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Trademarks

A Primer on Practice at the Trademark Trial & Appeal Board

by Paul Devinsky | Jun 30, 2022 | Trademarks

In a precedential decision rendered in an opposition proceeding, the Trademark Trial & Appeal Board (Board) took the lawyers for each side to task for ignoring Board rules in presentation of their case, but ultimately decided the case on a likelihood of confusion analysis. The Board found that the parties’ marks and goods were “highly similar” and sustained the opposition. Made in Nature, LLC v. Pharmavite LLC, Opposition Nos. 91223352; 91223683; 91227387 (June 15, 2022, TTAB) (Wellington, Heasley and Hudis, ALJs) (precedential).

Pharmavite sought registration of the standard character mark NATURE MADE for various foods and beverages based on allegations of bone fide intent to use in commerce. Made in Nature (MIN) opposed on the ground that Pharmavite’s mark so resembled MIN’s registered and common law “Made In Nature” marks as to cause a likelihood of confusion when used on the goods for which registration was sought.

In its brief to the Board, Pharmavite raised, for the first time, the Morehouse (or prior registration) defense. MIN objected to the Morehouse defense as untimely. The Board agreed, noting that defense is “an equitable defense, to the effect that if the opposer cannot be further injured because there already exists an injurious registration, the opposer cannot object to an additional registration that does not add to the injury.” The party asserting a Morehouse defense must show that it “has an existing registration [or registrations] of the same mark[s] for the same goods” (emphasis in original).

Here, the Board found that this defense was not tried by the parties’ express consent and that implied consent “can be found only where the non-offering party (1) raised no objection to the introduction of evidence on the issue, and (2) was fairly apprised that the evidence was being offered in support of the issue.” In this case, Pharmavite did introduce into the record its prior NATURE MADE registrations but only for the purpose of supporting Pharmavite’s “[r]ight to exclude; use and strength of Applicant’s mark.” The Board found that this inclusion did not provide notice of reliance on the Morehouse or prior registration defense at trial.

In sustaining the opposition, the Board commented extensively on the record and how it was used, “[s]o that the parties, their counsel and perhaps other parties in future proceedings can benefit and possibly reduce their litigation costs.”

Over-Designation of the Record as Confidential

The Board criticized the parties for over-designating as confidential large portions of the record, warning that only the specific “exhibits, declaration passages or deposition transcript pages that truly disclosed confidential information should have been filed under seal under a protective order.” If a party over-designates material as confidential, “the Board will not be bound by the party’s designation.”

Duplicative Evidence

The Board criticized the parties for filing “duplicative evidence by different methods of introduction; for example, once by Notice of Reliance and again by way of an exhibit to a testimony declaration or testimony deposition.” The Board noted that such practice is viewed “with disfavor.”

Overuse of [...]

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No Harm, No Foul: No False Advertisement Where Trade Association Failed to Show Injury

by Tessa Kroll | Jun 30, 2022 | Trademarks
The US Court of Appeals for the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of a home inspector association on a false advertising claim brought by a competitor, finding no evidence of injury or harm and explaining that harm could not be presumed merely from the fact that the parties compete for members. Am. Soc’y of Home Inspectors, Inc. v. Int’l Ass’n of Certified Home Inspectors, Case No. 21-1087 (10th Cir. June 14, 2022) (Tymkovich, C.J.; Carson, Rossman, JJ.)

The International Association for Certified Home Inspectors (InterNACHI) and the American Society of Home Inspectors (ASHI) are competing national organizations that offer memberships with benefits such as advertising, online education and logo design to independent home inspectors. InterNACHI brought a false advertisement claim under the Lanham Act against ASHI, its sole national competitor, for featuring the slogan “American Society of Home Inspectors. Educated. Tested. Verified. Certified.” on its website. InterNACHI alleged that ASHI’s tagline was misleading because ASHI’s membership includes “novice” inspectors who are not trained or certified. These “novice” inspectors are promoted on ASHI’s online “find-an-inspector” tool, where home buyers can find a local inspector and view their contact information, qualifications and membership level (associate, inspector or certified inspector). According to InterNACHI, ASHI’s misleading slogan coupled with its public promotion of novice members as inspectors caused InterNACHI to lose potential members. The parties filed cross motions for summary judgment. The district court granted summary judgment in favor of ASHI, concluding that InterNACHI failed to show that it was injured by the tagline as required under the Lanham Act. InterNACHI appealed.

