Unfair competition is not a tort with specific elements; instead it describes a general category of torts which courts recognize for the protection of commercial interests. Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 305 (Minn. App. 1987) citing W. Prosser and W. Keeton, The Law of Torts § 130, at 1015 (5th ed. 1984). A claim of unfair competition can be based on a variety of different torts. See United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 632 (Minn.1982) (stating unfair competition can be based on tortious interference with contract or improper use of trade secrets); Sanitary Farm Dairies, Inc. v. Wolf, 261 Minn. 166, 175, 112 N.W.2d 42, 49 (1961) (referring to an employee’s breach of loyalty as unfair competition).
Employee Breach of Duty of Loyalty
An implied condition in every employment contract is the employee’s duty of honesty and faithfulness to the employer. An employee’s breach of this duty by committing serious acts of misconduct justifies an employer’s withholding of wages and other benefits. Hlubeck v. Beeler, 9 N.W.2d 252, 254 (Minn. 1943). Although Minn. Stat. § 181.79 prohibits employers from making deductions from an employee’s wages for theft, loss or indebtedness without the employee’s prior written consent, this statutory provision apparently does not supersede the forfeiture doctrine under the implied common law duty of loyalty. Brekke v. THM Biomedical, Inc., 683 N.W.2d 771, 775 (Minn. 2004). Where an employee has breached the common law duty of loyalty, the statute is inapplicable because the employee, having failed to live up to her end of the bargain, has not effectively earned any wages. Id.
Even in the absence of a noncompete clause or a trade secret, an employer may still attempt to show that an employee engaged in unfair competition by means of disloyal conduct. An employee may not solicit the business of an employer prior to leaving the employment relationship. Sanitary Farm Dairies, Inc. v. Wolf, 112 N.W.2d 42 (Minn. 1961). The courts have cautioned, however, that a fine line exists between permissible “preparation for a change in employment” and disloyal solicitation. Id. The difference between lawful “preparation” and unlawful “solicitation” is a factual question not appropriate for resolution in a motion for summary judgment. Rehabilitation Specialists at 305–06.
Federal and Minnesota Unfair Competition
Under the Lanham Act, Federal law permits a damaged party to seek civil recovery from a person who uses false or misleading designations or descriptions in connection with goods, container, or services, where the designation or description is likely to cause confusion or mistake regarding the associations and sources of goods, services or commercial activity. See 15 U.S.C. § 1125(a). The analysis for claims under the Minnesota Consumer Fraud Act and Minnesota Uniform Deceptive Trade Practices Act (Minn. Stat. § 325D) is the same as that applied under the Lanham Act. Buetow v. A.L.S. Enterprises, Inc., 713 F.Supp.2d 832, (D.Minn. 2010).
False Representation of Goods
The Lanham Act provision proscribing false description or representation of goods provides for two distinct causes of action: false designation of origin or source, known as “product infringement,” and false description or representation, known as “false advertising.”
False Designation of Goods
Elements of Lanham Act false designation of origin violation are: 1) defendant used in connection with trade false designation of origin or false description of representation; 2) defendant caused such goods and services to enter into commerce; 3) that plaintiff is a person who believes that he or she is likely to be damaged as result. 1st Nat. Reserve, L.C. v. Vaughan, 931 F.Supp. 463 (E.D.Tex.1996).
In order to prevail on claim for false advertisement under the Lanham Act, a plaintiff must show that defendant’s advertisements are false and misleading, actually or likely to deceive substantial segment of their audience, material in their effects on purchasing decisions, for goods that entered interstate commerce, and actually or likely to injure plaintiff. Rock-A-Bye Baby, Inc. v. Dex Products, Inc., 867 F. Supp. 703 (N.D. Ill. 1994).
