Grupo Bimbo - Order Denying PI

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 1 of 44 Page ID #:2412
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [NOTE: Certain portions of this Order have been redacted due to the confidential nature of an agreement referenced in the parties briefs. A full copy of the Order has been filed under seal for GRUPO BIMBO, S.A. B. DE C.V., BARCEL USA, LLC ) ) ) Plaintiffs, ) ) v. ) ) SNAK-KING, CORP., and THE ) TRUSTEE OF THE LEVIN FAMILY ) 2010 IRREVOCABLE GIFT TRUST, ) ) Defendants. ) _______________________________ ) CASE NO.: CV 13-2147 ABC (VBKx) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
ORDER DENYING PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION PUBLIC REDACTED VERSION
viewing by the parties.] Pending before the Court is Plaintiffs Grupo Bimbo, S.A. B. de C.V. (Bimbo) and Barcel USA, LLCs (Barcel, collectively Plaintiffs) motion for a preliminary injunction, filed on April 30, 2013. (Docket No. 23.) Defendants Snak-King Corp. and The Trustee of
The Levin Family 2010 Irrevocable Gift Trust opposed on May 27 and Plaintiffs replied on June 3. (Docket Nos. 48, 59.) The Court
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ordered supplemental briefing on June 12 and July 2, and the parties filed supplemental briefs under seal. 89.) (Docket Nos. 66, 71, 77, 82, For the
The Court heard oral argument on Monday, July 22, 2013.
reasons below, the motion is DENIED. I. BACKGROUND1 This trademark and trade dress case arises out of a clash between TAKIS, a rolled tortilla chip manufactured and distributed by Plaintiffs Bimbo and Barcel, and TACO-LITOS, a competing product manufactured and distributed by Defendant Snak-King. By way of this
motion, Plaintiffs seek to enjoin Snak-King from advertising, promoting, marketing, distributing, producing, or selling any products that use the TACO-LITOS mark, packaging, or product shape, believing that TACO-LITOS has caused and will cause substantial consumer confusion with TAKIS. Plaintiffs contend that the growing
distribution of TACO-LITOS will irreparably harm their hard-earned goodwill. A. Plaintiffs TAKIS Corn Snacks
Bimbo is a publicly traded Mexican company, and Barcel is its United States subsidiary. (Declaration of Ruben Herrera 1.) Bimbo
produces, distributes, and markets nearly 10,000 different food products around the world. Id. 4. Its well-known United States
brands include THOMAS English muffins, ENTENMANNs baked goods, SARA LEE breads, and the subject of this motion, TAKIS corn snacks. Id.
Barcel manufactures, imports, distributes, and sells TAKIS corn snacks in the United States for Bimbo. Id.
The Court has reviewed the parties objections to evidence and to the extent those objections are inconsistent with the Courts ruling, they are OVERRULED. 2
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In the United States, sales of TAKIS corn snacks have been increasing. corn snacks. In 2006, Barcel sold approximately $2.8 million of TAKIS Id. 5. In 2008, sales of TAKIS increased to $20 Id. Since
million, and by 2012, sales had increased to $90 million.
2008, total United States sales of TAKIS corn snacks have exceeded $290 million. Id. Id. 6. The most
TAKIS corn snacks come in different flavors.
popular flavor, chili and lime, is offered under the secondary mark FUEGO. Id. TAKIS FUEGO represents approximately 85% of TAKIS sales Id.
in the United States, and more than 50% of Barcels revenues.
TAKIS are sold by major big box retailers, chain and independent grocery stores, convenience stores, gas stations, and independent stores. Id. 17. For example, TAKIS can be found in over 1,400 Wal-
Mart stores and 200 Target stores, Sams Clubs, Kroger, Safeway (Vons), Food 4 Less, Walgreens, CVS, Circle K, and 7-Eleven. B. The TAKIS Mark and Trade Dress2 Id.
Plaintiffs argue that the TAKIS mark and trade dress are unique source identifiers for TAKIS corn snacks. 1. TAKIS Mark
The TAKIS mark is the subject of several U.S. federal trademark registrations, including an incontestable registration. (Declaration
Plaintiffs identify three TAKIS source identifiers-the TAKIS mark, packaging, and product configuration (shape of the corn snack). (Mem. at 2.) Packaging and product configuration are both aspects of trade dress. McCarthy on Trademarks 8:5 (4th ed. 2013) (While trade dress traditionally referred to packaging and labelling of a product, the term has now been stretched to include the shape and design of the product itself.); Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 209 (2000) (trade dress is "a category that originally included only the packaging or dressing of a product, but in recent years has been expanded by many courts of appeal to encompass the design of a product."). 3
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of Edwin Mann 2, Ex. 1.) U.S. Trademark Registration 2,770,663, Principal Register: TAKIS for fried corn snacks. (Mann Decl., Ex. 1 at 143) (registered Oct. 7, 2003; incontestable). U.S. Trademark Registration Register The mark consists with a swirl design instead letter i. (Id. Ex. 1 at registration further states has no meaning in a foreign 4,079,594, Principal of the word TAKIS of a dot over the 145.) The that the word TAKIS language. Id.
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Despite acknowledging that TAKIS is a coined term, Plaintiffs assert that it uses the Spanish suffix -IS, a diminutive, to convey the idea of a little taco. 2. Trade Dress (Herrera Decl. 7, 26.)
Plaintiffs make two arguments regarding TAKIS trade dress: product configuration and packaging. Plaintiffs assert that the TAKIS
product configuration slanted ends and visible fold suggestive of a rolled taco is immediately identifiable as TAKIS. Herrera Decl. 11.) (Mem. at 3;
Interestingly, the United States Patent and
Trademark Office (PTO) initially refused to register the TAKIS product shape on the ground that applicants mark is a nondistinctive product configuration. (Declaration of Cindy Caditz
18, Ex. 15; Supplemental Declaration of Cindy L. Caditz 5, Ex. 3.) Bimbo submitted a Response to Office Action on July 3, 2006, arguing that it had made continuous and substantially exclusive use of the mark in U.S. commerce at least since November 2000" and that the PTO may presume the mark had become distinctive based on such use. After publishing official notice of the mark and receiving no opposition, the TAKIS product shape was federally registered on December 26, 2006. Mann Decl., Ex. 1 at 161 (U.S. Trademark Id.
Registration 3,188,850, The mark consists of the configuration of the 4
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goods in the form of a rolled-up taco shell.). incontestable.
The mark is now
The packaging for various flavors of TAKIS is also federally registered, although not incontestable. See Mann Decl., Ex. 1 at 148
(U.S. trademark registration 3,783,796 for TAKIS Crunchy Fajita); Ex. 1 at 152 (U.S. Trademark Registration 3,783,767 for TAKIS FUEGO); Ex. 1 at 155 (U.S. Trademark Registration 3,783,785 for TAKIS Guacamole); Ex. 1 at 157 (U.S. Trademark Registration 3,862,100 for TAKIS NITRO); Ex. 1 at 159 (U.S. Trademark Registration 3,783,797 for TAKIS Salsa Brava). The federal registrations for packaging expressly disclaim
the exclusive right to use the pictorial representations of the corn snacks and limes apart from the mark as shown. Id.
According to Plaintiffs, the TAKIS packaging contains the following elements: (1) bright purple and black bag; (2) three, redorange corn snacks in the shape of the TAKIS product configuration; (3) the corn snacks laying across each other with visible slanted ends and fold; (4) flame under the corn snacks; (5) two cut limes; (6) TAKIS word mark in yellow; and (7) a background swirl design. at 6.) C. Barcels Advertising of TAKIS (Mem.
Since 2009, Barcel has spent over $10 million advertising TAKIS, including through in-store shelf displays, internet, signs, print, television, radio, direct marketing, and special promotions. Decl. 13.) (Herrera
Barcel also promotes TAKIS via social media, including Id. 16. Id. TAKIS were the The TAKIS Facebook page has received
Facebook and Twitter.
over 1.9 million Likes.
TAKIS has received publicity from third parties.
subject of a Chicago Tribune taste test article in which TAKI FUEGO 5
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won for spicy snacks.
(Mann Decl., Ex. 3.)
In 2012, Minneapolis
children created a music video titled Hot Cheetos and Takis that received over five million hits on YouTube. D. Id., Ex. 4.
Snak-King Produces Taquito Chips for Private Label Brands
In late 2011, Snak-King began producing taquito chips for private label brands. (Declaration of Barry C. Levin 10, 13.) Snak-Kings
private label brand taquito chips have been sold at 7-Eleven stores continuously since late 2011 to the present, at Wal-Mart stores continuously since February 2012 to the present, and at Fresh & Easy stores continuously since October 2012. Id. 13.
In early 2012, Bimbo learned that Snak-King was producing a private label corn snack under the name Great Value for Wal-Mart. (Herrera Decl. 21.) Upon learning that the Great Value corn snacks
had a virtually identical shape to TAKIS, Plaintiffs attorneys sent a cease-and-desist letter to Wal-Marts counsel on February 13, 2012. (Mann Decl., Ex. 11.) Plaintiffs and Snak-King exchanged several
communications, including Snak-Kings June 21, 2012 notification to Plaintiffs that it would within the next week move forward with plans to manufacture and sell its own brand of rolled tortilla snack foods and [would] be investing substantial time and resources in the development and growth of the product line. (Caditz Decl., Ex. 6.)
Snak-King subsequently made an offer of a negotiated resolution setting a July 20, 2012 deadline for Plaintiffs to respond. Decl., Ex. 11 at 197-198.) (Mann
Although Plaintiffs counsel sent an
August 1, 2012 email stating that his client continues to consider [Snak-Kings] offer and we hope to respond to it in the near future, it appears that no response was forthcoming. Id.; Caditz Decl. 10.
Plaintiffs provide no explanation for the abrupt end to their 6
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communications with Snak-King; they simply state that by mid-2012, they believed the Great Value corn snacks were no longer being sold. (Herrera Decl. 22.) Despite Plaintiffs knowledge in early 2012 that Snak-King was supplying Wal-Mart and 7-Eleven with taquito chips in a virtually identical shape to TAKIS, Plaintiffs did not file this suit until March 1, 2013. E. (Caditz Decl. 3.)