InterNACHI argued that the district court incorrectly concluded that no reasonable jury could find that InterNACHI was harmed by the slogan and improperly refused to presume harm from the parties’ relationship as direct competitors. The Tenth Circuit disagreed, explaining that a plaintiff claiming false advertising under the Lanham Act must plead “an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” In support of its claim, InterNACHI offered the following:

A survey showing that consumers may be deceived by the slogan

Data showing an increase in ASHI associate membership following implementation of the slogan

A declaration by InterNACHI’s founder attesting to the harm caused to InterNACHI as a result of ASHI’s slogan.

The Tenth Circuit reasoned that consumer confusion does not bear on whether home inspectors are more likely to join ASHI instead of InterNACHI because of the slogan. The Court also declined to infer harm from ASHI’s increase in associate membership, which was likely attributable to other factors, such as the institution of reduced student membership fees or the closure of another national association for home inspectors around the time the slogan was introduced. The Court further noted that inspectors can join both organizations and that InterNACHI had not shown that its own membership levels decreased because of ASHI’s slogan. With respect to the declaration by InterNACHI’s founder that “use of th[e] slogan in connection [...]

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Drink Up, but Not with Lehman Brand

by Paul Devinsky | Jun 9, 2022 | Trademarks
In the context of an opposition proceeding, the US Court of Appeals for the Federal Circuit upheld a Trademark Trial & Appeal Board (Board) refusal to register a trademark based on likelihood of confusion with a famous but expired mark, notwithstanding the applicant’s assertion of abandonment of the mark by the original registrant. Tiger Lily Ventures Ltd. v. Barclays Capital Inc., Case Nos. 21-1107;- 1228 (Fed. Cir. June 1, 2022) (Lourie, Bryson, Prost, JJ.)

Tiger Lily sought to register the word mark LEHMAN BROTHERS for beer and spirits and for bar services and restaurant services. Barclays, whose Lehman Brothers marks had expired, opposed the applications based on likelihood of confusion. Tiger Lily argued that Barclays had abandoned the mark and filed an opposition to Barclays’ application to register the work mark LEHMAN BROTHERS. The Board sustained Barclays’ oppositions on the grounds of likelihood of confusion and dismissed Tiger Lily’s opposition. Tiger Lily appealed.

Tiger Lily challenged the Board’s decision, arguing that the Board erred in its determination that Barclays did not abandon its rights in the LEHMAN BROTHERS mark and, relatedly, that Barclays established priority with respect to the LEHMAN BROTHERS mark in its own application. Tiger Lily also argued that the Board erred in finding that its proposed mark for beer and spirits and its proposed mark for bar services and restaurant services would cause a likelihood of confusion with Barclays’ LEHMAN BROTHERS mark.

Addressing the issue of abandonment, the Federal Circuit explained that “there are two elements to a claim for abandonment: (1) nonuse; and (2) intent not to resume use,” and “even limited use can be sufficient to avoid a finding that use of a mark has been ‘discontinued.’” The Court noted that Tiger Lily acknowledged that Barclays had used the mark “continuously in the course of winding up the affairs of at least one Lehman Brothers affiliated company” and thus failed to prove nonuse. Whether Lehman Brothers would exist after bankruptcy proceedings ended was immaterial.

On the issue of likelihood of confusion and the DuPont factors, the Federal Circuit found that “because the LEHMAN BROTHERS mark has achieved a high degree of fame, it is afforded a broad scope of protection.” Tiger Lily attempted to draw a distinction between “consumer recognition” as compared with “goodwill” as a factor and argued that it was actually trying to trade on the “bad will” associated with the mark. The Court found “no legal support for [this] subtle distinction.” The Court concluded that “Tiger Lily’s attempts to capitalize on the fame of the LEHMAN BROTHERS mark weighs in favor of finding a likelihood of confusion,” and that the Board’s findings on the remaining factors were supported by substantial evidence.

