Intellectual Property

China’s National Intellectual Property Administration Launches Belt and Road Patent Accelerated Examination Pilot Program

On January 17, 2025, China’s National Intellectual Property Administration (CNIPA) released the “Guidelines for the Belt and Road Accelerated Examination Pilot Program” (“一带一路”专利加快审查试点项目指南), effective January 20, 2025. The Belt and Road initiative is a global infrastructure program launched by China to invest in land and sea corridors to connect China to the world. The Pilot Program, which is somewhat analogous to the Patent Prosecution Highway (PPH), allows for accelerated patent examination in China when a Belt and Road country’s patent office indicates at least one claim in corresponding family member is allowable.
While the Pilot Program envisions including all Belt and Road countries (perhaps including more than 150 countries that signed a Memorandum of Understanding with China per Fudan University), it appears that Türkiye may be the only participating country at this time.

The period of the Pilot Program will commence on January 20, 2025 and end on January 19, 2027. Under the Pilot Program, the total number of applications to be accepted by CNIPA will be limited to 1000 per year, the maximum number of applications from each participating office will be limited to 100 per year. After the expiration of this two-year period, an evaluation will be conducted to determine whether the pilot program should be extended.
Requirements to participate include:
(a) The CNIPA application shall have at least one corresponding application in the participating office, which has determined that one or more claims of the corresponding application is/are patentable/allowable.
(b) All claims in the CNIPA application must sufficiently correspond to one or more of those claims determined to be patentable/allowable in the corresponding application.
(c) The CNIPA application must have been published.
(d) The CNIPA application must have entered into substantive examination stage. Note that as an exception, the applicant may file a request for accelerated examination simultaneously with the Request for Substantive Examination.
(e) The CNIPA has not begun examination of the application at the time of filing the request for accelerated examination.
(f) The CNIPA application must be electronic patent application.
More information can be found here (Chinese and English).

The Loper Loophole: Will Loper Bright Chip Away at Federal Circuit Rule 36 Summary Affirmances?

Criticism of the U.S. Court of Appeals for the Federal Circuit’s practice of issuing summary affirmances without written opinions in federal appeals and, in particular, Patent Trial and Appeal Board (PTAB) decisions, under Federal Circuit Rule 36 has reached a fever pitch. Recent briefs to the U.S. Supreme Court and rehearing petitions to the Federal Circuit advocate for change. Does the U.S. Supreme Court’s momentous 2024 decision casting aside the Chevron doctrine in Loper Bright Enterprises v. Raimondo now offer a path for PTAB appellants to circumvent Rule 36 altogether?
Rule 36 of the Federal Circuit’s Rules of Appellate Procedure permits the court to affirm on appeal without an opinion when the court determines that one of five criteria are met. The Federal Circuit has explained that a summary affirmance neither rejects nor endorses the underlying reasoning from the tribunal below, and therefore does not carry precedential weight. Nevertheless, a Rule 36 affirmance constitutes a final judgment for the litigants before the court and may be relied on for purposes of claim preclusion, issue preclusion, judicial estoppel, and law of the case.
The scrutiny of Rule 36 affirmances has been especially acute in connection with recent PTAB decisions. For example, amicus briefs were filed over the past few months in support of a petition submitted by patent holder ParkerVision, Inc., which contrasted the comments of former Federal Circuit judges conveying that the court should provide an opinion in every case, with the reality that the Federal Circuit issued Rule 36 summary affirmances in 43 percent of PTAB appeals between 2011 and 2024. This practice, ParkerVision urged, runs afoul of the requirement of 35 U.S.C. § 144 that a court provide the reason for its decision.
But the Loper Bright decision, which overturned the Chevron doctrine requiring courts to defer to agency interpretation of statutes, may sometimes require the Federal Circuit to exercise “independent judgment in determining the meaning of a statutory provision.”
In Loper Bright, the Supreme Court held that when confronted with a statutory ambiguity, a court must not defer to an agency’s interpretation but instead should do its “ordinary job of interpreting statutes, with due respect for the views of the Executive Branch.” While prior PTAB appeals to the Federal Circuit would have been affirmed when the court agreed that the agency’s interpretation of an ambiguous statute was reasonable, such deference is no longer permitted. Framing a PTAB appeal through the lens of a “statutory ambiguity” may increase the likelihood that the Federal Circuit will be unable to rubber-stamp the statutory interpretation and associated findings of the PTAB using Rule 36.
In October 2024, appellant-patent owner Converter Manufacturing made this very argument when it petitioned the Federal Circuit to rehear its appeal en banc after receiving a Rule 36 affirmance of an adverse PTAB decision in Converter Manufacturing, LLC v. Tekni-Plex, Inc. Converter Manufacturing claimed the Supreme Court’s decision in Loper Bright barred the Federal Circuit from deferring to the U.S. Patent and Trademark Office’s (USPTO) interpretation of patent law under 35 U.S.C. §§ 102 and 103, and argued that the Federal Circuit panel had substituted the USPTO’s interpretation for its own by issuing the summary affirmance.
Although the petition was ultimately denied, it raises new questions about the limits of Federal Circuit affirmances under Rule 36 in light of Loper Bright. Perhaps the Supreme Court’s shift away from deference offers a new opportunity for appellants to position their appeal to avoid the dreaded two-word decision: “summarily affirmed.”

