Flexible Steel Lacing Company v. Conveyor Accessories, Inc.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION FLEXIBLE STEEL LACING CO., ) Plaintiff/Counter-Defendant, ) No. 17 C 5540 v. ) ) □ Chief Judge Rubén Castillo CONVEYOR ACCESSORIES, INC., ) Defendant/Counter-Plaintiff. MEMORANDUM OPINION AND ORDER Plaintiff/Counter-Defendant Flexible Steel Lacing Co. (“‘Flexco”) brought this action for trade dress infringement and unfair competition. (R. 1, Compl.) Flexco alleges that Defendant/Counter-Plaintiff Conveyor Accessories, Inc. (“CAI”) infringed its registered and common law trade dress by promoting and selling conveyor belt fasteners having a non- functional product configuration confusingly similar to that belonging to Flexco. (/d. J 2.) Before the Court is CAI’s motion for summary judgment of invalidity (R. 71, Def.’s Mot.), and Flexco’s motion for partial summary judgment on CAI’s declaratory judgment counterclaim and its affirmative defense of unclean hands (R. 80, PI.’s Mot.). For the reasons discussed below, CAI’s motion is granted, and Flexco’s motion is denied as moot. RELEVANT FACTS The following facts are undisputed unless otherwise stated. Flexco is an Illinois corporation with its principal place of business in Downers Grove, Illinois. (R. 83-1, Pl.’s Resp. Def.’s SOF { 1.) CAI is a Delaware corporation with its principal of business in Burr Ridge, Illinois. (Jd. §] 2.) Flexco sells rivet hinged fasteners for connecting the ends of conveyor belts together. (/d. 6-7.) The Flexco fasteners attach to each of the two ends of a conveyor belt by inserting rivets through each aperture on the top of the upper surface of the fastener. Ud. { 8.) The choice of an appropriate hinged fastener in various operations involves considerations such as the tensile strength of the belts employed and the pulley diameters in the conveyor drive system. (id. | 9.) A fastener is designed to provide strong holding capacity for its particular application without being too thick so as to ensure that it avoids interfering with the pulleys, belt cleaners, and other conveyor belt components. (/d.) To avoid catching on other components, Flexco’s fasteners have traditionally been coined or beveled. (R. 83-1, Pl.’s Resp. Def.’s SOF { 36.) In 1997, Flexco modified its fastener from a straight beveled leading edge, to a scalloped leading edge. (/d. JJ 10, 35.) Flexco’s then-engineer manager Edward Musil was involved in the development of the scalloped leading edge fastener. Ud. F§ 34, 35.) At the time, he explained that the “main purpose of a scalloped edge will be to prevent fasteners from getting scraped off by the cleaner.”! (Jd. 4 35.) He also visited a testing site in 1998 and observed that the scalloped fastener had a “noticeably gentler impact with the various cleaners,” than the straight edge one, and that mine personnel believed it would result in longer lives of the conveyor belt splice and cleaner blades. (/d. § 38.) Flexco engineers also tested the configuration and determined it performed better or at least equal to its conventional straight leading edge fastener. (Jd. { 39.) Flexco’s president Rick White testified, however, that the reason for introducing the scalloped edge of other fasteners was to differentiate the Flexco ' The Court finds that the parties’ references to this document and several others discussed in this paragraph should not be sealed. Neither the parties’ filings nor their exhibits contain trade secrets (or information from which trade secrets could be copied or reverse engineered), privileged information, or other information required to be confidential. Baxter Int'l v. Abbott Labs., 297 F.3d 544, 545 (Although the parties’ confidentiality agreement might suffice at the discovery stage, “those documents, usually a small subset of all discovery, that influence or underpin the judicial decision are open to public inspection unless they meet the definition of trade secrets or other categories of bona fide long-term confidentiality.”). product from competition. (R. 90-1, Def.’s Resp. Pl.’s Add’1 SOF 1.) Mr. Musil similarly testified that the scalloped shape was