CAFC Says Patent Claims Need Not Explicitly Disclose Material Benefits for Trademark Functionality Doctrine

On January 3, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in CeramTech GmbH v. Coorstek Bioceramics LLC in which the appellate court affirmed the Trademark Trial and Appeal Board’s (TTAB) cancellation of CeramTech’s trademark protections for pink-colored ceramic hip components. The Federal Circuit decision underscores the importance of utility patent claims to trademark functionality doctrine even when those claims don’t explicitly disclose the utilitarian advantage of the design registered as a trademark.

CeramTech markets artificial hip components branded as Biolox Delta composed from a zirconia-toughened alumina (ZTA) ceramic that includes chromium oxide, or chromia. CeramTech had obtained patent protection for the chemical composition of Biolox Delta in U.S. Patent No. 5830816, Sintered Molding. The ‘816 patent, which expired in October 2013, discloses that chromia, which colors the ZTA ceramic pink, helps the composition achieve greater hardness levels. The patent also discloses that adding chromia in different amounts can color the ZTA composition red, purple, yellow, black or gray.

CeramTech Concedes Material Benefits of Chromia in First Morton-Norwich Factor

In April 2013, two trademark registrations were added to the Supplemental Register to protect the pink coloring of CeramTech’s ceramic hip components. Rival firm Coorstek then began proceedings at the TTAB and in U.S. district court in March 2014 to cancel CeramTech’s registrations for claiming functional features of those hip components. Applying the four-factor functionality test laid out by the Federal Circuit’s predecessor, the U.S. Court of Customs and Patent Appeals (CCPA), in In re Morton-Norwich Products (1982), the TTAB found that the pink coloring was functional due largely to CeramTech’s patents and its public communications disclosing the benefits of chromia. The TTAB also discredited experimental testing from related German patent litigation on chromia’s lack of benefits submitted by CeramTech due to flawed methodology, and also rejected CeramTech’s unclean hands defense based on Coorstek’s previous representations on chromia’s lack of material benefits in ZTA ceramics.

Much of CeramTech’s appeal focused on the first Morton-Norwich factor, which looks at patents disclosing the utilitarian advantages of the trademarked design. On this point, CeramTech argued that the TTAB erred by attributing functional benefits to chromia other than hardness, and that the Board improperly applied U.S. Supreme Court precedent on trademark functionality from TrafFix Devices v. Marketing Displays (2001).

As to CeramTech’s first challenge, the Federal Circuit noted that the patent owner admitted that the Board correctly read the ‘816 patent when attributing increased hardness in ZTA ceramics to the addition of chromia. On the application of TrafFix Devices, the Federal Circuit found that the TTAB properly applied the Supreme Court’s holding in that decision. CeramTech had conceded both that adding chromia to ZTA ceramic turns the composition pink, and that the ‘816 patent protected Biolox Delta. “These concessions establish that the ’816 patent claims a feature[],’ the color pink, which CeramTec has trademarked,” the Federal Circuit wrote, noting that this conclusion was further supported by other CeramTech patents and patent applications disclosing chromia’s impact on ZTA ceramic’s hardness.

CeramTech had also challenged the TTAB’s application of the third and fourth factors of Morton-Norwich, which inquire into the availability of functionally equivalent designs for competitors, and facts indicating that the design results in comparatively cheap and easy manufacture. The TTAB found that both of these factors were neutral as to the mark’s functionality. In affirming those conclusions, the Federal Circuit found that CeramTech mischaracterized evidence of functionally equivalent ZTA ceramic compositions as undisputed, reiterating testimony from a Coorstek employee who spoke both to the composition’s increased hardness and that its manufacturing costs were similar to other ZTA ceramics.

TTAB Wrong to State That Unclean Hands Defense is Unavailable in Functionality Cases

The Federal Circuit also found that the TTAB properly rejected the German test results, which purported to show that the addition of chromia in ZTA ceramics up to 0.5% by weight had no effect on hardness or wear resistance for Biolox Delta. The appellate court noted that the TTAB’s conclusion here was bolstered by CeramTech’s own experiments showing that ZTA ceramics show a pink color when the composition includes more than 0.5% of chromia by weight. While CeramTech had argued that Biolox Delta contains 0.33% of chromia by weight, within the range analyzed by the German test, the Federal Circuit noted that the trademark registration is not tied to a specific amount of chromia but rather the pink color of the composition.

After the Federal Circuit found that the TTAB properly placed the burden of proving functionality on Coorstek, the appellate court concluded that the TTAB committed harmless error in foreclosing CeramTech’s unclean hands argument. The appellate court agreed that the Board spoke too strongly by stating that an unclean hands defense was unavailable in functionality proceedings due to the strong public interest in removing functional marks from the trademark register. However, the Federal Circuit found that the TTAB has discretion to reject defenses on a case-by-case basis and that the Board’s decision, which was not marked precedential, didn’t seem to announce a new policy broadly applicable to all TTAB proceedings involving functionality.