Trade Dress Protection: Eye Candy
Julia Anne Matheson, Michael R. Justus
March 15 2009
The sweeping competition injected into the industry by generic-drug manufacturers has increased the need for brand-name drugmakers to boost consumer recognition of, and desire for, their branded products. To combat market erosion, many drugmakers have turned to DTC advertising to encourage patients to recognize and request a particular drug by name. To augment this effort, pharmaceutical companies have also focused on the design of the drugs themselves, adding unique source-identifying features such as color, shape, size, taste, or aroma to differentiate their products in the marketplace. AstraZeneca is an example of a company that has enjoyed billions of dollars in sales of its Prilosec product, due in part to its marketing savvy—educating the consuming public to recognize Prilosec as “the purple pill.” But recent case law calls into question the scope of trademark protection available to these organoleptic properties in pharmaceutical product design.
Trade Dress Basics
While trade dress has traditionally referred to protectable elements of product packaging, it also encompasses the design of a product itself. Product-design elements may include color, size, shape, aroma and even flavor. While the governing case law makes clear that these types of design features can never be “inherently distinctive,” meaning they cannot qualify for trademark protection immediately upon adoption, protection may nonetheless be available down the road if certain hurdles are cleared.
To qualify for trade-dress protection, product-design features must be shown to have acquired distinctiveness or “secondary meaning” among a substantial portion of the relevant purchasing public. Secondary meaning refers to a feature's acquisition of a new (or second) meaning as a source identifier. Thus, to secure protection, the owner of a product-design trade dress must be able to demonstrate that the consuming public has come to associate the particular product design with the owner. Marketing and advertising typically play a central and critical role in this process.
For pharmaceuticals, like other types of products, source identification is only one part of the conundrum of trade-dress protection. In addition, the Lanham Act requires that a product configuration not be “functional” to obtain protection. A trademark is considered functional “when it is essential to the use or purpose of the device or when it affects the cost or quality of the device.” Functionality thus refers to product-design aspects that go beyond serving exclusively as a source identifier or enhancing the aesthetic appeal of the product, and serves some other purpose such as improving product performance. If the product design is found to be legally functional, protection is not available. According to recent case law, the functionality hurdle may present a particularly unique complication in the pharmaceutical arena.
Pharmaceutical Product-Design Case Law
To date, in the US, only a handful of decisions have addressed the question of functionality of pharmaceutical product designs. The courts are particularly strict in their application of the functionality standard in relation to pharmaceutical product design. Unlike in other industries, several courts have denied protection where it can be demonstrated that the product design serves any useful purpose to the doctor or patient—including the ability to distinguish the product from others in the marketplace.
A. Color and Shape
The first case to address the issue of product configuration in the pharma arena was the Supreme Court's 1924 decision in William R. Warner Co. v. Eli Lilly & Co. The case addressed the manufacturer's efforts to obtain exclusive trademark protection in the chocolate flavor and brown color of its product. Although the evidence demonstrated that the chocolate additives provided a distinctive flavor and color, it also showed that they acted as a suspension medium deemed to enhance the drug's efficacy. Accordingly, the additives were held to be functional and thereby incapable of protection.
Thirty-five years later, in Norwich Pharmacal Co. v. Sterling Drug, the Second Circuit denied trademark protection for the bright pink color of Pepto-Bismol stomach medicine. The court concluded that the color was functional in that it was “soothing” to patients, thereby providing a “psychosomatic effect” and “therapeutic value” in treating upset stomachs. While in other industries, the appeal of the color would be viewed merely as aesthetically pleasing and accordingly protectable, the Norwich court stretched the concept of functionality to deny protection.
Another 21 years passed before the Eastern District of New York held in Ives Labs v. Darby Drug Co. that the color, size and shape of a pill capsule was functional because the appearance of the capsule had both a therapeutic effect and assisted patients in identifying the product and distinguishing it from other medications.
Later that year, in SK&F Co. v. Premo Pharm. Labs., Inc., the Third Circuit bucked the emerging trend, concluding that the pill color at issue was not functional. The case involved a diuretic drug contained in a maroon-and-white capsule. The court held that the multi-hued capsules were not functional in helping patients identify the drug. In so holding, the court pointed to the fact that equivalent diuretic drugs were marketed and sold in orange tablets, rather than maroon-and-white capsules, and that there was “ample evidence that neither the capsule form, nor the color combination reflects any industry practice for the identifications of diuretics.”
In subsequent cases, several other courts followed the Third Circuit's lead, allowing trade-dress protection for product design. In A.H. Robbins Co. v. Medicine Chest Corp., the court held that the shape and color of a round, light-blue pill was nonfunctional. In Hoffman La Roche v. Premo Pharm. Lab., the court granted protection for the color of light-green capsules. Likewise, in Merck & Co. v. Par Pharm., the court held the color combination of blue and white for capsules was nonfunctional. This line of cases left the state of the law in doubt, generating hope among brand owners of a new trend in favor of protection.
