Soclean, Inc. v. Sunset Healthcare Solutions, Inc.

United States Court of Appeals
for the Federal Circuit
______________________
SOCLEAN, INC.,
Plaintiff-Appellee
v.
SUNSET HEALTHCARE SOLUTIONS, INC.,
Defendant-Appellant
______________________
2021-2311
______________________
Appeal from the United States District Court for the
District of Massachusetts in No. 1:20-cv-10351-IT, Judge
Indira Talwani.
______________________
Decided: November 9, 2022
______________________
BRENDAN COX , Laredo & Smith, LLP, Boston, MA, ar-
gued for plaintiff-appellee. Also represented by P AYAL
SALSBURG.
J OHN L ABBE , Marshall, Gerstein & Borun LLP, Chi-
cago, IL, argued for defendant-appellant. Also represented
by MARK HARRY I ZRAELEWICZ, T IFFANY D. G EHRKE .
______________________
Before N EWMAN, L OURIE, and P ROST , Circuit Judges.
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 2
P ROST , Circuit Judge.
Sunset Healthcare Solutions, Inc. (“Sunset”) appeals
the U.S. District Court for the District of Massachusetts’s
order granting preliminary injunctive relief to SoClean,
Inc. (“SoClean”) requiring “Sunset to clearly associate its
online marketing and sales . . . with the Sunset brand.” So-
Clean, Inc. v. Sunset Healthcare Sols., Inc., 554 F. Supp. 3d
284, 308 (D. Mass. 2021). We affirm.
BACKGROUND
This appeal is a small part of a larger intellectual-prop-
erty dispute between SoClean, a medical-device company
that produces sanitizing devices for Continuous Positive
Airway Pressure (“CPAP”) machines, and Sunset, one of its
former distributors. As relevant here, SoClean owns
U.S. Trademark Registration No. 6,080,195 (“the ’195 reg-
istration”) for the configuration of replacement filters for
its sanitizing devices:
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 3
SoClean sued Sunset for patent infringement on Feb-
ruary 20, 2020; it filed a second patent-infringement law-
suit about a year later; and, shortly thereafter, it amended
the complaint in the second lawsuit to assert trademark-
infringement claims based on, among others, the ’195 reg-
istration. The district court consolidated the two cases at
the parties’ request.
On April 23, 2021, SoClean asked the district court to
preliminarily enjoin Sunset from using, selling, offering for
sale, or making in the United States filters that SoClean
alleged infringed the ’195 registration. The district court
granted the motion in part, concluding that SoClean was
likely to succeed on the merits and, accordingly, was enti-
tled to a presumption of irreparable harm. SoClean, 554 F.
Supp. 3d at 306–07. Balancing the equities and weighing
the public interest, the district court concluded that So-
Clean’s request to enjoin all sales of Sunset’s filters would
“go[] much further than necessary” to “end any possible
statutory violation.” Id. at 308. The district court instead
crafted a narrow “injunction that prohibits Sunset from en-
gaging in those practices that result in consumer confu-
sion” and enjoined Sunset from marketing its filters “using
images of the filter cartridge alone”; “[a]ny image, draw-
ings, or other depictions of Sunset’s filter cartridge used for
the purposes of promotion, marketing and/or sales shall
prominently display the Sunset brand name in a manner
that leaves no reasonable confusion that what is being sold
is a Sunset brand filter.” Id.
Sunset appeals. We have jurisdiction under 28 U.S.C.
§§ 1292(c)(1) and 1295(a)(1).
D ISCUSSION
We review a preliminary-injunction order under the
law of the regional circuit. Koninklijke Philips N.V. v. Tha-
les DIS AIS USA LLC, 39 F.4th 1377, 1379 (Fed. Cir. 2022).
The First Circuit reviews preliminary-injunction decisions
for abuse of discretion; it reviews underlying questions of
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 4
law de novo and questions of fact for clear error. Am. Inst.
for Foreign Study, Inc. v. Fernandez-Jimenez, 6 F.4th 120,
122 (1st Cir. 2021).