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Counterfeit Dealer Gets Smoked in Trademark Preliminary Injunction Proceeding

by Tessa Kroll | Jun 2, 2022 | Copyrights, Trademarks
The US Court of Appeals for the Ninth Circuit affirmed a preliminary injunction barring the defendant from selling counterfeit e-cigarette and vaping products bearing the plaintiff’s logo because the plaintiff’s psychoactive products were legal and could support a valid trademark. AK Futures LLC v. Boyd St. Distro, LLC, Case No. 21-56133 (9th Cir. May 19, 2022) (Kleinfeld, Fisher, Bennett, JJ.)

AK Futures manufactures e-cigarettes and vaping products, including delta-8 THC goods marketed under its “Cake” brand. Delta-8 THC is a psychoactive compound found in the Cannabis sativa plant, which encompasses both hemp and marijuana. The compound is similar in effect to delta-9 THC, the primary psychoactive agent in marijuana, but delta-8 THC is typically manufactured from hemp-derived cannabidiol (CBD). The cultivation and possession of hemp was legalized by the Farm Act in 2018.

AK Futures sued Boyd Street Distro, a Los Angeles purveyor of smoke products, for trademark and copyright infringement. Boyd Street sold virtually identical counterfeit Cake-branded e-cigarettes and vaping products containing delta-8 THC. At the time of suit, AK Futures had a registered copyright protecting its Cake logo—a stylized “C” overlaying a two-tier cake—and pending trademark applications for six marks incorporating the word “Cake” or the Cake logo for use in connection with e-cigarette products. The district court granted AK Futures’ motion for preliminary injunction. Boyd Street appealed.

On appeal, Boyd Street conceded the copyright claim, but argued that AK Futures could not own a valid trademark in connection with its e-cigarettes and vaping products because the sale of delta-8 THC was prohibited under federal law. In response, AK Futures argued that the 2018 Farm Act legalized delta-8 THC and products containing the compound.

The Ninth Circuit agreed that AK Futures’ use of the marks in commerce was lawful and could give rise to trademark priority. The Court found that the “plain and unambiguous” text of the Farm Act indicated that delta-8 THC products were lawful. The Farm Act removed “hemp” and “tetrahydrocannabinols in hemp” from Schedule I in the Controlled Substances Act, where “hemp” is defined as “the plant Cannabis sativa L. and any part of that plant, including . . . all derivatives, extracts, [and] cannabinoids . . . with a delta-9 concentration of not more than .3 percent.” The Court noted that the delta-9 THC concentration level was the only statutory metric for distinguishing marijuana from hemp, and that the terms “derivative, extract, or cannabinoid” were substantially broad. The Court thus concluded that “hemp” encompasses delta-8 THC products that contain no more than 0.3% delta-9 THC.

Boyd Street argued that the US Drug Enforcement Agency had interpreted the Farm Act as not applicable to delta-8 THC because it is “synthetically derived” and argued that US Congress never intended the Farm Act to legalize psychoactive substances. The Ninth Circuit perfunctorily dismissed these arguments based on the clear and unambiguous statutory language. Since the Cake-branded products allegedly contained less than 0.3% delta-9 THC, the Court held that AK Futures was likely to succeed in demonstrating that its [...]

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Delay in Enforcing Trademark Measured from When Infringement Became Actionable

by Eleanor B. Atkins | May 26, 2022 | Trademarks
Addressing laches and progressive encroachment, the US Court of Appeals for the Eighth Circuit reversed and remanded a district court’s grant of summary judgment based on laches because the district court failed to “conduct a meaningful analysis” as to when the trademark infringement first became actionable. A.I.G. Agency, Inc. v American International Group, Inc., Case No. 21-1948 (8th Cir. May 13, 2022) (Loken, Gruender, Grasz, JJ.)

