The Third Circuit recently decided one of the most significant cookie cases in recent memory. In a unanimous decision, the court affirmed a lower court finding that Pocky are not deserving of trade dress protection because their shape is functional, rather than indicative of their source. The court rejected a too-narrow construction of the limitations on trademark protection for fear of blurring the lines between patent and trademark protections.
Any circuit court of appeals decision that begins with the line “This is a tale of more than just desserts,” and ends with the line “That’s the way the cookie crumbles” is going to get a blog post on this site. That is my solemn pledge to you. And so it is with Ezaki Glico Kabushiki Kaisha v. Lotte International America Co, an opinion of the Third Circuit filed on January 27, 2021.
I had no idea what Pocky were before I moved to New York. The first time someone offered me one out of a box, I thought, “A cookie stick partially coated with chocolate? Genius.” As a life-long and maniacally prolific cookie-eater, I was surprised to learn from this case that Pocky have been sold in the U.S. since 1978 through a subsidiary of the plaintiff, Japanese confectionery company Ezaki Glico. Five years later, the defendant, Lotte, began selling what looked like Pocky knockoffs called “Pepero.” Naturally, Ezaki Glico objected to the competition and tried to keep it in check by registering Pocky product configurations as trade dresses, by securing a utility patent for a “Stick Shaped Snack and Method for Producing the Same,” and by sending Lotte cease and desist letters. Finally, in 2015 Ezaki Glico sued Lotte in federal court for trademark infringement and unfair competition, under both state and federal statutes. The district court granted summary judgment to Lotte, finding that Pocky’s product configuration was functional, and therefore not protectable as trade dress.
Any lawyer who has ever had to explain to someone that you can’t “patent” a company logo, or “trademark” an invention will appreciate Judge Bibas’s concise explanation of the differences between these two types of intellectual property protections. Utility patents protect “new and useful” inventions for 20 years. Design patents protect “new, original and ornamental designs” for 15 years. Trademarks, on the other hand, protect words, names, symbols or devices that serve to identify the source of goods sold (e.g. the Nike “swoosh”). Trademark law also protects trade dress, which is the “overall look of a product or business,” including, for example, a product’s packaging, design, size, shape or color (e.g. the classic curvy glass Coke bottle). Crucially, trademark protection, unlike patent protection (or copyright protection for that matter), never expires. For this reason, as the court put it, “We are careful to keep trademark law in its lane.” If businesses are able to secure trademark protection for products that only deserve at most patent protection, they would be gifted an unfair advantage in the marketplace.
The key word in the Pocky case was “functional.” Federal trademark law prohibits the registration of marks that are “functional.” A party accused of infringing a registered trademark is permitted to do so on the basis that the mark is “functional.” The holder of an unregistered trademark must show that the mark is not “functional.” If Lotte could show that Ezaki Glico’s trade dress protections covered an aspect of Pocky that was “functional,” it would prevail. The court flipped open a dictionary and interpreted “functional” as “designed or developed chiefly from the point of view of use.” Or, simply, as “useful.” As the court noted, this makes sense when you consider that “Utility patents, not trademarks, protect inventions or designs that are ‘new and useful.’”
Ezaki Glico seized on one line from Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 169 (1995) in which the Supreme Court said that a product feature cannot serve as a trademark “if it is essential to the use or purpose of the article” or “affects the cost or quality of the article.” Displaying a splash of creativity and chutzpah, Ezaki Glico argued that this meant that a product configuration was “functional” only if it was essential to the use or purpose of the article. The Third Circuit rejected this narrow reading of the jurisprudence, finding a number of cases that found functionality based on a number of other factors. In any case, doesn’t “essential to the use . . . of the article” just mean “useful to the article”? I’m not sure exactly what rhetorical leverage Ezaki Glico thought it was buying by trying to equate “functional” with “essential.”
With the legal framework in place, the court set about determining whether the design elements of Pocky that were protected by trade dress were, in fact, functional. The question was not whether Pocky itself is functional (of course! You can eat it or use it to operate your remote control), but whether the particular shape and form chosen for Pocky is functional. For example, an armrest is a functional part of an armchair, but could nevertheless be entitled to trade dress protection if it were designed in a way that had nothing to do with functionality, perhaps even at the expense of comfort or cost. It’s a little counterintuitive, but the more that a product’s design improves the cost or quality of a product, the less likely it is to merit trademark protection. Keep in mind that useful innovations are the province of patent, not trademark, law.
The court found that Pocky’s partly uncoated section is intended to be a handle, allowing snackers to eat their fill without getting chocolate all over their hands. This is a useful characteristic of the cookie. Similarly, Pocky’s stick shape makes it easy to hold and easy to pack into boxes to facilitate sharing (as I myself found out lo those many years ago). In one of the most scathing indictments of American laziness ever to appear in the jurisprudence, the court also found that Pocky’s shape was functional because it “lets people eat the cookie without having to open their mouths wide.” My advice to Nabisco: apply for trade dress protection for Mallomars immediately.
The court concluded that Pocky’s trade dress was functional because its features were not “arbitrary or ornamental flourishes that serve only to identify Ezaki Glico as the source.” The takeaway: when you invent a new snack, make sure it’s really hard to eat. That’s why I will soon be introducing the “Shocky,” a porcupine-shaped cookie with electrified chocolate quills.