Department of Education Warns NCAA Schools That NIL Deals May Implicate Title IX Obligations

The U.S. Department of Education warned National Collegiate Athletic Association (NCAA) schools that payments to athletes for the use of their names, images, and likenesses (NIL) implicate the gender equal opportunity requirements of Title IX of the Education Amendments, even if from outside sources.

Quick Hits

The U.S. Department of Education released a fact sheet that provides guidance on educational institutions’ Title IX obligations with NIL compensation for college athletes.
The guidance confirms the Department of Education’s view that NIL compensation from schools constitutes “athletic financial assistance” covered by Title IX’s equal opportunity requirements.
The guidance comes amid a changing landscape in college sports with NIL compensation and the prospect of potential revenue-sharing between schools and college athletes.

On January 16, 2024, the Department of Education’s Office for Civil Rights (OCR) released a nine-page fact sheet, titled, “Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities,” providing long-awaited guidance on schools’ obligations with respect to Title IX in the context of NIL.
The fact sheet confirms that the department views NIL compensation provided by a school as “athletic financial assistance,” which Title IX requires to be distributed in a nondiscriminatory manner under Title IX.
The guidance comes years after the NCAA lifted restrictions on college athletes’ ability to earn compensation for their NIL. This has led to the formation of so-called NIL collectives, organizations typically comprised of boosters, fans, alumni, and businesses, to facilitate NIL deals for athletes.
Further, the NCAA and major conferences have reached a proposed settlement in litigation that will pay nearly $2.8 billion in back pay to former athletes over the next ten years and establish a revenue-sharing framework in which schools will be allowed to share more than $20 million annually with their athletes.
Title IX regulations require schools to provide equal athletic opportunity, regardless of sex, including with “athletic financial assistance” that schools award to college athletes.
According to the OCR fact sheet, the Department of Education “does not view compensation provided by a third party (rather than a school) to a student-athlete for the use of their NIL as constituting athletic financial assistance awarded by the school.” However, the fact sheet warns that the OCR has “long recognized that a school has Title IX obligations when funding from private sources, including private donations and funds raised by booster clubs, creates disparities based on sex in a school’s athletic program or a program component.”
“The fact that funds are provided by a private source does not relieve a school of its responsibility to treat all of its student-athletes in a nondiscriminatory manner,” the Department of Education said in the fact sheet. “It is possible that NIL agreements between student-athletes and third parties will create similar disparities and therefore trigger a school’s Title IX obligations.”
The department noted the variety and evolving nature of NIL agreements in college athletics and specified that the application of Title IX “is a fact-specific inquiry.” Further, and in recognition of the continued evolution of college athletics, the department noted that “Title IX regulations assume that the receipt of financial assistance does not transform students, including student-athletes, into employees,” and the fact sheet, thus, operates under the same assumption. The Department of Education stated that it would “reevaluate” this position should the legal landscape around that issue change.
Next Steps
The fact sheet comes just days before the presidential administration changeover, which is anticipated to impact the federal government’s response to NIL pay and make systemic changes to college sports, including regarding the question of employee status. Still, the fact sheet indicates that schools may face risks under Title IX with the distribution of NIL compensation even if third parties are providing that money.

