Trade Dress Series, Part 5: Trade dress infringement

Part 1 of this series introduced trade dress in restaurants and Part 2 took a closer look at restaurant décor as trade dress. Part 3 explored how courts across the country apply different tests when evaluating whether there has been an infringement and how the law is interpreted and applied here in New York and the Second Circuit. Part 4 took a look at functional features of décor and explain how they are not protected by trade dress law. This article will address trade dress infringement.

Copying trade dress is a form of unfair trade practices. Trade dress infringement cases are a real threat to restaurateurs. Gone are the days when you hire an interior designer to create a trendy visual appearance for your restaurant, you open your doors, and you become the local “in” place. Business is now as much defense as it is offense. New restaurant owners are being forced to be highly defensive in developing décor schemes to avoid liability, often seeking legal opinions for the right to use a particular décor theme. New entrepreneurs cannot afford the risk of litigation against the deep pockets of a national restaurant chain or celebrity-owned establishment. Before construction begins, new restaurant owners often conduct market studies of existing restaurant decors in the nearby market and national chains, comparing the features of their intended décor with those of existing establishments. They also assess the functionality of the features within the whole design and whether they are inherently distinctive design elements.

What is trade dress? No, it is not the employees’ uniforms. It is the “product packaging” of your eatery. It’s the one-of-a-kind look of the place. It’s uncommon and distinctively recognizable by customers. It includes everything that is part of the customer experience, but for simplicity in our discussion, we’ll refer to it as “restaurant décor.”

Let’s look at the trade dress of the national chain Fuddruckers as an example of what encompasses trade dress and the issues surrounding infringement. In 1987, the Fuddruckers chain claimed that Doc’s B.R. Others, Inc. (“Doc’s”) had copied its distinctive décor, menu layout, and style of service. Fuddruckers has claimed trade dress rights in the concept of open food preparation areas visible to customers, glassed-in display cases for its various food items, bulk storage of food items in customer areas, use of bulk size containers for its soft drinks, cheeses in crockpots, and institutional-sized containers of condiments. Fuddruckers also uses ubiquitous two-by-four white tiles on its walls, bar, and counters, as well as neon signs, many mirrors, brown and white checked flooring and tablecloths, directors chairs and exterior yellow awning. Fuddruckers asserted that Doc’s was trying to copy these distinctive features to capitalize on its successful business model. On appeal, the Ninth Circuit favored Fuddruckers, finding the overall trade dress inherently distinctive.

One of the key factors in the Fuddruckers case was that the owners of the competitor had visited several locations of the chain and had even considered purchasing a franchise. When their own restaurants looked quite similar, an inference of bad faith intent was not hard to find. Fuddruckers was undeniably their model, or at least a strong inspiration.

To be infringing, the trade dress of the competitor must create a likelihood of confusion, meaning that consumers could reasonably be confused by which restaurant they had entered. So, how is “likelihood” established? Well, as a first matter, the existence of actual confusion will establish that it was not only likely but was in fact experienced by consumers. Courts will also look to the objective intent (Read: Did the competitor do it on purpose?) of the competitor to copy the décor theme, the similarities of the décor themes, similarities of the marketing channels, and the strength of the consumer’s association of the décor theme with the brand it represents.

The courts have stated that menu, restaurant layout, and service style are protectable aspects of a restaurant design. So in the Fuddruckers case, the attorneys argued that Fuddruckers had brown and white checkered patterns and Docs had black and white and larger checkered patters. It is a legal argument, but I am not personally convinced this is a particularly defining difference. There is a three-part analysis:

1. Is it functional?

2. Is there consumer recognition (secondary meaning)?

3. Is there likelihood of confusion?

A restaurant would not be able to claim a particular color and try to prevent other eateries from using that color. However, a distinctive combination of colors, and especially in a particular pattern, can be distinctive enough to earn trade dress protection. The ultimate issue is whether checkered patterns were strongly associated by the public with the Fuddruckers brand. Checkered patterns are fairly common in kitchens and restaurants, so I think this would be an uphill battle. (But that’s what attorneys are for, anyway!)

The question in a trade dress case is “Does a consumer think the eatery is operated by the competitor?” A key factor is whether the eateries advertise in the same trade channels and to the same clientele. What about the case of two eateries which are in different and distant markets? In this situation, it is possible for them to co-exist. What if a national chain has not entered a particular market and wants to enjoin the competitor newcomer from using a similarly styled décor because it may later want to enter that market? In order to prevent the newcomer from using a similar, or even identical, restaurant décor, the national chain must establish that its décor was recognized among some substantial portion of consumers nationally. Unless it is nationally recognized, it can’t be nationally protected. If there is no likelihood of confusion, the competitor may not be enjoined even if the national chain’s trade dress is protectable and is popular and recognizable in remote markets. Thus, if a chain is well-known on one coast but relatively unknown on the other coast, a similar decor theme would likely be permitted, since consumers would not be confused if they were not familiar with the chain.

It is not necessary that every location of a chain be identical. However, there must be common design elements that customers come to recognize with the brand. What are design elements that might be considered trade dress? Let’s look at Fuddruckers again. The restaurants feature openly visible food preparation areas – from the butchery, to the grill, to the bakery. Customers are entertained by the preparation of the fresh food. The chain also featured bulk-style service of condiments, drinks, and other food items. Warehouse-style stacking of cartons in the dining and service areas added to the trendy ambiance.

My favorite part of their theme is the bakery name “Mother Fuddruckers.” (I can’t help but smile at the obvious inference.)

The chain claimed several other design features. Frankly, some of them would probably not pass legal muster because they are not functional or not particularly unique in the restaurant industry: neon signs, mirrors, checkered floors and tablecloths, yellow awnings, and a PA system to call customer orders. The features also include paper-lined trays as serving platters, video games near the restrooms, French doors between dining rooms, bulk ice cream display cases, over-sized stacked napkin holders, and interior canvas awnings to give an “outdoor feel.”

On the other hand, some of the Fuddrucker’s claimed trade dress elements are more distinctive: director-style chairs, a proprietary newspaper at the table, and the sale of bones for dogs (yes, actual meat bones, and the proceeds are donated to animal shelters).

It is important to understand that it is not any individual design element, but the entire package together as a complete experience. The trade dress is the “look and feel” of the eatery as a whole, its “visual image” to the public. Thus, elements that are functional can be combined in a unique way that they become unique in combination.

A trade dress clearance search can be a cost-effective investment to protect against costly cease and desist injunctions that may close the doors of your new eatery for weeks or months, detrimentally impacting both your reputation and your pocketbook.

However, if you find yourself on the wrong end of a cease and desist demand, you will want to bring your attorney documents that tend to show no copying intent and how you independently developed your decor and theme. You will also want to bring pictures and videos that depict identifiable differences between the two establishments that would be distinctive enough to avoid a potential customer from thinking he was in the competitor’s establishment. It will also be helpful to discuss how the allegedly protected décor design elements are functional or that you would be severely disadvantaged by any limitation on that particular element because of the lack of other comparable equivalents or substitutes. It is also helpful to show that the feature is commonly used (not unique or arbitrary). These are all good defenses to the claims being asserted against you.