This mаtter is before the Court on Plaintiff's Motion for Preliminary Injunction.
I. BACKGROUND
Plaintiff Kodiak Cakes LLC ("Plaintiff) is a Delaware corporation with its principal place of business in Park City, Utah. Since 1982, Plaintiff has manufactured and sold high protein, whole grain pancake mix, among other products. In 2014, following some media attention, Plaintiff experienced significant growth in its commercial success. Plaintiff is now a major competitor within the pancake mix industry, and its products are sold at health food stores and major retailers such as Walmart and Target.
Plaintiff's packaging is pictured below.
The packaging on the left was distributed and sold beginning in 2014 and the packaging on the right is the most recently designed packaging. Both versions are currently being sold.
Plaintiff claims its protected trade dress consists of the following unique elements: "a kraft box featuring a distinctive tan, red, black, and white color scheme characterized by: a light tan background color offset by a bold, full bleed black border; alternating use of serif and sans serif fonts; standout appearance of reference to 'Protein Packed' and 'Whole Grains.' "
Defendant Continental Mills, Inc. ("Defendant") is a Washington corporation with its principal place of business in Tukwila, Washington. Under the brand "Krusteaz," Defendant also manufactures and sells pancake mix, among other products, and has done so for 86 years. Defendant's Krusteaz-branded pancake mix is sold at major retailers throughout the United States. Krusteaz pancake mix is generally packaged in a high-gloss box featuring a large image of a stack of pancakes and a Krusteaz logo in red across the top of the box. An image of its original protein pancake mix product is shown below.
In June 2018, upon "seeing changes in the pancake mix market and after conducting its own research,"
Plaintiff filed suit in this Court on October 10, 2018, for trade dress infringement in violation of
II. DISCUSSION
To obtain a preliminary injunction, the moving party must demonstrate: "(1) a likelihood of success on the merits; (2) a likelihood that the movant will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in the movant's favor; and (4) that the injunction is in the public interest."
A. LIKELIHOOD OF SUCCESS
"[T]he very purpose of an injunction under Rule 65(a) is to give temporary relief based on a preliminary estimate of the strength of the plaintiff's suit, prior to the resolution at trial of the factual disputes and difficulties presented by the case"
Plaintiff seeks a preliminary injunction based on its claim of trade dress infringement. "A product's trade dress 'is its overall image and appearance, and may include features such as size, shape, color or color combinations, texture, graphics, and even particular sales techniques.' "
1. Distinctiveness/Secondary Meaning
Plaintiff must first show that the its trade dress is inherently distinctive or that it has acquired secondary meaning. "A trade dress is inherently distinctive if its 'intrinsic nature serves to identify a particular source.' "
A generic mark refers to a general class of goods, such as "cola," of which an individual article is but a member. Such marks do not indicate the particular source of an item and are not entitled to any trademark protection. A descriptive mark identifies a characteristic or quality of an article or service, such as its color, odor, function, dimensions, or ingredients. A descriptive mark may receive protection only when it has acquired a secondary meaning by becoming distinctive of the applicant's goods in commerce. Suggestive marks suggest rather than describe a characteristic of the product and require the consumer to use imagination and perception to determine the product's nature. Arbitrary marks use common words, symbols, and pictures that do not suggest or describe any quality or characteristic of the goods or services. Finally, fanciful marks are words invented or selected for the sole purрose of functioning as a trademark. Suggestive, fanciful, and arbitrary marks are considered inherently distinctive and entitled to trademark protection.14
While the Tenth Circuit has utilized these categories in the trade dress context, it has "not mandated exclusive use of that framework."
Plaintiff explains that its protected trade dress includes the following elements: "a light tan background color offset by a bold, full bleed black border; and the use of contrasting black, red, and white lettering and backgrounds. In addition, the Kodiak Trade Dress makes alternating use of serif and sans serif fonts and includes standout appearance of references to 'Protein Packed' and 'Whole Grains.' "
The Tenth Circuit has held "that the use of color in product packaging can be inherently distinctive (so that it is unnecessary to show secondary meaning) only if specific colors are used in combination with a well-defined shape, pattern, or other distinctive design."
