Jay Franco & Sons, Inc. v. Franek
2010 U.S. App. LEXIS 17019, 615 F.3d 855, 96 U.S.P.Q. 2d (BNA) 1404 (2010)
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Rule of Law:
A product design is functional, and therefore cannot be protected by a trademark, if it is essential to the use or purpose of the article, affects the cost or quality of the article, or its exclusive use would put competitors at a significant non-reputation-related disadvantage.
Facts:
- In the mid-1980s, Clemens Franek's company, CLM Design, Inc., began designing and selling circular beach towels.
- CLM marketed the towels by highlighting both their fashionable nature ('Don’t be square!') and their utilitarian benefit, noting that the round shape allows a sunbather to pivot with the sun without repositioning the towel.
- In 1986, CLM applied for a trademark for the 'configuration of a round beach towel,' which was granted by the Patent and Trademark Office in 1988.
- After CLM dissolved, the trademark was assigned to Franek, who continued to sell the towels.
- In 2006, Franek discovered that a competitor, Jay Franco & Sons, Inc., was selling its own round beach towels to retailers like Target and Walmart.
- A utility patent for a different product, a towel that converts into a bag, claimed that a circular shape was a useful feature for a towel because it allows a sunbather to reposition their body towards the sun without moving the towel.
Procedural Posture:
- Clemens Franek sued Target and Walmart in federal court for trademark infringement.
- Jay Franco & Sons, Inc., the supplier of the towels to Target and Walmart, then filed a separate suit against Franek in the U.S. District Court for the Northern District of Illinois, seeking a declaratory judgment to invalidate Franek's trademark.
- The district court consolidated the two cases.
- The district court granted summary judgment in favor of Jay Franco, holding that the trademark for a round beach towel was invalid because the design is functional.
- Franek (appellant) appealed the district court's judgment to the U.S. Court of Appeals for the Seventh Circuit, with Jay Franco as the appellee.
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Issue:
Is the configuration of a round beach towel a functional product design that cannot be protected as a trademark under the Lanham Act?
Opinions:
Majority - Easterbrook, Chief Judge
Yes, the configuration of a round beach towel is a functional design and cannot be protected as a trademark. A design is functional if it is essential to the item's use or purpose or affects its cost or quality. Franek's own advertisements and a separate utility patent both touted the utilitarian advantage of a round towel for sunbathers, providing strong evidence of its functionality. The round shape improves the towel's quality by providing the most rotational space for a sunbather with the least amount of material. Furthermore, the design is also aesthetically functional; fashion is a form of function. A circle is a basic geometric shape, and granting one producer an indefinite monopoly on it would impoverish the design palettes of competitors and put them at a significant non-reputation-related disadvantage, which is prohibited under trademark law.
Analysis:
This decision reinforces the boundary between trademark and patent law by applying a broad definition of functionality that includes both utilitarian and aesthetic benefits. It clarifies that a product's basic shape is likely to be deemed functional if it offers any advantage—practical or aesthetic—that is not related to source identification. The case serves as a strong precedent against attempts to use trademark law to gain a perpetual monopoly over fundamental design elements, thereby stifling competition and innovation. It also highlights how a company's own marketing claims can be used as evidence to invalidate its trademark by demonstrating the functionality of the design feature in question.