Snak-Kings TACO-LITOS Brand Corn Snacks
In October 2012, Snak-King began selling TACO-LITOS, a corn snack product that competes with TAKIS. 14.) (Herrera Decl. 21; Levin Decl.
Snak-King developed the TACO-LITOS name, which combines the (Levin Decl.
Spanish word taco with the suffix ito meaning small. 14.)
TACO-LITOS are sold under Snak-Kings EL SABROSO trademark.
Id. 15. Plaintiffs allege TACO-LITOS is similar to TAKIS in packaging and product shape and that TACO-LITOS flavors track each of the TAKIS flavors. (Mann Decl., Exs. 9-10.)
Packaging:
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Product Shape:
TAKIS flavors: Crunchy Fajita, Nitro
Fuego (chili and lime), Guacamole, Salsa Brava,
TACO-LITOS flavors: Spicy Chile N Lime, Guacamole, Salsa Picante (Mann Decl., Ex. 9; Levin Decl. 15, Ex. 3.) F. Bimbos Agreement with PepsiCos Subsidiary, Frito-Lay
Defendants challenge Bimbos product configuration registration on the grounds that Bimbo did not use the taquito chip shape substantially exclusively from 2000 through 2006. Supp. Mem. at 2.) (Docket No. 75,
For a few years during that time period, PepsiCos
subsidiary Frito-Lay North America, Inc. was also producing taquito chips bearing the same product configuration as Plaintiffs TAKIS product. Id. Defendants point to two separate Statement of Use
documents that Frito-Lay filed with the PTO in 2004 for its DORITOS ROLLITOS taquito chip. Decl. 6, Ex. 4.) (Caditz Decl. 17, Ex. 14; Supp. Caditz
Those documents stated that the specimens were Id. PepsiCo discontinued
first used in commerce in December 2003. DORITOS ROLLITOS in 2005. 4.)
(Declaration of Tracey L. Giertz 5, Ex.
In February 2012, Frito Lay reintroduced the taquito chip using the trademark DORITOS DINAMITA. (Caditz Decl. 7, Ex. 5.) Frito-
Lays DORITOS DINAMITA uses the Takis configuration mark in the U.S. 8
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under a transaction agreement with Bimbo. [REDACTED]
Id. 8, Ex. 6 at 2.
Both sides have submitted declarations regarding the interpretation and application of Mexican law to the agreement. (Docket Nos. 81, 89.) [REDACTED] In this action, Plaintiffs have asserted claims for trademark infringement, packaging trade dress infringement, and infringement of product configuration trade dress under the Lanham Act, 15 U.S.C. 1114, 1125(a). II. LEGAL STANDARD A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of hardships tips in his favor, and that an injunction is in the public interest. Winter v. Natural Res. Defense Council, Inc.,
555 U.S. 7, 20 (2008); Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir. 2009). This recitation of the
requirements for a preliminary injunction did not completely erase the Ninth Circuits sliding scale approach, which provided that the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another. Vanguard Outdoor, LLC v. City of Los Angeles, 648 F.3d 737,
739 (9th Cir. 2011). In one version of the sliding scale, a preliminary injunction could issue where the likelihood of success is such that serious questions going to the merits were raised and the balance of hardships tips sharply in [plaintiffs] favor. 9 Id. at 740 (internal quotation
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marks omitted; brackets in original). survived Winter. Id.
This serious questions test
Therefore, serious questions going to the
merits and a hardship balance that tips sharply in the plaintiffs favor can support issuance of an injunction, so long as the plaintiff also shows a likelihood of irreparable injury and that the injunction is in the public interest. III. DISCUSSION Plaintiff seeks a preliminary injunction based on trademark, trade dress (product shape), and trade dress (packaging).3 As a preliminary matter, the Court finds that Defendants definition of the relevant competitive market as taquito chips is too narrowly defined. See, e.g., Topps Co. v. Gerrit J. Verburg Co., Id. (internal quotation marks omitted).
41 U.S.P.Q.2d 1412, 1419 (S.D.N.Y. 1996) (improper to define the competitive market as diamond ring shaped lollipops [plaintiffs trade dress] rather than the candy industry in general); accord Ford Motor Co. v. Lloyd Design Corp., 184 F. Supp. 2d 665 (E.D. Mich. 2002) (the product category is not auto floor mats with FORD trademarks on them, but auto floor mats with any indicia on them). Even Snak-Kings own
filings with the PTO identify TACO-LITOS as goods including corn chips and tortilla chips, not taquitos or taquito chips. Decl., Ex. 5.)4 (Giertz
Thus, the Court agrees with Plaintiffs that the
At many points in both parties briefs, the analyses converge, which is understandable given the amount of overlap in the theories. Nevertheless, each of these claims must stand alone if the Court is to grant a preliminary injunction. When the same analysis applies to more than one theory of infringement, the Court has endeavored to cross-reference the previous section of the Order where the element is discussed in greater detail. Defendants examples of varying brands of frozen taquitos (e.g., Jose Ole, Don Miguel, and El Monterey) are therefore (continued...) 10
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relevant market is corn snacks or tortilla chips. A. Trademark: TAKIS v. TACO-LITOS
In order to show trademark infringement, the plaintiff must demonstrate that the defendant is using a mark confusingly similar to a valid, protectable trademark owned by the plaintiff. Brookfield
Commcns, Inc. v. W. Coast Entmt Corp., 174 F.3d 1036, 1046 (9th Cir. 1999). 1. Validity
Registration of a mark provides constructive notice throughout the United States of the registrants claim to ownership and is prima facie evidence of validity. 15 U.S.C. 1072, 1115; Park N Fly, Within
Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 202 (1985).
five years of registration, any person who believes that he is or will be damaged by registration may seek to cancel a mark. 1064(a). Park N Fly, 469 U.S. at 202. 15 U.S.C.
After five years continuous
use after registration, the mark becomes incontestable, which means it is conclusively presumed either that the mark is nondescriptive, or if descriptive, has acquired secondary meaning. Id. at 205; Au-Tomotive
Gold v. Volkswagen of Am., 457 F.3d 1062, 1072 (9th Cir. 2006) (trademarks that are registered and incontestable are presumed valid, distinctive, and non-functional). In other words, a defendant faced
with an incontestable registered mark cannot defend by claiming that the mark is invalid because it is descriptive and lacks secondary meaning. The parties do not dispute that Plaintiffs have an incontestable registered trademark in the word TAKIS for fried corn snacks. (...continued) irrelevant. (Declaration of Cindy Caditz 15-16, Exs. 12-13.) 11
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(Mann, Ex. 1 at 142.)
Nor do they dispute that the TAKIS mark,
which consists of the word TAKIS with a swirl design instead of a dot over the letter i, is registered yet still contestable. 144 (registered on January 3, 2012). Id. at
Instead, the parties focus on
whether TACO-LITOS is confusingly similar to TAKIS. 2. Likelihood of Confusion
The touchstone of a Lanham Act claim is the likelihood of consumer confusion, which requires the factfinder to determine whether a reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks. Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 630 Likelihood of confusion is determined by evaluating
(9th Cir. 2005).
the familiar factors outlined in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 34849 (9th Cir. 1979): (1) strength of the marks; (2) relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels; (6) degree of consumer care; (7) defendants intent in selecting the mark; and (8) likelihood of expansion of the product lines. Surfvivor, 406 F.3d at 631. [T]his
eight-factor test for likelihood of confusion is pliant, so the relative importance of each individual factor will be case-specific and even a subset of the factors could demonstrate likely confusion. Brookfield, 174 F.3d at 1054. Both sides tend to conflate the analysis of the product mark with trade dress and configuration. In this section, the Court analyzes
the factors as they apply to the word marks TAKIS and TACO-LITOS in their order of importance in this case. a. Similarity of the Marks
The more similar the marks in terms of appearance, sound, and 12
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meaning, the greater the likelihood of confusion.
Network
Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1150 (9th Cir. 2011). In evaluating appearance, sound, and meaning, the
Court follows three axioms: first, the marks must be considered in their entirety and as they appear in the marketplace; second, similarity is adjudged in terms of appearance, sound, and meaning; and third, similarities are weighed more heavily than differences. GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1206 2000). Sight. The TAKIS mark, as it appears in the marketplace, is (9th Cir.
written in yellow with the T capitalized and the remainder of the letters in lowercase. As noted in the trademark registration, there Because it is a relatively
is a swirl in place of the dot on the i.
short word, TAKIS appears taller on the packaging; it is nearly twice the height of the TACO-LITOS mark. In contrast, TACO-LITOS
is written in an orange hue in all caps and each letter is necessarily smaller because of the length of the word. Plaintiffs argue visual
similarity because both words commence with TA and end with S. (Mem. at 17.) The Court is unconvinced and finds that the visual
similarity subfactor does not weigh in favor of a likelihood of confusion. Sound. As with sight, Plaintiffs argue aural similarity because (Mem. at
both words begin with TA and end with a vowel + S sound. 17.)
But TAKIS has only two syllables compared to TACO-LITOS, This factor also weighs against finding likely
which has four. confusion. Meaning.
Although the TAKIS trademark registration expressly
indicates the word TAKIS has no meaning in a foreign language (Mann, 13
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Ex. 1 at 144), Plaintiffs explain that TAKIS uses the Spanish suffix -IS, a diminutive, to convey the idea of a little taco. 17; Herrera 26.) (Mem. at
Defendants add a diminutive -ITOS to TACO to Defendants seize on Plaintiffs explanation to
suggest a little taco.
argue that Plaintiffs cannot prevent Defendants or other competitors from using a portion of a mark to describe a product. 17.) (Opp. at 16-
