IP Industry Summary: Third Circuit Knocks The Wind Out Of Boating School’s Sails

Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014)

Two Virgin Islands sailing schools hit some choppy water recently when one school sued the other. Fair Wind Sailing (Fair Wind) alleged that its former employees, H. Scott Dempster and Larry Bouffard, copied its business in many respects when opening their competing sailing school, Virgin Island Sailing School (VISS). This copying, according to Fair Wind, amounted to trade dress infringement. Fair Wind identified its trade dress as the combination of its use of catamaran vessels, a unique teaching curriculum, student testimonials, and its registered domain name.

The similarities between the schools' businesses are striking. VISS uses only 45-foot catamarans, just like Fair Wind. Additionally, the junior school uses identical teaching curricula, itineraries, and student feedback procedures to those used by Fair Wind. Web marketing for both schools is also identical. VISS even included on its website a picture of a catamaran owned by Fair Wind, student testimonials from students that Dempster taught while working for Fair Wind, and a reference to Bouffard's tenure with Fair Wind.

On appeal, however, the Third Circuit affirmed the district court's grant of the defendants' motion to dismiss the trade dress infringement claim for failure to state a claim, explaining that a plaintiff must prove three elements to make out a trade dress infringement claim. First, the design must be nonfunctional, meaning it is not essential to the use or purpose of the service, does not affect the cost or quality of the service, nor does it put competitors at a significant non-reputation-related advantage if they are not allowed access to it. Second, the design must be inherently distinctive or have acquired secondary meaning. Finally, consumers must be likely to confuse the...