In Paddington Corp. v. Attiki Importers & Distributors, Inc. ,
There [was] no evidence in the record of any industry practice of using a design like the one that appear[ed] on the bottle's labels. There [was] nothing descriptive about the bottle and label design that conveys anything about its particular contents, except for the use of the trademark "No. 12 Ouzo," ... and the fact that the bottle [was] of a style such that it indicates to the observer that it contains a liquid that probably is potable.22
The court found that "the tone and layout of the colors, the style and size of the lettering, and, most important, the overall appearance of the bottle's labeling," "were selected from an almost limitless supply of patterns, cоlors and designs" and were, therefore, "undeniably arbitrary."
In AmBrit, Inc. v. Kraft, Inc. ,
Similarly, in McNeil Nutritionals, LLC v. Heartland Sweeteners LLC ,
Aside from its use of the words "Protein Packed" and "Whole Grains," none of Plaintiff's elements are descriptive of pancake mix. Additionally, there is no evidence that this color scheme or design is commonly used in the pancake mix market. Defendant provides examples of various pancake mixes in the marketplace that also use a kraft-type box and/or a dark border offset by a light or tаn background. However, viewed in its entirety, Plaintiff's trade dress is visually distinct from each of its competitors. As with the cases discussed above, "the tone and layout of the colors, the style and size of the lettering, and, ... the overall appearance of the [package's] labeling" were "selected from an almost limitless supply of patterns, colors and designs" and are accordingly "undeniably arbitrary."
Defendant argues that Plaintiff's claim cannot succeed because it has not adequately articulated the elements of its trade dress. This argument is not persuasive. The Tenth Circuit in Forney found that the Plaintiff had not sufficiently identified its trade dress where the trade dress as described was not definite. For example, the Forney Court found it significant that the plaintiff identified the trade dress as follows: "that the yellow [bar] 'typically' begins higher than red [bar]," and "the [l]ettering and accents 'may' be red, yellow, white, or black."
Based on the above, the Court finds that Plaintiff is likely to succeed in demonstrating that its trade dress is inherently distinctive. Even if not inherently distinctive, the Court finds that Plaintiff has demonstrated that its trade dress has acquired secondary meaning. Secondary meaning can be shown by circumstantial evidence such as: (1) the length and manner of the trade dress's use; (2) the nature and extent of advertising and promotion of the trade dress; (3) the efforts made in the direction of promoting a conscious connection, in the public's mind, betwеen the trade dress and a particular product; (4) actual consumer confusion; (5) proof of intentional copying; or (6) evidence of sales volume.
2. Likelihood of Confusion
In determining whether a likelihood of confusion exists, courts are to consider the following factors: (1) the degree of similarity between the products; (2) the intent of the alleged infringer in designing its product; (3) evidence of actual confusion; (4) similarity in how the products are marketed; (5) the degree of care likely to
i. Degree of Similarity
"[M]arks may be confusingly similar if, as entities, they look or sound similar or convey the same idea or meaning."
The similarities of the products include the following: a kraft box; a similar color scheme with a black border, tan foreground, and red, black, and white lettering and images; similar fonts; and prominent placement of the words "protein" and "whole grains." The differences are as follows: Plaintiff's packaging includes a large image of the Kodiak Cakes bear within a circle while Defendant's packing includes an image of a large stack of pancakes. The placement of images and wording are different, each bears its own logo, and there are subtle differences in the colors, layout, and font design.
Considering these elements as a whole, the Court finds this factor weighs in favor of Plaintiff. Defendant is correct that the Kodiak bear logo, featured prominently on all of Plaintiff's products, is not found on Defendant's packaging. Instead, Defendant's packaging features a large drawn image of a stack of pancakes. However, when weighing the similarities more heavily than the differences and examining each of the boxes singly, the two boxes present a confusingly similar appearance and convey the same overall message. This is particularly true when viewing the competing companies' pancake mix packaging presented in both parties' briefing.
ii. Intent to Copy
"[D]eliberate adoption of a similar mark may lead to an inference of intent to pass off goods as those of another which in turn supports a finding of likelihood of confusion."
Direct evidence of intent to copy is not necessary. For example, in Beer Nuts, Inc. , the Tenth Circuit found the evidence of intent to copy weighed in favor of the plaintiff where: the plaintiff's use of its trademark predated the use of defendant's
Here, the evidence shows that Defendant originally packaged its protein pancake mix similar to each of its pancake mixes, which included the high-gloss box with an image of a large stack of pancakes and the Krusteaz logo prominently placed across the top of the box. Defendant's protein pancake packaging changed to its current design after Defendant conducted a market research study. Defendant admits knowledge that Plaintiff is leading the protein pancake mix industry and further admits that Defendant's market research was conducted, in part, to understand why Plaintiff had achieved such success. Defendant also admits that it sought to create a product to compete with Plaintiff's product. After the study, Defendant produced a packaging for its protein pancake product in sharp contrast to its traditional pancake mix packing and, as discussed above, obviously similar to Plaintiff's product.