After representing to the PTO that TAKIS has no meaning in a
foreign language to obtain the trademark, Plaintiffs cannot credibly take the opposite position to support a finding of confusing similarity. The Court does not find a likelihood of confusion for the
meaning sub-factor. In sum, the sight, sound, and meaning factors weigh against finding a likelihood of confusion. b. Relatedness of the Goods
Under this factor, parties need not be direct competitors, but the goods must be reasonably thought by the buying public to come from the same source if sold under the same mark. Rearden LLC v.
Rearden Commerce, Inc., 683 F.3d 1190, 1212 (9th Cir. 2012) (internal quotation marks omitted). The ultimate question is whether customers Surfvivor, 406
are likely to associate the two product lines. F.3d at 633.
In this case, the parties do not dispute that they are direct competitors. (Mem. at 18.) Based on the TAKIS and TACO-LITOS word
marks alone, it is unlikely that customers would associate the two products. For purposes of the likelihood of confusion analysis as it
applies to the word marks, the factor of relatedness of the goods weighs against finding a likelihood of confusion.
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c.
Strength of the Mark
The stronger a mark meaning the more likely it is to be remembered and associated in the public mind with the marks owner the greater the protection it is accorded by the trademark laws. Network Automation, 638 F.3d at 1149. In assessing a marks strength,
the Court must analyze both its conceptual and commercial strength. Id. Conceptual strength involves classifying the mark on
the spectrum of distinctiveness, while commercial strength is based on actual marketplace recognition, including advertising expenditures. Id. The conceptual strength of a mark is determined by its placement on a continuum of marks from generic, afforded no protection; through descriptive or suggestive, given moderate protection; to arbitrary or fanciful[,] awarded maximum protection. E. & J. Gallo Winery v.
Gallo Cattle, 967 F.2d 1280, 1291 (9th Cir. 1992) (citation omitted). Here, the TAKIS mark has been in use for almost ten years. 1 at 142.) (Mann Ex.
The mark does not mean anything in English or Spanish and
does not describe the product, which means it is likely at least suggestive. That said, the question is whether TAKIS distinguishes Plaintiffs goods from those of others. Defendants opposition misses
the mark in this regard, focusing on taco and taquito products and arguing that the field of taco and taquito-related marks is extremely crowded. (Opp. at 13-14.) But the TAKIS word mark is not synonymous
with tacos or taquitos and is therefore not hemmed in on all sides by similar marks on similar goods[.] Miss World (UK) Ltd. v.
Mrs. Am. Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988). In any event, the TAKIS trademark has achieved incontestable 15
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trademark status, which precludes Defendants from challenging the mark on the grounds that it is not inherently distinctive or lacks secondary meaning. Park N Fly, Inc. v. Dollar Park & Fly, Inc., 469
U.S. 189, 205 (1985) (concluding that the holder of a registered mark may rely on incontestability to enjoin infringement and that such an action may not be defended on the grounds that the mark is merely descriptive.). Thus, the TAKIS mark is likely at least suggestive
and therefore conceptually strong. As to the parties comparative commercial strength, Plaintiffs point to the hundreds of millions of dollars of sales, and millions of dollars of advertising spent on developing the TAKIS mark. 18.) (Mem. at
Plaintiffs also reference media mentions, including the 2012
viral video, as evidence of the public notoriety that TAKIS has achieved in the United States. (Mem. at 19.) Plaintiffs have
demonstrated a likelihood of success that their mark is commercially strong. d. Overlapping Marketing Channels
Convergent marketing channels increase the likelihood of confusion. Network Automation, 638 F.3d at 1151. Here, there is
clear overlap between the parties marketing channels, which weighs in favor of a likelihood of confusion. The Court does not attribute much
weight to this factor, however, because it has not found the marks similar in sight, sound, and meaning. e. Degree of Customer Care Network
Low consumer care increases the likelihood of confusion.
Automation, 638 F.3d at 1152; Beer Nuts v. Clover Club Foods Co., 805 F.2d 920, 927 (10th Cir. 1986) (inexpensive snack foods are impulse items and confusion is more likely); Fiji Water Co., LLC v. Fiji 16
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Mineral Water USA, LLC, 741 F. Supp. 2d 1165, 1180-81 (C.D. Cal. 2010) (premium bottled water is low-cost, making confusion more likely). Given that TAKIS and TACO-LITOS are sold at low cost and often located by check-out counters, the Court agrees that the snacks are likely to be an impulse buy. This factor is accorded little weight, however, Thus,
because the Court has found that the marks are not similar.
even a consumer acting on impulse is not likely to confuse the two products. f. Actual Confusion
Although not required, actual confusion among significant numbers of consumers provides strong support for the likelihood of confusion. Network Automation, 638 F.3d at 1151. The Court
appreciates that it is exceedingly difficult to detect instances of actual confusion when . . . the goods are relatively inexpensive and their actual properties are exactly identical. at 928. Plaintiffs accuse Defendants of carefully mix[ing] TACO-LITOS with TAKIS products on Barcel-branded racks. Ex. 1.) (Figueroa Decl. 5-6, Beer Nuts, 805 F.2d
Plaintiffs point to the declaration of a Barcel field
marketing manager who states that a store clerk at a grocery store in Salinas, California thought TACO-LITOS was from Barcel and a store floor manager who also thought TACO-LITOS was a Barcel product. 8-9. Plaintiffs cite similar examples from a Kwik E Mart in Id.
Colton, California, a P&M Supermarket and El Tepeyac grocery store in New Jersey, and a 7-Eleven in Texas. (Herrera Decl., Ex. 8.)
Defendants claim such declarations are hearsay, that Defendants do not and cannot control placement of TACO-LITOS in stores, and that the store owner or distributor determines where and how to display 17
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products.
(Levin Decl. 19-24.)
The Court agrees that Plaintiffs
proferred declarations from employees based on conversations they purportedly had with clerks and store managers are hearsay and do not evidence confusion among consumers. Sharper Image Corp. v. Target
Corp., 425 F.Supp.2d 1056, 1073 (N.D. Cal. 2006) (sworn statements of plaintiffs retailers not probative evidence of secondary meaning in minds of consumers). On Reply, Plaintiffs introduce two instances of consumers who have purportedly expressed confusion on social media sites: Picture of TACO-LITOS bag with caption: Bought these thinking it was Taxis [sic]/. - #thestruggle #tacolitos. (Declaration of Tracey Giertz, Ex. 1.) Picture of TACO-LITOS bag with caption: These arent TAKIS?!? #faketakis #somad. Id.
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Plaintiffs offer two more examples in their supplemental brief: Picture of TACO-LITOS bag with caption: Wtf?! I almost got excited at my job cuz I thought they sold #Takis. .. Smh #FakeTakis (Giertz Supp. Decl., Ex. 1.) Picture of TACO-LITOS bag with caption: Takis lil brother #tacolitos #spicy Id.
Although there is no legal requirement for actual consumer confusion at this stage, the Court is not satisfied that Plaintiffs have shown actual confusion based on four social media comments and the absence of consumer complaints to Plaintiffs. g. Intent
The knowing adoption of a closely similar mark used by another is a basis for inferring intent to deceive the public, which is strong evidence of a likelihood of confusion. 2d at 1181. Fiji Water Co., 741 F. Supp.
However, the intent factor carries only minimal weight 18
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because an intent to confuse customers is not required for a finding of trademark infringement. GoTo.com, 202 F.3d at 1208.
Plaintiffs argument about mixing bags of TACO-LITOS on Plaintiffs shelf displays or clip strips is a red herring. Plaintiffs hearsay statements from their field managers that they spoke with store managers who saw TACO-LITOS sales representatives deliberately place TACO-LITOS on shelves with TAKIS are offset by Defendants declarations indicating that the stores decide where to display the products. (Compare Declaration of George Zavala 25 with Plaintiffs have no proof that
Declaration of Kewal Krishan 5-7.)
Defendants were responsible for intermingling the products. Plaintiffs then argue that their prior notification to Snak-King of their rights in Spring 2012over six months before Snak-King released TACO-LITOSproves that the development and launch of the TACO-LITOS chips and packaging comes with full knowledge of Plaintiffs rights[.] (Reply at 9.) Aside from the fact that this
position clearly weakens Plaintiffs no delay argument (discussed in Section III.D below), Plaintiffs were clearly on notice of Defendants plan to begin producing and marketing TACO-LITOS in early 2012. Plaintiffs failed to follow through on their discussions with SnakKing on this issue. (Caditz Decl. 10.) As such, the Court is not
prepared to find intent to deceive. h. Expansion of Product Lines
The expansion of product lines factor does not carry much weight here because the parties already directly compete. See Network
Automation, 638 F.3d at 1153 (finding expansion factor unimportant because parties already directly competed). Therefore, this factor
has little impact on the likelihood of confusion. 19
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i.
Summary of Sleekcraft Factors
Despite the fact that the majority of the Sleekcraft factors favor Plaintiffs, the Court finds that those factors are less important in this case, where the marks are so dissimilar in sight, sound, and meaning. Sleekcraft, 599 F.2d 341, 348-49 (9th Cir. 1979)
([T]he relative importance of each factor will be case-specific . . . [and] it is often possible to reach a conclusion with respect to likelihood of confusion after considering only a subset of the factors.). Thus, the Court finds it is unlikely that consumers would
be confused between the trademark TAKIS and TACO-LITOS. 3. Conclusion on the Merits
