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As the leading trademark treatise concurs, "functional" means useful. To boil it down to a phrase: something is 'functional' if it works better in this shape. That includes features that make a product cheaper or easier to make or use. Because the functionality bar is supposed to keep trade dress from creating back-door patents, the test of what is functional should be very similar to that of patent law.
Ezaki Glico is a Japanese confectionery company. For more than half a century, it has made and sold Pocky: a product line of thin, stick-shaped cookies. These cookies are partly coated with chocolate or a flavored cream, some with crushed almonds, and the end of each is left partly uncoated to serve as a handle.Ezaki Glico makes Pocky in both a standard and an "Ultra Slim" size. In 1978, Ezaki Glico started selling Pocky in the United States through its wholly owned subsidiary here. Since then, it has tried to fend off competitors by registering U.S. trademarks and patents. It has two Pocky product configurations registered as trade dresses. Ezaki Glico also has a utility patent for a "Stick Shaped Snack and Method for Producing the Same."
Starting in 1983, another confectionery company called Lotte started making Pepero. These snacks are also stick-shaped cookies (biscuits) partly coated in chocolate or a flavored cream, and some have crushed almonds too. It looks remarkably like Pocky. Lotte and its U.S. subsidiary have been selling Pepero in the United States for more than three decades.
From 1993 to 1995, Ezaki Glico sent letters to Lotte, notifying Lotte of its registered trade dress and asking it to cease and desist selling Pepero in the United States. Lotte assured Ezaki Glico that it would stop until they resolved their dispute. But Lotte resumed selling Pepero. For the next two decades, Ezaki Glico took no further action. In 2015, Ezaki Glico sued Lotte in federal court for selling Pepero. Under federal law, Ezaki Glico alleged trademark infringement and unfair competition, in violation of the Lanham (Trademark) Act §§ 32 and 43(a), 15 U.S.C. §§ 1114, 1125(a)(1)(A). Under New Jersey law, it alleged trademark infringement and unfair competition, in violation of both the common law and the New Jersey Fair Trade Act, N.J.S.A. § 56:4-1 and 2. After discovery, the District Court granted summary judgment for Lotte, holding that because Pocky's product configuration is functional, it is not protected as trade dress. Ezaki Glico appealed.
Is Pocky’s trade dress functional, thereby removing it from the protections of the law?
Ezaki Glico has two registered Pocky trade dresses, both broad. The first "comprises an elongated rod comprising biscuit or the like, partially covered with chocolate." The second consists of thesame sort of snack, along with almonds on top of the chocolate or cream. Every feature of Pocky's registration relates to the practical functions of holding, eating, sharing, or packing the snack. Consider each stick's uncoated handle. Ezaki Glico's internal documents show that it wanted to make a snack that people could eat without getting chocolate on their hands. Pocky was born when Ezaki Glico found that it could coat just part of a cookie stick, leaving people an uncoated place to hold it. So it designed Pocky's handle to be useful. The same is true of Pocky's stick shape. As Ezaki Glico recognizes, the stick shape makes it "easy to hold, so it c[an] be shared with others to enjoy as a snack." It also lets people eat the cookie without having to open their mouths wide. And the thin, compact shape lets Ezaki Glico pack many sticks in each box, enough to share with friends. Viewed as a whole, Pocky's trade dress is functional. The claimed features are not arbitrary or ornamental flourishes that serve only to identify Ezaki Glico as the source. The design makes Pocky more useful as a snack, and its advantages make Pocky more appealing to consumers for reasons well beyond reputation. As Ezaki Glico's own documents acknowledge, "Pocky provides a functional value [Enjoy chocolate lightly]." Even further, there is plenty of evidence that Ezaki Glico promotes Pocky's "convenient design." Its ads tout all the useful features described above. It advertises "the no mess handle of the Pocky stick," which "mak[es] it easier for multi-tasking without getting chocolate on your hands." It also describes Pocky as "[p]ortable," since "one compact, easy-to-carry package holds plentiful amounts of Pocky." "With plenty of sticks in each package, Pocky lends itself to sharing anytime, anywhere, and with anyone." These promotions confirm that Pocky's design is functional.
Though Ezaki Glico created Pocky, it cannot use trade dress protection to keep competitors from copying it. The Lanham Act protects features that serve only to identify their source. It does not cover functional (that is, useful) features. That is the domain of patents, not trademarks. Ezaki Glico has not borne its burden of showing nonfunctionality. There is no real dispute that Pocky's design is useful, so the trade dress is not protectable.