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Last week, the U.S. Court of Appeals for the Third Circuit issued an opinion in <a href="https://www2.ca3.uscourts.gov/opinarch/222821p.pdf"><em>PIM Brands Inc. v. Haribo of America Inc.</em>, No. 22-2821 (Sept. 7, 2023)</a>, affirming the U.S. District Court for the District of New Jersey’s order canceling PIM’s trademark registration due to functionality.

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PIM’s trademark, Registration No. 5,029,701, relates to sour watermelon candies. The trademark includes two components: (1) a wedge shape, and (2) a color scheme, that jointly resemble a slice of watermelon. PIM sued Haribo for trademark and trade dress infringement under the Lanham Act, alleging Haribo produced and sold watermelon candies that closely resemble PIM’s candies. Haribo countered that PIM’s trade dress was functional, and PIM’s trademark registration should be canceled. The district court agreed with Haribo. It found PIM’s wedge shape and color scheme served a functional purpose to identify the flavor of the candy and ordered that PIM’s trademark registration be canceled due to functionality.

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The Third Circuit affirmed. PIM raised two arguments on appeal: (1) the district court erred in considering the wedge shape and color scheme together, and (2) the wedge shape includes design characteristics that uniquely identify PIM’s candies while differing from an actual slice of watermelon.

The Court rejected PIM’s first argument as inconsistent with Third Circuit precedent. PIM sought to have the wedge shape analyzed separately from the color scheme because it was undisputed that the candy’s color scheme functionally identified its watermelon flavor. The Court disagreed, holding that when an entire trade dress serves a single function (<em>i.e</em>., to identify a flavor), and when two design choices contribute to that same function, the design choices should be considered together for purposes of assessing functionality. &nbsp;

The Court next addressed the functionality of PIM’s wedge shape and color scheme together. The Court emphasized that “functionality is not a high bar,” and design choices that “would put competitors at a significant non-reputation-related disadvantage” are functional. In analyzing the resemblance between PIM’s trademark and actual watermelon slices, the Court found that reasonable jurors could conclude that the trade dress identified the flavor of the candy. Thus, the Court affirmed the district court’s holding that PIM’s trade dress was functional even though the wedge shape and colors did not perfectly match an actual slice of watermelon.

Third Circuit Affirms Trademark Cancelation Due to Functionality