Under the circumstances, Plaintiffs have not demonstrated a likelihood of prevailing on the merits of their trademark infringement claim as to the TAKIS and TACO-LITOS marks. B. Trade Dress (Product Configuration)
Trade dress includes the shape and design of the product itself. Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205
(2000) (trade dress is a category that originally included only the packaging or dressing of a product, but in recent years has been expanded by many courts of appeal to encompass the design of a product.). To assert a claim for trade dress infringement based on
product configuration (also referred to as product shape), the following elements must be met: (1) a valid trade dress shape that is recognized by customers to identify and distinguish source; (2) the shape is non-functional; and (3) the accused product creates a likelihood of confusion as to source, sponsorship, connection or approval because of the similar shape or design. McCarthy, 7:54.
Because Plaintiffs have a federal registration, the burden of proof on 20
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the first two elements validity and functionality shifts to Defendants. 1. 15 U.S.C. 1115(a), (b). Validity
As discussed in Section III.A.1 above, registration of a mark is prima facie evidence of validity. 15 U.S.C. 1072, 1115; Park N The
Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 202 (1985).
product configuration trade dress registration is dated December 26, 2006 and has become incontestable. U.S.C. 1065.) (Mann Decl., Ex. 1 at 161; 15
The incontestability of the mark precludes Defendants
from challenging the validity of the mark on the grounds that it is not inherently distinctive and lacks secondary meaning. Id. However,
an incontestable mark may be canceled at any time on certain specified grounds, including that (1) it was obtained fraudulently, (2) it has become generic, (3) it has been abandoned by the registrant, or (4) the mark is functional. 15 U.S.C. 1064(c), 1115(b)(1), (2) & (8).
Defendant bears the burden of establishing one of the specified grounds for cancellation of the incontestable mark. a. Fraud
Fraud is an enumerated statutory exception to an incontestable trademark registration. 15 U.S.C. 1115(b). To prove fraud on the
PTO, Defendants must show a false representation regarding a material fact, the registrants knowledge or belief that the representation is false, the intent to induce reliance upon the misrepresentation and reasonable reliance thereon, and damages proximately resulting from the reliance. Cir. 1990). Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th
Fraud must be proven by clear and convincing evidence and Spin
[t]here is no room for speculation, inference or surmise.
Master Ltd. v. Zobmondo Entmt LLC, 778 F. Supp. 2d 1052, 1061 (C.D. 21
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Cal. 2011). Defendants assert that Bimbos claim in a July 2006 PTO filing that it made substantially exclusive use of the mark in U.S. commerce since at least November 2000 was fraudulent. 5, Ex. 3.) (Supp. Caditz Decl.
They attach Statement of Use documents submitted to the
PTO by Frito-Lay in 2004, which they claim evidence the existence of Frito-Lays DORITOS ROLLITOS during the same time period. Caditz Decl. 6, Ex. 4.) (Supp.
PepsiCo discontinued DORITOS ROLLITOS in
2005 (Giertz Decl. 5, Ex. 4) and Plaintiffs obtained their product configuration trademark in December 2006. (Mann Ex. 1 at 161.)
Plaintiffs respond that the unsworn statement was made by Bimbos outside counsel, was not material to the PTO in granting the registration, and that one other user does not invalidate a substantially exclusive claim. (Reply at 17-18.) On this record,
and given Defendants burden of proof, the Court is not prepared to find that Bimbos representation of substantially exclusive use of the mark amounts to fraud on the PTO. b. Generic
Perhaps the clearest test for genericness is the Who are youWhat are you? test. McCarthy, 12:1 (4th ed. 2011). A mark
answers the buyers question Who are you?
In response to the
question What are you? many competitive goods or services will give the same generic answer regardless of source of origin. Marks that
constitute a common descriptive name are referred to as generic. . . . (Citation omitted.) Generic terms are not registrable, and a
registered mark may be canceled at any time on the grounds that it has become generic. . . . Park N Fly, Inc. v. Dollar Park & Fly, Inc.,
469 U.S. 189, 194 (1985); Reno Air Racing Assn, Inc. v. McCord, 452 22
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F.3d 1126, 1135 (2006) ([R]egistered marks are endowed with a strong presumption of validity, and a defendant has the burden of showing genericness by a preponderance of the evidence.). Defendants have not met their burden because the taquito chip shape is not a common shape in the tortilla chip industry. See Big
Island Candies, Inc. v. Cookie Corner, 269 F.Supp.2d 1236, 1243 (D. Haw. 2003) (finding Hawaiian shortbread cookie diagonally dipped in chocolate generic after reviewing evidence that very similar cookies are commonly made and sold, both in Hawaii and elsewhere in the United States); Malaco Leaf, AB v. Promotion in Motion, Inc., 287 F.Supp.2d 355, 364 (S.D.N.Y. 2003) (concluding Swedish Fish gummy candy was generic after noting examples of 69 third-party uses of gummy fishshaped designs). In addition to Defendants and the private labels
they supply, the only other manufacturer of the taquito chip in this product configuration is Frito-Lay, whose right to use the configuration is addressed in more detail below. The lack of
prevalence of this particular shape in the industry militates against a finding of genericness. Moreover, the taquito chip product configuration is not such a basic or necessary format that no one should have a trade dress monopoly on it[.] Big Island Candies, Inc., 269 F.Supp.2d at 1243.
Plaintiffs include several examples of alternative tortilla chip shapes to show that competitors do not need to use the taquito chip product configuration to be competitive. (Declaration of Roberto
Cayetano Guzman Tello 11, Ex. 1 [Bokados Enre-2 product with a bowtie shape] & Ex. 2 [Sabritas Turbos product with a screw shape].) The Court finds that Defendants have not shown that the TAKIS product configuration is generic in the corn snack/tortilla chip 23
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industry. c. Functionality Functional
A protectable trade dress must be non-functional.
features of a product are those that are essential to the use or purpose of the article or . . . affect the cost or quality of the article. TrafFix Devices, 532 U.S. 23, 32 (2001) (citation omitted).
To determine whether a products trade dress is functional, the Ninth Circuit has set out four factors, none of which is dispositive: (1) whether the trade dress yields a utilitarian advantage; (2) whether alternative designs are available; (3) whether advertising touts the utilitarian advantages of the design; and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture. Disc Golf Assn, Inc. v. Champion Discs, Inc., 158 F.3d If the trade dress is registered, the
1002, 1005 (9th Cir. 1998).
registration is presumptive evidence of non-functionality and the burden of showing functionality is on the defendant. i. Utilitarian Advantages
Federal courts in the Ninth Circuit have found that trade dress features have utilitarian advantages when they affect the cost or quality of the product or the features are the actual benefit that the consumer wishes to purchase, as distinguished from an assurance that the particular entity made, sponsored, or endorsed a product. Fiji Water, 741 F.Supp.2d 1165, 1173, citing Leatherman Tool Group v. Cooper Indus., Inc., 199 F.3d 1009, 1011-12 (9th Cir. 1999). In this case, the taquito chip shape does not provide utilitarian advantages over other tortilla chip or corn snack shapes. The
benefits cited by Defendants could be said of all tortilla chips: superior crunch, improved strength, flavor retention, and the ability 24
1 2 3 4 5 6 7 8
to be dipped and retain dip.
(Levin Decl. 11.)
One would be hardThe benefits of
pressed to find a soggy, weak, flavorless corn snack.
a rolled snack piece are therefore not unique to this product configuration. Thus, the Court finds that Plaintiffs are likely to
succeed on the merits of their argument that their product configuration is non-functional. ii. Alternative Designs, Advertising, and Method of Manufacture
As explained in connection with genericness (Section III.B.1.b 9 above), the market is flush with alternative, dissimilar snack shapes. 10 (See, e.g., Cayetano Decl. 11, Ex. 1 [Bokados Enre-2 product with a 11 bow-tie shape] & Ex. 2 [Sabritas Turbos product with a screw shape].) 12 In addition, Defendants have not shown that Barcels advertising 13 touts any utilitarian benefits of the TAKIS product configuration. 14 See Fiji Water, 741 F.Supp.2d at 1175 (finding one article reporting 15 that the FIJI square bottle shape was designed to save shipping costs 16 was insufficient to support a finding of functionality). 17 Finally, the TAKIS product configuration is clearly more 18 difficult to manufacture than a traditional corn chip. 19 explain that they first chose the shape, then figured out how to make 20 it. 21 would need to expend resources to remove the curved edge from the 22 taquito chip (Opp. at 8), but whether the design achieves economies 23 in manufacture or use. 24 U.S.A., Inc., 4 F.3d 819, 823 (9th Cir. 1993). 25 the product configuration is non-functional.5 26 27 28 The Court, having determined that Defendants have not demonstrated aesthetic functionality as to product configuration, will (continued...) 25
5
Plaintiffs
(Cayetano Decl. 12.)
The question is not whether Defendants
International Jensen, Inc. v. Metrosound The Court finds that
1 2
d.
Naked Licensing or Consent to Use as Trademark Abandonment
