Is shrinkwrap around a functional design thereby functional?

Luv N' Care, Ltd. v. Walgreen Co., --- F.Supp.2d ----, 2010 WL 996515 (S.D.N.Y.)

Plaintiffs make NUBY baby products. They alleged that Walgreens sold knockoff copies of two sippy cups, perpetrating a bait and switch by shelving the lookalikes next to NUBY products and below signs identifying them as NUBY products. Walgreens then stopped selling NUBY products and continued to sell the allegedly infringing sippy cups. (One consumer testified that she was tricked into purchasing the non-NUBY sippy cups.)

The court found material issues of fact on protectability of the alleged trade dress, secondary meaning, nonfunctionality, and likely confusion. The presence of a house mark, among other things, would allow reasonable triers of fact to differ on likely confusion. Likewise, though all the elements of the sippy cups were in use on other products, there were material issues about whether the combination of elements was itself functional and about the relevance of various utility patents. The product packaging trade dress claim was in some respects dependent on the product design trade dress claim, because the packaging was plastic in the shape of the included sippy cup. The court therefore erred on the side of caution, as instructed by Wal-Mart, and required a showing of secondary meaning for purposes of the summary judgment motion. On functionality, however, the court found extra issues with regard to functionality: perhaps product design and packaging merged, but a jury might find that there are alternate ways that the packaging, including graphics and lettering, could have been designed, especially given that Nuby previously used large cardboard boxes instead of individual shrinkwrap. (I bet there are good cost/sales-related functionality arguments for switching from box to shrinkwrap, though.)

The NY unfair competition cause of action does not always require a showing of secondary meaning in cases of deliberate, confusing use of nonfunctional trade dress by a competitor. (Note: especially given Wal-Mart, Traffix, Dastar, and the like, I would find NY’s law on this point vulnerable to conflict preemption: if federal law allows deliberate copying of an unpatented article, then, absent some special circumstance like hot news, state law shouldn’t be able to reverse that policy judgment. Then again, I’m not sure how there could be confusion in the absence of secondary meaning.) Material issues of Walgreens’ bad faith and likely confusion remained. The court did, however, dismiss plaintiff’s New York statutory consumer protection claim; ordinary trademark infringement doesn’t cause the special harm to the public interest required for a NYGBL §349 claim.