Considering the case law cited above, this evidence is sufficient to create an inference that Defendant intended to copy Plaintiff's trade dress. Defendant argues that its only intent was "to create a product to compete with Kodiak."
iii. Evidence of Actual Confusion
"Although not necessary to prevail on a trademark infringement claim, evidence of actual confusion in the marketplace may be the best indication of likelihood of confusion."
In conjunction with its Motion, Plaintiff offered the following evidence of actual customer confusion: (1) a statement from Plaintiff's former employee stating that he spoke to "several customers who expressed confusion after seeing the Krusteaz protein pancake mix packaging in stores;"
At the hearing, Plaintiff's CEO similarly testified that Plaintiff had received statements from customers who had purchased Defendant's product thinking that it was Plaintiff's mix. After the hearing, Plaintiff provided a Supplemental Appendix identifying other instances of customer confusion and instances where people have commented on the similarity between the two packages.
In addition to this evidence, Plaintiff has also provided charts using sales data provided by SPIN, a subscription service that provides sales figures for various products in the food industry. These charts compare the sales data for the parties' protein mixes. They show that Defendant experienced growth after it started using the accused package and that growth increased during the time when its mix would have become distributed more widely. In contrast, Plaintiff's sales decreased during that time.
Defendant argues that Plaintiff's evidence is insufficient to demonstrate actual confusion. The Tenth Circuit has held that "isolated instances of actual confusion may be de minimis."
In King of the Mountain Sports, Inc. , the Tenth Circuit found that seven isolated instances of actual confusion to be de minimis.
To combat Plaintiff's evidence of actual confusion, Defendant hired an expert to conduct a survey. Evidence of actuаl confusion "may be introduced through surveys, although their evidentiary value depends on the methodology and questions asked."
Defendant's expert reported that, "[c]ontrolling for pre-existing beliefs, guesses, other background noise that respondents may bring to the survey, and the non-asserted design elements of the product," 7% of respondents believed "Kodiak was
Putting aside the Court's concerns about the evidentiary value and methodology used in the survey, Defendant's evidence tends to support Plaintiff's claim of actual confusion rather than detract from it. This support is found in not only the raw data, but also the comments provided by the survey takers, which Defendant's expert does not address. As Plaintiff points out, those statements include some of the following comments about the similarity of the packaging: "They basically took the entire design and could get sued;" "They look exactly the same just with different pictures and words;" "The product seems identical;" "They look almost exactly alike;" "Wouldn't it be copyright infringement or something I don't think it's legal to do that."
Considering all of the evidence, the Court finds that this factor weighs in favor of Plaintiff. Plaintiff has provided evidence of numerous instances of actual confusion. Further, Defendant's survey evidence shows that over 42% of the treatment group respondents believed there was some connection between the two mixes. This combined evidence supports a showing of actual confusion.
iv. Similarity of Products and Manner of Marketing
"The greater the similarity between the products, the greater the likelihood of confusion."
First, the two products are very similar. Both products are protein-rich pancake mixes packaged in a box. Notably, both packages рrominently tout the high protein content of the pancake mix. Second, the products reach the consumers through the same markets. Both pancake mixes are available throughout the United States in prominent retail and grocery establishments. Not only does the evidence show that they are often found in the same stores, it further shows that they are found in the same aisle, and in some cases, right next to each other. "[T]he possibility of confusion is greatest when products reach the public by the same retail outlets."
v. Degree of Care Exercised by Consumers
The Tenth Circuit has held that "buyers typically exercise little care in the selection of inexpensive items that may be purchased on impulse."
Defendant argues that consumers of pancake mix are more likely to care about "the nutritional value, number of ingredients, and degree of processing in their mix,"
vi. Strength of the Mark
"The stronger the mark, the greаter the likelihood that encroachment on the mark will cause confusion."
First, the Court finds that the conceptual strength of the trade dress is strong, for the reasons discussed above.