A.I.G. Agency (Agency) is a family-owned insurance broker in Missouri and American International Group, Inc. (International) is a large insurance company. Each company has used its version of an AIG trademark for decades. Agency first adopted the mark in 1958 while International began using AIG sometime between 1968 and 1970. In 1995, International sent a demand letter to Agency notifying it of International’s trademark registration and requesting that Agency cease use of the AIG mark. Agency responded that it had the right to use AIG in Missouri and Illinois because it had been using the trademark in those states long before International obtained its registration. In 2008, International again reached out to Agency demanding that it stop using AIG as a mark. Agency again asserted that it had the right to use the mark in Missouri and Illinois. International responded that it did not object to Agency’s use of AIG in St. Charles and St. Louis Counties in Missouri, but it would contest Agency’s use beyond that limited geographic scope.

Nearly a decade later, in 2017, Agency sued International for common law trademark infringement and unfair competition. International asserted that Agency’s claims were barred by laches and counterclaimed for trademark infringement, trademark dilution and unfair competition. Both parties moved for summary judgment, and the district court granted summary judgment for International, finding that Agency’s claims were barred by the doctrine of laches. Agency appealed.

The Eighth Circuit explained the difference between the equitable affirmative defense of laches (which is meant to bar claimants from bringing unreasonably delayed claims) and the doctrine of progressive encroachment (under which the period of delay in a trademark infringement case is measured not from when a claimant first learned of the allegedly infringing mark, but from when that infringement first became actionable). The Court explained that “[t]he doctrine [of progressive encroachment] saves trademark holders from being hoisted upon the horns of an inequitable dilemma—sue immediately and lose because the alleged infringer is insufficiently competitive to create a likelihood of confusion, or wait and be dismissed for unreasonable delay.” Here, Agency argued that it did not have an actionable and provable claim for infringement until 2012 when International changed its marketing strategy.

The Eighth Circuit found that the district court failed to “conduct a meaningful analysis” to determine when the infringement became actionable, noting that the district court found that laches barred the claims because “both parties have been using ‘AIG’ in the same markets for decades, each with full knowledge of the other’s activities.” The Court further criticized the district court for not employing a specific test to determine [...]

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Déjà vu Decision on Likelihood of Confusion

by Amol Parikh | May 19, 2022 | Trademarks
The US Court of Appeals for the Fifth Circuit affirmed a district court’s dismissal of a trademark suit that was essentially identical to a previous lawsuit that was dismissed based on a finding of lack of confusion. Springboards to Education, Inc. v. Pharr San Juan Alamo Independent School District, Case No. 21-40336 (5th Cir. May 10, 2022) (Willett, Engelhardt, Wilson, JJ.)

Springboards sells products to school districts in connection with its “Read a Million Words Campaign.” The campaign builds excitement around reading by incentivizing school children to read books through promises of induction into the Millionaire’s Reading Club and access to rewards, such as t-shirts, backpacks and fake money. Springboards’ goods may typically bear any combination of trademarks that it registered with the US Patent & Trademark Office (PTO), including “Read a Million Words,” “Million Dollar Reader,” “Millionaire Reader” and “Millionaire’s Reading Club.”

Pharr San Juan Alamo (PSJA) is a public school district in Hidalgo County, Texas. Springboards sued PSJA in 2016 in federal court, alleging trademark infringement based on the school district’s use of “millionaire”-themed reading incentive programs allegedly “using products and services bearing marks and branding identical to or confusingly similar to Springboards’ marks.” While the case was pending, the Fifth Circuit issued its decision in Springboards to Education, Inc. v. Houston Independent School District, where it found that another public school district’s summer reading program did not infringe Springboards’ trademarks. Observing the parallels between the Houston case and the PSJA case, the district court granted PSJA’s motion for summary judgment that it did not infringe any of Springboards’ trademarks. Springboards appealed.

Calling it “déjà vu all over again,” the Fifth Circuit affirmed the district court’s finding that PSJA’s use of Springboards’ marks was not likely to cause confusion. The Court explained that distinguishing between Springboards’ catalog of “millionaire”-themed goods and unaffiliated “millionaire”-themed goods that other educational entities have elected to deploy is not difficult, and unique imprints on “millionaire”-themed reading challenges are widespread in the educational field. The Court noted that as in Houston, Springboards did not allege that PSJA itself is in the business of competing with Springboards by selling its own “millionaire”-themed products to the school districts that make up Springboards’ customer base. The Court thus concluded that PSJA’s use of a million-word reaching challenge did not confuse and was not intended to confuse the sophisticated school districts that Springboards targets with its marks.