Make Protecting Your UK and EU Product Packaging and Labels Your New Year’s IP Resolution. Part 1: Protect Unique Packaging in the EU

New developments in Europe make a filing strategy for registered designs and trade marks even more essential for the modern consumer business. Read on to find out more.
On 19 December 2024, the EU’s new Packaging Regulation was signed and will come into force 18 months after the date of publication, still to be announced. This repeals the old packaging directive and makes significant changes to the regime. These changes include introducing stringent requirements on sustainability, recyclability and limiting single-use plastics for products sold in the EU. However, the regulation will also provide certainty for brands as the regulation will harmonise the rules across all EU member states, which will stop brands having to contend with varying, sometimes conflicting, packaging rules in different markets.
Packaging Minimisation in the EU
This new regulation will have a large effect on many industries including fast moving consumer goods, cosmetics and fashion, but we want to draw your attention to one new requirement in particular, the requirement for packaging minimisation (Article 10). This requires packaging to be designed so as to minimise its volume and weight, and to enable recyclability.
There will therefore be a ban on “superfluous” packaging such as double walls and false bottoms, but also packaging that is not necessary for “packaging function”. Together these could limit a brand’s ability to use inventive and creative packaging to stand out in the market. For instance, a product packaging in an unusual shape that is not strictly necessary to its function could be banned.
There is a (somewhat limited) exception to this rule for packaging that is protected under EU or national design or trademark laws or applicable international agreements. This exception applies provided that packaging changes would affect “the shape of the packaging in such a way that the trademark can no longer distinguish the trademarked good from goods of another undertaking, and the design can no longer keep its new and individual characteristics”. Importantly, UK designs and trademarks will not count, and companies will need EU-based registrations to qualify for this exception.
However, the exception only applies to trademark and design rights protected before the date of entry into force of the new regulation. This means that the clock will start to tick very shortly with an 18-month window to ensure designs and trademarks are properly filed.
Key Takeaways for Brands
The key takeaways are:

Review trade mark and design portfolios to check protection status today;
File trade marks for any hero products and packaging to protect their shape, look and feel (multiple marks may be necessary depending on the complexity of the packaging); and
File registered designs for new products as soon as possible.

Look out for Part 2 of this series on combating product imitations (known as ‘dupes’) in the UK, coming soon.

Ceramtec GMBH v. Coorstek Biocermanics LLC

This case examines the application of trademark functionality doctrine in the medical device industry, specifically addressing whether the pink color of ceramic hip components can be protected as a trademark. The case provides important guidance on how courts evaluate functionality claims and the intersection between patent and trademark protection for product features.
Background
Ceramtec manufactures artificial hip components using zirconia-toughened alumina (“ZTA”) ceramic material containing chromium oxide (chromia). The chromia gives their products, marketed under the name “Biolox Delta,” a distinctive pink color. Prior to seeking trademark protection, Ceramtec held U.S. Patent 5,830,816 covering their ceramic composition, which expired in January 2013.
In January 2012, Ceramtec applied for two trademarks claiming protection for the color pink used in ceramic hip components. The marks were registered on the Supplemental Register in April 2013, covering both a “hip joint ball” and an “acetabular shell or fossa.”
Coorstek, a competitor in the medical implant market, manufactures two different ZTA ceramic materials: CeraSurf-p, which contains chromia and is pink, and CeraSurf-w, which does not contain chromia and is white. On March 3, 2014, Coorstek filed both a lawsuit in the District of Colorado and a cancellation petition with the Trademark Trial and Appeal Board (TTAB), arguing that the pink color was functional and therefore ineligible for trademark protection.
The TTAB ruled in favor of Coorstek, finding that the pink color was functional and cancelling Ceramtec’s trademark registrations. The Board based its decision on evidence from Ceramtec’s expired patent and their technical publications showing that chromia provided material benefits to the ceramic components. Ceramtec appealed this decision to the Federal Circuit, challenging both the Board’s functionality finding and its handling of the unclean hands defense.
Issue(s)
Whether the pink color of Ceramtec’s ceramic hip components is functional and thus ineligible for trademark protection.
Holding
The Federal Circuit affirmed the TTAB’s decision canceling Ceramtec’s trademarks, finding that the pink color was functional and therefore not eligible for trademark protection.
Reasoning
The Federal Circuit’s analysis centered on the Morton-Norwich factors, a four-part test established in In re Morton-Norwich Products, Inc. that courts use to determine whether a product feature is functional. These factors examine: (1) the existence of a utility patent disclosing the utilitarian advantages of the design; (2) advertising materials in which the originator of the design touts its utilitarian advantages; (3) the availability to competitors of functionally equivalent designs; and (4) facts indicating the design results in a comparatively simple or cheap method of manufacturing.
Applying these factors to Ceramtec’s case:

