Walmart Stores, Inc. vs. Samara Brothers, Inc. : Commercial Law

1. Summarize the facts associated with Walmart Stores, Inc. v. Samara Brothers, Inc.
Samara is a manufacturer of children's clothing. The core of Samara's business is its line of spring/summer seersucker children's garments. Wal-Mart is a national chain of retail stores which sells a variety of items, including children's clothes.
In 1995, Wal-Mart contracted with Judy-Philippine, Inc. (“JPI”) to have JPI manufacture for Wal-Mart a large quantity of children's seersucker garments to be offered for sale under Wal-Mart's house label, “Small Steps,” in the 1996 spring/summer season. The samples on which the Wal-Mart buyers' orders of JPI garments were based were actually Samara garments. In other words, the Wal-Mart paperwork preparatory for placing an order bears photographs of the garments being ordered, and in many of those photographs the name “Samara” is readily discernible on the hangtags and/or neck labels of the garments.
When JPI manufactured the clothes, it copied sixteen of Samara's garments with some small modifications to produce the line of clothes required under its contract with Wal-Mart. Wal-Mart Stores, Inc. then sold these items in its stores under the “Small Steps” label. Samara holds copyright registrations on thirteen of the sixteen garments copied.
In early June 1996, a buyer at J.C. Penney, one of a number of stores which sells Samara's clothing under contract with Samara, called Samara's offices to complain that she had seen Samara garments on sale at Wal-Mart for a retail price lower than J.C. Penney could charge under its contract with Samara. Samara advised the caller that it did not supply clothing to Wal-Mart.
At that point, Samara representatives investigated the children's clothes racks at Wal-Mart and other similar stores-K MART, Caldor, Hills and Goody's-and determined that garments that appeared to be copies of Samara garments were being sold at each of the stores.
Wal-Mart alone sold the JPI garments under its own house label. The other stores sold the garments under the JPI label, “Cuties by Judy.”

2. Identify the legal question(s) that is under consideration.
The legal question is that Wal-Mart’s case appears to be a narrow opinion devoted to the arcane question of whether federal trade dress protection requires a showing that the trade dress has “acquired” distinctiveness and if there is a protection of infringement registration of trademarks under the Lanham Act, which defines in §45 to include “any word, name, symbol, or device, or any combination thereof [used or intended to be used] to identify and distinguish [a producer’s] goods . . . from those manufactured or sold by others and to indicate the source of the goods . . . .” 15 U. S. C. §1127. Registration of a mark under §2 of the Act, 15 U. S. C. §1052, enables the owner to sue an infringer under §32, 15 U. S. C. §1114; it also entitles the owner to a presumption that its mark is valid, see §7(b), 15 U. S. C. §1057(b), and ordinarily renders the registered mark incontestable after five years of continuous use, see §15, 15 U. S. C. §1065. In addition to protecting registered marks, the Lanham Act, in §43(a), gives a producer a cause of action for the use by any person of “any word, term, name, symbol, or device, or any combination thereof . . . which . . . is likely to cause confusion . . . as to the origin, sponsorship, or approval of his or her goods . . . .” 15 U. S. C. §1125(a). It is the latter provision that is at issue in this case.
The breadth of the definition of marks registerable under §2, and of the confusion-producing elements recited as actionable by §43(a), has been held to embrace not just word marks, such as “Nike,” and symbol marks, such as Nike’s “swoosh” symbol, but also “trade dress”— a category that originally included only the packaging, or “dressing,” of a product, but in recent years has been expanded by many courts of appeals to encompass the design of a product.

3. Prioritize the rules of law that the court will consider.
Since the text of §43(a) provides little guidance as to the circumstances under which unregistered trade dress may be protected. It does require that a producer show that the allegedly infringing feature is not “functional,” see §43(a)(3), and is likely to cause confusion with the product for which protection is sought, see §43(a)(1)(A), 15 U. S. C.. §1125(a)(1)(A). Nothing in §43(a) explicitly requires a producer to show that its trade dress is distinctive, but courts have universally imposed that requirement, since without distinctiveness the trade dress would not “cause confusion . . . as to the origin, sponsorship, or approval of [the] goods,” as the section requires. Distinctiveness is, moreover, an explicit prerequisite for registration of trade dress under §2, and “the general principles qualifying a mark for registration under §2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under §43(a. In evaluating the distinctiveness of a mark under §2 (and therefore, by analogy, under §43(a)), courts have held that a mark can be distinctive in one of two ways. First, a mark is inherently distinctive if “[its] intrinsic nature serves to identify a particular source; Second, a mark has acquired distinctiveness, even if it is not inherently distinctive, if it has developed secondary meaning, which occurs when, "in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself.”
With such a broad universe of possibilities, the courts strove to create analytic tools to help determine the central condition of protection, “distinctiveness.” Our need for the appearance of order (however ephemeral) produced a brief working taxonomy of “distinctiveness,” the Abercrombie factors. In the defining of a set of distinctiveness pigeon holes: a mark is to be categorized as “arbitrary,” or “fanciful,” or “suggestive,” or “descriptive,” or “generic.” If the mark fits into one of the first three boxes, it is a “technical” trademark and is deemed “inherently distinctive.” If it is “descriptive,” it is not “inherently” distinctive, but may “acquire” distinctiveness over time, and become protected as public association creates a “secondary,” source-identifying meaning. If it is “generic,” it may never be considered “distinctive.” While word and pictorial marks can readily fit into the Abercrombie taxonomy,(is the science of classification according to a pre-determined system, that is mutually exclusive, unambiguous, and taken together,) these kinds of marks, the product of marketing ingenuity, are not so easily shoe-horned into these categories.
Determination of distinctiveness is particularly troublesome in the case of “trade dress,” the configuration or design of a product or its package.
Rather than just putting trade dress into a spectrum of distinctiveness, as in Abercrombie, the Seabrook test distinguishes distinctive from non -distinctive trade dress by focusing directly upon whether the trade dress is unique or common. Courts differed over which test to apply to trade dress as well as over whether trade dress could ever be inherently distinctive.
As the law stands today there is no clear distinctive manner to which to determine the uniqueness under today’s trade dress protection.
Maybe the trade dress could be protected under intellectual property laws since the idea of its uniqueness is an illusion.

