Georgia-Pacific has been selling toilet paper for over 100 years. About 20 years ago, it introduced a diamond-shaped embossed design on its toilet paper and rebranded it Quilted Northern. It obtained trademarks, copyrights, and utility and design patents. When Kimberly-Clark introduced a quilted design on its brand of toilet paper, Georgia-Pacific filed suit. The complaint alleged unfair competition and trademark infringement. Judge Kendall (N.D. Ill.) granted summary judgment to Kimberly-Clark, concluding that the diamond design was functional and not subject to trademark protection. Georgia-Pacific appeals.

In their opinion, Seventh Circuit Judges Kanne, Evans, and Sykes affirmed. Under the Lanham Act, a trademark registration creates a rebuttable presumption of validity. If a challenger, however, shows strong evidence of functionality, the mark holder has a heavy burden of demonstrating that the mark is not merely functional. The Supreme Court addressed functionality in TrafFix, where it stated that a feature is functional "if it is essential to the use or purpose of the article or if it affects the cost or quality of the article." The Court found several TrafFix factors to be relevant: a) a description of functionality in a utility patent, b) advertising the feature, c) difficulty in creating an alternative design, and d) the effect on quality or cost. First, the Court looked to the utility patents and compared the trademarks’ "essential feature" with the utility patents’ "central advance." The parties agreed that the essential feature is the embossed diamond design. All five utility patents also point to the diamond design as the central advance. This is strong evidence of functionality. The Court found support for its conclusion when it went behind the patents' claims themselves to the specifications. The first factor, therefore, supported a finding of functionality. With regard to the second factor, the Court noted significant advertising that linked the diamond design to various utilitarian benefits. That also supports functionality. The third factor, alternative designs, does not particularly support functionality since there are numerous alternatives. The final factor is the design's effect on quality. The Court agreed with the district court that Georgia-Pacific makes numerous claims of quality enhancement based on the design. The Court thus concluded that Georgia-Pacific failed to rebut Kimberly-Clark's, strong evidence of functionality. The Court briefly discussed and rejected Georgia-Pacific claims regarding packaging design and latches.