Minnesota Trade Secrets Act
The Minnesota Uniform Trade Secrets Act (“MUTSA”) is an adoption of the Uniform Trade Secrets Act. MUTSA protects certain types of information through an action for misappropriation. Minn.Stat. §§ 325C.01–325C.08. Under the act, misappropriation is statutorily defined as improper acquisition, disclosure, or use of a “trade secret.” Minn.Stat. § 325C.01, subd. 3. Courts analyze three factors to determine whether a particular item constitutes a trade secret: (1) the information is not generally known or readily ascertainable; (2) the information derives independent economic value from secrecy; and (3) the party has made reasonable efforts to maintain secrecy of item. Lexis-Nexis v. Beer, 41 F.Supp.2d 950, (D. Minn. 1999). Under MUTSA, the burden is on the party asserting misappropriation to establish each factor considered in determining whether information is a “trade secret.” NewLeaf Designs, LLC v. BestBins Corp., 168 F.Supp.2d 1039, 1043 (D. Minn. 2001).
Customer lists are not generally considered trade secrets if ascertainable by proper means. Fleming Sales Co. v. Bailey, 611 F.Supp. 507, 511 (N.D. Ill. 1985). Information as to customers, including knowledge of contact persons, prior purchasing history, and product and service requirements do not constitute trade secrets under the Uniform Trade Secrets Act. Id. at 512. Such information is considered “readily ascertainable by proper means over the course of time without efforts beyond those ordinarily exerted by salesmen in developing countries” and comprises general skills and knowledge acquired in the course of employment. Id. at 514. Employees are generally free to take and use such general skills and knowledge in later pursuits, especially if they do not take the form of written records, compilations or analyses.” Id.
On the other hand, in Surgidev Corp. v. Eye Technology, Inc., 648 F.Supp. 661 (D.Minn.1986), the Court held that a former employee’s knowledge of opthamologists who were high volume implanters or who were to become high volume implanters or who implanted investigational lenses were protectable as trade secrets. Fundamental to this holding was the numerous testimony demonstrating that the identify of high volume implanters was considered to be confidential in the ophthalmological industry. Id. at 682.
In Minnesota, the elements of a business defamation claim are generally the same as those for personal common law defamation. Korth v. Nathan Weiner & Assocs., No. Civ. 4-96-
698, 1996 U.S. Dist. LEXIS 21952 (D. Minn. 1996); Nat’l Refining Co. v. Benzo Gas Motor Fuel Co., 20 F.2d 763 (8th Cir. 1927). One difference is that “a corporation must show that [the defaming party’s] statements directly tended to affect the credit, property or business of the corporate plaintiff.” Korth, 1996 U.S. Dist. LEXIS 21952; see also Advanced Training, 352 N.W.2d at 10 (“a corporation must show that defendant’s written statements directly tended to affect the credit, property or business of the corporate plaintiff”). Another difference is that Minnesota courts have given an expansive reading to the First Amendment protections for speech about corporations. The elements of a Minnesota Common Law defamation claim are:
- a false and defamatory statement of fact concerning the plaintiff;
- communicated to someone other than plaintiff; and
- with a tendency to harm the plaintiff’s reputation and lower him in the estimation of the community.
Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980)
Statement Must be False
A plaintiff must establish that the allegedly defamatory statement is false. Weinberger v. Maplewood Review, 668 N.W.2d 667, 673 (Minn. 2003). A true statement cannot be defamatory as a matter of law. Stuempges, 297 N.W.2d at 255. Notably, “[a]n appellate court ‘will not overturn a jury finding on the issue of falsity unless the finding is manifestly and palpably contrary to the evidence.’” Dunn v. Nat’l Beverage, 729 N.W.2d 637, 651 (Minn. Ct. App. 2007) (quoting Lewis v. Equitable Life Assurance Soc., 389 N.W.2d 876, 889 (Minn. 1986)). To satisfy the falsity element, a corporate plaintiff must show that the defendant’s statements “present or imply a provably false assertion of fact.” Nat’l Beverage, 729 N.W.2d at 652 (quoting Marchant Inv. & Mgmt. Co. v. St. Anthony West Neighborhood, 694 N.W.2d 92, 95-96 (Minn. Ct. App. 2005)). In evaluating the statements, the jury will consider, among other things: the broad context and general tenor of the statements; the specific context and content of the statements; the reasonable expectations of the audience; and whether the statements are sufficiently objective to be susceptible to being proven true or false.