The court found that Ceramtec’s expired patent disclosing the use of chromia in ZTA ceramics provided strong evidence that the pink color was functional, as it resulted from a feature that provided material benefits.
The court considered Ceramtec’s advertising materials and public communications, which disclosed that chromia provides material benefits to the ZTA ceramics, further supporting functionality.
Regarding the availability to competitors, the court found no evidence that alternative designs would work as well, making this factor neutral in the analysis.
The court determined that evidence about manufacturing costs and methods was inconclusive and treated this factor as neutral.

Particularly significant was the relationship between Ceramtec’s expired patent and their trademark claims. The court emphasized that features previously protected by a patent cannot later be protected through trademark law if they are functional, as this would effectively extend patent protection indefinitely.
The court also rejected Ceramtec’s argument that the Board improperly applied the “unclean hands” doctrine, finding that the Board properly considered the public interest in removing registrations for functional marks from the trademark register.
Through this decision, the Federal Circuit reinforced the principle that functional product features, even if they create a distinctive appearance, cannot be protected as trademarks when they serve a utilitarian purpose essential to the product’s use or manufacture.
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Tickled Pink No More

Federal Circuit Affirms Cancellation of CeramTec’s Trademarks for Pink Ceramic Hip Implants
January 16, 2025
Color trademarks have traditionally been difficult to obtain. Of the over 4 million trademark registrations, there were less than 1000 color trademarks as of 2019.[1] To be eligible for trademark registration, a color must have acquired distinctiveness and must not be functional. Recently, the Federal Circuit examined the functional component of the analysis and explained why it presents such a hurdle to registration—particularly when a party also obtains patent protection.
On January 3, 2025, the U.S. Court of Appeals for the Federal Circuit upheld the Trademark Trial and Appeal Board (TTAB) decision canceling trademarks claiming protection for the pink color of ceramic hip components.
CeramTec, a manufacturer of ceramic components for artificial hip implants, developed zirconia toughened alumina (ZTA) containing chromia, which imparts pink color and increased hardness. This material was protected under CeramTec’s U.S. Patent No. 5,830,816, which expired in January 2013. In 2012, CeramTec sought trademark protection for the pink color of its ceramic components. CoorsTek, a competitor, successfully petitioned the TTAB to cancel the trademarks, arguing that the pink color was functional.
On appeal, the Federal Circuit affirmed the TTAB decision, emphasizing that trademarks are not registrable or enforceable if the design is functional. The court analyzed the TTAB’s application of the Morton–Norwich factors to determine functionality:

the existence of a utility patent disclosing the utilitarian advantages of the design;
advertising materials in which the originator of the design touts the design’s utilitarian advantages;
the availability to competitors of functionally equivalent designs; and
facts indicating that the design results in a comparatively simple or cheap method of manufacturing the product.

CeramTec GmbH v. Coorstek Bioceramics LLC, No. 2023-1502, 2025 WL 29252 (Fed. Cir. Jan. 3, 2025).
The court also considered TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001), which establishes that utility patents are strong evidence of functionality. The Federal Circuit noted that the functionality doctrine ensures the public is free to use innovations after a patent expires.
Based on these findings, the court affirmed that CeramTec’s pink trademarks are functional and therefore ineligible for protection.
If you have any questions about the impact of these changes, please contact your Miller Canfield attorney or the authors of this alert.
[1] Wang, Xiaoren, Should We Worry about Color Depletion? An Empirical Study of USPTO Single-color Trademark Registrations (January 18, 2022). Available at SSRN: https://ssrn.com/abstract=4011677 or http://dx.doi.org/10.2139/ssrn.4011677

Tickled Pink No More – Federal Circuit Affirms Cancellation of CeramTec’s Trademarks for Pink Ceramic Hip Implants

