On March 20th, 2001, the Supreme Court decided a trademark case, TrafFix Devices, Inc., vs. Marketing Displays, Inc., that will help define the boundaries between trademarks and other forms of intellectual property, such as patents. This case follows on the 2000 Supreme Court trademark case, Wal-Mart vs. Samara Brothers, which clarified the borders between trademark law and copyright law. Read the Samara decision.(PDF File) (when there, select Case 99-150, or # 38)

The TrafFix case involved the design of sign stands, used to temporarily prop up highway signs during short-term operations such as road construction or patching. Marketing Displays held patents for a two-spring design mechanism, which propped up the signs during periods of high wind. After the patents expired, a competitor, TrafFix Devices, sold sign stands that looked similar to those made by Marketing Displays. Marketing Displays sold their sign stands under the brand name "WindMaster", while the new competitor TrafFix sold sign stands under the name "WindBuster".

Marketing Displays sued TrafFix Devices in a Michigan federal district court, alleging trademark infringement, based on the similar names; trade dress infringement, based on the similar designs; and unfair competition. TrafFix counter-sued Marketing Displays on antitrust grounds. The court ordered TrafFix to stop using the "WindBuster" name, and TrafFix lost its antitrust counter-claim. The court sided with TrafFix, however, on the unfair competition claim, and the trade dress (design) infringement claim. Both sides appealed, and the appeals court sent the unfair competition, trademark infringement, and trade dress infringement suits back to the lower court for trial. The Sixth Circuit noted that different appeals courts had come to different conclusions, regarding the applicability of trademark protections to designs previously covered by patents. The Supreme Court accepted the case for consideration, to resolve conflicts among the appeals court decisions (known in the profession as a "circuit split"). Read the appeals court decision.

The Supreme Court first noted that product design or packaging can serve to identify a product with its manufacturer or source. This distinctive identification is known as "secondary meaning", and can be protectable under federal trademark law as "trade dress". The manufacturer or source can take action to prevent competitors from marketing products likely to be confused with its own, in the marketplace.

On the other hand, trade dress protection may not be claimed for product features that are merely functional, since the features serve not to identify a product, but to make it work. When a utility patent is granted for a product, the Supreme Court reasoned, the patent is strong evidence that the features in question are functional. Moreover, the owner of the patent bears a heavy burden, in convincing a court otherwise. This serves to discourage a patent holder from continuing a monopoly on their product design, after the patent expires (normally seventeen years after the patent issues, subject to many exceptions).

In this case, Marketing Displays held patents on their dual-spring device. In fact, when their patent was still in force, they had successfully sued a competitor in the late 1970s, for marketing a sign stand with similar springs. The Supreme Court reasoned that Marketing Displays could not sue a competitor over a functional feature of their product, then turn around and sue another competitor later on, arguing that their feature is not functional. The Court noted that the trademark laws do not exist to reward manufacturers for their innovation in creating a particular device. That is the goal of the patent laws.

The Court, however, also noted that "if, despite the rule that functional features may not be the subject of trade dress protection, a case arises in which trade dress becomes a practical equivalent of an expired utility patent, that will be time enough to consider the matter". The issue, however, will have to await another day.