Definition of Defamatory
Whether a statement is capable of defamatory meaning is a question of law. Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569, 573 (Minn. 1987). However, “if the words are capable of the defamatory meaning, it is for the jury to decide whether they were in fact so understood.” Utecht v. Shopko Dep’t Store, 324 N.W.2d 652, 653 (Minn. 1982). The applicable standard is “whether a reasonable person would believe the statement to be defamatory.” Anderson v. Kammeier, 262 N.W.2d 366, 372 (Minn. 1977).
For a statement to be defamatory against a corporation, it must “directly tend to affect the credit, property, or business of the corporate plaintiff.” Nat’l Beverage, 729 N.W.2d at 651. This is also the measure of harm or damages in a business context. Id. A corporation does not have a “personal” reputation, and only an injury to the corporation’s “business” reputation can be actionable.
Generally, a plaintiff must prove damages to recover for common law defamation. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). General damages include harm to the plaintiff’s reputation and standing in the community. Id. at 258. General damages are presumed in cases where the plaintiff proves defamation per se or proves special, pecuniary damages. See Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987). Because statements that “directly tend to affect the credit, property, or business of the corporate plaintiff” are defamatory per se, most corporate plaintiffs will not need to prove general or special damages. Nat’l Beverage, 729 N.W.2d at 651. Special damages are economic losses proximately caused by a defamatory statement that result from someone or something other than the conduct of the defamer or plaintiff. Restatement (Second) of Torts § 575 cmt. b (1977).
Malicious injury or wrong is a claim for relief related to defamation. If certain words have not injured the reputation of any one, there is no action for defamation. Marudas v. Odegard, 215 Minn. 357, 10 N.W.2d 233, 235 (Minn. 1943). However, if the defendant maliciously intended to injure the plaintiff by his words and succeeded in this intent, and damage to the plaintiff was the direct result of the defendant’s words, there is a cause of action, whatever the nature of the words, provided they are untrue.’ Id. Therefore, “[a] claim for ‘malicious wrong’ is not simply coextensive with a defamation claim . . . it can provide relief where a defamation claim fails.” Keckhafer v. Prudential Ins. Co. of America, 2002 U.S. Dist. LEXIS 19320, 2002 WL 31185866 *5 (D.Minn.2002). Although “Marudas is old . . . it abides as a sound statement of the law in Minnesota.” Id. Therefore “where a plaintiff alleges that a defendant maliciously intended to injure . . . her by communicating false words and has succeeded in that malicious intent, and damage to the plaintiff is the direct result of the defendant’s untrue words, a claim exists under Minnesota law upon which relief can be granted.” Id. On a cautionary note, only two Minnesota cases even acknowledge that this particular tort and it is not a means of getting around an absolute privilege defense. Harris v. City of Wabasha, 2007 U.S. Dist. LEXIS 10431, 3-4 (D. Minn. Feb. 14, 2007).
Under Minnesota law, there are two possible tortious interference claims:
- tortious interference with an existing contract; or
- tortious interference with a prospective business relation or, as it is sometimes referred to, a prospective economic advantage. Hern v. Bankers Life Cas. Co., 133 F. Supp. 2d 1130, 1137 (D. Minn. 2001).
Tortious Interference with Contract
A third party who interferes with and causes the breach of a contract may be liable for damages if his actions are intentional and unjustified. See Kallok v. Medtronic, Inc., 573 N.W.2d 356, 361 (Minn. 1998) (quoting Sorenson v. Chevrolet Motor Co., 171 Minn. 260, 266, 214 N.W. 754, 756 (1927); citing Nordling v. N. States Power Co., 478 N.W.2d 498, 505 (Minn. 1991)). The cause of action of interference with contract seeks to balance the need to “protect an interest in the security of contractual relationships” against the importance of protecting legitimate competition in the marketplace. Wild v. Rarig, 234 Minn. at 442 n.16, 790 n.16; see also United Wild Rice, 313 N.W.2d at 632-33 (quoting RESTATEMENT (SECOND) TORTS § 766B (1979)).
To prevail in a claim for tortious interference with contract, a plaintiff must establish five elements: (1) the existence of a contract; (2) the alleged wrongdoer’s knowledge of the contract; (3) intentional procurement of its breach; (4) without justification; and (5) damages. Kallok, 573 N.W.2d at 362 (quoting Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994)). Minnesota has specific rules regarding what proof is required to establish or disprove each of these elements and what damages are available to a plaintiff who prevails on a claim for tortious interference with contract.