Color trademarks have traditionally been difficult to obtain. Of the over 4 million trademark registrations, there were less than 1000 color trademarks as of 2019.[1] To be eligible for trademark registration, a color must have acquired distinctiveness and must not be functional. Recently, the Federal Circuit examined the functional component of the analysis and explained why it presents such a hurdle to registration—particularly when a party also obtains patent protection.
On January 3, 2025, the U.S. Court of Appeals for the Federal Circuit upheld the Trademark Trial and Appeal Board (TTAB) decision canceling trademarks claiming protection for the pink color of ceramic hip components.
CeramTec, a manufacturer of ceramic components for artificial hip implants, developed zirconia toughened alumina (ZTA) containing chromia, which imparts pink color and increased hardness. This material was protected under CeramTec’s U.S. Patent No. 5,830,816, which expired in January 2013. In 2012, CeramTec sought trademark protection for the pink color of its ceramic components. CoorsTek, a competitor, successfully petitioned the TTAB to cancel the trademarks, arguing that the pink color was functional.
On appeal, the Federal Circuit affirmed the TTAB decision, emphasizing that trademarks are not registrable or enforceable if the design is functional. The court analyzed the TTAB’s application of the Morton–Norwich factors to determine functionality:

[1] Wang, Xiaoren, Should We Worry about Color Depletion? An Empirical Study of USPTO Single-color Trademark Registrations (January 18, 2022). Available at SSRN: https://ssrn.com/abstract=4011677 or http://dx.doi.org/10.2139/ssrn.4011677

Expungement and Reexamination Proceedings at the USPTO: Cost-Effective and Efficient Processes for Cancelling Trademarks

Businesses seeking to clear the path for their trademarks can challenge trademarks of others that are not genuinely in use. The U.S. Patent and Trademark Office (USPTO) expungement and reexamination proceedings provide businesses with tools to challenge such existing trademark registrations. The USPTO recently announced that it has successfully used such proceedings to clear more than 25,000 unused goods and services from the trademark register in 2024.
To maintain their registration, trademark owners are required to use their trademark in commerce for all the goods and services listed in the registration. However, when active trademark registrations include goods and services that no longer apply, they can block subsequent legitimate owners from registering the same or a similar mark.
Expungement and reexamination proceedings are two ways a party can challenge a registration due to nonuse in an attempt to cancel that registration. These proceedings are generally less expensive and more efficient than a formal cancellation proceeding before the Trademark Trial and Appeal Board (TTAB). If the request succeeds, the USPTO will delete those goods or services from the registration or cancel the registration altogether.
Expungement versus Reexamination
The type of proceeding depends on the particular facts. A party may institute an expungement proceeding if it can show that the owner never used the trademark in commerce with reference to some or all of the goods or services listed in the registration. Expungement is available for a registration based on use in commerce, a foreign registration, or the Madrid Protocol. Expungement must be requested between three and ten years after the trademark registration date.
On the other hand, a party may institute a reexamination proceeding if it can show that the owner did not use the trademark in commerce with reference to some or all of the goods or services listed in the registration on or before the relevant date required for showing proof of use. The “relevant date” is the date when the underlying application was initially filed based on use in commerce. When the underlying application was filed or amended to an intent-to-use basis, the “relevant date” is the date that an accepted amendment to allege use was filed or the end date of the statement-of-use period for an accepted statement of use. Reexamination must be requested within the first five years after registration.
How to Institute a Proceeding
To institute either an expungement or a reexamination proceeding, a party must submit the relevant form requesting that the USPTO institute a proceeding, including a verified statement, evidence supporting nonuse (such as past and current nonuse, fake or digitally altered specimens of use, or evidence of improper behavior that is relevant to nonuse), and a $400 fee per class of goods or services challenged. The trademark owner is notified and can submit a response. Aside from the original filing, no other documents are required. The USPTO will then consider all the evidence and make a determination. This process can take anywhere from four to twelve months.
For comparison purposes, the cost to institute a formal proceeding at the TTAB is $600 per class and can last up to three years. This does not include any legal fees incurred as a result of engaging in the adversarial proceeding, including motion filings and discovery.
Conclusion
In the past, if a registered mark were cited against an application based on a likelihood of confusion, the applicant could either respond with arguments as to why there was no likelihood of confusion or seek to cancel the registered mark. The expungement and reexamination proceedings give applicants another avenue for overcoming this type of refusal.

