Chudleigh\u2019s is an apple farm and bakery based in Ontario, Canada, which sells baked goods to consumers and commercial entities. In the mid-1990s, Scott Chudleigh, an owner of the business, began developing a \u201csingle-serve, fully baked . . . apple pie\u201d to sell to restaurants, to which it already distributed multi-serving apple pies. Mr. Chudleigh and his wife tested several possible shapes for the single-serve pies, settling on a round shape with six folds of pastry encircling the filling. Chudleigh\u2019s registered a trademark for the six-fold pastry design, known as the Blossom Design, and the mark became incontestable in 2005.<\/p>\n
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Chudleigh\u2019s has distributed various versions of the Blossom to consumers and commercial establishments. In addition, Chudleigh\u2019s spoke with Applebee\u2019s about supplying a signature apple dessert, but never made a deal to do so.<\/p>\n
Sweet Street manufactures and sells desserts to restaurant chains, including Applebee\u2019s, and distributors. In 2010, Applebee\u2019s asked Sweet Street to develop a single-serving apple dessert for its restaurants. Sweet Street proposed a round \u201capple pocket\u201d that consisted of a unitary, pie-like bottom with an open top covered by six rectangular pieces of dough folded around the filling in a counter-clockwise spiral pattern. Applebee\u2019s liked the look of the pastry and hired Sweet Street to provide it.<\/p>\n
To meet Applebee\u2019s demand, Sweet Street considered outsourcing the production of the dessert. To this end, Sweet Street entered discussions with Chudleigh\u2019s, which sent samples for it to consider. Sweet Street declined to contract with Chudleigh\u2019s to produce the dessert, citing the fact that the look of the product was different from what Applebee\u2019s wanted, and instead produced the dessert itself. After a limited test run, Applebee\u2019s launched Sweet Street\u2019s dessert at all 1,865 of its restaurants. It sold well.<\/p>\n
Scott Chudleigh noticed an internet story about Applebee\u2019s new dessert and sent an employee to purchase a sample. Thereafter, Chudleigh\u2019s sent a cease-and-desist letter to Applebee\u2019s claiming the Cinnamon Apple Turnover infringed its registered trade dress in the Blossom Design because the \u201cdessert looks strikingly similar to Chudleigh\u2019s wellknown BLOSSOM Design, featuring the same six-fold spiral pattern.\u201d After discussions with Applebee\u2019s, Chudleigh\u2019s agreed to allow Applebee\u2019s to sell its remaining inventory of the dessert.<\/p>\n
Sweet Street filed suit against Chudleigh\u2019s, (1) seeking declaratory judgments that its product did not infringe on the Blossom trade dress and that Chudleigh\u2019s registered trademark in the Blossom Design was invalid, (2) requesting cancellation of the trademark, and (3) claiming tortious interference with Sweet Street\u2019s contractual relationship with Applebee\u2019s. Chudleigh\u2019s filed counterclaims for trademark infringement and unfair competition. After discovery, both parties moved for summary judgment. The District Court granted summary judgment to Sweet Street on the trademark-related claims, and to Chudleigh\u2019s on the tortious interference claims.<\/p>\n
The District Court reasoned that the Blossom Design\u2019s key element of \u201csix folds or petals of upturned dough [is] essential to contain the filling, and the number of folds or petals is determined in part by the size of the product,\u201d making it functional, and therefore ineligible for trademark protection. Only \u201cincidental, arbitrary or ornamental product features which identify the product\u2019s source\u201d are protectable as trade dress. Features that are \u201cfunctional\u201d are not protectable.<\/p>\n
\u201c[I]n general terms, 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.\u201d If we do not determine that a feature is functional under this standard, we next ask whether affording it trademark protection would nonetheless put competitors at a \u201csignificant non-reputation-related disadvantage\u201d that would restrict competition in the market. This second formulation captures the concept of \u201caesthetic functionality.\u201d Where the product feature meets the first test for functionality, \u201cthere is no need to proceed further to consider if there is a competitive necessity for the feature,\u201d or \u201cengage . . . in speculation about other design possibilities\u201d that would satisfy the functional purpose of the feature.<\/p>\n
Sweet Street has shown the trade dress is functional. The evidence establishes that the \u201coverall combination of features\u201d that Chudleigh\u2019s claimed to constitute the Blossom Design is functional because the shape of the dough is essential to the purpose of an effective single-serving fruit pie, and affects its cost and quality. Scott Chudleigh\u2019s own account of his creation of the Blossom Design shows that the single-serving size and round shape of the design were critical to minimizing the cost of the pastry and to filling a need in the restaurant industry to reduce waste and ease serving.<\/p>\n