Two Ninth Circuit decisions provide a helpful introduction to 3 naked licensing of trademarks. 4 Tyfield Importers, Inc., 289 F.3d 589, 595-96 (9th Cir. 2002) 5 (affirming cancellation of plaintiffs registration of mark because 6 plaintiff engaged in naked licensing); FreecycleSunnyvale v. Freecycle 7 Network, 626 F.3d 509, (9th Cir. 2010) (affirming grant of summary 8 judgment where plaintiff demonstrated defendant engaged in naked 9 licensing and consequently abandoned trademarks). 10 established that [a] trademark owner may grant a license and remain 11 protected provided quality control of the goods and services sold 12 under the trademark by the licensee is maintained. Barcamerica, 289 13 F.3d at 595-96 (citation omitted); Freecycle, 626 F.3d at 515. 14 Naked licensing occurs when the licensor fails to exercise 15 adequate quality control over the licensee. 16 515. 17 function as a symbol of quality and a controlled source. 18 McCarthy 18:48. 19 constitutes abandonment of any rights to the trademark by the 20 licensor. 21 the owner is estopped from asserting rights to the trademark. 22 23 24 25 26 27 28 (...continued) not discuss this arcane theory in detail. Once the relevant competitive market is defined to include tortilla chips and corn snacks, it becomes clear that there are many alternative shapes available, including rolled, unrolled, flat, round, spirals, bow-ties, triangular, and scoops. (Reply at 16.) Unlike the novelty items that have been found aesthetically functional (e.g., heart-shaped box, distinctive typeface, penguin-shaped cocktail shaker), Defendants have not shown that consumers purchase taquito chips for their aesthetic value. 26
5
Barcamerica Intl USA Trust v.
It is well-
Freecycle, 626 F.3d at
Naked licensing may result in the trademarks ceasing to Id., citing
Naked licensing is inherently deceptive and
Id.
Once a trademark owner has abandoned the trademark, Id.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Such abandonment is purely an involuntary forfeiture of trademark rights, for it need not be shown that the trademark owner had any subjective intent to abandon the mark. citing McCarthy 18:48. Barcamerica, 289 F.3d at 596,
The proponent of a naked license theory Id. (citation omitted).
faces a stringent standard of proof.
Defendants argue that Bimbo abandoned any trademark in its product configuration by permitting Frito-Lay to use its exact product configuration without adequate quality control, giving rise to a naked license. (Supp. Mem. at 3-4.) [REDACTED] Plaintiffs respond that there is no naked license because Mexican law supplies an implied license with a quality control standard that is enforceable regardless of whether the agreement contains an express license. (Mem. at 3-7.) Plaintiffs submit the
declaration of Horacio Rangel, a licensed Mexican lawyer, in support of their claims and assertions based on Mexican law. Mr. Rangels
declaration, however, is full of legal conclusions unsupported by reference to Mexican statutory law, case law, or other authority. Instead, Mr. Rangel attempts to convince the Court by simply repeating each legal conclusion several times throughout his lengthy declaration. Defendants provide numerous reasons why the agreement cannot be a valid implied license. First, they point to the declaration of [REDACTED]6 The Cardenas
Bimbos Intellectual Property Manager[.]
The Court DENIES Plaintiffs ex parte application to amend the Cardenas declaration[.] [REDACTED] (Docket No. 90.) Bimbo provides no legitimate justification for its last minute attempt to change sworn testimony to rebut Defendants argument. The Court notes its (continued...) 27
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declaration makes no distinction between express or implied licenses. Therefore, Bimbo has already disclaimed any other licenses for the TAKIS product configuration in this litigation. Second, Defendants submit the Declaration of Gaspar Zavala, a licensed Mexican lawyer, to rebut Mr. Rangels declaration. Zavala opines that a license under Mexican law requires (1) identification of the parties with their express consent, (2) specific identification of the licensed marks, and (3) a writing to evidence the intent to enter a license. (Zavala Decl. 12(a)-(c).) [REDACTED] Finally, Defendants argue that Bimbo has not recorded the settlement agreement with the Mexican Institute of Industrial Property (similar to the PTO) despite the fact that Bimbo has recorded license agreements with over 560 registrations to date. 17.) (Zavala Decl. 16Mr.
The Court is persuaded that Bimbo knows how to create a license
when it chooses. The Court finds Defendants contentions raise serious questions about whether Plaintiffs can prevail on their theory that the settlement agreement is a license.7
6
Nevertheless, the Court is
(...continued) disapproval of this tactic. In response to Defendants arguments regarding the absence of quality control resulting in trademark abandonment, Plaintiffs offer an alternative theory that the agreement could be construed as a consent agreement. The Court ordered Plaintiffs to file supplemental briefing on whether Bimbo intended the agreement to be a license or consent agreement. (Docket No. 77.) Plaintiffs supplemental brief stood behind its characterization of the agreement as a license, but sought to reserve their right to argue consent given that discovery was still in its early stages. Plaintiffs, however, point to no discovery that would assist in resolving the question of what Bimbo intended the agreement to be. After all, Bimbo does not need to (continued...) 28
7
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hesitant to characterize the agreement as a naked license because it requires PepsiCo to, among other things, sell its product in nonconfusing packaging. (Mem. at 4, n. 4.) Thus, there can be no worry
that PepsiCos use of the product configuration would somehow damage Plaintiffs reputation or goodwill by creating an association between PepsiCos product and Plaintiffs. Rather, the Court finds it more likely that the agreement is a consent to use because Plaintiffs have consented to PepsiCos use of their product configuration. The danger in allowing others to use
ones product configuration without attribution, however, is the risk that such an agreement suggests there is no likelihood of confusion with respect to product configuration. See, e.g., Versa Prods. Co. v.
Bifold Co. Ltd., 50 F.3d 189, 216 (3d Cir. 1995), cert. denied, 516 U.S. 808, 116 S.Ct. 54, 133 L.Ed.2d 19 (1995) (The use of private labeling undermines a claim that a product's appearance denotes its source, because consumers will be less likely to associate the multifariously labeled product with a single source.) (emphasis in original). McCarthy explains the problem well: What if, in response to defendants argument of no confusion based on the consent given to another, plaintiff responds by arguing that the use consented to was also infringing? In that event, the agreement must have been a license devoid of quality control. Thus, a trademark owner should avoid consenting to conduct which everyone else sees as infringing activity. The mark owner may find that by doing so, it has hemmed itself in with respect to future litigation. McCarthy 18:81.
25 Ultimately, the existence of Frito-Lays DINAMITAS strongly 26 27 28 (...continued) conduct discovery to determine its own intent. 29
7
(Docket No. 89 at 1.)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
suggests Plaintiffs have abandoned their product configuration or, at least, have waived or are estopped from claiming a likelihood of confusion based on product configuration. Universal City Studios,
Inc. v. Nintendo Co., Ltd., 578 F.Supp. 911, 929(S.D.N.Y. 1983) (Whether construed as a license or a covenant not to sue, the agreements purport to authorize the use of a Universal mark. The extensive uncontrolled use of the mark indicates either Universals abandonment of that mark or the inability of the mark to designate a single source of origin to consumers.). On this record, the Court
cannot say that Plaintiffs have a likelihood of success in prevailing on their product configuration infringement claim. 2. Likelihood of Confusion
As with the trademark claim, Plaintiffs must show that customers or others will likely be confused as to source, sponsorship, connection or approval because of the similar shape or design of Defendants product. Nabisco Brands, Inc. v. Conusa Corp., 722 F.
Supp. 1287 (M.D.N.C. 1989), affd without op., 892 F.2d 74 (4th Cir. 1989), reported in full, 14 U.S.P.Q.2d 1324 (4th Cir. 1989) (granting preliminary injunction against sale of candy whose shape was virtually identical to LIFESAVERS because of the likelihood that consumers will connect any candy product shaped like a lifesaver to be made by Lifesavers). The Court acknowledges that not all of the Sleekcraft
factors will be appropriate for or function the same way with respect to trade dress as applied to a product configuration. Nevertheless,
the factors help to determine whether confusion is likely. a. Similarity of the Product Configuration
Unlike trademarks or packaging trade dress, in a product configuration trade dress infringement case, 30
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consumers do not have to rely on a potentially distinctive configuration to identify the source of the product; rather, they can generally look to the packaging, trademarks, and advertising used to market the product, which are typically much less ambiguous. Consumers therefore have less need, and so are much less likely, to rely on a product configuration as an indicator of the products source. Accordingly, they are less likely to be confused as to the sources of two products with substantially similar configurations. Versa Prods. Co. v. Bifold Co. Ltd., 50 F.3d 189, 202-03 (3d Cir. 1995), cert. denied, 516 U.S. 808, 116 S.Ct. 54, 133 L.Ed.2d 19 (1995), cited with approval in Leatherman Tool Group, Inc. v. Cooper Indus., 199 F.3d 1009, 1013 (9th Cir. 1999). In this case, the packaging is opaque, so consumers are not likely to rely on the product configuration as indicative of its source. The pictorial representation of the product configuration
that appears on the packaging is discussed in the packaging section below. Thus, this factor carries little weight in connection with
product configuration. b. Strength of the Product Configuration
[T]he trademark distinctiveness scale is ill-suited for application to trade dress inhering in a product configuration. Versa Prods., 50 F.3d at 203. The Court does, however, acknowledge
that Plaintiffs incontestable trademark registration in the product configuration conclusively demonstrates inherent distinctiveness and secondary meaning. However, that factor is complicated in this situation because the strength of product configuration is relevant to determining likelihood of confusion only if consumers rely on the product configuration to identify the producer of the good. [REDACTED] 31 Id.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Additionally, Defendants have been producing taquito chips for private label brands in the same product configuration since late 2011. Thus,