selected because “it looked good.” (R. 83-1, PI.’s Resp. Def.’s SOF § 35.) In 1997, Flexco filed a patent application with the U.S. Patent and Trademark Office (“USPTO”). (Id. at § 10.) The application issued in April 2000 as U.S. Patent Number 6,053,308 (“the ‘308 Patent”), and expired in September 2017. (/d.; R. 71-4, ‘308 Patent.) Figure 2 of the ‘308 Patent depicts a belt fastener before riveting the upper and lower plates to a belt: 30 28 2 2 a VE 4 S- “he 8) bejikx = @s SS tor” — 40 (<> Cate E> 4 GS as (E> pober Se ES SN A ‘4 Se Soret S4S The Court finds that Flexco’s response to the complained-of material in CAI’s reply adequately responds to any concerns it had raised in its motion to strike. Accordingly, the motion to strike (R. 95) is denied. reasonable jury could return a verdict for the nonmoving party.” Kvapil v. Chippewa Cty., 752 F.3d 708, 712 (7th Cir. 2014) (quotation omitted). In deciding whether a dispute exists, the Court must “construe all facts and reasonable inferences in the light most favorable to the non-moving party.” Nat'l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717, 723 (7th Cir. 2015) (quotation omitted). Under Rule 56, the movant has the initial burden of establishing that a trial is not necessary. Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 627 (7th Cir. 2014). “That burden may be discharged by showing . . . that there is an absence of evidence to support the nonmoving party’s case.” /d. (quotation omitted). If the movant carries this burden, the nonmovant “must make a showing sufficient to establish the existence of an element essential to that party’s case.” Jd. (quotation omitted). The nonmovant “must go beyond the pleadings (e.g., produce affidavits, depositions, answers to interrogatories, or admissions on file) to demonstrate that there is evidence upon which a jury could properly proceed to find a verdict in [its] favor.” Id. (quotation omitted). “The existence of a mere scintilla of evidence, however, is insufficient to fulfill this requirement.” Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). “[S]peculation and conjecture” also cannot defeat a motion for summary judgment. Cooney v. Casady, 735 F.3d 514, 519 (7th Cir. 2013). “[OJnly disputes that could affect the outcome of the suit under governing law” will preclude summary judgment. Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir. 2001) (quotation omitted). ANALYSIS I. Principles of Trade Dress The Lanham Act protects trade dress, even if it is not registered, and authorizes civil actions against infringers provided the trade dress is not functional. See 15 U.S.C. 10 § 1125(a); Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210 (2000). “[P]atent law alone protects useful designs from mimicry; the functionality doctrine polices the division of responsibilities between patent and trademark law by invalidating marks on useful designs.” Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855, 857 (7th Cir. 2010). Thus, the functionality doctrine seeks to promote competition by preventing trademark law from inhibiting legitimate alternatives by allowing a producer to control a useful product feature. Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 169 (1995). As to unregistered alleged trade dress, the party seeking protection bears the burden of proving that its dress is non-functional. 15 U.S.C. § 1125(a)(3); TrafFix Devices Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32 (2001). On the other hand, registration of a trademark creates a rebuttable presumption of validity that puts the initial burden of proof on the party seeking to invalidate the registered mark. Georgia-Pacific Consumer Prods. LP v. Kimberly- Clark Corp., 647 F.3d 723, 727 (7th Cir. 2011). The presumption, however, “evaporates as soon as evidence of invalidity is presented.” /d. (internal quotation omitted). It is well-established that “‘a product feature is functional and cannot serve as a trademark it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” TrafFix, 532 U.S. at 32 (internal quotations omitted). Although functionality is a factual question, “the bar for