A party seeking a preliminary injunction must estab-
lish (1) a likelihood of success on the merits of its claim;
(2) a likelihood of irreparable harm in the absence of pre-
liminary relief; (3) that the balance of equities tips in its
favor; and (4) that the injunction is in the public interest.
Together Emps. v. Mass Gen. Brigham Inc., 32 F.4th 82, 85
(1st Cir. 2022) (citing Winter v. Nat. Res. Def. Council, Inc.,
555 U.S. 7, 20 (2008)). “The first two factors are the most
important.” Id.
Sunset raises two challenges on appeal, both relating
to the likelihood-of-success factor. First, it argues that the
district court abused its discretion when it concluded that
SoClean was likely to defeat Sunset’s defense that the
’195 registration lacks secondary meaning. Second, it con-
tends that the district court erred in finding that the avail-
ability of alternative designs for the filter’s head meant
that SoClean was likely to defeat Sunset’s functionality de-
fense. We address each in turn.
I
We begin with Sunset’s secondary-meaning argu-
ments. Sunset contends that the district court (1) afforded
too much weight to the presumption of validity and (2) held
Sunset to a higher standard of proof than the applicable
preponderance-of-the-evidence standard. Neither conten-
tion has merit.
There is no dispute that SoClean’s trade dress is a
product-configuration trade dress, so it is only protectable
“upon a showing of secondary meaning.” See Wal-Mart
Stores, Inc. v. Samara Bros., 529 U.S. 205, 216 (2000). But
where, as here, the trade dress is federally registered, that
registration “shall be prima facie evidence of the validity of
the registered mark and of the registration of the mark.”
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 5
15 U.S.C. § 1057(b); see also id. § 1115(a) (“Any registration
. . . of a mark registered on the principal register provided
by this chapter and owned by a party to an action . . . shall
be prima facie evidence of the validity of the registered
mark and of the registration of the mark.”). When the
mark has been registered for fewer than five years and re-
mains contestable, as is the case for the ’195 registration,
“the effect of registration . . . is to shift the burden of proof
from the plaintiff to the defendant, who must introduce suf-
ficient evidence to rebut the presumption of the plaintiff’s
right to exclusive use.” Borinquen Biscuit Corp. v. M.V.
Trading Corp., 443 F.3d 112, 117 (1st Cir. 2006) (cleaned
up).
Though Sunset acknowledges that it bears the burden
of showing that SoClean’s registration lacks secondary
meaning, it nonetheless argues that the district court
should have “decide[d] whether the evidence that was be-
fore the [trademark] examiner, in view of Sunset’s argu-
ments and additional evidence, is sufficient to support
SoClean’s Section 2(f) registration.” Appellant’s Br. 23–24.
The district court agreed that Sunset had “raise[d] ques-
tions as to whether the [e]xaminer followed PTO proce-
dures in approving” the ’195 registration.1 SoClean, 554 F.
Supp. 3d at 296. It nevertheless presumed that the regis-
tration was valid because “Sunset ha[d] pointed to no
1 Namely, while evidence of five years’ continuous
use is prima facie evidence that a mark has acquired dis-
tinctiveness, 15 U.S.C. § 1052(f), the Trademark Manual of
Examining Procedure (“TMEP”) requires additional evi-
dence for “nondistinctive product design” like SoClean’s fil-
ter, see TMEP § 1212.05(a). As the district court noted, the
trademark examiner “granted SoClean the benefit of th[e]
statutory presumption and approved the [m]ark” without
requiring additional evidence of secondary meaning. So-
Clean, 554 F. Supp. 3d at 296.
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 6
authority for the proposition that this court may simply ig-
nore the statutory mandate.” Id. Sunset contends that this
was error because Congress vested courts with authority to
review trademark registrations. Specifically, Sunset
points to 15 U.S.C. § 1119, which states that “the court may
determine the right to registration, order the cancelation
of registrations, in whole or in part, restore canceled regis-
trations, and otherwise rectify the register with respect to
the registrations of any party to the action.”