Just Compensation Based on Hypothetical Negotiation

In a long-standing copyright dispute on its second visit to the US Court of Appeals for the Federal Circuit, the Court affirmed the modest damages award from the US Court of Federal Claims, ruling that a hypothetical negotiation between the parties would have resulted in a license in the amount awarded by the claims court. Bitmanagement Software GmBH v. United States, Case No. 23-1506 (Fed. Cir. Jan. 7, 2025) (Dyk, Stoll, Stark, JJ.)
In 2016 Bitmanagement sued the US Navy for copyright infringement of its software. The Court of Federal Claims awarded damages based on usage of the software, rather than the number of copies made. In the first appeal, the Federal Circuit agreed with the claims court that the Navy had an implied license to make copies of the software but was limited as to simultaneous users of the software, a condition that the Navy breached. The Federal Circuit remanded the case with the following instruction:
Because Bitmanagement’s action is against the government, it is entitled only to “reasonable and entire compensation as damages . . . , including the minimum statutory damages as set forth in section 504(c) of title 17, United States Code.” 28 U.S.C. § 1498(b).

The Federal Circuit further instructed the claims court that Bitmanagement was:
. . . not entitled to recover the cost of a seat license for each installation. If Bitmanagement chooses not to pursue statutory damages, the proper measure of damages shall be determined by the Navy’s actual usage of BS Contact Geo in excess of the limited usage contemplated by the parties’ implied license. That analysis should take the form of a hypothetical negotiation. . . . As the party who breached the . . . requirement in the implied license, the Navy bears the burden of proving its actual usage of the . . . software and the extent to which any of it fell within the bounds of any existing license.

Following this mandate, the claims court denied Bitmanagement’s damages demand of almost $86 million and awarded $154,000. Bitmanagement appealed, arguing that it was entitled to damages based on each copy of the software made, rather than damages based on use exceeding the implied license.
The Federal Circuit disagreed, explaining that the law does not require that every award of copyright damages be on a per-copy basis:
. . . whenever the copyright in any work protected under the copyright laws of the United States shall be infringed by the United States . . . the exclusive action which may be brought for such infringement shall be an action by the copyright owner against the United States in the Court of Federal Claims for the recovery of his reasonable and entire compensation as damages for such infringement . . .

As the Federal Circuit noted, the methods used to determine recovery of “actual damages” under § 504 are those “appropriate for measuring the copyright owner’s loss.” Therefore, in § 504(b) cases, the copyright owner must prove “the actual damages suffered by him or her as a result of the infringement.”
As the Federal Circuit further explained, the “reasonable and entire compensation” provided for by § 1498(b) “entitles copyright owners to compensatory damages . . . but not to non-compensatory damages.” The focus is on “the copyright owner’s loss,” as opposed to the value obtained by the government.
Since the statutory requirement is to establish actual damages that are the consequence of, and thus caused by, the infringement, the Federal Circuit concluded that Bitmanagement was not entitled to recover per-copy damages.
Citing to its 2012 decision in Gaylord v. United States, the Federal Circuit explained that where a plaintiff cannot show lost sales, lost opportunities to license, or diminution in the value of the copyright (as in this case), an award of actual damages should be “based on the fair market value of a license covering the defendant’s use. The value of this license should be calculated based on a hypothetical, arms-length negotiation between the parties.”

Pink Is Not the New Black: See Functionality Doctrine

The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial & Appeal Board decision canceling trademarks for the color pink for ceramic hip components, stating that substantial evidence supported the Board’s findings that the color pink as used in the ceramic components was functional. CeramTec GmbH v. CoorsTek Bioceramics LLC, Case No. 23-1502 (Fed. Cir. Jan. 3, 2025) (Lourie, Taranto, Stark, JJ.)
Trademarks cannot be functional. The functionality doctrine prevents the registration of useful product features as trademarks. As explained by the Supreme Court (1995) in Qualitex v. Jacobson Prods.:
The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, 35 U.S.C. §§ 154, 173, after which competitors are free to use the innovation. If a product’s functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity).

CeramTec manufactures ceramic hip components made from zirconia-toughened alumina (ZTA) ceramic containing chromium oxide (chromia). The addition of chromia gives the ceramic a characteristic pink color. CeramTec obtained trademarks for the pink color as used in these components. CoorsTek Bioceramics, a competitor, challenged the trademarks, arguing that the pink color of the ceramic was functional. The Board agreed, finding that the pink color was functional because it resulted from the addition of chromia, which provided material benefits to the ceramic, such as increased hardness. CeramTec appealed.
The Federal Circuit applied the four-factor Morton-Norwich (CCPA 1982) test to determine functionality:

Existence of a utility patent
Advertising materials
Availability of functionally equivalent designs
Comparatively simple or cheap manufacture.

