                           In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 03-2704
ECO MANUFACTURING LLC,
                                             Plaintiff-Appellee,
                               v.


HONEYWELL INTERNATIONAL INC.,
                                         Defendant-Appellant.
                        ____________
      Appeal from the United States District Court for the
       Southern District of Indiana, Indianapolis Division.
      No. 1:03-CV-0170-DFH—David F. Hamilton, Judge.
                        ____________
ARGUED SEPTEMBER 4, 2003—DECIDED DECEMBER 31, 2003
                   ____________



 Before FLAUM, Chief Judge, and EASTERBROOK and
MANION, Circuit Judges.
  EASTERBROOK, Circuit Judge. Eco Manufacturing pro-
poses to make a thermostat similar in appearance to
Honeywell’s well-known circular, convex model with a
round dial. Honeywell’s model (which it calls “The Round”)
is on the left, Eco’s on the right:
2                                               No. 03-2704




After receiving Honeywell’s demand that it cease and
desist, Eco filed this action seeking a declaratory judgment
that its product would not infringe Honeywell’s intellec-
tual-property rights. Honeywell’s round thermostat form-
erly was protected by two patents—a utility patent
(No. 2,394,920) that lasted between 1946 and 1963, and
a design patent (No. D176,657) that expired in 1970.
Honeywell then sought a trademark registration for the
shape of this product. The Patent and Trademark Office
denied that application, concluding that the shape is
functional and thus cannot serve as a trademark. In re
Honeywell Inc., 187 U.S.P.Q. 576 (T.T.A.B. 1975), affirmed,
532 F.2d 180 (C.C.P.A. 1976). Honeywell tried again a
decade later and fared better. This time the agency ruled in
its favor, In re Honeywell Inc., 8 U.S.P.Q. 2d 1600 (T.T.A.B.
1988), and allowed the registration to be published for
opposition. Emerson Electric objected; before this was
resolved, however, Emerson and Honeywell reached a
settlement and the mark’s registration became final in
1990. It is this registration (No. 1,622,108) that, according
to Honeywell, prevents any other firm from selling a round
thermostat as long as Honeywell continues to make and sell
its own product.
No. 03-2704                                                  3

  Honeywell filed a counterclaim seeking equitable relief.
This appeal is from the district court’s order declining to
issue a preliminary injunction that would block Eco from
bringing its product to market. 2003 U.S. Dist. LEXIS 11384
(S.D. Ind. June 20, 2003). Like the Trademark Trial and
Appeal Board in 1975, the district court concluded that the
shape of Honeywell’s thermostat is functional—or, to be
precise, that the likelihood of such a finding after a trial on
the merits is sufficiently high, and damages are sufficiently
easy to calculate if Honeywell turns out to win in the end,
that Eco should be allowed to sell its competing product
while the litigation proceeds. A product’s appearance (often
called its “trade dress”) can serve as a trademark to the
extent that design identifies the product’s maker. See 15
U.S.C. §1127; Wal-Mart Stores, Inc. v. Samara Brothers,
Inc., 529 U.S. 205 (2000); Qualitex Co. v. Jacobson Products
Co., 514 U.S. 159 (1995); Two Pesos, Inc. v. Taco Cabana,
Inc., 505 U.S. 763 (1992); W.T. Rogers Co. v. Keene, 778 F.2d
334 (7th Cir. 1985). But a functional aspect of the design
cannot be trademarked, even if it also (at least before
competition breaks out) identifies the product’s source. In
the district court’s view, TrafFix Devices, Inc. v. Marketing
Displays, Inc., 532 U.S. 23 (2001), treats the grant of a
utility patent as showing that the patented feature is
functional. After the patent expires, the covered elements
of the design are available to all. See Sears, Roebuck & Co.
v. Stiffel Co., 376 U.S. 225 (1964); Kellogg Co. v. National
Biscuit Co., 305 U.S. 111 (1938). Cf. Dastar Corp. v. Twenti-
eth Century Fox Film Corp., 123 S. Ct. 2041 (2003). Only
“arbitrary, incidental, or ornamental aspects” (TrafFix, 532
U.S. at 34) of the patented product remain available for
trademark use, the district court concluded, and the
circular shape of Honeywell’s thermostat is not just filigree.
A spherical section is no more usable as a trademark than
a cube or tetrahedron would be.
4                                                No. 03-2704