Sunset’s argument fails. The presumption of validity
is not conditional; the statute provides that a certificate of
registration “shall” result in the presumption, without
specifying any exceptions. See 15 U.S.C. § 1057(b). Sunset
fails to identify any statutory or legal basis to withhold the
presumption from a registration. And “withholding the
presumption” is the basic import of Sunset’s position, no
matter what it acknowledges about who bears the burden;
scrutinizing the application process and deciding whether
the trademark examiner was correct to issue the registra-
tion in the first place is the opposite of presuming that the
registration as issued is valid. Sunset may still invoke
§ 1119 and ask the district court to rectify the register if
SoClean’s trade dress is deficient; Sunset simply bears the
burden of proof in doing so, and SoClean is entitled to rely
only on the presumption and need not present any evidence
of its own. The district court did not, therefore, abuse its
discretion when it declined to revisit the examiner’s actions
and alter the statutory presumption of validity.
Sunset’s second argument—that the district court held
it to a higher burden—fares no better. To be sure, the dis-
trict court’s opinion contains a misstatement: in discussing
the consequence of the ’195 registration’s presumption of
validity, it said that “the burden is on Sunset, not SoClean,
to satisfy the ‘vigorous evidentiary requirements,’ either by
direct or circumstantial evidence, to prove that the [m]ark
has not obtained secondary meaning.” SoClean, 554 F.
Supp. 3d at 298 (emphasis removed). But there are no
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 7
“vigorous evidentiary requirements” on the challenger for
proving lack of secondary meaning; a trademark challenger
need simply show invalidity of the mark—here, that the
’195 registration is merely descriptive—by a preponder-
ance of the evidence. See Borinquen, 443 F.3d at 117–18.
The “vigorous evidentiary requirements,” as the district
court noted, apply to “the question of whether a mark has
obtained secondary meaning.” SoClean, 554 F. Supp. 3d at
297 (emphasis added) (citing Yankee Candle Co. v. Bridge-
water Candle Co., 259 F.3d 25, 43 (1st Cir. 2001)). That
burden is on the owner of a non-registered trade dress and
so is inapplicable here. See Yankee Candle Co., 259 F.3d at
43, 45. So, by implying that Sunset was required to meet
“vigorous evidentiary requirements” to prove lack of sec-
ondary meaning, it appears that the district court may
have applied an incorrect standard.
But the oft-repeated adage that “we review judgments,
not opinions,” applies here. See, e.g., Omega Pats., LLC v.
CalAmp Corp., 13 F.4th 1361, 1369 (Fed. Cir. 2021). The
district court went on to examine Sunset’s evidence of no
secondary meaning and found it “equivocal, at best.” So-
Clean, 554 F. Supp. 3d at 298. Equivocal evidence plainly
fails to satisfy a preponderance-of-the-evidence standard,
so Sunset is wrong to suggest that the district court would
have reached a different result had it applied the correct
standard. The district court’s misstatement of the applica-
ble standard of proof is harmless error. See Vanderbilt
Univ. v. ICOS Corp., 601 F.3d 1297, 1308 (Fed. Cir. 2010)
(finding harmless error where “[t]he district court’s find-
ings demonstrate that under the correct legal test, [appel-
lant] did not carry its burden”); Environ Prods. v. Furon
Co., 215 F.3d 1261, 1266 (Fed. Cir. 2000) (“When the error
as to the weight of proof could not have changed the result,
the erroneous instruction is harmless.”).
Accordingly, we affirm the district court’s finding that
SoClean is likely to defeat Sunset’s secondary meaning de-
fense.
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 8
II
We turn next to Sunset’s assertion that the district
court misapplied the law by considering the availability of
alternative designs after finding that SoClean’s trade dress
is functional. Sunset contends that SoClean’s trade dress
design “is entirely utilitarian” and that the district court
erred by giving weight to the fact that alternative ways of
designing the filter head existed. Appellant’s Br. 32, 37.
“[A] product feature is functional, and cannot serve as
a trademark, if it is essential to the use or purpose of the
article or if it affects the cost or quality of the article.”
