supreme Court said it was permissible to examine "the patent and its prosecution history to see if the feature in question is shown as a useful part of the invention." Indeed, the Supreme Court expressly declined to resolve whether the Patent Clause of the U.S. Constitution (Art. I, §8, cl. 8) prohibited "the holder of an expired utility patent from claiming trade dress protection."

The holding in Traffix Devices is consistent with the Supreme Court's prior decision in Samara Brothers to restrict the use of trade dress as a vehicle for protecting product designs. However, by leaving open even the remote possibility that a feature included in a patent claim might not considered be functional (and therefore protectable as trade dress), they may unfortunately allow the debate on this issue to continue (more narrowly) in the various Circuits.

Another issue left open by Traffix Devices is the effect of a design patent covering the alleged trade dress feature. By definition, a design patent can cover only "ornamental" features of the design. Does this mean that features covered by the design patent are presumptively not functional for the purpose of trade dress protection? If so, is this presumption rebuttable? Since a design patent can cover only distinctive, unobvious design features, does this mean that those features are inherently distinctive? How can this be reconciled with the Supreme Court holding in Samara Brothers that product design cannot be inherently distinctive trade dress? The Traffix Devices case certainly did not resolve all questions as to what is protectable trade dress.