the strength of the product configuration as an identifier is weak. c. Degree of Customer Care
A consumer exercising ordinary care is likely to rely on packaging, trademarks, and advertising, rather than product configuration, to ascertain the source of a product. Because clear
labeling thus should generally be legally and factually sufficient to remedy confusion where unpatented product configurations are at issue, clarity of labeling (and marketing) must be taken into account in considering whether there is a likelihood that consumers exercising ordinary care will be confused as to the sources of substantially identical products. Id. at 204. This factor, as applied to product
configuration, carries little weight. d. Actual Confusion
The actual confusion factor applies equally to product configuration as to trademark or packaging cases. If a defendants
product has been sold for an appreciable period of time without evidence of actual confusion, one can infer that continued marketing will not lead to consumer confusion in the future. Id. at 205.
In this case, Plaintiffs have not presented any evidence of actual confusion based on product configuration. Their purported
evidence of actual confusion hearsay statements from Barcel employees and comments on social media is directed to trademark and packaging, not product configuration. likely confusion. e. Intent Thus, the factor weighs against
Although intent is an appropriate consideration in the context of 32
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trademark or product packaging trade dress, its applicability to product configuration is doubtful. See id. at 205. Where product
configurations are concerned, we must be especially wary of undermining competition. Competitors have broad rights to copy successful product designs when those designs are not protected by (utility or design) patents. It is not unfair competition for someone to trade off the good will of a product . . . ; it is only unfair to deceive consumers as to the origin of ones goods and thereby trade off the good will of a prior producer. omitted). The Court agrees with the Third Circuits holding in Versa Products that in the product configuration context, a defendants intent weighs in favor of a finding of likelihood of confusion only if intent to confuse or deceive is demonstrated by clear and convincing evidence, and only where the products labeling and marketing are also affirmatively misleading. Id. at 208; Leatherman Tool Group, Inc. v. Id. at 207 (citation
Cooper Inds., Inc., 199 F.3d 1009, 1013 (9th Cir. 1999) (citing Versa Products and holding that deliberate intent to copy does not support finding a likelihood of confusion in product configuration cases unless a products labeling and marketing are also affirmatively misleading); Bobrick Washroom Equipment, Inc. v. American Specialties, Inc., No. CV 10-6938-SVW-PLAx, 2012 WL 3217858, at *15-16 (C.D. Cal. Aug. 8, 2012) (same). For the reasons set forth in the
trademark and product packaging sections, the intent factor therefore weighs against a finding of likelihood of confusion. f. Relatedness of the Goods, Overlapping Marketing Channels, and Expansion of Product Lines
The analysis under these three factors for product configuration 28 33
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is the same as for trademark. Based on the analysis of the foregoing factors, the Court finds no likelihood of confusion for product configuration. 3. Conclusion on the Merits
Accordingly, Plaintiffs have not met their burden of showing a likelihood of success on the merits of their product configuration trade dress infringement claim. C. Trade Dress (Packaging)
To assert a claim for trade dress infringement, a plaintiff must prove three basic elements: (1) plaintiff owns a protectable trade dress in a clearly articulated design or combination of elements that is either inherently distinctive or has acquired distinctiveness through secondary meaning; (2) the accused mark or trade dress creates a likelihood of confusion as to source, or as to sponsorship, affiliation or connection; and (3) if the trade dress is not registered, the plaintiff must prove that the trade dress is not functional. If the trade dress is registered, the registration is
presumptive evidence of non-functionality and the burden of showing functionality is on the accused defendant. 8:1 (4th ed. 2013). 1. Validity McCarthy on Trademarks
As discussed above in Section III.A.1, registration of a mark is prima facie evidence of validity. 15 U.S.C. 1072, 1115; Park N In
Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 202 (1985). contrast with the TAKIS trademark, which appears to have become
incontestable through five years use after federal registration, the registrations for the various TAKIS trade dress have not become incontestable. See, e.g. Mann Decl., Ex. 1 at 147, 151, 154, and 158 34
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(trade dress for TAKIS Crunchy Fajita, Fuego, Guacamole, and Salsa Brava all registered May 4, 2010). As a result, although registration
is prima facie evidence of validity, the Lanham Act shall not preclude an opposing party from proving any legal or equitable defense or defect . . . which might have been asserted if such mark had not been registered. 15 U.S.C. 1115(a). Defendants must rebut the Vuitton
presumption of validity by a preponderance of the evidence.
et Fils S.A. v. J. Young Enterprises, Inc., 644 F.2d 769, 776 (9th Cir. 1981) (the presumption of validity need not be rebutted by clear and convincing evidence; only a preponderance of the evidence is required). Trade dress consists of discrete elements that make up the total image of a product and may include features such as size, shape, color, color combinations, texture or graphics. Intl Jensen, Inc. Trade
v. Metrosound U.S.A., Inc., 4 F.3d 819, 822 (9th Cir. 1993).
dress protection is broader in scope than trademark protection because it protects aspects of packaging and product design that cannot be registered for trademark protection and because it requires the court to focus on the entire selling image. Clicks Billiards v.
Sixshooters Inc., 251 F.3d 1252, 1259 (9th Cir. 2001) ([W]e focus not on the individual elements, but rather the overall visual impression that the combination and arrangement of those elements create.). To be protectable, the combination of elements must be either inherently distinctive or have acquired distinctiveness through secondary meaning. The court evaluates several factors to determine
whether packaging is so unique, unusual, or unexpected in this market that one can assume without proof that it will automatically be perceived by consumers as an indicator of origin: (1) whether the 35
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design is a common basic shape or design, (2) whether it was unique or unusual in a particular field, (3) whether it was a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods viewed by the public as a dress or ornamentation for the goods, or (4) whether it was capable of creating a commercial impression distinct from the accompanying words. Seabrook Foods, Inc. v. Bar-Well Foods Ltd., 568 F.2d 1342, 1344 (CPPA 1977); McCarthy 8:13 (4th ed. 2013) (commenting that Seabrook test is preferred for classifying inherently distinctive trade dress in packaging and containers). Plaintiffs claim that the TAKIS federally registered packaging trade dress consists of the following elements: (1) bright purple and black bag; (2) three, red-orange corn snacks in the shape of the TAKIS product configuration; (3) the corn snacks laying across each other with visible slanted ends and fold; (4) flame under the corn snacks; (5) two cut limes; (6) TAKIS word mark in yellow; and (7) a background swirl design. (Mem. at 6.)
Defendants argue that Bimbo expressly disclaimed the following pictures of the product and ingredients in its trade dress registration: corn snacks in elements (2) and (3) and the limes in element (5). (Mann, Ex. 1 at 151-158.) The Court agrees that these
elements are not to be considered apart from the mark as shown in Bimbos registration and has only considered them for that purpose in its analysis below. Defendants do not attack the validity of Bimbos packaging trade dress registration, and instead focus their challenge on the likelihood of confusion factors. Before reaching those factors,
however, the Court feels compelled to note that Plaintiffs have the 36
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burden of demonstrating secondary meaning8 because their product registrations are not incontestable. Plaintiffs have done so here,
but only by virtue of having a registered trademark whereby secondary meaning is presumed. The Court does not reach the merits of this
issue as Defendants have not raised a validity challenge on the basis of lack of secondary meaning as to packaging trade dress. 2. Likelihood of Confusion
Plaintiffs allege that the TACO-LITOS trade dress is strikingly similar to the TAKIS trade dress. (Mem. at 6.) As with trademark
infringement, the test of infringement in the case of trade dress is whether there is a likelihood of confusion created by Defendants accused trade dress. a. Similarity of the Packaging
To assess similarity of the trade dress, the courts consider the two trade dresses in their entirety and as they appear in the marketplace, judge similarity in terms of appearance, sound, and meaning, and weigh similarities more heavily than differences. Water, 741 F.Supp.2d at 1178; GoTo.com, 202 F.3d at 1206. Fiji
Given that
the sound and meaning sub-factors do not apply to packaging, the Court analyzes only the appearance sub-factor below. A visual inspection of the TAKIS and TACO-LITOS packaging reveals
A trade dress has secondary meaning when in the minds of the public, the primary significance of a product feature . . . is to identify the source of the product rather than the product itself. Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n.11 (1982). Secondary meaning can be established by direct consumer testimony or survey evidence that actual purchasers associated the design with the source, the length and manner of advertising, the amount of sales and number of customers, the length, manner, and exclusive use of the particular trade dress, and proof of intentional copying of the trade dress by defendant. Filipino Yellow Pages, Inc. v. Asian Journal Publns, Inc., 198 F.3d 1143, 1151 (9th Cir. 1999). 37
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