Second, the Court finds that the commercial strength of the trade dress is strong. "Commercial strength is 'the marketplace recognition value of the mark.' "
identified several factors as helpful in evaluating secondary meaning, including direct evidence of recognition by consumers and circumstantial evidence regarding: (1) the length and manner of the mark's use, (2) the nature and extent of advertising and promotion of the mark, and (3) the efforts made to promote a conscious connection, in the public's mind, between the mark and a particular product.76
Plaintiff argues its trade dress is commercially strong because of the "years of effort and substantial amount of money that Kodiak has spent forging a connection between its trade dress and its pancake
Additionally, as previously discussed, prior to Defendant's new protein pancake mix packaging, Plaintiff's trade dress was noticeably distinct when compared to the competing market. Plaintiff and Defendant provided a number of examples of competing pancakе mixes, most of which appear drastically different than Plaintiff's packaging and quite similar to each other. While there were some boxes with a kraft box and more rustic feel, none utilized the same color scheme or general theme.
Based on the conceptual strength of the mark, the advertising efforts of Plaintiff, and the unique packaging of Kodiak Cakes in the pancake mix industry, the Court finds this factor weighs strongly in favor of Plaintiff.
Based upon the above, the Court finds that Plaintiff has met its burden in showing it is likely to succeed in demonstrating a likelihood of confusion.
3. Nonfunctional
The Tenth Circuit adopted a test for functionality that focuses on the product's effect on competition.
Plaintiff's trade dress is not functional such that it would hinder its competitors from fairly competing in the marketplace. Defendant argues that its market research showed that use of a kraft box attracts a certain type of customer. Therefore, preventing Plaintiff's competitors from being able to use a kraft box would hinder Defendant's ability to compete fairly in the protein pancake marketplace. That issue, however, is not before the Court. Plaintiff does not claim its trade dress is only a kraft box. It claims trade dress protection for all the elements of its packaging taken as a whole. Even if, as Defendant argues, the kraft box is functional, "[a] combination of features may be nonfunctional and thus protectable, even though the combination includes functional features."
Because Plaintiff has demonstrated that (1) its trade dress is inherently distinctive; (2) the balance of each of the factors for consideration weigh in favor of finding a likelihood of confusion between the parties' protein pancake mix product; and (3) its trade dress is nonfunctional, the Court finds that Plaintiff has met its burden in
B. IRREPARABLE HARM
"The purpose of a preliminary injunction is not to remedy past harm but to protect plaintiffs from irreparable injury that will surely result without their issuance."
Plaintiff argues that it has demonstrated irreparable harm in the form of customer confusion, lost customers, loss of goodwill, and reputational damage. The Tenth Circuit has found that "loss of customers, loss of goodwill, and further erosion of [a business'] competitive position" are "the types of factors that district courts should consider when deciding whether a plaintiff has shown a sufficient probability of irreparable harm."
Here, Plaintiff has failed to provide a strong showing of loss of goodwill or reputational damage as a result of Defendant's conduct. However, Plaintiff has provided evidence that it has expended significant resources to develop its brand and that some of its customers are purchasing Defendant's product by mistake. The number of actual customers purchasing Defendant's product by mistake is impossible to ascertain. This is especially true given the inexpensive nature of the products. The Tenth Circuit has noted that "[p]urchasers are unlikely to bother to inform the trademark owner when they are confused about an inexpensive product."
To further support its claim of irreparable harm, Plaintiff has provided sales data which shows that, after Defendant introduced the accused packaging, Defendant's sales of its protein mix increased while Plaintiff's sales decreased. While Defendant is correct that this evidence does not conclusively demonstrate that the accused packaging has resulted in lost sales, it provides support for Plaintiff's claim that it has and is continuing to lose customers and its competitive position is weakened based on Defendant's alleged infringement. Based upon this, the amount of damages would be difficult, if not impossible to ascertain, and Plaintiff has shown it is likely to suffer irreparable harm without the issuance of an injunction.
C. BALANCE OF THE HARMS
As discussed, Plaintiff has shown it is likely to suffer irreparable harm if Defendant is permitted to continue selling its protein pancake mix as it is currently packaged. Defendant has also presented evidence that it would incur substantial costs if it is forced to stop distribution of its current protein pancake mix packaging sooner than planned. Defendant "would incur direct costs related to any recall and
The Court agrees that Defendant is likely to suffer hardship if the injunction is issued. However, the Tenth circuit has held that "when the case for infringement is clear, a defendant cannot avoid a preliminary injunction by claiming harm to a business built upon that infringement."
D. PUBLIC INTEREST
Finally, that the Court finds that public interest favors granting the injunction. While public interest favors inter-market competition, that competition must be fair. Public interest in fair competition dictates that Defendant should not be allowed to profit off the efforts of Plaintiff in achieving its commercial success. Public interest also disfavors allowing competition at the expense of customer confusion.