functionality is so low that it can often be decided as a matter of law[.]” Arlington Specialties v. Urban Aid, Inc., 847 F.3d 415, 420 (7th Cir. 2017). To determine whether a feature is functional, courts look to the following five 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; [and] (5) the effect of the design feature on an item’s quality or cost. 11 Georgia-Pacific, 647 F.3d at 727-28 (quoting Specialized Seating, Inc. v. Greenwich Indus., LP, 472 F. Supp. 2d 999, 1011 (N.D. III. 2007)). A utility patent, in particular, has “vital significance” in assessing functionality. TrafFix, 532 U.S. at 29 (“[A] utility patent is strong evidence that the features therein claimed are functional.”). As the Seventh Circuit explained, a utility patent is an “excellent cheat sheet” in assessing functionality because “any design claimed in a patent is supposed to be useful.” Jay Franco, 615 F.3d at 857. Accordingly, evidence of functionality based on a prior patent “adds great weight to the statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection.” TrafFix, 532 U.S. at 29-30. “Where the expired patent claimed the features in question, one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device.” Jd. at 30. II. CAI’s Motion for Summary Judgement of Invalidity CAI seeks to invalidate Flexco’s registered and common law trade dress on the ground that they are functional, and invalid as a matter of law. (R. 71, Def.’s Mot. Summ. J.) According to CAI, Flexco admitted as much in its prosecution of its ‘326 and ‘848 registrations, and in any case functionality of the Flexco marks is evidenced by the claims and disclosures of the ‘308 patent, the features touted in Flexco’s advertising, and internal records from Flexco showing testing and evaluations of the beveled scalloped edge. (R.71-1, Def.’s Mem. Supp. Mot. Summ. J. at 12-14.) Flexco opposes the motion, arguing that the functional benefits to which CAI points do not arise from the shape of the fastener, but instead from other features, (R. 83, Pl.’s Resp. at 8-11.) According to Flexco, CAI misconstrues both the ‘308 patent and Flexco’s advertising statements to make it seem like the entirety of the fastener shape is functional, when instead its 12 marks and alleged trade dress only accommodate useful functions of the fastener or are ornamental and source-indicating. (/d. at 3-5, 12-13.) Indeed, Flexco says, the «308 Patent is simply a red herring, as it was only for a different, smaller fastener, and does not apply to the configurations it asserts here. (/d. at 12.) Relying heavily on the availability of alternative designs and its asserted reason for the scallop in its smaller fasteners, Flexco argues it has provided sufficient evidence of a factual dispute regarding functionality to withstand the present motion. (/d. at 12-13.) The Court begins with consideration of whether the ‘308 Patent disclosed the alleged trade dress features as functional, or whether their reference appears just incidentally. According to CAI, the *308 Patent describes the functional benefits of Flexco’s beveled scalloped edge. (R.71-1, Def.’s Mem. Supp. Mot. Summ. J. at 6-7, 12-14.) According to Flexco, the ‘308 Patent does not read on its trademark shapes but only applied to its smaller fastener with teeth, the R2, and any utility of the “leading edge” in its patent refers only to the fastener’s outermost tips (“shoulders”) and not its entire edge (“mustache’’) or interior shape (“smile”). (R. 83, Pl.’s Resp. at 3-5, 12-13; R. 95, Pl.’s Mot. Strike or Surresp. at 3-5.) Flexco depicts these features like so: = Leading edge\ oN shoulder G&S. Se a Beveled Smile 13 (OO) @— Wustache = Mustache (R. 83, Pl.’s Resp. at 4-5.) In support of its position, Flexco emphasizes that the drawings of the ‘308 Patent, and in particular Figure 2 of the patent, do not show the center, curved smile section of the fastener as beveled. (R. 83, Pl.’s Resp. at 12.) It argues that even as to the outline of the fastener, or its edge (the mustache), beveling is not claimed by the patent but rather disclosed as prior art. (/d. at 12- 13.) According to Flexco, its larger fasteners