CHAPTER 5 - § 5.02

• Jurisdiction: United States

§ 5.02 THE WAL-MART DECISION AND INHERENT DISTINCTIVENESS

As discussed in Chapter 4, the Supreme Court decision in Two Pesos related to the trade dress of a Mexican restaurant with a "festive eating atmosphere": its interior dining and patio areas were decorated with Mexican artifacts, bright colors, paintings, and murals, which the Court reasoned gave an inherently distinct impression.¹ Although the décor had arguably not yet acquired secondary meaning, the Court held that the plaintiff (Taco Cabana) had the right to exclude competing restaurants from decorating their Mexican eateries in a similar style due to the inherent distinctiveness of the Taco Cabana design.² Put simply, the Court permitted the plaintiff to state a claim for trade dress infringement without requiring an evidentiary showing of secondary meaning.

Following the decision in Two Pesos, it seemed that the primary test for assessing eligibility for trade dress protection was whether the design in question was inherently distinctive. Secondary meaning was a consideration only in those cases where the designs in question failed the test of inherent distinctiveness. Given the difficulty and expense involved in gathering sufficient evidence to prove secondary meaning, the Two Pesos decision was a welcome development to the owners of unique trade dress. It meant that they could take trade dress cases into litigation (and potentially to trial) without the added expense of proving secondary meaning (such as through consumer surveys). In some cases, plaintiffs did just that. Cautious litigants, however, took a "belt and suspenders" approach, developing proof of secondary meaning as a backup position. As we will discuss below in connection with the Wal-Mart case, the failure to produce such backup evidence of secondary meaning, or to argue for its application, can be case fatal to one's case.

Some eight years after its decision in Two Pesos, the Supreme Court tackled some of these evidentiary conundrums in Wal-Mart. The Court drew a bright line between product configurations and product packaging, holding that only the latter could survive without evidence of secondary meaning.

The Wal-Mart case arose from a dispute between a clothing designer (Samara Brothers) and the ubiquitous retail giant Wal-Mart over the design of a line of children's clothing.³ The clothing line at issue was a line of spring and summer one-piece seersucker outfits decorated with appliqués of hearts, flowers, fruits, and the like.⁴ Some examples of the Samara designs are shown below.

In 1995, Samara Brothers contracted to sell its line of appliquéd seersucker outfits with a number of retail stores, including J. C. Penney and other chain stores.⁵ Presumably on recognizing the popularity of the Samara Brothers clothing line at other stores, Wal-Mart obtained the designs for a number of garments from the line.⁶ With photographs of the Samara Brothers garments in hand, Wal-Mart contracted with one of its clothing suppliers to manufacture similar products that would be sold in its own stores during the 1996 spring and summer seasons.⁷ The clothes that were ultimately sold in Wal-Mart's stores contained only minor modifications of the original Samara Brothers design and were sold at prices lower than those charged by retailers of authentic Samara Brothers clothing.⁸ By the end of 1996, Wal-Mart had earned a gross profit of more than $1.15 million from the sale of its replica garments.⁹

On discovering the unmistakably similar clothing line for sale at Wal-Mart stores, Samara Brothers sued Wal-Mart, Wal-Mart's supplier, and a number of other retail stores that sold the allegedly infringing clothing line.¹⁰ Samara Brothers originally sought to hold Wal-Mart liable for copyright infringement, trade dress infringement, consumer fraud, and unfair competition.¹¹ With the exception of Wal-Mart, each of the defendants named in the complaint settled before trial.¹²

Initially, the jury found in favor of Samara Brothers on all of its claims.¹³ Wal-Mart attempted to overturn the verdict by arguing that there was insufficient evidence to support a conclusion that Samara Brothers' clothing designs could be legally protected as distinctive trade dress for purposes of section 43(a) of the Lanham Act.¹⁴ Its arguments were rejected by both the district court and the appeals court for the Second Circuit.¹⁵ However, Wal-Mart eventually found relief when the Supreme Court granted certiorari and reversed and remanded the case.¹⁶

