Appeal From the United States District Court For the Eastern District of Pennsylvania D.C. Civil No. 84-3271
1. Shen Manufacturing Company, importers and distributors of a kitchen towel known as the Ritz Flemish Wonder towel, appeals the district court's judgment denying Shen's unfair competition claim brought pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1982).*fn1 Standard Terry Mills, manufacturers of a competing towel, appeals from the district court's denial of their motion for attorneys' fees or a partial new trial on the issue of such fees.
2. Standard Terry originally filed this action requesting a declaratory judgment, invoking the district court's jurisdiction under 15 U.S.C. § 1121 (1982) and 28 U.S.C. § 1338(b) (1982). We have jurisdiction pursuant to 15 U.S.C. § 1121 and 28 U.S.C. § 1291 (1982). Because we hold that the district court did not err in its application of § 43(a) nor abuse its discretion in denying attorney's fees, we affirm.
3. Both parties in this case are Pennsylvania corporations and competitors in the kitchen textile products business. In 1961, the John Ritzenthaler Company designed the Ritz Flemish Wonder towel No. 117 and entered into an exclusive distribution arrangement with Abbeloos & Fils, a Belgium firm that manufactures the towel. The Ritz Flemish Wonder towel is made from a weave designated in the industry as "glass type," made from a huckaback weave. This weave is characterized by white squares of relatively coarse material enclosed by stripes of plain, or smooth material.*fn2 This particular weave produces a strong but absorbent towel that requires no ironing. Shen acquired the John Ritzenthaler Company sometime in late 1960 or early 1961.*fn3
4. In 1984, Standard Terry began to manufacture a towel that it concedes is a copy of the Ritz Flemish Wonder towel that Standard Terry calls the Supra-Weave towel. Like Shen's towel, the Supra-Weave towel is a glass type towel made of 100% cotton. Both towels feature a similar "windowpane check" pattern created by coloring the stripes of plain weave surrounding the huckaback weave. The differences between the two towels are relatively minor. The Supra-Weave towel is smaller than the Ritz towel, woven in a two-ply as opposed to a one-ply construction, and the colored stripes are slightly brighter. The towels also differ in that the Ritz Flemish Wonder towel has both horizontal and vertical border stripes while the Supra-Weave towel has only a horizontal border stripe. The labels on the towels differ completely in appearance.
5. In early June 1984, Shen discovered Standard Terry's Supra-Weave towel at a trade show in New York City. On June 11, Shen's counsel wrote Standard Terry asserting Shen's common law trademark claim in its towel under § 43(a) of the Lanham Act and demanding that Standard Terry cease marketing the Supra-Weave towel. After further communications between counsel proved unavailing, Standard Terry brought the instant action for a declaratory judgment in Montgomery County Court. Shen successfully moved for removal to the United States District Court for the Eastern District of Pennsylvania, and counterclaimed for injunctive relief against Standard Terry.
6. After a bench trial the court held that both the weave and the windowpane check pattern of the Ritz Flemish Wonder towel were functional and therefore could not be protected under § 43(a) of the Lanham Act.*fn4 The court relied on our discussion of the doctrine of "aesthetic functionality" in Keene corporation v. Paraflex Industries, 653 F.2d 822 (3d Cir. 1981) ("Paraflex Industries"), in reaching its conclusion that the towel's trade dress did not qualify for § 43(a) protection. The court also denied Standard Terry's application for attorneys' fees under § 35 of the Lanham Act, 15 U.S.C. § 1117 (1982).*fn5
7. To succeed in a claim of trade dress infringement, Shen needed to prove: (i) that the Ritz Flemish Wonder towel's trade dress is nonfunctional; (ii) that its trade dress had acquired a secondary meaning among consumers as a means of identifying the source of the product; and (iii) that public was likely to confuse the Ritz Flemish Wonder with the Supra-Weave towel. See Freixenet, S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 151 (3d Cir. 1984). The district court decided this case on the basis of its evaluation of the first factor.
8. The functionality doctrine accommodates the twin purposes behind the Lanham Act. It protects the manufacturer (and the consumer) from the copying of those features that signify a product's source (and quality) and encourages competition by preventing one manufacturer from acquiring a monopoly by attempting to trademark those features of a design essential to a successful product of that type. See W.T. Rogers Co. v. Keene, 778 F.2d 334, 338-39 (7th Cir. 1985); Paraflex Industries, 653 F.2d at 824. As we previously have observed,
the essence of the question [of functionality] is whether a particular feature of a product or service is substantially related to its value as a product or service, i.e., if the feature is part of the "function" served, or whether the primary value of a particular feature is the identification of the provider.
United States Golf Association v. St. Andrews Systems, 749 F.2d 1028, 1033 (3rd Cir. 1984), citing Morton-Norwich Products, Inc., 671 F.2d 1332, 213 U.S.P.Q. (BNA) 9 (C. C.P.A. 1982); see Ives Laboratories, Inc. v. Darby Drug Co., 601 F.2d 631, 643 (2nd Cir. 1979) (functional features are those that prove "an important ingredient in the commercial success of the product" rather than simply an ...