were only scalloped to “look good,” as opposed to its smaller fastener, which was scalloped for the specific purpose of enabling it to fit with a larger five-rivet applicator tool. (/d. at 13.) The focus of the Court’s review of the ‘308 Patent, however, is not limited to whether it only covers a particular fastener, but rather, whether it discloses the utilitarian advantages of the particular features Flexco now alleges as trade dress. See TrafFix, 532 U.S. at 30-31. At issue in TrafFix was a claim of trade dress infringement of the design of plaintiff's dual spring mechanism for use in outdoor signs that had been the subject of a prior utility patent. Jd. at 25- 26. Notably, the fact that the dual spring device as disclosed in the patent looked “very different” from the plaintiff's purported trade dress did not affect the Court’s analysis in finding the feature functional. /d. at 30. Instead of focusing on whether the product fell within the terms of the prior patent, the Court focused on the utilitarian aspects of the dual spring feature and whether it 14 served the same purpose as in the patented design. Jd. at 32. Similarly in Jay Franco, the Seventh Circuit rejected an argument that a prior patent for a similar product did not trigger the TrafFix presumption of functionality where the product would not have infringed on the prior patent. See Jay Franco, 615 F.3d at 858. As the Seventh Circuit explained, “[fJunctionality is determinized by a feature’s usefulness, not its patentability or its infringement of a patent.” Jd. Viewing the ‘308 Patent through this lens, the Court concludes that it discloses the utilitarian advantages of the features Flexco asserts as trade dress. The claims of the patent cover the scalloped leading edge described in the specification. (R. 83-1, Pl.’s Resp. Def.’s SOF 15; R. 71-4, ‘308 Patent col. 12, Ins. 24-33.) The specification discloses the functional advantages of beveling for “improved belt gripping and for a lower lead-in profile.” (R. 71-4, ‘308 Patent col. 10, In 18-22.) The disclosure is not limited to a portion of the edge, but instead explains that “the outboard edges 44 and 46 of the present two rivet fastener 14 are similarly beveled for biting into the belt carcass.” (/d. at col. 10, Ins 22-24.) In turn, Numbers 44 and 46 are described in the ‘308 Patent as the “scalloped outboard edge 46,” and the “outboard edge 44 of the upper plate 24 can be similarly scalloped.” (/d. at col. 10, In 31-39, 45-46.) The ‘308 Patent also discloses the functional advantage of scalloping, so that “there is less plate material spaced from the rivet apertures 32 such as if the edge 46 extended straight across between the outer peaks of the outer curve sections 88,” as well as “the bite thereof. . . is improved,” as is the “lead in profile for being engaged by scraper blades that clean the belt.” (/d. at col. 10, In 40-49.) While the ‘308 Patent claims that the scallop allows a two-rivet fastener to be inserted into a five-rivet fastener applicator as Flexco emphasizes, it also claims that the scallop “reduce[s] the amount of plate material spaced from the apertures so that with the fastener riveted onto the belt end, the 15 contoured edge bites into the corresponding belt surface for a lower profile for the fastener and additional belt griping and tensile force resistance.” (/d. at col. 12 Ins. 27-38.) Flexco’s arguments notwithstanding, the express language of the patent makes clear that neither its scope nor the functional benefits described therein are limited to a two-rivet fastener. For example, independent claim 1 has no limitation on the number of rivets, while dependent claim 4, which depends on claim 1, has the additional limitation of a “two-rivet fastener.” (/d. at col. 11, In 49-col. 12, In 14, col. 12, In 33-38.) See Liebel-Flarshhein Co. v. Medrad, Inc., 358 F.3d 898, 910 (Fed. Cir. 2004) (“As this court has frequently stated, the presence of a dependent claim that adds a particular limitation raises a presumption that the limitation in question is not found in the independent claim.”). Second, the patent specifically explains in the