Having found that each of the four requisite factors for a preliminary injunction weigh in favor of Plaintiff, the Court will grant Plaintiff's Motion.
III. CONCLUSION AND PRELIMINARY INJUNCTION
It is therefore
ORDERED that Plaintiff's Motion for Preliminary Injunction (Docket No. 16) is GRANTED and the Court enters the following preliminary injunction.
IT IS HEREBY ORDERED that Defendant, and each of its rеspective officers, agents, servants, employees, and attorneys, and any other persons who are in active concert or participation with any one of them, ARE HEREBY PRELIMINARILY ENJOINED AND RESTRAINED pending the final hearing and determination in this action from:
a. Continuing to sell, advertise, or promote any product using the infringing packaging, or using any packaging that is otherwise confusingly similar to the Kodiak Trade Dress;
b. Within 7 days of the date of this Order, Defendant shall cease production of the current Krusteaz Protein Packaging;
c. Within 7 days of the date of this Order, Defendant shall initiate a recall of all product packaged in the current Krusteaz Protein Packaging;
d. Within 7 days of the date of this Order, Defendant shall remove or destroy all signs, posters, pictures, billboards, advertisements, or other printed matter that displays the current Krusteaz Protein Packaging in any manner or that otherwise displays any packaging that is confusingly similar to the Kodiak Trade Dress; and
e. Within 7 days of the date of this Order, Defendant shall remove all internet posts, pictures, or other material (including but not limited to on Defendant's Facebook, Instagram, and other social media pages) that display the current Krusteaz Protein Packaging in any manner or that otherwise displays any product packaging that is confusingly similar to the Kodiak Trade Dress.
It is further
ORDERED that Plaintiff shall post a bond in the amount of $ 1,000,000. This Order will be effective upon posting of the required security.
Notes
Docket No. 2 ¶ 14.
Docket No. 28, at 2.
Docket No. 16-1, at 2.
RoDa Drilling Co. v. Siegal ,
GTE Corp. v. Williams ,
DTC Energy Grp., Inc. v. Hirschfeld ,
Gen. Motors Corp. v. Urban Gorilla, LLC ,
Savant Homes, Inc. v. Collins ,
Id. at 1147-48.
Sally Beauty Co., Inc. ,
Forney Indus., Inc. v. Daco of Mo., Inc. ,
Forney Indus., Inc. ,
Docket No. 16, at 7.
Forney Indus., Inc. ,
See Paddington ,
Forney Indus. ,
Savant Homes, Inc. ,
Vail Assoc., Inc. v. Vend-Tel-Co., Ltd. ,
Gen. Motors Corp. ,
Beer Nuts, Inc. v. Clover Club Foods Co. ,
Sally Beauty Co. ,
Beer Nuts, Inc. ,
See Docket No. 16, at 9; Docket No. 28, at 9.
Beer Nuts, Inc. ,
Sally Beauty Co. ,
Beer Nuts, Inc. ,
Docket No. 28, at 16.
Sally Beauty Co. ,
Docket No. 17 ¶ 3.
Docket No. 18.
Docket No. 19.
Docket No. 20 ¶ 18.
Id. ¶ 19.
See Docket No. 36.
King of the Mountain Sports, Inc. v. Chrysler Corp. ,
Hornady Mfg. Co., Inc. v. Doubletap, Inc. ,
Sally Beauty Co. ,
Docket No 30-2, at 9-10.
Id. at 59.
Docket No. 35, at 2 (citing Docket No. 30-2).
Docket No. 30-2, at 108-52.
Sally Beauty Co. ,
Beer Nuts Inc. ,
Sally Beauty Co. ,
Hornady Mfg. Co. ,
Docket No. 28, at 17.
Docket No. 30 Ex. 1 ¶ 12.
Sally Beauty Co. ,
Hornady Mfg. Co., Inc. ,
Water Pik ,
Hornady Mfg. ,
Docket No. 16, at 18.
See Docket No. 28, at 11.
Brunswick Corp. v. Spinit Reel Co. ,
Hartford House, Ltd. v. Hallmark Cards, Inc. ,
DTC Energy Grp., Inc ,
DTC Energy Grp., Inc ,
Beer Nuts, Inc. ,
Because Plaintiff has shown irreparable harm, the Court need not address whether harm can be presumed.
Docket No. 28, at 23.
Gen. Motors Corp. ,