The Federal Circuit found the first and second Morton-Norwich prongs were strongly in CoorsTek’s favor, as CeramTec held multiple patents that disclosed the functional benefits of chromia, such as toughness, hardness, and stability of the ZTA ceramic. Similarly, the Court found that CeramTec had multiple advertising materials that promoted its product’s functional advantages.
The Federal Circuit found that there was no evidence of alternative designs that were functionally equivalent to the pink ZTA ceramic, rendering the third factor neutral. The Court also found the fourth factor neutral because there was conflicting evidence regarding whether chromia reduced manufacturing costs.
Finally, CeramTec argued that CoorsTek should be precluded from challenging the trademarks based on the doctrine of unclean hands. The Federal Circuit acknowledged that the Board spoke too strongly in suggesting that the unclean hands defense is categorically unavailable in functionality proceedings but found any error to be harmless. The Court confirmed that the Board had adequately considered the defense and found it inapplicable in this case.
Hannah Hurley also contributed to this article.

Lager Than Life: $56 Million Verdict in Beer Trademark Dispute Still on Tap

The US Court of Appeals for the Ninth Circuit upheld a $56 million trial verdict in a trademark dispute, finding that the evidence supported the jury’s conclusion that a beer company’s rebranding of one its beers infringed a competitor’s trademark. Stone Brewing Co., LLC v. Molson Coors Beverage Company USA LLC, Case No. 23-3142 (9th Cir. Dec. 30, 2024) (Graber, Friedland, Bumatay, JJ.) (nonprecedential).
Stone Brewing sued Molson Coors in 2018 alleging that Molson changed its packaging of Keystone Light to emphasize the word “stone” in its “Own the Stone” marketing campaign, and that this change infringed Stone Brewing’s trademarks and caused consumer confusion. Molson raised a variety of defenses, all of which were rejected. A jury found infringement and ultimately awarded Stone Brewing $56 million. Molson appealed.
Molson argued that the district court erred in finding that the four-year laches clock did not bar Stone Brewing’s Lanham Act claims. The Ninth Circuit found that the laches clock began running in 2017 when Molson launched the “Own the Stone” campaign, to which all of Stone Brewing’s claims related. The Court noted that prior to 2017, Molson never referred to Keystone as anything other than Keystone in its packaging, marketing, or advertising materials, and specifically never broke up the product name “Keystone” and used the term “Stones” to refer to the number of beers in a case (“30 stones”) or as a catch phrase (e.g., “Hold my Stones”). Thus, the Court found that Stone Brewing brought the suit within the four-year statute of limitations period.
Molson also argued that the district court erred in refusing to set aside the jury verdict on the ground that Molson had a superior interest in the STONE mark. Stone Brewing applied to register the STONE mark in 1996, and the Ninth Circuit found there was substantial evidence that Molson did not approve production of packaging that used “Stone” before that date.
Molson argued that the district court erred in refusing to set aside the jury verdict on likelihood of confusion. The Ninth Circuit disagreed, explaining that Stone Brewing provided evidence from which a jury could plausibly conclude there was “actual confusion” by distributors and customers who thought that Stone Brewing sold Keystone Light. The Court noted that Molson expressly de-emphasized “Keystone” and instead highlighted “Stone” in its 2017 product refresh. The Court also explained that both brands compete in the same beer space, use the same marketing and distribution channels, and are relatively inexpensive products, all of which allowed the jury to plausibly conclude that Molson’s 2017 product refresh of Keystone Light was likely to cause consumer confusion.
Molson also challenged the damages award. At trial, Stone Brewing sought damages in three categories:

$32.7 million for past lost profits
$141.4 million for future lost profits
$41.8 million for corrective advertising.

The jury returned a verdict of $56 million in general damages, which was about one quarter of the requested damages, but did not indicate what amount came from each category. Molson argued that Stone Brewing could not recover future lost profits because no court has awarded speculative future lost profits. The Ninth Circuit disagreed, citing its 2014 decision in Oracle v. SAP in which it upheld a damages calculation that considered a lost future “ongoing stream of revenue from [the infringed upon company’s] former customers.” The Court found that Stone Brewing provided expert testimony that estimated how long it would take Stone Brewing to recover its sales after corrective advertising, and that the jury could reasonably rely on the expert’s calculation to determine that Stone Brewing’s sales would not recover immediately.