Traffix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32
(2001) (cleaned up). This “doctrine prevents trademark
law, which seeks to promote competition by protecting a
firm’s reputation, from instead inhibiting legitimate com-
petition by allowing a producer to control a useful product
feature.” Qualitex Co. v. Jacobson Prods. Co, 514 U.S. 159,
164 (1995). “The fact that a product contains some func-
tional elements does not, however, preclude Lanham Act
protection.” I.P. Lund Trading ApS v. Kohler Co., 163 F.3d
27, 37 (1st Cir. 1998). A combination of functional features,
where the combination itself is not functional, is protecta-
ble; “[t]he crucial inquiry is into the effect that granting
protection will have on the opportunity of others to com-
pete.” Id.
Sunset argues that the district court, after concluding
that SoClean’s filter design is functional, erred in giving
weight to the possibility that the filter’s head could have
different shapes. Appellant’s Br. 37. That premise, how-
ever, is incorrect: the district court never concluded that
the filter’s design is functional. Rather, the district court
said (1) that “direct evidence strongly suggests that the fea-
tures of the body of” the mark are functional; (2) that “di-
rect evidence suggests that many”—not all—“features of
the head of the [m]ark are functional”; and (3), after a
thoughtful discussion regarding a circuit split on the
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 9
question of whether the availability of alternative designs
is relevant indirect evidence of nonfunctionality, that alter-
native designs SoClean had identified for the filter head
“constitute evidence that there are some arbitrary ele-
ments to SoClean’s filter that Sunset decided to copy where
functionality has not otherwise been established.” So-
Clean, 554 F. Supp. 3d at 299–302 (emphasis added). The
takeaway for the district court was that the ’195 registra-
tion “comprises both functional and non-functional fea-
tures.” Id. at 302. That, combined with the statutory
presumption of validity, was enough for the district court
to conclude that SoClean was likely to defeat Sunset’s func-
tionality challenge. Id.
Sunset is also wrong in its argument that the district
court never should have considered alternative designs.
Most circuits, including this court, have held that alterna-
tive designs are a relevant consideration in the functional-
ity analysis. See Valu Eng’g Inc. v. Rexnord Corp., 278 F.3d
1268, 1276 (Fed. Cir. 2002). The leading treatise on trade-
mark law considers that the correct approach as well. See
J. Thomas McCarthy, 1 McCarthy on Trademarks and Un-
fair Competition § 7.75 (5th ed. 2021). Indeed, Sunset does
not appear to argue that this approach is incorrect, nor do
we believe that the First Circuit would follow a different
path because the majority view is consistent with that
court’s exhortation to focus the inquiry on “the effect that
granting protection will have on the opportunity of others
to compete.” I.P. Lund, 163 F.3d at 37. Sunset argues only
that the availability of alternative designs should not de-
feat a preexisting functionality finding, but as explained
above, that is not what the district court concluded. The
district court, therefore, did not incorrectly apply the law.
Further, while Sunset does not overtly try to relitigate
the functionality question, it does briefly argue about the
functionality of the filter’s head. See Appellant’s Br. 40–42.
In doing so, however, it relies on the same evidence that
the district court weighed and found insufficient, and
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SOCLEAN, INC. v. SUNSET HEALTHCARE SOLUTIONS, INC. 10
Sunset does not identify any clearly erroneous findings or
other abuse of discretion. Accordingly, we affirm the dis-
trict court on the functionality issue as well.
Finally, the district court noted that, under the Trade-
mark Modernization Act of 2020, SoClean is entitled to a
rebuttable presumption of irreparable harm once the court
has found that SoClean is entitled to a likelihood of success
on the merits. Sunset did not attempt to rebut that pre-
sumption. As for factors three and four, the district court
concluded that the balance of the equities and considera-
tions of public interest weigh in SoClean’s favor, and Sun-
set has likewise not challenged those findings on appeal.
We also note the narrowness of the preliminary injunction.
For all of these reasons, we affirm the district court’s grant
of the preliminary injunction.
CONCLUSION
We have considered Sunset’s remaining arguments
and find them unpersuasive. We affirm the district court’s
preliminary-injunction order.
AFFIRMED
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