• Of Automobile Accessories and Aesthetic Trademark Functionality
  • October 31, 2006 | Author: Raphael A. Gutierrez
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • When a consumer buys a trademarked product, has the buyer been influenced by the mark as an indicator of the source or origin of the product, or simply because the mark itself is attractive? The U.S. Court of Appeals for the Ninth Circuit dealt with the legal implications of that question in a recent trademark infringement case, Au-Tomotive Gold, Inc. v. Volkswagen of Amer., Inc., and supported the efforts of certain trademark owners to prevent authorized third parties from selling products showing the owners’ marks.

    Au-Tomotive Gold, Inc. (“Auto Gold”) sold automobile accessories, such as key chains and license plate frames, which bore the marks or logos of various car makers, such as Audi, Cadillac, Honda, Jeep, and Volkswagen (“VW”). Auto Gold did not have the car makers’ permission to use these marks and logos.

    When Audi and VW objected to the unauthorized use of their respective marks by Auto Gold, the conflict ended up in federal trial court in Oakland, CA. Audi and VW claimed that Auto Gold committed trademark infringement (and other wrongs). The trial court held that Auto Gold’s use of these marks on its products was “aesthetically functional,” and, therefore, Auto Gold was not liable for trademark infringement.

    Trademark law is designed to ensure that consumers can identify the sources or origins of the products (and services) that they are purchasing. A mark, which is an identifier of the source or origin of a product, can be a word, a phrase, a design, or even the shape of the product or its packaging. However, when a feature of the mark is essential to the use or purpose of the product, or affects its cost or quality, that feature is functional and cannot be protected under trademark law. (See “The Nonfunctionality Requirement in Trademark Law,” in the November 11, 2003 issue of this newsletter.) “Aesthetic functionality” refers to the appeal to consumers of a mark, or a feature of the mark, without regard to whether the mark identifies the source or origin of the product.

    Audi and VW appealed the trial court’s decision to the Ninth Circuit and obtained a reversal of that decision.

    The Ninth Circuit explained that a court considering whether a feature of a mark is functional must first decide whether the feature is essential to the use or purpose of the marked product, or whether the feature affects the cost or quality of the product. If a feature is functional in either of these respects, the analysis ends there, unfavorably for the mark owner. However, if the feature is not utilitarian, then the court must still consider whether giving the mark’s owner trademark-law protection of that feature would create a significant competitive disadvantage for the owner’s business competitors that is not reputation-related. The court should avoid creating such a disadvantage.

    The Ninth Circuit admitted that, looking at past cases, it was difficult to find many examples of truly aesthetic features of marks. Two oft-used examples are heart-shaped boxes for candy and china patterns. A consumer likely buys the box because it is in the shape of a heart, not because the shape of the box sends a message about the quality of the candy inside. Similarly, a consumer likely buys china because its pattern design is the appealing feature, and not the source identifier, of the china.

    The Ninth Circuit ultimately determined that the marks in question, used in the ways in question, served source-identifying purposes and were not functional in the utilitarian sense. The license plate frames and the key chains worked regardless of their associated marks. Removal of the marks would not affect the cost or quality of the products. The appellate court further found that giving trademark protection to the aesthetic aspects of the marks of Audi and VW did not give those companies unfair advantages in the marketplace against companies like Auto Gold, criticizing the contrary argument as being akin to the complaint that “If I can’t trade on your trademark, I can’t compete.”

    At the end of the day, any analysis of trademark functionality, whether utilitarian or aesthetic, is extremely fact-intensive, so the practical impact of the Au-Tomotive decision may be minimal. The aesthetic functionality doctrine has not been widely embraced, and there are few decisions making findings of aesthetic functionality.