Springboards tried to distinguish the Houston case by arguing that the Houston school district had one summer reading program whereas PSJA has had several year-long reading programs and that the requirements of PSJA’s reading program are identical—and not merely similar to—Springboards’ model program. Springboards also noted that its founder worked his entire career in Hildago County (where PSJA is located) and visited schools, teachers and administrators in the district—unlike Houston, which was over 300 miles away. The Court found that these facts did not move the needle, in light of its finding that sophisticated school district customers can [...]

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Wild and Untamed Trademarks: Madrid Protocol Grants Right of Priority as of Constructive Use Date

by Katherine Pappas | Apr 28, 2022 | Trademarks
Addressing for the first time the question of enforceability of a priority of right in a trademark granted pursuant to the Madrid Protocol where the registrant’s actual use in commerce began after the allegedly infringing use, the US Court of Appeals for the Ninth Circuit found that the Madrid Protocol grants priority as of the constructive use date, but to prevail on an infringement action based on that superior right of priority, the registrant must still establish the requisite likelihood of confusion under the Lanham Act. Lodestar Anstalt v. Bacardi & Co., Case No. 19-55864 (9th Cir. Apr. 21, 2022) (Baldock, Berzon, Collins, JJ.)

Under the Madrid Protocol, applicants with trademarks in another country may obtain an “extension of protection” (generally equivalent to trademark registration) in the United States without needing to first use the mark in US commerce. Instead, the grant may be based on an applicant’s declaration of bona fide intent to use its mark in the United States.

In 2000 and 2001, Lichtenstein-based company Lodestar developed a brand of Irish whiskey called “The Wild Geese,” which was marketed in the US as “The Wild Geese Soldiers & Heroes.” Around 2008 and 2009, Lodestar developed the idea for the “Untamed” word marks, and in 2009 the US Patent & Trademark Office (PTO) accepted for filing two applications on behalf of Lodestar seeking extension of protection under the Madrid Protocol for the internationally registered “Untamed” word marks. The PTO published the marks for opposition, then granted the extensions of protection in 2011. In 2013, Lodestar developed a rum under The Wild Geese Soldiers and Heroes brand that used the Untamed word mark on the label. The rum was shown at the April 2013 Rum Renaissance Trade Show in Florida, where consumers sampled the rum. The rum was also featured in print advertisements associated with the trade show. But by June 2013, Lodestar had “decided to park the USA rum project as [it was] getting better returns in other markets.”

In 2012, Bacardi began developing the ad campaign “Bacardi Untameable.” Before launching the campaign, Bacardi ran a trademark clearance search that turned up Lodestar’s “Untamed” trademarks. From 2013 to 2017, Bacardi ran its “Bacardi Untameable” campaign. In response, Lodestar began promoting a then-nonexistent product “Untamed Revolutionary Rum” in an effort “to complement the Wild Geese Rum and also to combat Bacardi’s attempts to take over our Untamed mark.” In January 2015, the first Untamed Revolutionary Rum was sold to US retailers. In August 2016, Lodestar sued Bacardi for trademark infringement, arguing injury based on reverse confusion, as well as associated claims for unfair competition. The district court granted summary judgment in favor of Bacardi. Lodestar appealed.

The Ninth Circuit found that the district court erred on the threshold question of whether Lodestar’s Revolutionary Rum should be considered in the analysis of likelihood of confusion. The district court had found that the relevant products were those existing prior to launch of Bacardi’s campaign (excluding the later-created Revolutionary Rum). The Court found [...]