Existence of Contract
A plaintiff in action for tortious interference with contract must first establish the existence of the contract. Frequently, this element is easily satisfied because it is either undisputed or is easily established by an undisputable writing evidencing the agreement. See Kallok, 573 N.W.2d at 362 (“Medtronic easily established the first three Kjesbo elements. First, as [Defendant] signed a valid noncompete agreement, it is evident that a contract existed between him and Medtronic.”); see also Kjesbo, 517 N.W.2d at 588 (“Here, defendant-respondents concede the existence of a contract . . . .”). But where the existence of a contract is disputed, proof in the form of the actual written agreement and testimony regarding the agreement may be necessary to establish the existence of the contract. See Lipka v. Minn. Sch. Employees Ass’n, Local 1980, 537 N.W.2d 624, 632 (Minn. Ct. App. 1995) (“Lipka fails to meet the first element of the tortious interference test because there is no evidence in the record of a contract between Bohl and ISD No. 31.”). In Royal Realty Co. v. Levin, the defendants challenged the existence of the first element – the existence of a contract – of the plaintiff’s tortious interference claim on the ground that the oral real estate contract was void because it failed to comply with the statute of frauds. Royal Realty Co. v. Levin, 244 Minn. 288, 292, 69 N.W.2d 667, 671 (1955). In rejecting this argument, the court noted that the relevant authorities are in agreement that, with few exceptions, “noncompliance with the statute of frauds does not relieve the interfering party of liability for inducing breach of the contract.” Id. The court noted that Minnesota precedent – holding that the statute of frauds defense is only available to the party to be charged – and compelling policy considerations, support this conclusion.
Knowledge of the Contract
A plaintiff alleging tortious interference with contract must also establish that the alleged tortfeasor had knowledge of the contract. Kallok, 573 N.W.2d at 362. This element is easier for a plaintiff to satisfy than it may at first appear. Although actual knowledge of the existence of the contract is certainly sufficient, the plaintiff need not establish actual knowledge in order to satisfy this requirement. Swaney v. Crawley, 191 N.W. 583 (Minn. 1923). Rather, it is sufficient for the plaintiff to show that the defendant “had knowledge of facts which, if followed by reasonable inquiry, would have led to a complete disclosure of the contractual relations and the rights of the parties.” Id.
Tortious Interference with Prospective Business Relations
Minnesota courts have long recognized a cause of action for tortious interference with prospective contractual relations. See Wild v. Rarig, 234 N.W.2d 775, 790 (Minn. 1975); The Restatement (Second) of Torts, section 766B sets forth a general explanation of a claim for tortious interference with prospective contractual relations, stating: “[o]ne who intentionally and improperly interferes with another’s prospective contractual relation . . . is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relations, whether the interference consists of: (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation.” United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 632-33 (Minn. 1982) (quoting RESTATEMENT (SECOND) TORTS § 766B (1979)). In Minnesota, the elements of a claim for tortious interference with prospective contractual relations include: (1) the existence of a reasonable expectation of economic advantage; (2) that the defendant had knowledge of that expectation of economic advantage; (3) that the defendant wrongfully and without justification interfered with the plaintiff’s reasonable expectation of economic advantage or benefit; (4) that, in the absence of the wrongful act of the defendant, it is reasonably probable that the plaintiff would have realized his economic advantage or benefit; and (5) that the plaintiff sustained damages as a result of this activity. Harbor Broadcasting, Inc. v. Boundary Waters Broadcasters, Inc., 636 N.W.2d 560, 569 (Minn. Ct. App. 2001); Hough Transit, Ltd. v. Nat’l Farmers Org., 472 N.W.2d 358, 361 (Minn. Ct. App. 1991).
The important factor is whether the behavior was wrongful. “Every act done by a businessman in diverting trade from a competitor to himself is an act intentionally done, and when successful is an injury to the competitor because to that extent it lessens his profits. But it is not wrongful. Trade must be free and unrestricted, but the competitor should operate within the zone of fair dealing. Competition justifies the use of all lawful and fair means to gain the trade that would otherwise go to a competitor in business. . . . Fraud, misrepresentation, intimidation, coercion, obstruction, molestation, or the willful and intentional procurement of violation of contractual relations are practices which competition does not authorize.”). Sorenson v. Chevrolet Motor Co., 214 N.W. 754, 756 (Minn. 1927).
