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Summary Judgment Denied both Parties in Trade Dress Litigation brought by Rubik’s Cube

by | Feb 18, 2021 | Firm News

“Trade Dress,” also known as “product configuration,” for those who don’t know, is the design or appearance of a product and/or its packaging, which the purchasing public has come to associate with a single source for that product. (“Single source,” in trademark parlance, generally means the same manufacturer or producer.) Recognizable trade dress comes in many forms: the shape of the iconic Coca-Cola bottle is perhaps the most famous example. In order to qualify for trade dress protection, the trade dress must be shown not to be functional “at law.” The Coca-Cola bottle is, of course, functional in the factual sense — it holds the liquid inside — but the shape of the bottle is not essential to its use or purpose. Nor does it affect the quality of the bottle or provide a competitive advantage by being cheaper to produce.

When Rubik’s Cube was first launched on the market in 1980 (after a 1977 release in Hungary), it was protected by two patents pertaining to how the Cube’s individual cubes are manipulated to scramble or solve the puzzle. The patents specified the exterior appearance — “surfaces of the small cubes forming each surface of the large cube are colored or carry numbers, figures or any other symbol which can be assembled into a predetermined logical order” — as well as the Cube’s “preferred embodiment,” i.e. a puzzle cube in which “small cubic elements forming the plane surfaces of the large cube are either colored or indicated with numbers, figures or any other symbols.”

Hands solving a Rubik's cube

 

Neither patent mentioned specific colors, but in March 1982, then-owner Ideal applied to register the design as a trademark, specifically “a black cube having nine color patches on each of its six faces with the color patches on each face being the same and consisting of the colors red, white, blue, green, yellow and orange.” In its response to an Office Action from the United States Patent and Trademark Office questioning the scope of Ideal’s trademark protection, Ideal stated that that competitors were free to develop alternative puzzle cubes “formed of any color plastic material” other than black, and that the “color patches need not be square . . . nor need they be colored . . . [a]nd, if colored, they need not be the precise colors used” for the Rubik’s Cube. U.S. Registration No. 1265094 was issued on January 24, 1984.

Through the 1980s and 1990s, Rubik’s Cube reached a fame that few products enjoy. Rubik’s Cube has always been sold as a cube with a black base and the six exterior colors, and successor owners of the mark have spent millions of dollars in marketing the cube and prosecuting imitators. Manufacturers of Rubik’s Cubes are given a style guide which specifies the Pantone color numbers that must be used.

In 2015, Flambeau, Inc., the defendant in the case, developed its own 3×3 puzzle cube, called the Duncan Quick Cube. (The Duncan mark, owned by Flambeau, is best known for its use on yo-yos.) The Quick Cube has a white base, and the component cubes have colored patches of fluorescent red, white, blue, green, yellow, and orange. The colors are thus distinguishable from those specified in the Rubik’s Cube trade dress mark. Despite that, Rubik’s Cube’s current owner, Rubik’s Brand Limited (“RBL”), filed suit on August 28, 2017.  It did not seek a preliminary injunction to stop Flambeau from selling the Duncan Quick Cube while the case was pending, suggesting that RBL knew that it was going out on a limb with its infringement claim. In order to secure a preliminary injunction, the moving party must convince the court that it is likely to succeed on the merits of the case.

On August 24, 2020, the judge on the case, the Hon. Paul G. Gardephe, issued an order referring the parties’ dispositive motions to Magistrate Judge Katharine M. Parker, who would issue a “Report and Recommendation.” Judge Gardephe is an “Article III” judge — appointed and confirmed by the United States Senate pursuant to Article III of the U.S Constitution. Magistrate Judges, on the other hand, are appointed by majority vote of the Article III judges of each district court. Article III judges serve for “life,” while magistrate judges serve terms of eight years if full time, four years if part-time. Reports and Recommendations of Magistrate Judges are subject to “de novo” review by the Article III judge, so in practice every factual finding and application of law is subject to questioning by either party. That said, Judge Gardephe will probably adopt the Magistrate Judge’s recommendation that the parties go to trial, given that the facts proffered by both parties are in dispute.

When it developed the Quick Cube, Flambeau considered Rubik’s Cube as its primary competitor and wanted to make a cube that was “like” the Rubik’s Cube, but at half the retail price. This is not exactly earth-shattering news. Any smart company that wants to win market share targets its top competitors. And Flambeau was indeed smart: after it decided on its colors, it sought an opinion from counsel with thirty years’ experience in trademark law, and was told that the design did not infringe.

There are two main issues in the case. The first is whether the “look” and colors of the Quick Cube infringe on Rubik’s Cube’s trade dress trademark.  The test in the Second Circuit, where the U.S. District Court, Southern District of New York, sits, is based on the case Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), which cites eight factors, none of which are dispositive and also may be considered along with still other factors: (1) the strength of the trade dress; (2) the similarity between the two products at issue; (3) the proximity of the products and their competitiveness; (4) the likelihood that the original user of the trade dress might “bridge the gap” by developing a product to be sold in the market of the alleged infringer’s product; (5) evidence of actual consumer confusion; (6) whether the new trade dress was adopted in good or bad faith; (7) product quality; and (8) the sophistication of the buyers in the relevant market.