   Honeywell’s lead argument in this court is that it does not
matter whether, or to what extent, the thermostat’s shape
is functional. That is so, Honeywell submits, because the
trademark registration became incontestable in 1996,
before Eco brought a competing product to market. Once a
mark has been used for five years following registration, it
becomes “incontestable”. 15 U.S.C. §1065. Incontestability
is “conclusive evidence of the validity of the registered mark
and . . . the registrant’s exclusive right” to use the mark in
commerce. 15 U.S.C. §1115(b). See Park ‘N Fly, Inc. v.
Dollar Park and Fly, Inc., 469 U.S. 189 (1985).
  The words “incontestable” and “exclusive” sound more
impressive than the legal rights that the Lanham Act ac-
tually conveys, however. Section 1065 says that even “in-
contestable” marks must yield to prior users, and that the
protection dissipates if the mark becomes generic. More-
over, and more to the point, §1065 says that a claim based
on an incontestable mark may be defeated “on a ground for
which application to cancel may be filed at any time under
paragraphs (3) and (5) of section 1064 of this title”. Section
1064(3) provides that a mark may be cancelled if it is,
or becomes, functional. Thus incontestability does not avoid
the question whether the thermostat’s round shape is
functional.
  As Honeywell sees things, however, resort to the function-
ality proviso in §1064(3) is anachronistic. Congress added
that particular language to the Lanham Act in 1998, two
years after registration No. 1,622,108 passed the five- year
mark that made it incontestable. See §201(b) of Pub. L.
105-330, 112 Stat. 3064 (effective Oct. 30, 1998). To apply
a 1998 law to a mark that became incontestable in 1996
would be retroactive, Honeywell insists. New legislation is
presumptively non-retroactive, see Landgraf v. USI Film
Products, 511 U.S. 244 (1994), and Congress did not
designate §201(b) as one of those rare enactments with
retroactive effect.
No. 03-2704                                                  5

  This line of argument assumes that recognition of a
functionality defense changed the law. Courts that had
addressed the subject before 1998 were divided on the
question whether functionality was a ground of cancellation
despite its absence from the statutory text. Compare
Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863 (8th Cir.
1994) (yes), with Shakespeare Co. v. Silstar Corp., 9 F.3d
1091 (4th Cir. 1993) (no). The Supreme Court had not spo-
ken—though it later, in TrafFix, raised the possibility that
functionally is a constitutionally required limitation on
trade dress protection, lest patent protection effectively be
of unlimited duration. 532 U.S at 35. See also Shakespeare,
9 F.3d at 1099 (Niemeyer, J., dissenting). (Because patent
law prohibits any unauthorized manufacture or use of the
patented product, the product’s shape necessarily will
denote its origin while the patent lasts; and if this link
between form and origin in turn creates trademark pro-
tection, then the patent’s term lasts indefinitely.) To the
extent that Congress codified rather than changed the
governing rules, no retroactivity issue arises. We need not
decide what the pre-1998 law required, however, because
Honeywell misconceives what it means for a statute to be
retroactive.
  A law is retroactive when it alters the legal consequences
of completed acts. See Jahn v. 1-800-FLOWERS.com, Inc.,
284 F.3d 807 (7th Cir. 2002). Changing the rules governing
future behavior, by contrast, is a prospective application.
This is why, “[w]hen the intervening statute authorizes or
affects the propriety of prospective relief, application of the
new provision is not retroactive.” Landgraf, 511 U.S. at 273.
Honeywell does not want damages or any other remedy on
account of conduct that predated Pub. L. 105-330. It wants
prospective relief. Applying the 1998 law to Eco’s conduct in
2003 and beyond is entirely prospective. Honeywell invokes
the language of “vested rights,” but statutes are malleable.
All Honeywell ever has had to go on is a statutory rule; it
6                                                No. 03-2704

did not have a contract or a license or a judgment—and
even a judgment may be modified prospectively when the
law underlying it is amended. Compare Plaut v. Spendthrift
Farm, Inc., 514 U.S. 211 (1995) (judgments specifying the
consequences of past conduct are unalterable), with Miller
v. French, 530 U.S. 327, 341-50 (2000) (prospective relief
may change as statutory foundation changes), and Robert-
son v. Seattle Audubon Society, 503 U.S. 429 (1992) (same).
Shortly after Lampf, Pleva, Lipkind, Prupis & Petigrow v.
Gilbertson, 501 U.S. 350 (1991), Congress changed the
statute of limitations to reopen the opportunity to litigate
certain securities claims (see 15 U.S.C. §78aa-1); and,
though the Court held in Plaut that this change could not
be applied to cases that had been finally dismissed before
the amendment, it made clear the propriety of applying the
law to litigation in progress or yet to be commenced, even
though this meant that some claims were revived after the
(original) statute of limitations had run. Likewise Congress
could repeal the Lanham Act without infringing anyone’s
rights, or abolish the difference between incontestable
and other marks, or increase to 25 years the time before
a mark has the benefits of incontestability. The actual
change worked by §201(b) of Pub. L. 105-330 was more
modest, and as we have stressed may not have been a
change at all.
  Thus we arrive at the question whether the shape of
Honeywell’s thermostat is so clearly non-functional that the
district judge abused his discretion by failing to enjoin Eco’s
competing model. We put the question this way because, on
an appeal from the denial of interlocutory relief, appellate
review is deferential. The district court was on solid ground
to observe that, after TrafFix,
    [a] utility patent is strong evidence that the fea-
    tures therein claimed are functional. If trade dress
    protection is sought for those features the strong
No. 03-2704                                                  7