Unreasonable Restraint of Trade: Contracts, Combinations, and Conspiracies
In Minnesota, like many states, a contract, combination, or conspiracy between two or more persons in unreasonable restraint of trade or commerce is unlawful. Minn. Stat. § 325D.51. Minnesota antitrust law is interpreted consistently with federal case law developed under Sherman Anti-Trust Act. State by Humphrey v. Road Constructors, Inc., 474 N.W.2d 224 (Minn. App. 1991). Minn. Stat. § 325D.51 codifies the “rule of reason” used to evaluate the legality of trade restraints under federal law. See Note, Minnesota Antitrust Law of 1971: Interpretation and Analysis, 63 Minn. L. Rev. 907, 926-27 (1979). In deciding whether restraint of trade is unreasonable, court must examine purpose, market power and anticompetitive effect of restraint. Hough Transit, Ltd. v. National Farmers Organization, 472 N.W.2d 358 (Minn. App. 1991). The court must focus on the restraint’s effect on competition, not its effect on an individual competitor. See National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679 (U.S. 1978).
Whether a restraint is unreasonable is a question of fact. Minnesota-Iowa Television Co. v. Watonwan T.V. Improvement Ass’n, 294 N.W.2d 297, 307 (Minn. 1980). Some combinations so detrimentally affect competition they are conclusively presumed to be unreasonable, and therefore illegal, restraints of trade. See Northern Pacific Ry. Co. v. United States, 356 U.S. 1, (1958). Under Minnesota law, any “contract, combination, or conspiracy between two or more persons refusing to deal with another person, except a refusal to deal by associations, trading boards, or exchanges when predicated upon a failure to comply with rules of membership” is deemed to restrain trade or commerce unreasonably and is unlawful. Minn. Stat. § 325D.53. This section does not require the restraint of trade to be between competitors, and therefore, a vertical non-price restraint on trade could arguably be illegal per se under the statute. Under federal law, vertical non-price restraints are never illegal per se. See Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, (1988). However, Minnesota Courts have found that a contract where the manufacturer agreed not to solicit contract work in a particular locality and to sell exclusively to two local dealers who were to receive profits on local work and to buy proportionate share of requirements from manufacturer was not “in restraint of trade.” Pittsburgh Plate Glass Co. v. Paine & Nixon Co., 1930, 234 N.W. 453 (Minn. 1930).
Any combination, the necessary effect of which is to stifle competition in trade or business, violates statute, irrespective of the intention of the parties. State v. Duluth Bd. of Trade, 121 N.W. 395 (Minn. 1909). When the unlawful intent of certain competing corporations, parties to an agreement to form a combination in restraint of trade, is established, the character and extent of the former competition among them is immaterial. State v. Creamery Package Mfg. Co., 126 N.W. 126 (Minn. 1910). A combination of several persons and corporations, all independent dealers in milk and cream, to increase the price of milk, was held illegal even though the increase in price was necessary to make a profit. State v. Minneapolis Milk Co., 144 N.W. 417 (Minn. 1913).
To establish a claim for unlawful monopolization under the Sherman Act or its Minnesota counterpart, a plaintiff must demonstrate that the defendant (1) possessed monopoly power in the relevant market and (2) willfully acquired or maintained that power as opposed to gaining that power as a result of a superior product, business acumen, or historical accident. Insignia Systems, Inc. v. News America Marketing In-Store, Inc., 661 F. Supp.2d 1039 (D. Minn 2009). A monopoly in trade and commerce is created within meaning of statute when, as a result of efforts to that end, previously competing businesses are so concentrated in the hands of a single person or corporation, or a few persons or corporations acting together, that they have power to practically control the prices of a commodity, and to thus suppress competition. State v. Duluth Bd. of Trade, 121 N.W. 395 (Minn. 1909).