significant differences in the two packages that outweigh the similarities. First, the pictorial representations of the product are
not crossed in the exact same manner and angle (Reply at 19; Mem. at 7) as Plaintiffs chips: the TAKIS package has three taquito chips with two forming a roughly 90-degree angle and the TACO-LITOS package has two taquito chips at an approximately 120-degree angle. Second, the flames on the TAKIS packaging are much bolder and brighter than those on the TACO-LITOS packaging. Likewise, the two
cut limes feature prominently in the center of the TAKIS packaging, while the one cut lime and chili pepper (which is unique to the TACOLITOS package) appear towards the bottom of the TACO-LITOS package. Finally, the position of the trademark in element (6) is readily distinguishable. As explained in the trademark analysis of similarity
of the marks, the yellow TAKIS mark capitalizes the T with the remainder of the letters in lowercase with a swirl over the i. The
TACO-LITOS mark, in contrast, is in all caps, orange, and takes up overall less space on the package. Moreover, Snak-King prominently
marks its packages with its federally registered EL SABROSO mark, which appears in all-white at the top center of the package. Walter
v. Mattel, Inc., 31 F.Supp.2d 751, 760 (C.D. Cal. 1998) ([O]therwise similar marks are not likely to be confused where used in conjunction with the clearly displayed name and/or logo of the manufacturer.) (citation omitted), affd, 210 F.3d 1108 (9th Cir. 2000). Taking all of the elements of the trade dress together, the Court does not find the packaging similar. b. Strength of the Packaging
A strong, inherently distinctive trade dress is entitled to the most protection because it is more likely that consumers will be 38
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
confused by anothers use of a similar trade dress. F.2d at 348.
Sleekcraft, 599
Plaintiffs have registered the TAKIS trade dress and
have spent millions of dollars advertising the TAKIS mark, which is featured prominently on the TAKIS packaging. Coupled with the
hundreds of millions of dollars of sales of TAKIS, the Court finds Plaintiffs have demonstrated a likelihood of success that their trade dress is strong. c. Degree of Customer Care
When dealing with inexpensive products, customers are likely to exercise less care, thus making confusion more likely. Comm., Inc., 174 F.3d at 1060. Brookfield
For the same reasons as set forth in
the trademark section, the degree of customer care militates in favor of finding no likelihood of confusion because, even though taquito chips are a low-cost consumer good, the packaging is not so similar that a reasonably prudent consumer would be confused. d. Actual Confusion
Plaintiffs present the same evidence in support of actual confusion for trademark and trade dressdeclarations from employees containing hearsay statements of retail store owners and two examples of purported confusion on social media sites. For the same reasons as
set forth in the trademark section, this factor is neutral. e. Intent
Based on the Courts findings that the packaging trade dress is not similar and for the reasons explained in the trademark section, the Court is not prepared to find that Defendants intentionally copied Plaintiffs trade dress.
39
1 2
f.
Relatedness of the Goods, Overlapping Marketing Channels, and Expansion of Product Lines
The Court incorporates the analysis for trademarks as it does not 3 materially differ as applied to packaging. 4 Taken together, there is no likelihood of confusion as to 5 packaging. 6 3. 7 As discussed above, trademark law does not give exclusive rights 8 to functional features. 9 weighs the same four factors, none of which is dispositive: (1) 10 whether the trade dress yields a utilitarian advantage; (2) whether 11 alternative designs are available; (3) whether advertising touts the 12 utilitarian advantages of the design; and (4) whether the particular 13 design results from a comparatively simple or inexpensive method of 14 manufacture. 15 features. 16 asserting infringement has a federal registration, the burden of proof 17 shifts to the defendant to prove functionality. 18 Defendants only argument with respect to functionality is that 19 the color purple in element (1) is functional because it indicates 20 chili-lime flavor. 21 persuaded because, as Plaintiffs note, other colors are used to 22 designate chili-lime flavor (most notably, green) and purple is used 23 to designate flavors other than chili and lime. 24 and 4.) 25 the TAKIS packaging trade dress weigh in favor of a finding that the 26 packaging is not functional. 27 28 40 The Court finds that the combination of elements that make up (Chavez Decl., Exs. 3 (Levin Decl. 16-18.) The Court is not Clicks Billiards, 251 F.3d at 1259-60. If a plaintiff Id. The focus, again, is on the totality of the Disc Golf, 158 F.3d at 1006. The Court Functionality
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
4.
Conclusion on the Merits
Based on the foregoing, Plaintiffs are not likely to succeed on the merits of their trade dress infringement claim. D. Likelihood of Irreparable Harm
Plaintiffs argue that irreparable injury may be presumed after finding a likelihood of success on their trademark and trade dress infringement claims. That proposition is doubtful following the
Supreme Courts decisions in eBay inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) and Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). Cf. Flexible Lifeline Sys., Inc. v. Precision
Lift, Inc., 654 F.3d 989, 994-95 (9th Cir. 2011) (per curiam) (rejecting long-standing rule presuming irreparable harm from a likelihood of prevailing on the merits of a copyright infringement claim in light of eBay and Winter). But see Marlyn Nutraceuticals,
Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir. 2009) (accepting the presumption of irreparable harm upon a showing of trademark infringement without analysis). The Court need not decide whether a presumption of irreparable harm still exists in trademark cases because Plaintiffs delay severely undercuts their arguments on irreparable harm. See, e.g.,
Oakland Tribune, Inc. v. Chronicle Publ'g Co., 762 F.2d 1374, 1377 (9th Cir.1985) (Plaintiff's long delay before seeking a preliminary injunction implies a lack of urgency and irreparable harm.); McCarthy, 31:32 (It has often been held that unreasonable delay in filing suit and/or moving for a preliminary injunction can contribute to a defeat of a motion for preliminary injunction not upon the ground of laches, but for the reason that delay negates the moving party's ability to show the kind of irreparable injury needed for 41
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
preliminary relief.). Snak-King has been producing taquito chips for private label brands since late 2011. (Levin 10, 13.) These snacks have been Plaintiffs took no
sold continuously at various retailers.
Id. 13.
action to enforce the trade dress registration in the exact same product configuration that they now claim is being infringed. Plaintiffs sent their cease-and-desist letter to Wal-Mart regarding the alleged unauthorized use of the TAKIS configuration mark in February 2012. (Caditz Decl., Ex. 1.) Plaintiffs and Snak-King
exchanged correspondence on the merits of the infringement claims in the ensuing months. (Id., Exs. 2-5.) Since at least June 2012,
Plaintiffs have known that Defendants would be moving forward with the production and sale of their own brand of rolled tortilla snack foods. (Id., Ex. 6.) Yet the correspondence between the parties
regarding a potential negotiated resolution came to a halt after an August 1, 2012 e-mail from Plaintiffs counsel to Defendants counsel, stating, My client continues to consider your clients offer and we hope to respond to it in the near future. appears Plaintiffs never responded. filed this lawsuit. Plaintiffs argue their delay was justified because TACO-LITOS was not introduced until October 2012 and Plaintiffs did not become aware of the TACO-LITOS product until the late fall of 2012[.] (Reply at 22.) To support their claim that they were not aware of (Caditz Decl., Ex. 8.) It
Instead, in March 2013, they
TACO-LITOS, they state that they did not uncover many key facts until 2013, citing to a declaration from an employee who found TACOLITOS intermingled with TAKIS at a grocery store in early 2013. (Figueroa Decl. 5-10.) Yet these same Plaintiffs were concerned 42
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
enough about alleged infringement in February 2012 to send a letter to Wal-Mart and then engage in detailed communications with Snak-King about their product launch. Plaintiffs knew their competitor was For Plaintiffs to now claim they
moving forward and took no action.
did not uncover many key facts until 2013 strains credulity. In any event, Plaintiffs have not shown irreparable injury under the likelihood of confusion factors as shown above. E. Balance of Hardships and Public Interest
In each case, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief. Amoco Prod. Co. v. Village of
Gambell, 480 U.S. 531, 542 (1987); see also International Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 827 (9th Cir. 1993) (In evaluating the balance of hardships a court must consider the impact granting or denying a motion for a preliminary injunction will have on the respective enterprises). In addition, the court must consider
the public interest as a factor in balancing the hardships when the public interest may be affected. Caribbean Marine Services Co. v.
Baldrige, 844 F.2d 668, 674 (9th Cir. 1988). The likelihood of confusion to consumers is [a] critical factor in our consideration of the harm to the public. Internet Specialties West, Inc. v. MilonDiGiorgio Enterprises, Inc., 559 F.3d 985, 995 n.5 (9th Cir.2009). The public has an interest in avoiding Id. Where there is no
confusion between two companies products.
finding of likelihood of confusion, however, an injunction [ ] depriv[es] consumers of a choice of products. 4 F.3d at 827. International Jensen,
In the absence of a finding of likelihood of
confusion, therefore, the interest of the public weighs against entry 43
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
of an injunction. IV. CONCLUSION For the reasons above, Plaintiffs motion for a preliminary injunction is DENIED.
DATED:
July 22, 2013 ________________________________ AUDREY B. COLLINS UNITED STATES DISTRICT JUDGE
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Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 1 of 44 Page ID #:2412

