On June 28, 2012, the Trademark Trial and Appeal Board ("TTAB") of the U.S. Patent and Trademark Office ("USPTO") ruled in favor of the Hershey Chocolate and Confectionary Corporation ("Hershey"), reversing the USPTO’s decision that Hershey’s candy bar configuration was functional and non-distinctive.
On August 20, 2009, Hershey filed a trademark application (Serial No. 77/809223) with the USPTO for registration of a design mark for "candy; chocolate" in International Class 30. The mark (see below), was described as "a configuration of a candy bar that consists of twelve (12) equally-sized recessed rectangular panels arranged in a four panel by three panel format with each panel having its own raised border within a large rectangle."
Hershey claimed that the mark had acquired distinctiveness, based on use since December 31, 1968. The Trademark Examiner refused registration, however, on the ground that the mark was a "functional configuration of the goods" and, alternatively, that if the mark was not functional, the mark consisted of a non-distinctive configuration and, accordingly, did not function as a trademark. In addition, the Examiner determined that the mark had not acquired distinctiveness, despite continuous use since 1968. Hershey appealed the decision on February 11, 2011.
APPEAL TO TTAB
Before discussing the merits of the case, the TTAB addressed the configuration of the candy bar, namely, (1) a rectangle divided into 12 segments, (2) of equal size, (3) in a four by three arrangement, with (4) a raised border design for each segment, and noted that regardless of whether each element was functional or non-functional, the overall combination of these elements would guide its review.
The Board first considered whether the design was functional, explaining that the functionality doctrine balances trademark and patent law, and then focused on the following four factors:
The existence of a utility patent;
Advertising that touts the utilitarian advantages of the design;
The availability of alternate designs; and
Whether the design results from a comparatively simple or inexpensive method of manufacturing.
In defense of the refusal, the Trademark Examiner argued that the "flat rectangular shape and the ‘scoring’ of applicant’s candy bar into smaller pieces represent[ed] functional features which constitute an absolute bar to registration." The Examiner relied in part on the existence of a utility patent that claimed a method of scoring candy so that it could be broken into smaller pieces, numerous articles that touted the utility of the candy bar for sharing, and other third party candy bars that were flat and segmented.
In response, Hershey argued that the Examiner had only focused on one element of the design (i.e., the scoring) and ignored the other elements of the configuration. In addition, Hershey argued that the patent cited by the Examiner did not disclose the features comprising Hershey’s mark, that Hershey had not promoted the utilitarian advantages of the design and, moreover, numerous alternative designs were available to competitors. Finally, Hershey argued that its design was not the result of a simpler or less expensive method.
In considering both sides’ arguments, the Board stated that there was "no doubt" that the scoring of the candy bar served a useful function and that, "[s]imply put, candy bar segmentation is a functional feature of such goods." The Board further explained, however, that Hershey was seeking to register a candy bar that comprised all of the elements shown in the description and drawing of the mark. Accordingly, while the TTAB posited that there was "no question" that the rectangular shape or segments alone were functional and not registrable, it must balance the functional elements against any non-functional elements to determine whether the mark as a whole was functional.
In doing so, the Board disagreed with the Examiner’s focus on the rectangular shape and the segments as being dispositive of the issue of functionality, because this focus ignored the other elements of the mark. The Board further stated that the raised-border rectangles formed a prominent part of Hershey’s mark, there was no evidence that this particular combination of recessed rectangles with a raised border was used by other candy manufacturers or that the overall design was "in any way" functional. As such, when the significance of the design was balanced against the rectangular shape, including the segments, the mark as a whole was not functional.
The Trademark Examiner also refused registration of the mark on the ground that the design was not inherently distinctive and Hershey had not established acquired distinctiveness. The Board noted that Hershey admitted that the mark was not inherently distinctive and that an applicant faces a heavy burden in establishing the distinctiveness of a product design, but concluded that based on the direct evidence Hershey submitted (i.e., results of consumer recognition surveys), as well as circumstantial evidence (i.e., the declaration of Hershey’s assistant secretary as to the length of use of the mark, the sales revenue and advertising expenditures), plus evidence of attempts by third parties to copy the design, the mark had acquired distinctiveness. As such, it reversed the refusal and remanded the application back to the Examiner for further review.
The mark was subsequently approved for publication on July 16, 2012 and will be published for opposition on September 4, 2012.