But when the next major decision came down in 2002, the District of New Jersey in Shire US v. Barr Labs, reversed this trend, concluding that the shape and color of Adderall tablets were functional and not protectable. In issuing its ruling, the court made the following findings. First, the color and shape of the pills varied with the tablet's strength—a feature designed to help patients distinguish between varying dosages, thereby enhancing efficacy. The need to distinguish between multiple dosages was particularly important here because In reaching its decision, the court gave great weight to extensive expert testimony from doctors indicating that ADHD patients are particularly likely to rely on “visual cues to compensate for disorder induced deficits in auditory attention & related cognition and memory processing.” In essence, according to the experts, patient safety and compliance increased when generic drugs looked similar to the branded drug. Thus, the very fact that the color and shape used by the branded manufacturer was effective in identifying the type and dosage of drug was the basis for the court's denial of protection. By acting as a source identifier, the product design increased compliance, thereby enhancing the efficacy, all of which, the court concluded, rendered the trade-dress functional and unsuitable for trademark protection.
The Third Circuit affirmed the Adderall decision the following year, taking a sharp turn from its 1980 decision in SK&F. The Third Circuit's decision, characterized in scholarly literature as “less of a faithful adherence to the principles of trademark law and more an expression of public policy to promote generic drug substitutions,” was met with applause by supporters of standardized trade dress for brand-name drugs and bioequivalent generics.
In addition to the Supreme Court's denial of protection for the chocolate flavor at issue in Eli Lilly above, the Trademark Trial and Appeal Board (TTAB) denied trademark registration for an “orange flavor” for antidepressant medication in In re N.V. Organon in 2006. The board relied on wide-ranging evidence, including the applicant's own website, suggesting that orange flavoring is commonly added to drugs to render them more palatable, which in turn increases patient compliance. This evidence revealed that orange flavoring was one of the more effective flavors in masking the taste of the underlying drug, thereby supporting a finding of “competitive need” and all but requiring a functionality holding. Relying on the evidence of record, the board concluded that the orange flavor “performs a utilitarian function that cannot be monopolized without hindering competition in the pharmaceutical trade.” The board expressed doubt that a flavor could ever function as a trademark, citing practical difficulties in examination and registration.
Notably, the TTAB's holding in Organon comports with the position of its European counterpart on registrability of flavors for pharmaceuticals. Three years before the Organon decision, OHIM—the Trademarks and Designs Registration Office of the European Union—refused registration to Eli Lilly's artificial strawberry flavor for pharmaceuticals on the ground of lack of distinctiveness.
The difficulty both Organon and Eli Lilly faced in obtaining trademark registration for flavors in the US and Europe is not all that surprising. The more unique a flavor, the less likely it is to appeal to a broad spectrum of the population. Because there are a limited number of flavors feasible for incorporation into the production of pharmaceuticals, flavor marks are uniquely susceptible to a competitive advantage claim. Flavor marks are generally problematic because consumers expect a flavor when they orally ingest a product, whether intentionally added by the drugmaker or not. As such, flavor is an inherently weak source identifier for orally administered pharmaceuticals or any other orally ingested product. And, as the TTAB noted in its Organon decision, flavor suffers from an additional problem. Consumers are unlikely to be able to distinguish pharmaceuticals based upon flavor when making their purchasing decision as they cannot be tasted before purchase.
Analysis and Suggestions
Courts in recent decisions have made clear that the special concerns surrounding drugs, particularly those surrounding patient compliance and safety, may trump drug companies' interests in protecting their intellectual property. Because of the inconsistent protection afforded to drug designs, brand-name drug manufacturers are increasingly focusing their branding strategies on more traditional avenues—brand names, taglines, and product packaging.
A branding strategy must necessarily vary significantly depending up whether the product at issue is OTC or by prescription. Although OTC medications can capitalize on the point-of-purchase courtship of consumers through their distinctive product packaging, prescriptions are typically filled in nondescript orange plastic containers. Accordingly, OTC drugmakers would be well served to focus on designing, marketing and registering distinctive product packaging—an area where the traditional trade-dress doctrine remains favorable. Prescription drugmakers may have to look elsewhere.
One possible solution for drugmakers could involve the adoption of blister-pack-style packaging typical of OTC cold medications and birth-control pills. While unquestionably more expensive from a packaging perspective, the possible benefits are multiple: blister packs eliminate the generic-container problem, custom-designed blister packs might garner trade-dress protection as inherently distinctive product-packaging, and blister packs are commonly designed in a way that actually increases patient compliance and reduces patient confusion or overdose.
It is unclear whether pharmacists will have the capability or the desire to fill every prescription in a custom-tailored blister pack. But to the extent any particular prescription drug allows for predictable and consistent dosages, blister packs might provide a way to protect and even foster market-share growth while also protecting the interests of the patient.
Another possible branding strategy could include providing pharmacists with small stickers displaying the brand name of the medication. Drugmakers could include sheets of stickers with each shipment of their drug encouraging pharmacists to affix a sticker on any container in which a drug is ultimately dispensed. This approach, while more time intensive, could also offer valuable benefits—ensuring that patients encounter the brand name while offering reassurance that the pharmacist has dispensed the proper medication.
Manufacturers may elect to step away from product configuration in favor of a more intense focus on the brand name itself. Traditional federal trademark protection for brand names and taglines is alive and well in the industry. DTC could further encourage patients' insistence on the brand-name drug. Marketers should continue to focus on identifying and promoting unique, easy-to-remember names for new drugs, while also striving to choose a name that is easy to register and enforce as a trademark (for example Viagra or Zoloft). Displaying the name on each pill could also increase sales revenue by raising awareness of, and subsequent demand for, the branded product. And manufacturers should continue to educate consumers that the purchase of brand-name drugs supports future research by true industry innovators. Consumers need to realize the truism that extra dollars spent on brand-name drugs today help fund the research and development of the wonder drugs of tomorrow.