Since the products are directly competitive, the Magistrate Judge pointed out, “evidence of actual consumer confusion,” the fifth factor, “can be an effective tool to prove a likelihood of confusion” between the products. RBL, however, admitted there was no evidence of actual confusion, a fact that weighs strongly in favor of Flambeau. In addition, both cubes are prominently marked with the parties’ respective logos, and this “will typically dispel confusion that might otherwise be expected,” the Magistrate Judge wrote, especially where, as here, the parties’ respective brand names are well known, widespread, and familiar to consumers. (The brand names are stamped only on the center white cube of each of the toys.) Nevertheless, the Quick Cube uses the same basic colors of Rubik’s Cube, “albeit different shades,” and the two cubes are sold in the same venues and compete side-by-side in the marketplace. Thus, the Magistrate Judge found, a trier of fact could go either way.

In analyzing the issue of likelihood of confusion, Magistrate Parker did not consider the issue of relative fame. Generally speaking, well-known marks are accorded a wider latitude of legal protection, and the greater the fame, the further away newcomers to the marketplace must stay. The principle doesn’t hold very well here, however, because RBL’s trade dress mark is strictly limited to the black base and specific colors, and in applying for the mark, then-owner Ideal was very clear that its mark did not apply to other colors.

The other main issue in the case is what is known as trademark dilution. The Trademark Dilution Revision Act of 2006 defines two causes of action for infringement, provided that the mark is “famous” — not relatively famous, but the kind of fame where a “significant portion of the relevant consuming public … recognizes the mark as a source indicator.” Fame can be measured indirectly by the volume of sales, advertising expenditures, how long the product has been on the market, uses in media, etc. Rubik’s Cube checked off each of these boxes. (Among other things, it has conspicuously appeared in many movies and videos, and was recognized by Time Magazine as one of the 13 most influential toys of all time.) The two “dilution” causes of action are “tarnishment” and “blurring.” The Magistrate Judge found that no reasonable trier of fact could find that there was “tarnishment” (i.e., harm to Plaintiff’s reputation), but found that there might be “blurring.”

Dilution by “blurring” occurs from an “association arising from the similarity between a mark … and a famous  mark that impairs the distinctiveness of the famous mark,” and applies whether or not there is a likelihood of confusion among consumers. 15 U.S.C. § 1125(c)(2)(B). Most blurring cases involve the use of a famous mark on unrelated goods or services. For example, on the theory of “blurring,” the U.S. District Court, Southern District of New York, held that Rolex Deli, a Brooklyn delicatessen, infringed Rolex’s famous mark for watches.

In any case, “blurring” is determined by analyzing six non-exhaustive factors that are specified in the statute: (1) the degree of similarity between the marks; (2) the degree of inherent or acquired distinctiveness of the famous mark; (3) the extent to which the owner of the famous mark exclusively uses that mark; (4) the degree of recognition of the famous mark; (5) whether the alleged infringer intended to create an association with the famous mark; and (6) any actual association between the competing marks. The Magistrate Judge’s analysis of most of these factors was much the same as for likelihood of confusion, but in finding that the parties would have to go to trial, she focused on the fifth factor, an intent to associate with the famous mark.  Specifically, she believed that the fact that Flambeau intended to target Rubik’s Cube as a competitor and wanted to design the Quick Cube to be “like” the Rubik’s Cube, “suggests” in intent to associate. Hopefully, a jury will use its better sense to understand that it wasn’t an “association” that Flambeau sought, but a strongly competing product.

There were other issues addressed in her decision as well, including whether the colors on the Rubik’s Cube are “functional.” Flambeau advanced various arguments of functionality but the only colorable one was that speedcubers seek out cubes with maximum color contrast because it helps them solve the puzzle more quickly. The Magistrate Judge dismissed this argument by simply observing that speedcubing was practiced by a tiny fraction of purchasers, and thus doesn’t represent how the cubes are most commonly used.

RBL’s Complaint alleged that ““Consumers who expect to receive plaintiff’s Rubik’s Cube puzzle, for which plaintiff has developed a national and international reputation, will be disappointed when using defendants’ imitation,” which causes “irreparable harm” to plaintiff’s  “reputation and goodwill.” Magistrate Parker threw cold water on that claim, leaving RBL with having to convince a jury that consumers will be confused about the source of the products based on trade dress that is really quite different (and not just based on the color differences, as can be seen from the above product photos). In addition, a quick search for either cube on Amazon.com turns up those and a host of competing cubes, all with different variations of basic colors. On the other hand, RBL really has nothing to lose. Its forty cease-and-desist letters sent to alleged infringers over the years, and this litigation, even if lost, are stark warnings to potential infringers. RBL and Duncan will each spend hundreds of thousands of dollars in legal fees, and few companies can afford such a fight.