summary of the invention that “[w]hile the hinged fastener described herein has two rivets and two teeth, it will be recognized that different numbers and types of fastener members . . . can be utilized. Thus, belt fasteners using more than two rivets . . . will still fall within the purview of this invention.” (R. 71-4, ‘308 Patent at col. 3, Ins. 13-20.) Similarly, the fact that the drawings depict a fastener with two rivets does not limit the disclosures of the patent, but instead demonstrates only a preferred embodiment. (/d. at col. 5, Ins. 47-48 (“[T]he rivet-hinged fasteners 14 herein preferably only utilize two rivets.”).) Moreover, neither Mr. Westphall nor Mr. Musi!’s opinion as to what the patent teaches can override its plain language. See, e.g., Howmedica Osteonics v. Wright Med. Tech., 540 F.3d 1337, 1346-47 (Fed. Cir. 2008) (inventor testimony as to intent is irrelevant to claim construction); Markman v. Westview Instruments, Inc., 52 F.3d 967, 983 (Fed Cir. 1995) (en banc) (patentholder’s opinion on claim construction that conflicts with plain language of patent does not create a question of fact). (E.g., R. 71-4, ‘308 Patent at col. 12 Ins 24-39.) Because the 16 ‘308 patent discloses the utilitarian advantages of the features Flexco claims as trade dress, it is strong evidence that those features are functional. This strong evidence of functionality is bolstered by Flexco’s own advertisements touting the benefits of its beveled scalloped edge fasteners. See Jay Franco, 615 F.3d at 859. Flexco’s marketing materials declared, “The scalloped design contributes to improved fastener profile resulting in increased compatibility with belt cleaners and improved cleaner-tip wear.” (R. 83-1, Pl.’s Resp. Def.’s SOF 24.) Flexco marketed its fasteners as featuring a “Low-profile Scalloped Edge ™ design that reduces hang-ups on cleaners, pulleys, etc.” (Jd. 26.) Flexco specifically noted, “The patented Scalloped Edge provides for a lower fastener profile to extend belt splice life and reduce exposure to belt cleaner backs and other conveyor components.” (/d. | 27.) These are the same functional benefits that are disclosed in the ‘308 Patent. Notably, Flexco’s advertisements did not distinguish what Flexco now calls the shoulders or smile from the rest of its leading edge or attribute functionality to anything other than its shape. (E£.g., id. 24-27.) Instead, the functionality of the features Flexco now asserts as trade dress is “unequivocally linked to [the] functional benefits” promoted in Flexco’s advertisements. See Georgia-Pacific, 647 F.3d at 730. Further, Flexco acknowledged these same benefits both in internal communications and in sworn declarations submitted to the USPTO in pursuit of its trademark registration. (/d. J§ 30, 31, 35, 38.) In specific response to the question of whether the “shape of the goods contribute[s] to the quality of the goods,” Mr. Westphall declared: “Yes, the overall shape of the goods contributes to the quality of the goods as it reduces the fastener’s exposure to cleaner blades, skirt rubber and return idlers. The overall shape also allows for reduced wear and tear on the fastener, which extends the life of the splice to maximize belt availability.” Ud. 931; R. 71-15, 17 Westphall June 11, 2015 Decl.) As with its advertising, no distinction was made as to any components of the overall shape. Instead, Mr. Westphall asserted then, as Flexco does now, that the availability of alternative designs to achieve the same function defeats a finding of functionality. (R. 71-15, Westphall June 11, 2015 Decl; R. 83, Pl.’s Resp. at 7, 11.) The problem for Flexco is that the availability of alternative designs to achieve the same function as its beveled scalloped leading edge fails to create a factual issue on functionality once the asserted feature is demonstrated to be functional. See, e.g., Specialized Seating, Inc. v. Greenwich Indus., LP, 616 F.3d 722, 727 (7th Cir. 2010). Instead, as the Seventh Circuit explained, the availability of alternatives in such a situation demonstrates that “all of the designs are functional, in the sense that they represent