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It’s Not in the Bag: TTAB Refuses to Register Generic Handbag Design

by Sarah Bro | Apr 28, 2022 | Trademarks
Ending a hard-fought three-year campaign to secure registration of a popular handbag, the US Patent & Trademark Office (PTO) Trademark Trial & Appeal Board designated as precedential its decision refusing registration of the product configuration mark, deeming it a generic configuration not eligible for trademark registration. The Board also concluded that even if the bag design had not been generic, the applicant failed to make a necessary showing that the design of the bag had acquired distinctiveness. In re Jasmin Larian, LLC, Serial No. 87522459 (TTAB, Jan. 19, 2022; redesignated Mar. 29, 2022) (Cataldo, Lynch, Allard, ATJ).

Fashion brand CULT GAIA’s “ARK” handbag is composed of bamboo strips creating a creating a see-through “sunburst design,” and has been carried by celebrities such as Beyoncé and Jessica Alba. The brand’s founder and CEO Jasmin Larian sought registration on the Principal Register of the following mark for a three-dimensional handbag:

After several years of examination, the examining attorney ultimately issued a final refusal on the ground that the proposed configuration was a generic configuration, or alternatively, was a nondistinctive product design that had not acquired distinctiveness. Larian appealed to the Board.

Acknowledging the commercial success of the CULT GAIA ARK bag, the Board explained that the issue before it was whether the proposed mark was generic (i.e., a common handbag design), or, alternatively, whether the bag constituted a nondistinctive product design that had acquired distinctiveness. The Board tackled both questions, since similar evidence was relevant to both inquiries.

A trademark must be distinctive to be eligible for registration. Such distinctiveness is measured on a spectrum, where one side of the spectrum is made up of generic terms or generic designs (i.e., non-distinctive and non-protectable as trademarks) and the other side is made up of registrable trademarks that are arbitrary or fanciful. Suggestive trademarks fall somewhere in the middle. In the context of product designs, genericness may be found where the design is so common in the industry that the design cannot be said to identify a particular source of the product. Generic product designs fail to function as a trademark. Genericness is assessed by determining the genus of the goods or services at issue, then determining whether the consuming public primarily regards the design sought to be registered as a category or type of trade dress for the genus of goods or services. For the ARK bag, the applicant and the examining attorney agreed that “handbags” was the genus of the goods at issue. The relevant consuming public was found to consist of ordinary consumers who purchase handbags.

The Board reviewed the evidence of record to assess the significance of the bag design to ordinary consumers, i.e., whether they viewed the configuration of the bag as a source-identifying trademark or merely as a common handbag design. The Board detailed eight different categories of evidence, which, according to the Board, showed that “in the decades leading up to and the years immediately preceding [...]

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First Sale Defense Bars Trademark Infringement Where Trademarked Component Is Adequately Disclosed

by Jodi Benassi | Apr 14, 2022 | Trademarks
A US Court of Appeals for the Ninth Circuit panel vacated a grant of summary judgment in favor of the plaintiff, holding that the first sale doctrine applies when a trademarked product is incorporated into a new product. Bluetooth SIG Inc. v. FCA US LLC, Case No. 21-35561 (9th Cir. Apr. 6, 2022) (per curiam).

Bluetooth SIG administers standards for Bluetooth technology. SIG owns and licenses the trademarks below to product manufacturers:

Fiat Chrysler Automobiles (FCA) makes cars that contain Bluetooth-equipped head units. The head units are made by third-party suppliers that have been qualified by SIG, but FCA has not taken steps to qualify the Bluetooth capabilities in its cars. FCA uses the SIG trademarks on its head units and publications.

SIG sued FCA under the Lanham Act for trademark infringement. In its defense, FCA asserted the first sale doctrine. Under the doctrine, the right of a producer to control the distribution of its trademarked product does not extend past the first sale of the product. For example, a purchaser who stocks, displays and resells a producer’s product under a producer’s trademark violates no trademark rights under the Lanham Act. The district court granted partial summary judgment for SIG on the first sale issue, finding that the first sale doctrine was inapplicable because FCA’s conduct went beyond “stocking, displaying, and reselling a product.” FCA appealed.

The Ninth Circuit found that the lower court erred when it took a narrow view of the Ninth Circuit’s 1995 decision in Sebastian Int’l, Inc. v. Longs Drugs Stores Corp., in which the Court stated that “it is the essence of the ‘first sale’ doctrine that a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark violates no right conferred upon the producer by the Lanham Act.” The panel noted that the Sebastian Court never purported to articulate the outer bounds of the first sale doctrine; instead it simply captured the unauthorized resale of genuine goods.

