Converse, Inc. v. International Trade Commission, et al.
Decided: October 30, 2018
Converse is a shoe company that began selling its Chuck Taylor All-Star shoes in 1932. This case concerns Converse's trademark/trade dress rights on the midsole design of this shoe, which includes the designs of: (1) the toe cap; (2) the multi-layered toe bumper featuring diamonds and line patterns; (3) the two stripes on the rubber material just below the (usually canvas) upper; and (4) the relative positions of these elements to each other. Although Converse began selling the Chuck Taylor shoe more than 85 years ago, its midsole design was not federally registered until 2013.
In 2014, Converse filed a complaint in the ITC alleging that several other shoe manufacturers had infringed its trade dress rights in this midsole design. Because some of these accused manufacturers began their alleged infringing behavior before the asserted mark’s 2013 federal registration date (and others after), the Commission had to consider both Converse’s common law and federal rights to its design.
To be protectable, all marks—federally registered or not—must be distinctive of a product’s source. Word marks and product-packaging trade dress may be inherently distinctive if their “intrinsic nature serves to identify a particular source.” But 18 years ago the Supreme Court held that product design trade dress—such as the one at issue here—can never be inherently distinctive; a design of this type is only protectable if it has developed secondary meaning, which occurs when, “in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself.”
The ITC found that Converse’s mark had never acquired secondary meaning, and therefore Converse had no common law rights to the mark and its federal registration was invalid. Despite this finding, the ITC determined that—if the mark were not invalid—it would be infringed. Finally, the Commission refused to enter an exclusion order with respect to any of the accused shoe manufacturers, including those who had defaulted.
After Converse filed an appeal, the Federal Circuit held oral argument in February 2018. Four months later, the Court requested supplemental briefing from Converse, the ITC and the intervenors (the accused manufacturers remaining in the case) on the following questions:
1. Was Converse required to show priority in the mark (i.e., secondary meaning at the time of first infringement) without regard to the presumption of validity that would exist if the trademark registration is valid?
2. What significance does the registration of the mark or its validity have in these proceedings?
3. Was it necessary or appropriate for the ITC to address the validity of the registered mark?
In addressing this first issue—whether Converse may rely on the presumption of its registered mark’s validity, regardless of when the alleged first acts of infringement took place—the panel’s two-judge majority began by noting that in any infringement action, the party asserting trade-dress protection must establish that its mark had acquired secondary meaning before the first infringing use by each alleged infringer. And here, the presumption of secondary meaning given to Converse’s registered mark is effective only as of the date of registration—that is, the date on which the PTO determined that secondary meaning had been acquired. Therefore, Converse enjoys no presumption of secondary meaning before the date of its registration, and it must show that its mark had acquired secondary meaning before the first infringing use by each accused infringer—several of whom began selling the accused athletic shoes years before Converse’s mark was registered.
Next, the Court said that the ITC used the wrong legal standard when it found that the asserted mark had not acquired secondary meaning, and held that on remand, the following six factors must be weighed together in determining the existence of secondary meaning:
(1) association of the trade dress with a particular source by actual purchasers (typically measured by customer surveys);
(2) length, degree, and exclusivity of use;
(3) amount and manner of advertising;
(4) amount of sales and number of customers;
(5) intentional copying; and
(6) unsolicited media coverage of the product embodying the mark.
The majority then addressed the significance of the trademark owner's and third parties' prior uses of the mark (which is relevant to factor 2). The Federal Circuit said that because the secondary meaning analysis primarily seeks to determine what is in the minds of consumers as of the relevant date, the most relevant evidence will be the trademark owner's and third parties' use in the “recent period” before first use or infringement.
But how far in the past is “recent?” The Court pointed to Section 2(f) of the Lanham Act, which suggests that the most relevant time period for this determination is 5 years before the date on which the claim of distinctiveness is made. Because the ITC had relied on evidence far older than this five-year period, it was instructed to reevaluate this older evidence on remand to determine whether it is relevant.
The Court then addressed the issue of whether the trademark owner's use of the mark was substantially exclusive (which is also relevant to factor 2). It criticized the ITC for considering prior third-party uses of shoes with designs that were not substantially similar to the asserted trademark, and instructed the Commission on remand to constrain its analysis (of both Converse's use and the use by its competitors) to marks that are substantially similar to Converse's registered mark.
The Federal Circuit also took issue with the ITC for having placed considerable weight on the intervenors’ survey evidence—dated two years after Converse had registered its mark—to support its determination that the mark had not acquired secondary meaning. The panel said that this survey evidence likely had little relevance because all of the intervenors—the only accused infringers remaining in the case—had begun their allegedly infringing use years before Converse had registered its mark; therefore, the Court instructed the ITC to consider whether Converse's mark had acquired secondary meaning as of each intervenor’s first alleged infringing use.
Judge O’Malley agreed with the majority that the ITC’s ruling should be vacated and remanded, but wrote a lengthy dissent saying that the majority:
(1) misperceives the scope of the ITC's authority to invalidate duly issued intellectual property rights when it addresses the issue of the validity of a registered mark;
(2) blurs the line between the concepts of priority of use under common law and the validity of a registered mark;
(3) espouses advisory—and unnecessary—opinions on the weight to be given certain survey evidence and the question of infringement; and
(4) ignores the ITC's statutory obligation to enter remedies against defaulting parties.
On the issue of the ITC’s authority to invalidate Converse’s federally registered mark, Judge O’Malley explained that the only accused infringers that are still participating in the case (the intervenors) began their alleged infringing activity long before Converse registered its mark; therefore—as a matter of law—the intervenors cannot infringe this registered mark. The only relevant question remaining is which party has priority of use; the validity of the federally registered mark is irrelevant to that question. And because the validity and infringement of Converse’s federal registration is irrelevant to any of the issues remaining in the case, Judge O’Malley criticized as dicta: (1) the majority’s discussion of survey evidence used to attack the registered mark’s validity; and (2) the majority’s discussion of the ITC’s findings that—if valid—Converse’s federally registered mark would be infringed.
Finally, Judge O’Malley argued that ITC is required by statute to grant relief to Converse against the defaulting parties; therefore, the majority should have instructed the ITC to either enter a remedy against all the defaulting parties, or justify its failure to do so.
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