Wednesday, December 23, 2009

Can word marks be functional?

Autodesk, Inc. v. Dassault Systèmes SolidWorks Corp., 2009 WL 4756469 (N.D. Cal.)

(Side note: 2009 seems to be the year courts decided to routinely put pictures in their decisions to aid understanding, recognizing that the technology now easily accommodates this. I approve of this development!)

Autodesk sued SolidWorks for federal and state trademark and related claims. Autodesk is a leader in computer-aided design (CAD) software. AutoCAD software is used to create and simulate designs by architects, engineers, manufacturers and others. AutoCAD, which dates from 1982, and other Autodesk applications create and store files in the DWG file format with a .dwg extension.

Autodesk alleged that it had used the DWG name as a word mark, not just a file extension, since 1982. It has used a logo with DWG on its website, product packaging, and computer file icon; uses include “DWG Unplugged,” the RealDWG software library, and similar tools allowing competitors to license the use of its DWG file format.
Since 2006, Autodesk has used the tagline “Experience It Before It’s Real.”

Since March 2007, plaintiff has used an orange frame outline on its software DVD cases and marketing materials for its Autodesk Inventor product.

SolidWorks is a competing CAD software company. Its software includes a reverse-engineered form of the .dwg format. Autodesk alleged that SolidWorks engaged in misleading marketing to confuse design professionals about its programs’ compatibility with AutoCAD. SolidWorks has released products named DWGeditor, DWGgateway, DWGseries, DWGviewer, and DWGnavigator, which are also used in defendants’ domain names. SolidWorks has sought federal registration for DWGeditor and DWGgateway; the court noted that related proceedings are currently stayed before the TTAB—Autodesk is trying to cancel the DWGeditor registration and opposing the DWGgateway application. SolidWorks also uses the AutoCAD word mark on its websites. Finally, its websites and marketing materials feature a design allegedly combining the “real” element of the RealDWG mark and tagline with the Autodesk Inventor trade dress.

In previous proceedings, the court dismissed a false advertising claim against SolidWorks’ statement that its product “unique capability helps you maintain file and design process compatibility, win business, and save time--all while avoiding expensive AutoCAD upgrade costs or subscription fees” as nonactionable puffery and dismissed the trade dress claim with leave to replead. After Autodesk’s first amended complaint, SolidWorks counterclaimed for false advertising and declaratory judgment on the ownership of the DWG mark. The parties then stipulated to the dismissal of all state law claims.

SolidWorks argued that DWG was generic and/or functional, and that Autodesk wasn’t the senior user.

DWG is unregistered, putting the burden on Autodesk of proving nongenericness. SolidWork’s key arguments were that DWG was, even before Autodesk adopted it, a generic term referring to drawings, and that genericide has occurred because Autodesk let others use DWG without interference. Therefore, DWG denotes a file type/format—a “what” rather than a “who.” Autodesk countered with arguments that consumers associate DWG with Autodesk. The court denied summary judgment because of multiple genuine issues of material fact.

The court did grant summary judgment rejecting SolidWorks’s functionality defense. Functionality generally doesn’t apply to word marks—how could a word mark in general be essential to the use or purpose of an article or affect its quality? The use of .dwg as a file extension is functional, but Autodesk disavows any ownership of “any even arguably functional use of DWG,” including its use as a file extension. Thus, Autodesk claims no monopoly over .dwg.

Comment: I think this is a huge limit, and might properly preclude most if not all of Autodesk’s claims once elaborated. In the foundational Kellogg case, the the right to make the functional article necessarily extended to the right to depict on the box what was in the box, even though pictures on the box are also trade dress. Cf. Traffix, holding that the right to use a functional design allowed the defendant to make that design obvious to consumers, even though it would not have interfered with functionality to cover it up. The right to use .dwg, if it is to be competitively useful, must allow extensive use of that letter sequence, even in a competing trademark.

The court, however, thought that functionality was not the right concept for word marks, because work marks have no functionality dictated by manufacturing efficiencies or utilitarian advantages. Word-functionality cases have been limited to computer programs where the use of the word is essential to compatibility, but Autodesk isn’t targeting such uses here. Autodesk isn’t trying to bar interoperability, but rather only use of the word mark DWG in a way that “improperly” associates the parties’ products. “Defendant has failed to explain how consumers would be denied any benefit of its product if plaintiff were to have exclusive nonfunctional use of DWG as a word mark.” Remaining concerns, similar to those in my comment above, can properly be addressed by fair use, on which more soon.

Comment: I think this is mostly true, but note how the modern concept of “use as a mark,” in which whether there is use as a mark is often determined by consumer reaction, creates a roadblock. This is especially true in the Ninth Circuit, which essentially gutted KP Permanent on remand. So, imagine Nabisco arguing that the picture on the Kellogg box served as a trademark—consumers perceived it as an indicator of source for Kellogg’s products. It would likely be true today at least that consumers perceived that particular picture of shredded wheat as an indicator of source. Absent some sleight-of-hand on trademark use, which most but not all courts would engage in, fair use would lose its ability to protect advertising of functional features.

What about priority of use? Both parties submitted evidence on their respective claims to be the senior user, leaving genuine issues of material fact.

On to trade dress: SolidWorks argued that the combination of an orange frame design, “Experience It Before It’s Real” slogan, and RealDWG trademark did not constitute protectable trade dress. The court found that the amended complaint sufficiently defined the asserted trade dress, including claiming the orange frame as inherently distinctive and source-identifying. Autodesk alleged that it uses a video marketing campaign combining the orange frame with the “real” element of RealDWG and its slogans. And it alleged that the SolidWorks real logo attempts to trade on Autodesk’s goodwill.