Equity Is Neither a “Good” Nor a “Service” Under Lanham Act

The US Court of Appeals for the Ninth Circuit affirmed a district court’s decision that, in terms of trademark use in commerce, corporate equity is not a “good” or “service” under the Lanham Act. LegalForce RAPC Worldwide, PC v. LegalForce, Inc., Case No. 23-2855 (9th Cir. Dec. 27, 2024) (Thomas, Wardlaw, Collins, JJ.) (Collins, J., concurring).
LegalForce RAPC Worldwide is a California corporation that operates legal services websites and owns the US mark LEGALFORCE. LegalForce, Inc., is a Japanese corporation that provides legal software services and owns the Japanese mark LEGALFORCE.
Both parties had discussions with the same group of investors. After those meetings, LegalForce Japan secured $130 million in funding, while LegalForce USA received nothing. Thereafter, LegalForce USA brought several claims against LegalForce Japan, including a trademark infringement claim. To support its case, LegalForce USA cited LegalForce Japan’s expansion plan, a trademark application for the mark LF, website ownership, and the use of LEGALFORCE to sell and advertise equity shares to investors in California.
The district court dismissed claims related to the website for lack of personal jurisdiction and dismissed claims related to the US expansion plan, trademark application, and alleged software sales in the United States as unripe. The district court dismissed the trademark infringement claims related to the efforts to sell equity shares for failure to state a claim. The court found that advertising and selling equity cannot constitute trademark infringement because it is not connected to the sale of goods or services, and the case did not present justification for extraterritorial application of the Lanham Act. LegalForce USA appealed.
To state a claim for trademark infringement under the Lanham Act, plaintiffs must show that:

They have a protectible ownership interest in the mark, or for some claims, a registered mark
The defendant used the mark “in connection with” goods or services
That use is likely to cause confusion. 15 U.S.C. § 1114(1)(a), § 1125(a).

The Ninth Circuit agreed with the district court that LegalForce Japan had not used LegalForce USA’s mark “in connection with” goods or services, and thus LegalForce USA failed to state a claim for which relief could be granted.
The Ninth Circuit concluded that using LEGALFORCE to advertise and sell equity failed to satisfy the requirement that a defendant used the mark in connection with goods or services. Referring to the U.C.C., the Court explained that corporate equity is “not a good for purposes of the Lanham Act, because it is not a movable or tangible thing.” Equity is also not a service because it is not a performance of labor for the benefit of another. There is no “another” involved because those who buy LegalForce Japan equity are owners and so they are not legally separate “others.”
The Ninth Circuit also agreed with the district court that LegalForce Japan’s services in Japan did not satisfy the “in connection with” goods or services requirement under the Lanham Act. To determine when a statute applies extraterritorially, courts invoke the 2023 Supreme Court Abitron Austria two-step test:

“[W]hether Congress has affirmatively and unmistakably instructed that the provision at issue should apply to foreign conduct”
“[W]hether the suit seeks a (permissible) domestic or (impermissible) foreign application of the provision, based on the statute’s focus and whether the conduct relevant to that focus occurred in the [US] territory.”

For the first step, the Supreme Court has held that the Lanham Act does not provide a “clear, affirmative indication” that it applies extraterritorially. As for the second step, the conduct relevant to trademark infringement would be the defendant’s “use [of the mark] in commerce.” The Lanham Act’s “use in commerce” requirement is equivalent to the “in connection with goods and services” requirement. Explaining that the Lanham Act does not apply if the mark is only used in connection with goods and services outside the US, the Ninth Circuit determined that the Lanham Act was inapplicable here because all LegalForce Japan services are outside the US.
In a concurrence, Judge Collins agreed that a company’s own equity or stock shares do not count as goods or services offered to customers in the market under the Lanham Act. At oral argument, LegalForce USA confirmed that the only good or service underlying its Lanham Act claims was LegalForce Japan’s equity. Although the Lanham Act does not define “goods” or “services,” how a company is internally structured under corporate law is distinct from goods and services that the corporation offers in commerce to its customers. However, Judge Collins thought it unnecessary to reach any additional issues to resolve this case or to import specific definitions of goods. Because securities may qualify as movable or tangible, he explained in a footnote that he did not agree with the majority’s limitation as to goods that are “movable” or “tangible” or its explanation as to why securities fail this test.