Lab Report Form May Create Non-Functional Trade Dress Rights and Infringement

By reversing the trial court’s summary judgment order, the Court of Appeals for the Ninth Circuit held that, in the context of a medical lab report form used by plaintiff, the side by side placement of certain data, the use of graphed results and the precise format used by plaintiff may not be “functional” and hence defeat plaintiff’s claim of trade dress infringement against a competitor. In Millennium Laboratories, Inc. v. Ameritox, Ltd., No. 13-56577 (9th Cir. 2016) (Available Here), the Ninth Circuit reversed the finding of summary judgment in favor of defendant Ameritox because a reasonable jury could conclude that plaintiff Millennium’s trade dress on its lab report form and format is not functional.  

The question considered was whether a product’s visual layout is functional, defeating a claim for trade dress infringement.  Both companies compete in the medication monitoring industry and sell urine-testing services to healthcare providers who treat chronic pain patients with powerful pain medication.  Each company provides its results in a report.  In 2012, Millennium sued Ameritox for trade dress infringement under the Lanham Act and for unfair competition under state law alleging Ameritox had copied its report design.  Ameritox moved for summary judgment arguing that Millennium’s trade dress was functional.  The district court granted summary judgment finding the trade dress functional and the Ninth Circuit reversed.

The Ninth Circuit stated its functionality test is a two step test.  Step 1: inquire whether the alleged significant non-trademark function satisfies the Supreme Court’s Inwood Laboratories definition of functionality-essential to the use or purpose of the article or affects its cost or quality.  If the claimed trade dress is determined to be functional under Step 1, then the inquiry is over.  If not in Step 2, the court should address whether the form has aesthetic functionality by inquiring whether protection of the lab report “form and format” feature as a trademark would impose a significant non-reputation-related competitive disadvantage.  If the court finds that the trade dress acts as a trademark, that is, it has no aesthetic functionality, then plaintiff established exclusive rights over the lab report’s form and format.

The Court found that Millennium’s report layout is a product feature.  Stated otherwise, the report its self is a product and is then judges under the Supreme Court’s Inwood Laboratories  standard.  If the lab report was held to be product packaging, the trade dress analysis is different.  The functionality factors for product design trade dress infringement are: (1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.  Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998).  The Appeals Court found that there were genuine issues of material fact as to whether Millennium’s claimed trade dress had any utilitarian advantages.  

A jury could find that the side by side placement could be merely aesthetic, not functional.  A jury could also conclude that many alternative designs were available.  A jury could find that the advertisements focused on the benefits of the “graphed results” rather than on the benefits of the specific layout.  Therefore, the Ninth Circuit reversed the finding of summary judgment of “no enforceable trade dress rights” in favor of defendant Ameritox because a reasonable jury could conclude that Millennium’s trade dress is not functional.  

The key point being that even if a comparison of the results is functional, this could be presented in many ways and the precise format used by a company asserting trade dress is not necessarily functional.   

Regarding the Step 2 analysis,  inquiring whether protection of the feature as a trademark would impose a significant non-reputation-related competitive disadvantage, the Appeals Court found that Millennium had offered evidence that the graphical format served in part as a source identifier.  Therefore a jury should assess the question of aesthetic functionality.

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