D.C. No.2:08-cv-00336-JCM-GWF D.C. No. 2:08-cv-00336-JCMWUXI Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding
The opinion of the court was delivered by: McKEOWN, Circuit Judge:
November 17, 2011-San Francisco, California
Before: Michael Daly Hawkins, M. Margaret McKeown, and Milan D. Smith, Jr., Circuit Judges.
Although "[p]rotection of trade dress, no less than of trademarks, serves the [Lanham] Act's purpose," Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774 (1992), that protection does not extend to designs that are functional. We consider here whether a traction hoist manufactured by Secalt, S.A., and Tractel, Inc. (collectively "Tractel") qualifies for trade dress protection. We agree with the district court that Tractel did not meet its burden to establish nonfunctionality and affirm the grant of summary judgment in favor of Jiangsu Shenxi Construction Machinery Co. ("Jiangsu"). We affirm the district court's award of attorney's fees to Jiangsu upon finding that this is an "exceptional" case meriting fees. While the line delineating "exceptional" cases under the Lanham Act may be murky, this action falls squarely within the realm of exceptional cases contemplated by the Act.
FACTUAL AND PROCEDURAL BACKGROUND
Tractel manufactures and sells the Tirak traction hoist, which is used typically for commercial building projects and external maintenance, like window washing. These devices are commonly affixed to suspended platforms to power the platforms up and down stationary wire ropes. Upon discovering that Jiangsu, a Chinese competitor, exhibited similar looking hoists at a trade show in Las Vegas, Tractel brought suit claiming that Jiangsu's hoists infringed the trade dress of the Tractel traction hoist. The complaint included three counts against Jiangsu: trade dress infringement under the Lanham Act; federal unfair competition; and related state law trade dress and unfair competition claims. This photograph reflects the design of Tractel's hoist.
Tractel alleges that the external design elements of its hoist deserve trade dress protection. It claims as its trade dress: 1) a cube-shaped gear box with horizontal fins; 2) a cylindrical motor mounted in an off-set position on the cube and partially overhanging the edge of the cube; 3) the cylindrical motor including vertical fins on a lower portion and a generally smooth sheet metal upper cover having a control descent lever and top cap positioned over the upper end and supported by rectangular legs; 4) a rectangular control box cantilevered to the motor by a square shaped member, the control box positioned over the cube, the control box including controls thereon; and 5) a rectangular frame.
In the district court, Jiangsu argued that Tractel failed to establish that its claimed trade dress was nonfunctional. Noting that "[e]ven when viewed in the most favorable light, the admissible evidence submitted by Tractel fails to suggest that the alleged Tirak trade dress is non-functional," the district court granted summary judgment in favor of Jiangsu. The district court also found the action to be "exceptional" under the Lanham Act and awarded both fees and costs to Jiangsu.
I. TRADE DRESS PROTECTION AND NONFUNCTIONALITY
 Trade dress protection under federal law is designed to promote competition. TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28 (2001). Such protection, however, "must subsist with the recognition that in many instances there is no prohibition against copying goods and products." Id. at 29. Rather, "[t]he physical details and design of a product may be protected under the trademark laws only if they are nonfunctional . . . ." Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 515 (9th Cir. 1989) (citing Vuitton Et Fils S.A. v. J. Young Enters., 644 F.2d 769, 772 (9th Cir. 1981)). Were a product's functional features protected, then "a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever." Disc Golf Ass'n v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998) (citation omitted).
Under the Lanham Act, Congress imposes a presumption of functionality, and plaintiff bears the burden of proving non- functionality. 15 U.S.C. § 1125(a)(3) ("In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional."). Therefore, Tractel, as the "one who seeks to establish trade dress protection must carry the heavy burden of showing that the feature is not functional, for instance by showing that it is merely an ornamental, incidental, or arbitrary aspect of the device." TrafFix, 532 U.S. at 30. In ...