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Protection of Trade Dress under §1125(a):

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992)

• In 1978, the plaintiff, Taco Cabana, opened a Mexican restaurant in San Antonio which had a highly distinctive decor.
  • Five more restaurants had been opened in San Antonio by 1985.
• In 1985, the defendant, Two Pesos, opened a Mexican restaurant in Houston which had a decor very similar to that of Taco Cabana.
  • Two Pesos expanded rapidly in Houston but did not enter San Antonio.
• In 1986, Taco Cabana entered Houston, Austin, Dallas, and El Paso.
  • Two Pesos also did business in Dallas and El Paso.
• The plaintiff brought suit under §1125(a) of the Trademark Act, claiming that the defendant had "infringed" its trade dress, which was comprised of its restaurants 'distinctive decor.
  • This trade dress was found in the trial court to not have acquired secondary meaning in the marketplace, however, it was found to be both inherently distinctive and nonfunctional.
  • These findings were sufficient, in the trial court's opinion, for a judgment to the effect that infringement of trade dress had occurred.
  • The trial court assessed damages based on a ruling that Two Pesos' infringement was intentional and deliberate.
• Defendant contended that the Trademark Act did not protect trade dress that had not yet acquired secondary meaning.
  • More specifically, it argued that, at the outset, a merchant's trade dress need only be distinctive to receive protection, then, at some later date, secondary meaning must exist for that protection to continue.
• The Court found that §1125(a) did not address the concept of secondary meaning and, in other places where that concept appears in the Trademark Act, it is a requirement for descriptive marks only.
  • The principles stated in §1052 of the Trademark Act which determine a mark's registrability (i.e., requirements related to distinctiveness) were seen as being applicable to determine whether an unregistered mark is entitled to protection under §1125(a).
• Thus, the Court agreed with the appeals court in upholding the trial court's rulings and found for the plaintiff, sustaining the award for damages based on the intentional and willful infringement of the defendant's trade dress.
  • Two concurrences addressed the issues presented not in terms of there having been "infringement" of unregistered trade dress, but rather in terms of the literal wording of §1125(a), its historic "false description or representation" element and the implicit requirement of there being sufficient distinctiveness for one party to make a false representation, description or designation in relation to another's trade dress.
    • Violation of §1125(a)'s terms, rather than "trade dress infringement" was seen as the actionable conduct.

• In an action for infringement of unregistered trade dress, the plaintiff, under §1125(a)(3), must now prove that its trade dress is nonfunctional.
  

Product design is distinguished within the category of unregistered trade dress:

Wal-Mart Stores, Inc. v. Samara Brothers, Inc.,       U.S.       (2000)

• The Supreme Court has distinguished the treatment to be given product design in actions for protection of unregistered trade dress under §1125(a).
  • Product design is seen per se as not being inherently distinctive because its purpose is generally not to identify a source of goods.
  • To protect product design as unregistered trade dress, the party seeking protection must show (in addition to satisfying the non-functionality requirement of §1125(a)(3)) that it has acquired secondary meaning.
  • In close cases between classifying trade dress as product "packaging" or "design", courts are required to err on the side of "design", with its attendant proof of secondary meaning requirement.