3rd Circuit Issues Precedential Opinion Invalidating Trade Dress Protection of a Cookie

Kaisha v Lotte


Ezaki Glico (“EG”) is a Japanese confectionery company that developed and began selling thin, stick shaped cookies under the trade name “Pocky” in the United States in 1978.  Each cookie has some amount of the length thereof coated with chocolate, flavored cream, and/or nuts.  A portion of the length is left uncoated to serve as a handle.  EG promoted Pocky’s convenient design – advertising that “the no mess handle…makes it easier for multi-tasking without getting chocolate on your hands.”  EG also advertises Pocky as portable and packaged in numbers that encourage sharing.

Lotte Confectionery (“Lotte”) began making and selling similar stick shaped cookies under the trade name “Pepero” in the US in 1983.   The two products are shown below.

EG sent cease and desist letters to Lotte from 1993 to 1995.  Lotte responded that they would stop selling Pepero in the US until the parties had resolved their dispute, but resumed selling Pepero.  EG took no further action until 2015, when EG sued Lotte in federal court alleging trademark infringement and unfair competition in violation of the Lanham Act, as well as the common law of the state of New Jersey and the New Jersey Fair Trade Act. The District Court granted summary judgement to Lotte, holding that the product configuration of Pocky was functional and thus not protectable as trade dress.

Tests of Functionality

On appeal, EG argued that the term “functional” as used in the statutes at issue is synonymous with “essential.”  The Third Circuit utilized a three part analysis to reach a different conclusion and reject this construction:

  1. Trademark law excludes useful designs from protection.  Trademark law intends to protect the owner’s goodwill and to prevent consumer’s from being confused about the source of a product, but does not extend to features that serve purposes other than source identification.  As stated by the 3rd Circuit “even if copying would confuse consumers about a product’s source, competitors may copy unpatented functional designs.”
  2. Functional features don’t need to be “essential,” merely “useful.” Under this prong of their analysis, the 3rd Circuit first turned to dictionary definitions of functional, and noted that a definition inclusive of “merely useful” dovetailed with the Patent Acts purpose of protecting inventions that are “new and useful.” The Court then noted that such a definition comported not only with precedent, but with the leading trademark treatise.
  3. Evidence of functionality.  The Court cited evidence that a feature or design makes a product work better; advertising touting usefulness; the existence of a utility patent claiming the feature; and limited number of designs as examples of ways of proving functionality.

Pocky’s Trade Dress is Functional

Applying the second test to EG’s Pocky product, the 3rd Circuit held “Every feature of Pocky’s registration relates to the practical functions of holding, eating, sharing, or packing the snack.” Coupled with EG’s marketing statements related to Pocky, the Court found sufficient basis to grant Lotte’s motion for summary judgement.  This was despite EG’s utility patent, which the court held irrelevant as being directed to a method of making Pocky, and EG’s evidence of nine alternate designs for partly coated chocolate snacks.

Seeing humor in the situation that EG probably did not, the Court held:

Though Ezaki Glico created Pocky, it cannot use trade dress to keep competitors from copying it.  Trade dress 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.  There is no real dispute that Pocky’s design is useful, so the trade dress is invalid.  We will thus affirm.  That’s the way the cookie crumbles.