A.J. Canfield Co. v. Vess Beverages, Inc., 85-2215

Citation230 U.S.P.Q. 441,796 F.2d 903
Decision Date15 July 1986
Docket NumberNo. 85-2215,85-2215
Parties, 230 U.S.P.Q. 441 A.J. CANFIELD CO., a corporation, Plaintiff-Appellee, v. VESS BEVERAGES, INC., a corporation, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

David C. Hilliard, Pattishall, McAuliffe & Hofstetter, Chicago, Ill., for defendant-appellant.

Richard H. Compere, Willian, Brinks, Olds, Hoffer, Gilson & Lione, Ltd., Chicago, Ill., for plaintiff-appellee.

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and ESCHBACH, Senior Circuit Judge.

CUMMINGS, Chief Judge.

This case involves a dispute over the plaintiff's ability to trademark the term CHOCOLATE FUDGE on a soft drink can. Defendant appeals the granting of a preliminary injunction that enjoins it from using CHOCOLATE FUDGE on its can of diet soda. For the reasons set out below, we affirm.

The plaintiff, A.J. Canfield Co., is an Illinois corporation that has bottled and sold a variety of soft drinks in the midwest since 1924. In 1972 Canfield developed a diet chocolate soda and labeled it under the alleged trademark CHOCOLATE FUDGE. Although other soft drink companies had diet chocolate-flavored soda, they labeled it CHOCOLATE. Over the 13-year period from 1972 to 1985 Canfield sold an average of 1.25 million cans a year. In August of 1984 Canfield switched artificial sweeteners from saccharin to nutrasweet in its line of diet soft drinks, including chocolate fudge. It spent approximately $500,000 promoting this change. The design of the can has "Canfield" prominently displayed as its housemark 1 as well as CHOCOLATE FUDGE in large block letters. Until 1984 the can also contained, in smaller letters, "artificially sweetened chocolate soda."

In January of 1985, Canfield received every company's dream, free advertising. Bob Greene, a widely read syndicated columnist for the Chicago Tribune, wrote an article about Canfield's Diet Chocolate Fudge Soda. The column raved about the soda pop. Greene, an admitted chocoholic, compared the drink to a cold hot fudge sundae, claimed that "chocolate" was inadequate to describe its flavor, and told his readers it had done wonders for his diet. Public reaction was swift; the demand became such that Canfield had a difficult time keeping its diet chocolate fudge soda on market shelves. Helping with the dramatic increase in sales was the rest of the media. Canfield's diet chocolate fudge soda received coverage from newspapers and magazines (including The New York Times and Time ) and also television coverage. Canfield, after numerous requests, licensed 12 bottlers nationwide to distribute its diet chocolate fudge soda across the country. Letters and phone calls to Canfield requested the drink or information where it could be purchased. Sales have increased 100-fold to approximately 50 million cans per annum.

The defendant, Vess Beverages, has bottled and sold soft drinks in the midwest since 1924. From 1979 until 1981 Vess produced a chocolate-flavored drink, labeled CHOCOLATE. The flavor was discontinued because of poor sales. After Greene's article in January 1985, Vess reentered the market with a new formula (different ingredients and taste) and labeled it CHOCOLATE FUDGE. On April 4, 1985, Vess received a cease and desist letter from Canfield asserting trademark rights in the term CHOCOLATE FUDGE. Nevertheless Vess went on to produce cans and market the new drink using the designation CHOCOLATE FUDGE. On April 30, 1985, Vess issued a press release and advertisement announcing "Diet Chocolate Fudge Now Available From Vess." Vess had no trouble getting shelf space for its product; in fact retailers called Vess seeking the new soda. This suit soon followed.