4. Compile the court’s decision and opinions on the case.
The originator of this case was Samara Brothers Inc., who brought suit against Walmart Stores Inc., and JPI, asserting claims for copyright infringement , trade dress infringement , violations of the New York consumer fraud statue and the New York common law if unfair competition. In a New York District Court, the jury found that Wal-Mart was liable on each of Samara’s four claims. The jury found that Wal-Mart had willfully infringed Samara’s rights, awarding Samara $912,856.77 on the copyright claims, $240,458.53 for the Lanham Act violation and $50 for the state law violation.
After the decision of the jury in the New York District Court, Wal-Mart appealed and all issues raised on appeal arose from the district court's denial of Wal-Mart's Motion for Judgment as a Matter of Law. The Court reviews a district court's denial of a Motion for Judgment as a Matter of Law, which is a motion that is made before a case is submitted to the jury, and argues that no reasonable jury could find for the opposing party (i.e., whatever evidence exists for such ruling is legally insufficient.
The court views the evidence in a light most favorable to the non-movant, granting that party every reasonable inference that the jury might have drawn in its favor.
On appeal, the Second Circuit affirmed the denial of Wal-Mart's motion, referring to its opinion in Landscape Forms, Inc. v. Columbia Cascade Co. and applying the third prong of the Duraco test, the court found that the "overall look" of a product and a distinctive combination of design elements could indicate a product's source. The court held that Samara's clothing involved a distinctive combination of elements, and so could be inherently distinctive.
However, in a unanimous opinion, the Supreme Court held that unregistered product design trade dress could not be inherently distinctive because consumers do not typically associate the product design with the product's source.
Thus, product designs can only be protected upon a showing of secondary meaning.
The Court reversed the Second Circuit's decision and remanded for proceedings consistent with its opinion. Writing for the Court, Justice Scalia first compared product designs to color. The Court recalled its discussion of trademarks in Qualitex Co. v. Jacobson Products, where it held that colors, while able to serve as trademarks, could never be inherently distinctive.
Analogizing to Qualitex, the Court found that product designs, like colors, do not immediately cause a consumer to think of a brand or product source.
Design, like color, is not inherently distinctive. The attribution of inherent distinctiveness to certain categories of word marks and product packaging derives from the fact that the very purpose of attaching a particular word to a product, or encasing it in a distinctive package, is most often to identify the product’s source.
Where it is not reasonable to assume consumer predisposition to take an affixed word or packaging as indication of source, inherent distinctiveness will not be found. With product design, as with color, consumers are aware of the reality that, almost invariably, that feature is intended not to identify the source, but to render the product itself more useful
Thus, both colors and product designs require a showing of secondary meaning in order to qualify for protection under the Lanham Act.
The Court further explained that even a unique product design is not inherently distinctive since it is typically intended to make a product more appealing and not to identify a brand. As an example, the Court considered a cocktail shaker shaped like a penguin.
The Court explained that consumers know that even this unusual design "is intended not to identify the source, but to render the product itself more useful or more appealing."
In the Court's view, applying the inherent distinctiveness principle to product designs might harm consumers by depriving them of the chance to benefit from aesthetic designs of competing products. Consumers should not be deprived of competition by a "rule of law that facilitates plausible threats of suit against new entrants based upon alleged inherent distinctiveness.

5. Prepare a conclusion for the outcome of the case.
The Court found that the descriptions “fail to indicate what unique combination of features makes the trade dress of the ten items in the [Landscape Form's product line] inherently distinctive under the
Knit waves test, i.e., likely to be perceived by consumers as bearing the stamp of their maker.” Landscape Forms. Further, the general notion of furniture “which is at once massive, yet appears to float” was too abstract to qualify as trade dress.
Essential to the “Samara look” is the method by which the design elements are combined on the garments. It is that amalgamation of the elements, what the Landscape Forms opinion termed a “distinctive combination of ingredients,” which creates the uniform, protectable Samara look.
We affirm the denial of Wal-Mart's Motion for Judgment as a Matter of Law on Samara's Lanham Act claim and Copyright Act claim and the district court's denial of Wal-Mart's request for a new trial based on an alleged error in the jury instructions.
The Supreme Court affirm the district court's holding that the state law claims were not preempted by § 301 of the Copyright Act.
The Supreme Court reversed the district court's grant of an injunction to Samara, and remanded the case so that the district court can refashion an injunction in light of this opinion and enter an order reflecting the new calculation of damages.

There is little practical value in waxing philosophical about the bright-line rule drawn by the Supreme Court in Wal-Mart v. Samara Brothers. As trademark practitioners, perhaps we should be satisfied with the knowledge that, for now, the practical approach by the Court has simplified this murky area of trademark practice and, like Voltaire's character "Candide," be content to simply "cultivate our garden.

References

www.caselaw.findlaw.com http://digitalcommons.law.scu.edu www.law.cornell.edu http://supreme.justia.com http://www.law.nyu.edu