The Ties That Bind: Second Circuit Rejects Trade Dress for Plastic Bag Closures

December 18, 2017 | Michael C. Cannata | Frank M. Misiti | Intellectual Property

Businesses must give careful consideration to ensuring that their trade dress is not functional.  A determination of functionality is fatal to any claim that a product contains a protectable trade dress.  In Schutte Bagclosures, Inc. v. Kwik Lok Corp., 699 F. Appx. 93 (2d Cir. 2017), the Second Circuit recently underscored the importance of functionality in affirming a District Court’s conclusion that: (1) the design for plastic bag closures sold by Kwik Lok Corp. (“Kwik Lok”) were functional and, thus, not protectable trade dress; and (2) consumers were not likely to be confused by a competing bag closure sold by Schutte Bagclosures, Inc. (“Schutte”).

In Schutte Bagclosures, Inc. v. Kwik Lok Corp., 193 F. Supp. 3d 245 (S.D.N.Y. 2016), Schutte sought a declaration that its plastic bag closures – devices used to secure bags of bread, fruit and pastries – did not infringe any purported intellectual property in the plastic bag closures sold by Kwik Lok.  Schutte also sought a declaration that Kwik Lok’s purported trade dress was invalid, unenforceable and subject to cancellation.  Kwik Lok, in return, counterclaimed, alleging that Schutte and its Dutch parent infringed and diluted Kwik Lok’s trade dress rights.

After a five-day bench trial, the District Court entered judgment in favor of Schutte and its Dutch parent holding that Kwik Lok’s trade dress was functional reasoning that:

[t]he design of the asserted trade dress is essentially a simple square accompanied with an opening through which the bag is closed.  Not only is this design basic and non-ornamental, it is also the most useful shape for the functions served by the bag closure because it contains the most material and therefore is the strongest shape for a closure of that size that is designed to be mechanically attached and constantly manipulated by the end use consumer.  The functionality of the closure has been acknowledged by Kwik Lok in expired utility patents and in promotional materials… [f]inally, the complete absence of competitors who sell alternatives to work in the same machines as the [trade dress] design is powerful evidence of the functionality of the design.

After concluding that Kwik Lok’s trade dress was not enforceable, for completeness, the District Court went on to analyze and reject Kwik Lok’s infringement claims on the grounds that consumers were not likely to be confused based on the competing designs.  Before addressing the more relevant factors for assessing the potential for consumer confusion, the Court observed that the parties did not dispute that: (i) there was no evidence of actual consumer confusion; (ii) Schutte’s products were not inferior to Kwik Lok’s products; and (iii) the “bridge the gap” factor did not apply because Schutte and Kwik Lok already operate in the same market.  The District Court, thereafter, examined the remaining factors used by courts to assess consumer confusion, including:

  1. the strength of the trade dress (favoring Kwik Lok based on the amount of resources expended in support of its product and its substantial sales);
  2. the proximity of the goods (favoring Schutte because Schutte demonstrated that its anticipated distributors would not distribute Kwik Lok’s products);
  3.  the sophistication of the purchasers (favoring Schutte because the purchasers were highly sophisticated); and
  4. bad faith (favoring Schutte because there was no evidence that Schutte intended to deceive consumers).

After analyzing the remaining factors, the District Court concluded that there was no likelihood of consumer confusion. This determination was also based, in part, on the conclusion that the products were not similar when examined in their purchasing context.  Accordingly, even if the product designs are similar, there can be no likelihood of mistaken purchases if the design of the products plays no role in the purchasing process.  Here, the District Court concluded that even though the designs of the products are similar, the labeling and packaging are dissimilar and, thus, reduce any likelihood of confusion.

Based on the above analysis, the District Court determined that Schutte was entitled to a declaration of non-infringement.  Kwik Lok appealed the District Court’s decision to the United States Court of Appeals for the Second Circuit, but the Second Circuit, in a two-page opinion, affirmed the decision for the same reasons contained in the District Court’s opinion.

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