    evidence of functionality based on the previous
    patent adds great weight to the statutory presump-
    tion that features are deemed functional until
    proved otherwise by the party seeking trade dress
    protection. Where the expired patent claimed the
    features in question, one who seeks to establish
    trade dress protection must carry the heavy burden
    of showing that the feature is not functional, for
    instance by showing that it is merely an ornamen-
    tal, incidental, or arbitrary aspect of the device.
523 U.S. at 29-30. Because Honeywell bears a “heavy
burden,” it is hard to say at this interlocutory stage that the
district judge abused his discretion in finding that the
burden had not been discharged.
  This is not to say that it would be impossible for
Honeywell to carry its burden. TrafFix gave “an orna-
mental, incidental, or arbitrary aspect of the device” as a
for-instance, and not as an exclusive means to show non-
functionality. The hood ornament on a Mercedes, or the four
linked rings on an Audi’s grille, would exemplify “an orna-
mental, incidental, or arbitrary aspect of the device” that
could survive as a trademark even if they once had been
included within a patented part of the auto. Honeywell
suggests a different way: Technological change. The
transistor was not invented until 1947, the year after
Honeywell’s utility patent issued. The innards of “The
Round” were a complex electro-mechanical linkage. The
circular casing and dial may have been related in a func-
tional way to the operating parts. Today many thermostats
are solid-state devices controlled by integrated circuits
equivalent to thousands of transistors; Eco’s model even
dispenses with mercury as an element of the temperature
sensor. Thus what was once functional may half a century
later be ornamental. Passage of time diminishes a utility
patent’s significance. And there are plenty of other ways to
8                                              No. 03-2704

package the necessary controls, as Honeywell reminds us
with this illustration:




  Eco responds that “The Round” may be functional simply
because some consumers prefer its look, and portions of the
district court’s opinion imply agreement with this submis-
sion. Aesthetic appeal can be functional; often we value
products for their looks. See Qualitex, 514 U.S. at 169-70.
Yet an understanding of “aesthetic functionality” as broad
as Eco’s would destroy protection of trade dress, as we
remarked in Keene. It would always be possible to show
that some consumers like the item’s appearance; then the
corner jewelry store could emulate the distinctive Tiffany
blue box, which would lose its ability to identify origin.
“Beauty lies in the eye of the beholder” therefore cannot by
itself establish functionality of trade dress. Perhaps,
however, a more complete record may show that consumers’
No. 03-2704                                                    9

desire for circular thermostats comes from more than
familiarity with a shape that Honeywell made famous.
After all, Honeywell did not invent the circle (or the wheel).
  It is not hard to think of three ways in which a round
thermostat could be functional, at least in principle. First,
rectangular objects may clash with other architectural or
decorative choices. Just as a building designed by Ludwig
Mies van der Rohe demands controls made from regular or
semi-regular polyhedra, so a building designed by Frank
Gehry could not tolerate boxy controls. Second, round
thermostats (and other controls) may reduce injuries, espec-
ially to children, caused by running into protruding sharp
corners. Third, people with arthritis or other disabilities
may find it easier to set the temperature by turning a large
dial (or the entire outer casing of the device) than by
moving a slider or pushing buttons on boxes. The record
does not contain much along any of these lines, but they are
sufficiently plausible to disable Honeywell from prevailing
at this preliminary stage, given the burden it bears as a
result of the expired patents. Although the three possibili-
ties we have mentioned do not show that roundness is
“essential” to a thermostat, that’s not required. TrafFix
rejected an equation of functionality with necessity; it is
enough that the design be useful. The Justices told us that
a feature is functional if it is essential to the design or it
affects the article’s price or quality. 532 U.S. at 33.
  Thus the district court did not abuse its discretion in
holding that Eco may go forward with a round thermo-
stat—at its own risk, of course, should the decision come
out otherwise on the merits. Although we have not endorsed
all of the district court’s legal analysis, it would be pointless
to remand for another hearing on interlocutory relief. The
case should proceed expeditiously to final decision; another
“preliminary” round would waste everyone’s time. It would
be especially inappropriate to direct the district judge to
10                                           No. 03-2704

issue a preliminary injunction when issues other than
functionality remain to be addressed. Eco contends, for
example, that Honeywell bamboozled the Patent and
Trademark Office when seeking registration during the
1980s, and material deceit would scotch this enforcement
action whether or not the trade dress is functional. We do
not express any view on that issue, or any ultimate view
about functionality; it is enough to say that the record
compiled to date adequately supports the district judge’s
interlocutory decision.
                                               AFFIRMED
A true Copy:
      Teste:
                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit




                  USCA-02-C-0072—12-31-03