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 2 of 44 Page ID #:2413

The Court heard oral argument on Monday, July 22, 2013.

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 3 of 44 Page ID #:2414

million, and by 2012, sales had increased to $90 million.

TAKIS corn snacks come in different flavors.

in the United States, and more than 50% of Barcels revenues.

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 4 of 44 Page ID #:2415

Interestingly, the United States Patent and

Registration 3,188,850, The mark consists of the configuration of the 4

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 5 of 44 Page ID #:2416

goods in the form of a rolled-up taco shell.). incontestable.

The mark is now

Facebook and Twitter.

over 1.9 million Likes.

TAKIS has received publicity from third parties.

subject of a Chicago Tribune taste test article in which TAKI FUEGO 5

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 6 of 44 Page ID #:2417

won for spicy snacks.

(Mann Decl., Ex. 3.)

Snak-King Produces Taquito Chips for Private Label Brands

Although Plaintiffs counsel sent an

Plaintiffs provide no explanation for the abrupt end to their 6

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 7 of 44 Page ID #:2418

Snak-Kings TACO-LITOS Brand Corn Snacks

TACO-LITOS are sold under Snak-Kings EL SABROSO trademark.

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 8 of 44 Page ID #:2419

TAKIS flavors: Crunchy Fajita, Nitro

Fuego (chili and lime), Guacamole, Salsa Brava,

For a few years during that time period, PepsiCos

first used in commerce in December 2003. DORITOS ROLLITOS in 2005. 4.)

(Declaration of Tracey L. Giertz 5, Ex.

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 9 of 44 Page ID #:2420

under a transaction agreement with Bimbo. [REDACTED]

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 10 of 44 Page ID #:2421

marks omitted; brackets in original). survived Winter. Id.

This serious questions test

Therefore, serious questions going to the

Thus, the Court agrees with Plaintiffs that the

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 11 of 44 Page ID #:2422

relevant market is corn snacks or tortilla chips. A. Trademark: TAKIS v. TACO-LITOS

After five years continuous

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 12 of 44 Page ID #:2423

(Mann, Ex. 1 at 142.)

Nor do they dispute that the TAKIS mark,

Instead, the parties focus on

whether TACO-LITOS is confusingly similar to TAKIS. 2. Likelihood of Confusion

(9th Cir. 2005).

The more similar the marks in terms of appearance, sound, and 12

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 13 of 44 Page ID #:2424

meaning, the greater the likelihood of confusion.

is a swirl in place of the dot on the i.

which has four. confusion. Meaning.

Although the TAKIS trademark registration expressly

indicates the word TAKIS has no meaning in a foreign language (Mann, 13

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 14 of 44 Page ID #:2425

Defendants add a diminutive -ITOS to TACO to Defendants seize on Plaintiffs explanation to

suggest a little taco.

After representing to the PTO that TAKIS has no meaning in a

are likely to associate the two product lines. F.3d at 633.

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 15 of 44 Page ID #:2426

Strength of the Mark

The mark does not mean anything in English or Spanish and

Case 2:13-cv-02147-ABC-VBK Document 130 Filed 07/22/13 Page 16 of 44 Page ID #:2427