different compromises” to a problem. Jd. This case is not like Bodum USA, Inc. v. A Top New Casting, Inc., a case upon which Flexco heavily relies. See Bodum USA, Inc. v. A Top New Casting, Inc., No. 16 C 2916, 2017 WL 6626018 at *9 (N.D. Ill., Dec. 28, 2017). In Bodum, the Court found a question of fact precluding summary judgment where the plaintiff claimed trade dress protection for the “overall design” of its coffeemaker which had never been the subject of a utility patent, despite that certain individual features included in the claimed trade dress had been patented and were functional. /d. at *9. To the contrary here, the utility of the very features Flexco asserts as trade dress is demonstrated by Flexco’s prior patent, its advertising, and its statements to the USPTO. Where functionality is established, the Court need not consider whether other design possibilities are available. TrafFix, 532 U.S. at 33; Arlington Specialties, 847 F.3d at 420. Flexco’s reliance on the ‘749 Patent also does not raise a triable issue since it does not reflect the same features Flexco asserts as trade dress. While a design patent “may be some evidence of non-functionality,” there must be “identity between the design patent and the 18 asserted trade dress configurations. In re Becton, Dickinson & Co., 675 F.3d 1368, 1375 (Fed. Cir. 2012); see also Georgia-Pacific, 647 F.3d at 729 (“[L]ike a trademark, design patents do not preclude a finding of functionality.”). As the Seventh Circuit recently reiterated, “Under TrafFix Devices, Specialized Seating, and Georgia-Pacific, the right question is whether the design feature affects product quality or cost or is ‘merely omamental.’” Arlington Specialties, 847 F.3d at 420. Here, Flexco answered that question when it acknowledged that its leading, beveled scalloped edge contributes to the quality of its product. (R. 83-1 Pl.’s Resp. Def.’s SOF 7 31; R. 71-15, Westphall June 11, 2015 Decl.) See TrafFix, 532 U.S. at 32-33. (“[A]product feature is functional, and cannot serve as a trademark, if it is essential to the use of purpose of the article or if it affects the quality of the article.” (internal quotation omitted)). Neither Mr. Musil nor Flexco’s president and CEO Richard White’s testimony that the scallop was chosen to be ornamental and source-indicating raises an issue of material fact from which a reasonable jury could return a verdict in Flexco’s favor. “[A] functional aspect of the design cannot be trademarked, even if it also . . . identifies the product’s source.” Eco Mfg. LLC v. Honeywell Int'l, Inc., 357 F.3d 649, 651 (7th Cir. 2003). On this record, Flexco is unable to carry its heavy burden to come forward with evidence showing a triable issue of fact that its asserted trade dress is non-functional. See TrafFix, 532 U.S. at 29. Accordingly, Flexco’s trademarked shapes and alleged common law trade dress are functional and invalid under the Lanham Act. CAI’s motion for summary judgment is therefore granted. Absent a protectable claim under the Lanham Act, Flexco’s common law and state law claims necessarily also fail. 19 Flexco’s Motion for Partial Summary Judgment Because the Court grants CAI’s motion for summary judgment of invalidity, which disposes of Flexco’s complaint, its motion for partial summary judgment on CAI’s declaratory judgment counterclaim and affirmative defense of unclean hands (R. 80, Pl.’s Mot. Partial Summ. J.) is denied as moot. CONCLUSION For the foregoing reasons, Defendant/Counter-Plaintiff CAI’s motion for summary judgment (R. 71) is GRANTED, and Plaintiff/Counter-Defendant Flexco’s motion for partial summary judgment (R. 80) is DENIED as moot. Flexco’s motion to strike certain portions of CAI’s reply in further support of its summary judgment (R. 95) is DENIED. Defendant/Counter- Plaintiff's CAI’s remaining counterclaims are DISMISSED as moot. The clerk of court is DIRECTED to enter final judgment in favor of Defendant/Counter-Plaintiff CAI and against Plaintiff/Counter-Defendant Flexco on Plaintiffs complaint. ENTERED: KEE, (s=- Chief Judge Rubén Castillo United States District Court Dated: May 2, 2019 20