The Ninth Circuit explained that the first sale doctrine also applies when a trademark is used to refer to a component incorporated into a new end product as long as the seller adequately discloses how the trademarked product was incorporated. The Court cited to the 1925 Supreme Court precedent in Prestonettes, Inc. v. Coty, which effectively extends the first sale doctrine beyond the examples stated in Sebastian. In Prestonettes, the Supreme Court held that trademark law did not prohibit a manufacturer from using a trademark, not to indicate the goods, but to say that the trademarked product was a component in a product being offered as new and changed. The Ninth Circuit also noted its 1998 holding in Enesco Corp. v. Price/Costco, in which it found that the first sale doctrine protected a retailer that resold dolls in allegedly inadequate packaging to the extent the repackaging was disclosed. The Enesco Court explained that if the public was adequately informed [...]

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Half-Baked Case: No Misappropriation or False Advertising Given Over-Broad Allegations

by Paul Devinsky | Mar 31, 2022 | Trade Secrets, Trademarks
The US Court of Appeals for the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of a defendant baker on a trade dress infringement claim and reversed the district court’s denial of the defendant baker’s motions for judgment as a matter of law on trade secrets misappropriation and false advertising claims. Bimbo Bakeries USA, Inc. v. Sycamore, Case Nos. 18-4062; -4031; -4040 (10th Cir. Mar. 18, 2022) (Hartz, Phillips, Eid, JJ.)

Bimbo Bakeries (and its predecessor, EarthGrains Baking Companies) owns, bakes and sells Grandma Sycamore’s Home-Maid Bread, a popular bread in Utah. U.S. Bakery is a competitor, and Leland Sycamore is the baker who developed the Grandma Sycamore’s recipe. Sycamore parted with his interest in Grandma Sycamore’s and opened his own bakery, Wild Grains Bakery. U.S. Bakery hired Wild Grains Bakery to produce another homemade bread product, Grandma Emilie’s. The relationship soured, and U.S. Bakery moved its Grandma Emilie’s operations in-house. U.S. Bakery developed a new formula for Grandma Emilie’s and enlisted a former Wild Grain employee to help. U.S. Bakery also created packaging for the bread based on Grandma Sycamore’s packaging. U.S. Bakery used several taglines to help sell its products, including “Fresh. Local. Quality.”

Bimbo Bakeries (then EarthGrains) sued Leland Sycamore, Tyler Sycamore (Leland’s son and co-baker), Wild Grains Bakery and U.S. Bakery, alleging multiple claims related to the Grandma Emilie’s operations, including trade secret misappropriation under the Utah Uniform Trade Secrets Act and trade dress infringement, trade dress dilution, false designation of origin, false advertising and unfair competition under the Lanham Act. Bimbo Bakeries alleged that U.S. Bakery’s use of the word “local” in the tagline “Fresh. Local. Quality.” constituted false or misleading advertising because U.S. Bakery did not actually bake all its bread products within the state of sale. The district court granted summary judgment in favor of U.S. Bakery on the trade dress infringement claim. The parties went to trial on the trade secrets misappropriation and false advertising claims. The jury ruled in Bimbo Bakeries’ favor on both and awarded more than $2 million in damages. The district court increased the damages owed by U.S. Bakery by almost $800,000 because U.S. Bakery was found to have willfully and maliciously misappropriated Bimbo Bakeries’ trade secret. The district court remitted the jury’s damages for the false advertising claim to around $83,000. The district court also permanently enjoined U.S. Bakery and Sycamore from using Bimbo Bakeries’ trade secret and denied renewed motions by U.S. Bakery and Sycamore for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

Bimbo Bakeries, U.S. Bakery and Sycamore appealed. Bimbo Bakeries argued that the district court should not have granted U.S. Bakery summary judgment on its trade dress infringement claim and should not have remitted damages for the false advertising claim. U.S. Bakery and Sycamore argued that the district court should have granted their renewed motions for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

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