In its opinion, the Supreme Court framed the issue on appeal as a question of when (or if) a person has a cause of action against another for the use of "any word, term, name, symbol, or device, or any combination thereof ... which ... is likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods."¹⁷ The Court acknowledged that the Lanham Act provided protection for trademarks and trade dress that have been used in commerce and have "become distinctive of the applicant's goods in commerce."¹⁸ However, foreshadowing its ultimate ruling, the Court noted there are some categories of trademarks and trade dress that can never be inherently distinctive.¹⁹

In deciding whether the Samara Brothers clothing designs were eligible for protection, the Court rejected the test that was applied by the district court.²⁰ This test was the one recited in Seabrook Foods v. Bar-Well, which dealt with a trademark infringement claim regarding a stylized "oval" or "leaf" design used on packaging for frozen foods.²¹ In Seabrook Foods, the court noted that the relevant considerations for determining whether a trademark is protectable are (1) whether it is a "common" basic shape or design, (2) whether it is unique or unusual in a particular field, (3) whether it is viewed by the public as a dress or ornamentation for the goods, and (4) whether it is capable of creating a commercial impression distinct from any accompanying words.²² Applying Seabrook Foods to the facts involved in Samara Brothers' dispute with Wal-Mart, the district court noted that evidence, including efforts made by Samara over the years to develop "the Samara look" through a "consistent feel" and its consistent use of seersucker and large appliqués, supported the finding that the designs were "sufficiently distinctive to be protectable."²³

In addition to the Seabrook Foods factors noted above, the district court looked at several factors that have an impact on the "secondary meaning" of the trade dress,²⁴ including advertising expenditures, sales success, and efforts to copy, stating:

The jury's conclusion that Samara's trade dress was sufficiently distinctive to be protectable is supported by the following evidence in the record: (1) the efforts made by Samara over the years to develop "the Samara look," to produce garments that "look like [they] come[] out of our office," that have a "consistent feel" to them, to "build a brand loyalty and establish a customer base"; (2) Samara's consistent use of seersucker, large appliqués usually integrated into the construction of the garments, and garment designs, including scalloped collars, matching pockets, and the lack of excess ornamentation, to develop a clean, simple, uncluttered but elegant "look"—a look of "simple sophistication"; (3) Samara's advertising efforts, which include, for example, spending approximately $100,000 on advertising in 1996; (4) Samara's sales success; (5) Wal-Mart's efforts to plagiarize the Samara look; and (6) the garments themselves.... While it is true that certain elements of Samara's designs were not protectable, the jury reasonably could have found that the combination of these elements was distinctive and thus protectable. (Citations omitted)²⁵

Despite the evidence of secondary meaning offered by Samara Brothers at the district court level, the Second Circuit limited the inquiry on appeal to whether the trade dress claimed in the clothing line was "inherently distinctive":

At the outset, we note that there is no assertion in this case that Samara's seersucker garments have acquired "secondary meaning" in the marketplace. Rather, at issue in the first instance is whether the garments are "inherently distinctive."²⁶

The limited nature of the Second Circuit's inquiry is perhaps the fault of Samara Brothers, whose brief on appeal did not mention secondary meaning or argue that secondary meaning existed in the clothing line.²⁷ Interestingly, Wal-Mart briefed the issue at length on appeal, noting:

The record here shows that Samara introduced scant evidence of its advertising—brief testimony concerning cooperative advertising dollars paid to Samara's retailers (without any requirement that the Samara name, as opposed to the private label name, be featured in those ads) and only three newspaper ads. Samara also introduced evidence that it had been using its alleged trade dress since 1985. What Samara did not offer into evidence is more telling. It offered no evidence by which to compare its advertising expenditures or sales revenues to others in its industry. It offered no evidence to suggest efforts to promote association between the alleged "Samara Look" and its source. It offered no evidence of unsolicited media coverage.²⁸

Adding to the confusion, the Second Circuit looked to evidence of secondary meaning in affirming the district court's findings of inherent distinctiveness and trade dress infringement:

Here, the jury heard the testimony of Samara's Vice-President for sales that Samara chose to design its line of spring/summer seersucker children's clothes using consistent design elements so that the look would be identified with Samara, building brand loyalty. Samara has produced this very same product line for years, and it represents, according to the witness's testimony, "the core [of Samara's] business" and the "lifeblood of the company." When Samara has produced other lines of clothes reflecting different

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