The US Court of Appeals for the Fifth Circuit found no infringement by a large, well-known company that used the registered mark of an individual whose own use was local and generated only a few sales and minimal profits. The Court vacated and remanded the case to determine whether plaintiff had abandoned the mark. Dennis Perry v. H.J. Heinz Co. Brands, L.L.C., Case No. 20-30418 (5th Cir. Apr. 12, 2021) (Graves, J.)
In 2010, Dennis Perry created a condiment concoction in his home kitchen that he named “Metchup,” constituting a blend of private label mustard and ketchup, and a blend of mayonnaise and ketchup. Perry sold the concoction in the lobby of his small motel in Louisiana. The US Patent & Trademark Office granted registration for his trademark “Metchup” and after five years declared his mark “incontestable.” Perry had slow sales, however, only selling about 60 bottles with $50 total profit over the years. Perry had a Facebook page for his product, but did not advertise or sell the product in stores or online.
Meanwhile, Heinz produced a condiment called “Mayochup,” a blend of mayonnaise and ketchup, that it began selling in the United States in 2018. Heinz held an online naming contest to promote its product, and when one participant suggested the name “Metchup,” Heinz posted a mock-up picture with the “Metchup” name, along with other proposals. Heinz’s counsel saw Perry’s trademark registration, but because Heinz was not actually selling a product named “Metchup” and there were so few indications that Perry’s product was actually being sold, Heinz concluded that Perry’s mark was not in use and could be used in its promotion. When Perry saw Heinz’s posting, he sued for trademark infringement.
The district court found that while Perry may have once had a valid trademark registration for “Metchup,” there was no likelihood of confusion with the Heinz product and the mark had been abandoned as a consequence of de minimis use. Perry appealed.
The Fifth Circuit analyzed the dispute based on the eight-factor likelihood of confusion test. The Court found three factors weighed in Perry’s favor:
- Product similarity: Both products were mixed condiments.
- Potential purchaser care: Consumers would exercise less care for a low-priced condiment.
- Mark similarity: Both products used the same word “Metchup,” although the Court noted that the packaging design looked very different.
The Court also found five factors weighed in Heinz’s favor:
- The type of mark on the spectrum (i.e., whether the name is related to what the product is): Here, the mark was “suggestive” because it was a mash-up of names related to the sauces used.
- Outlet and purchaser identity: The parties targeted different markets because Perry had limited sales in one motel, while Heinz targeted online and at almost all grocery stores.
- Advertising identity: Perry did not advertise besides his one Facebook page without online sales, while Heinz had large-scale advertising and sales.
- Defendant’s intent: Heinz did not intend to infringe because it assumed Perry’s mark was no longer in use.
- Actual confusion: There was no record or survey of any consumers actually being confused on the source of the products.
Weighing the factors overall, the Fifth Circuit concluded that use of Perry’s mark ultimately was not widespread enough for a consumer buying the Heinz product to be confused. Absent a likelihood of confusion, the Court agreed with the district court that Heinz’s use did not constitute infringement.
With regard to whether Perry had abandoned the mark for non-use, the Fifth Circuit noted that while Perry’s registration had achieved “incontestable” status because it was registered for more than five years, incontestable marks are still subject to a defense of abandonment as a consequence of intentional discontinued use of the mark in commerce. On this issue, the Court found that the district court erred by misplacing the burden of proof standard for abandonment and by misapplying the “use in commerce” requirement.
First, the burden should not have been on Perry to disprove abandonment. The Fifth Circuit explained that the burden was on Heinz to prove that Perry did not use the mark in commerce. Second, Heinz had not proven abandonment because abandonment requires “complete discontinuance of use” of the mark. There is no threshold sales requirement for “use” under the Lanham Act. Even minor and sporadic good faith use of a mark (in this case generating about $50 in profit) will defeat an abandonment defense because even de minimis activities can still influence interstate commerce and be regulated by Congress. The Court remanded the case for a fact-finder to determine whether Perry was making good faith use of the mark in commerce—did Perry have a good faith intent to continue to use his mark in commerce, or was he just trying to ketchup to Heinz’s condiment success?
