In the sweet world of confectionery, a recent ruling by the United States Court of Appeals for the Third Circuit has sent ripples through the candy community.

PIM, a manufacturer of candy, instigated a legal dispute against its competitor, Haribo of America Inc., based on its asserted trade dress rights in its Sour Jacks watermelon-shaped candies. PIM Brands Inc. v. Haribo of America Inc. (2023). Having introduced the wedge-shaped candy over two decades ago, PIM registered the design of a wedge in the specific color combination of red, white, and green as its trademark, and alleged that Haribo's watermelon candy infringed upon its trademark rights. Haribo contended that PIM's trade dress was functional, and thus sought to cancel PIM's trademark registration.

As we unwrap this legal conundrum below, we explore an important issue, functionality, as it relates to protection of trade dress, and why the issuance of a federal trademark registration is not necessarily definitive proof of one’s trademark rights. Specifically, we'll unravel why design choices, such as those seen in PIM’s Sour Jacks, while indicative of the brand, are not legally protectable, and how brands may want to reevaluate the elements that make up their visual identities.

Indulging in Trade Dress Protection

Trade dress, a subset of trademark law, safeguards the overall appearance of packaging or a product, encompassing elements such as the size, shape, or color. While patents protect functional and useful designs, trade dress focuses instead on non-functional, aesthetic aspects that are arbitrary, ornamental, and serve to identify the source of a product.

Enforcing trade dress rights involves proving that the trade dress is inherently distinctive or has acquired secondary meaning, i.e., that consumers associate the particular visual elements with a specific brand. Successful trade dress design can provide businesses with a valuable tool for maintaining brand recognition and preventing unfair competition in the marketplace.

Functionality: A Key Ingredient to Avoid

One major limitation on trade dress protection is that the protected design cannot be “functional.”  Functional does not mean that the article performs a function.  Watch, handbag, and clothing designs all perform a function, but they can still be protected as trade dress.  Rather, “functional” means that the design gives some competitive advantage, apart from association with the brand.

The primary form of that is called “utilitarian functionality.”  If the design makes the article work better, easier to use, or cheaper to manufacture, then it is functional – and that is an absolute bar to trade dress protection.

For example, luminous numeral markings on a watch are functional – they make it easier to tell time in the dark.  So that cannot be a trade dress for a watch design.

One way functionality can be shown is through the producer’s advertising.  If you brag that the product design of your article makes it work better, then that could be used against you in a trade dress case.

Note, however, that in order for the superior quality to render the design “functional,” the superiority has to be tied to the design.  The fact that a manufacturer brags that it puts out a high quality product by itself does not render the design functional.  Many designs for the same product can be manufactured in various degrees of quality, from excellent to poor.  What makes a design functional under trademark law is where the design itself makes the product superior in some way to the alternatives.

The other form of functionality is “aesthetic functionality.”  This means that something about the design is needed to compete.  For example, a decorative design for room furnishings is needed to match standard features used in interior decorating.

Digesting the Court’s Opinion

At the heart of PIM Brands lies the concept of functionality, and whether the design of a wedge in the specific color combination of red, white, and green is functional when used for PIM’s watermelon candies.

The court concluded in the affirmative. These features collectively identified the candy’s watermelon flavor, thus rendering it functional. As the court explained, trade dress protection is limited to design choices that serve only to brand a product. If a design choice simultaneously promotes a brand and also enhances the product's functionality, it will be considered functional and ineligible for trade dress protection.

In PIM Brands, both the color scheme and wedge shape of PIM's candy worked in tandem to convey the candy’s flavor. The court rejected PIM’s argument that the wedge shape alone served a branding purpose, emphasizing that the combination of colors and shape together made the candy more identifiable as a watermelon slice, and that is function enough.

As a result, PIM’s trademark registration for its wedge-shaped candy with green, white, and red coloring was cancelled, and PIM cannot prevent Haribo from selling its competing product.

Conclusion

Safeguarding your brand is not just about a distinctive design. It's about making sure those design choices remain legally protectable. Some design choices, such are those of the PIM’s watermelon candy, while arguably indicative of the brand, will not pass muster when held up against the rigors of trademark law. As a result, brands may want to reevaluate the elements that make up their visual identities to ensure that they can remain protected when confronted with legal opposition.

Moreover, obtaining a trademark registration, while a significant step in brand protection, is not a guaranteed shield against infringers. Like in PIM’s Brands, a trademark registration may be cancelled, and thus deemed meaningless, if a court determines that it was issued in error. If a registered design is deemed functional, it may lose its protectability — as it was never truly protectable to begin with — opening the door for competitors to replicate it without legal consequence.

As a business crafts its visual identity, emphasis should be placed not only on building a brand around elements that are truly distinctive, but simultaneously avoiding the issue of functionality, to secure trade dress protection under the law.