The court was skeptical that a commonplace shape like the rectangle could be inherently distinctive, whether alone or as a background for a word mark, even when combined with the color orange. In fact, Autodesk’s evidence showed that it had used a rectangular frame in different colors and different sizes and proportions; even if it had used one size and color, that wouldn’t convert an ordinary orange rectangle “from a common geometric element to one inherently indicative of plaintiff.” Autodesk needed to rely on secondary meaning.

Likewise, “real” in ordinary text didn’t seem to be inherently distinctive. In the CAD context, “real” is a commonplace term: it’s the point of CAD technology, to get a real-world visual image of a design. Moreover, Autodesk only used this combination twice, for a couple of seconds, in video clips. “This is not enough to allow the combination to be monopolized by one competitor and denied to all others.” (At least without secondary meaning.)

Autodesk didn’t have survey evidence of secondary meaning and sought to rely on its evidence of use and advertising over time, along with intentional copying, to establish acquired distinctiveness. Use and advertising, however, must stress the alleged trade dress prominently to justify an inference that secondary meaning exists. Here, Autodesk’s ads don’t stress or feature the orange frame, or the frame in combination with “real,” in any way that could establish secondary meaning. The presentation of the orange frame wasn’t consistent, and Autodesk offered no data about how extensive its ads using the claimed elements even were, instead offering only exemplars without frequency/geographic scope evidence. Especially given Autodesk’s use of many other different colored rectangles and geometric designs, the orange frame is simply a graphical feature of the package/program and wouldn’t generate secondary meaning.

Nor had Autodesk offered sufficient evidence of intentional copying. At most, SolidWorks knew of the similarity between the parties’ dresses; the evidence tilted more to the conclusion that SolidWorks assessed the similarities and found them insubstantial. Thus, SolidWorks won summary judgment on the trade dress claims.

Fair use: The sin alleged here was of “overemphasizing” the AutoCAD and Autodesk marks. Though SolidWorks also asked the court to find no likely confusion using the Sleekcraft factors, the Ninth Circuit has caselaw saying that once the defendant raises nominative fair use, that test replaces the Sleekcraft test, because it’s better at evaluating likely confusion in nominative fair use cases. I don’t quite see how that makes Sleekcraft “inapplicable”—if there were a material issue of fact on nominative fair use, but no such issue under Sleekcraft, the defendant should win, right? But it’s probably true that in a real nominative fair use case it makes sense to do nominative fair use first, and that, as here, where the parties directly compete, Sleekcraft wouldn’t do better for the defendant.

Naturally enough, everyone agreed on the first prong: you need to use the marks to refer to Autodesk and its products. But there were material issues on whether SolidWorks had used more of the marks than necessary and “whether such use suggests sponsorship or endorsement.”

(The latter of which is not really the test, of course. New Kids requires that the defendant do nothing else, other than use the mark in reasonable quantities, to suggest sponsorship or endorsement. Factor three of New Kids is not a mini-confusion test incorporating Sleekcraft; if it were, it would make defendants worse off than they are under Sleekcraft, as the Ninth Circuit has clearly stated that the burden is on a defendant to establish nominative fair use, while the plaintiff has the burden of establishing likely confusion. Even if the Ninth Circuit has undercut the specific holding of KP Permanent to the point of irrelevance, it should be guided by the Supreme Court’s observation that a defense that’s harder for the defendant to establish than baseline nonliability is pointless. That this application of New Kids is so consistently bungled by courts is the best argument for the Third Circuit’s reconfiguration of nominative fair use, though I myself think that, properly understood, the Ninth Circuit’s test works better precisely by using the three factors to create an unrebuttable presumption that confusion is unlikely.)

Summary judgment denied on the second and third New Kids factors.

Autodesk alleged false advertising in the following statements: (1) “DWGgateway is the first free data translation plug-in that lets AutoCAD users work easily with DWG files created by any version of AutoCAD software,” (2) “save DWG files to any version of AutoCAD software,” and (3) “open, edit, and share DWG data more effectively with others.” SolidWorks contested falsity, materiality, damage, and puffery as to (1) and (3).

An earlier order held that, on the pleadings, (1) and (3) appeared to describe specific testable characteristics. But it was summary judgment time now. “Work easily” on its own might be subjective and unmeasurable, but in context it could be viewed as referring to specific and testable characteristics—working with files coming from “any version” of AutoCAD. And there’s some evidence that SolidWorks’s product doesn’t work with every version of AutoCAD. Because this statement could induce reliance, it’s not puffery, at least for purposes of avoiding summary judgment.

But (3), “more effectively,” was too generalized and vague to be actionable. Effectiveness is a highly subjective standard that could mean a lot of things. The court then found that there were triable issues on the falsity and materiality of (1) and (2).

SolidWorks counterclaimed for false advertising in a Jonnie Real cartoon ad. (Collection of Autodesk comics here. It’s possible that these are funny if you use CAD software, but I make no promises.) Autodesk claimed that it only made vague claims of superiority upon which no reasonable consumer would rely, while SolidWorks argued that it was the butt of an implication that using its product would produce dangerous defects; the ads refer to a company called “Won’tWorks” and involve a roller coaster and bicycle, two recent components in SolidWorks ads.
The court agreed that these were general superiority claims, not specific verifiable allegations of what might happen with a competitor’s dimensioning. Absent more specific claims such as that the differences were verified by testing, whether something is a “real” risk or provides “real” interoperability depends on a consumer’s belief about what “real” means. The court distinguished a case involving arguably similar claims on a warning sticker—the context of a warning sticker is different from an exaggerated cartoon: “A consumer would not rely upon a cartoon with an implicit message of hyperbole.”

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