Minnesota antitrust law provides basis for cause of action for conspiracy to monopolize. Prestressed Concrete, Inc. v. Bladholm Bros. Culvert Co., 498 N.W.2d 274 (Minn. App. 1993). Elements of conspiracy to monopolize are concerted action, specific intent to achieve unlawful monopoly, and commission of overt act in furtherance of conspiracy. Id. The requirements to establish a conspiracy are well set forth in American Tobacco Co. v. United States, 328 U.S. 781, 809-10, 66 S. Ct. 1125, 1139, 90 L. Ed. 1575 (1946):
No formal agreement is necessary to constitute an unlawful conspiracy. Often crimes are a matter of inference deduced from the acts of the person accused and done in pursuance of a criminal purpose. Where the conspiracy is proved, as here, from the evidence of the action taken in concert by the parties to it, it is all the more convincing proof of an intent to exercise the power of exclusion acquired through that conspiracy. The essential combination or conspiracy in violation of the Sherman Act may be found in a course of dealings or other circumstances as well as in any exchange of words.
Discriminating between Different Regions within Minnesota unlawful
Discriminating between different regions (cities, sections or communities) within the state by selling goods for the purpose or with the effect of injuring a competitor or destroying competition a lower rate or price in one region than another is unlawful. Certain allowances are allowed for difference, if any, in the grade, quality, or quantity after equalizing the distance from the point of production, manufacture, or distribution and freight rates therefrom. The exception of course is a company who under sections 325D.01 to 325D.07 meets, in good faith, local competition within any one section, community or city.
Selling Below Costs
Certain sales below costs are condemned under Minnesota law. For such a sale to be illegal it must be accompanied by a certain purpose or result in a certain effect. Twenty-nine other states have statutory prohibitions against sales below cost applicable to most industries and products. All but one of these states require that the offer or sale be made with some specific culpable purpose or have such an effect. The absence of such a qualification would seem to render such a law unconstitutional. See, Fairmont Creamery Co. v. State of Minnesota, 274 U.S. 1 (1927).
Under Minn. Stat. 325.04, only those offers or sales of goods at less than cost are declared illegal which are made: for the purpose or with the effect of injuring competitors and destroying competition.’ It should be noted that both injury to competitors and the destroying of competition must be established as either the purpose or effect of the defendants’ actions in order to find or sustain a violation. Furthermore, apparently realizing the difficulty of enforcement of this type of law, the legislature provided some aid to the establishment of the dual purpose or effect. It provided that any sale by a retailer below an 8-percent markup, for the purpose or with the effect of injuring competitors or destroying competition, shall be prima facie evidence of a violation. Minn. Stat. 325.52. Thus, by showing such a sale with the purpose or effect of either injuring competitors or destroying competition, a plaintiff makes a prima facie showing of both elements.
Under Minn. Stat. 325.06(4) there is an important exception to this rule. That section provides that the provisions of 325.04 shall not apply to sales made “In an endeavor made in good faith to meet the legal prices of a competitor selling the same commodity, articles, goods, wares, or merchandise in the same locality or trade area.” The “legality” of the competitors prices does not need to be shown by the defendant; only that the “endeavor was in good faith.” State by Clark v. Wolkoff, 85 N.W.2d 401, 406 (Minn. 1957).
“To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” The second prong, in turn, entails proof of both factual and legal copying, that is: (1) “whether the defendant, as a factual matter, copied portions of the plaintiff’s [work]”; and (2) “whether, as a mixed issue of fact and law, those elements of the [copyrighted work] that have been copied are protected expression and of such importance to the copied work that the appropriation is actionable.”
Minnesota’s trademark statute is patterned closely after relevant provisions of the federal Lanham Act. As such, a court’s analysis of statutory claims under Minn. Stat. Ann. § 333.18 is coextensive with its analysis of Lanham Act claims. Courts have held that an independent analysis of such claims, therefore, would be duplicative of the Lanham Act analysis above.
Trade Dress Infringement
To establish ownership of trade dress, a plaintiff must prove that the trade dress has either acquired secondary meaning or is inherently distinctive and the trade dress is nonfunctional. Only the nonfunctional aspects of a product are protectable under Section 43(a). This requirement “strikes an appropriate balance between the goal of the functionality defense on the one hand, which is to encourage competition and the broadest dissemination of useful design features, and the Lanham Act’s purpose on the other, which is to prevent confusion as to source.”
Written by former law clerk Sean Taylor