The U.S. Court of Appeals for the Seventh Circuit upheld a decision by the district court finding the design on quilted toilet paper to be functional. The case, brought under the Lanham Act, 15 U.S.C. §§ 1051, et seq, involved Georgia-Pacific Company's QUILTED NORTHERN brand toilet paper and Kimberly-Clark Corporation's COTTONELLE brand toilet paper. Background of the Parties and Their Products Georgia-Pacific has been selling toilet paper since 1902, and rebranded that paper as Quilted Northern in the 1990s. The brand emphasizes a diamond-shaped embossed design that is on the paper itself, giving it a quilted appearance. Georgia-Pacific has received trademarks, copyrights, utility, and design patents for this design. The design that is the subject of the trademarks is also the subject of five utility patents. In 2008, Georgia-Pacific discovered that Kimberly-Clark, one of its main competitors in the toilet paper industry, had redesigned its Cottonelle Ultra and Scott Kimberly-Clark Professional bath tissues. Both products used a quilted design, which Georgia-Pacific believed to be very similar to its Quilted Diamond Design. Georgia-Pacific sued Kimberly-Clark for trademark infringement and unfair competition under the Lanham Act, and Kimberly-Clark moved for summary judgment arguing that the diamond design is functional and, therefore, not protectable. The district court granted that motion, and Georgia-Pacific appealed. Court Finds Quilted Design Functional The Seventh Circuit explained that although the Lanham Act creates a rebuttable presumption that a registered trademark is valid, once the defendant presents evidence of invalidity, the presumption disappears. The court further explained that functionally can be decided by the court in appropriate cases and that functionality applies whether or not the trademark is incontestable. To determine functionality, courts will look to the following factors: (1) the existence of a utility patent, expired or unexpired, that involves or describes the functionality of an item's design element; (2) the utilitarian properties of the item's unpatented design elements; (3) advertising of the item that touts the utilitarian advantages of the item's design elements; (4) the dearth of, or difficulty in creating, alternative designs for the item's purpose; (5) the effect of the design feature on an item's quality or cost. Georgia-Pacific at 6 (citations omitted). — The Existence of a Utility Patent Kimberly-Clark argued, and the court agreed, that Georgia-Pacific's utility patents overlapped with its trademarks and were "strong evidence of functionality" because a design claimed in a utility "patent is supposed to be useful." Id. at 6-7. The district court had found that the patents themselves referred to a tangible product—toilet paper—and not the process to create the paper. Moreover, the essential trademark feature is the quilted design, which is then embossed on the toilet paper. "Unfortunately for Georgia-Pacific, all five utility patents disclose a diamond lattice design filled with signature bosses and claim the benefits of this design as the 'central advance.'" Id. at 7-8. Georgia-Pacific argued that the quilted pattern was incidental, requiring the court to go beyond the patent claims to the specifications. Doing so, the Seventh Circuit stated that the patents' "all refer to the Quilted Diamond Design's utilitarian benefits of softness, bulk, and non-nesting." Id. at 9. The patents further claimed that the design was the "most preferred embodiment." Id. "And while the preferred embodiment alone is not definitive of functionality, the language Georgia-Pacific uses in the preferred embodiment (a lattice pattern filled with hearts and flowers) matches the language in the claims (a lattice structure and diamond-shaped cells)." Id. As to expert testimony and whether that could create a question of fact, the court explained that such testimony was unnecessary because it could "readily discern the scope and content of the utility patents at issue from the drawings, specifications, and claims." Id. at 10. Georgia-Pacific also argued that while the design may have been functional at one time, it was no longer functional. The court explained that the passage of time can make ornamental a design that was once functional. In the other words, time can diminish the utility patent's significance as an indicator of functionality. Here, however, the utility patents were still valid and as such, the first factor weighed in favor of functionality. — Georgia-Pacific's Advertising Finding the second factor inapplicable, the court next discussed the third factor, which is whether the advertisements touted the utility of the design: Georgia-Pacific's advertisements include the following claims: (1) "Quilted to Absorb"; (2) "Quilted to create thousands of places for moisture to go"; (3) "Our two softest layers of premium tissue are gently quilted together to give you and your family exceptional softness and comfort"; and (4) "Quilted Northern Ultra with a unique new quilted design for more quilting and comfort than ever before." Id. at 12. Georgia-Pacific claimed that the statements were mere puffery, but the district court had found that the statements were linked to a utilitarian advantage. Georgia-Pacific also claimed that these statements create a genuine issue of fact, but the Seventh Circuit disagreed, stating that the advertisements were clear and touted the usefulness of the design. — Availability of Different Designs and Affect on Quality As to the availability of different designs, the court found that the pattern could still be functional even if there were other patterns that could be used if that pattern represents one solution to a problem. Finally, the court also found that Georgia-Pacific's own claims were directed to the improved quality of the toilet paper, and therefore, the advantages affected the cost and quality of the product. Accordingly, the court found that Kimberly-Clark presented strong evidence of functionality and that Georgia-Pacific failed to prove the design was incidental. Moreover, if the design is functional then Kimberly-Clark could use that design not only on the product, but also on the product's packaging. Thus the court affirmed the district court's decision that the mark is functional and not entitled to trademark protection.
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