Canfield brought this unfair competition action against Vess on May 2, 1985, under Section 43(a) of the Lanham Act and Illinois common law. Canfield, asserting trademark rights in the designation CHOCOLATE FUDGE for diet soda, claims Vess' usage is unfair competition. On July 12, 1985, the district court granted Canfield's motion for a preliminary injunction, which prohibited Vess from using CHOCOLATE FUDGE to market its soft drink, 612 F.Supp. 1081, required Vess to deliver up and destroy its current inventory labeled chocolate fudge, and required Canfield to post a surety bond of $60,000. 2

Vess brings this interlocutory appeal under 28 U.S.C. Sec. 1292(a) and raises the following issues: Vess argues that the district court abused its discretion in granting the injunction because (1) Canfield was not likely to prevail on the merits since (a) chocolate fudge is a common descriptive term and not protectable under trademark law or (b) it is merely descriptive without secondary meaning; (2) the balance of harms weighs in favor of Vess; (3) the public interest will be disserved due to lack of competition in diet chocolate fudge sodas; and (4) even if CHOCOLATE FUDGE is a protectable trademark, Vess has adopted a fair use of the term to describe the taste of its soda. Vess also argues that the $60,000 bond required of Canfield is inadequate. We affirm.

I. STANDARD OF REVIEW

Appellate review of preliminary injunction grants has been recently explained by this Court, see Lawson Products Inc. v. Avnet, Inc., 782 F.2d 1429, 1436-1438 (7th Cir.1986); American Hosp. Supply v. Hospital Products Ltd., 780 F.2d 589 (7th Cir.1986). The standard of review is extremely deferential, typically stated as abuse of discretion. Roland Machinery Corp. v. Dresser Indus., Inc., 749 F.2d 380, 384-385, 388-391 (7th Cir.1984). As was discussed in Lawson, the review of a grant of preliminary injunction is mixed. Factual determinations are reviewed under a clearly erroneous standard; legal conclusions are reviewed de novo. 782 F.2d at 1437. But the ultimate weighing and balancing that makes up the decision whether to issue a preliminary injunction is highly discretionary given substantial deference. Id. Thus our review is limited to determining "whether the judge exceeded the bounds of permissible choice in the circumstances, not what we would have done if we had been in his shoes." 749 F.2d at 390.

The district court must evaluate the case under a well-delineated four-part test; we will review that court's analysis under that test for factual and legal error. See Roland, 749 F.2d at 388-391; Lawson, 782 F.2d at 1437; Brunswick Corp. v. Jones, 784 F.2d 271, 274 n. 2 (7th Cir.1986). Before granting a preliminary injunction the district court must have evidence before it through which the plaintiff has demonstrated the following: (1) no adequate remedy at law and irreparable harm; (2) "some" likelihood of success on the merits; (3) the balance of relative harms weighs in its favor; and (4) the public interest will not be disserved if the injunction issues. Roland, 749 F.2d at 386-388.

II. LIKELIHOOD OF SUCCESS

In order to prevail on the merits in an action under Section 43(a) of the Lanham Act, a plaintiff must show a valid trademark and a likelihood of confusion on the part of the public. 3 The district court found that Canfield had demonstrated a "substantial" likelihood of success as to both issues. Although Canfield may not have a substantial chance of prevailing at trial, see Yoo Hoo Beverage Corp. v. A.J. Canfield Co., No. 85-3701 HLS (D.N.J. March 19, 1986) [available on WESTLAW, DCTU database] (district court denied Canfield's petition for preliminary injunction); A.J. Canfield Co. v. Concord Beverage Co., 629 F.Supp. 200 (E.D.Pa.1985) (same), we cannot say its chances are less than negligible, and therefore affirm.

A. Generic or Common Descriptive Term

According to Vess, the term CHOCOLATE FUDGE is not trademarkable because it simply describes a flavor and is thus a common descriptive term. A generic or common descriptive term is defined as one commonly used as the name or description of a kind of goods. Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75, 79 (7th Cir.1977), certiorari denied, 434 U.S. 1025, 98 S.Ct. 751, 54 L.Ed.2d 772; Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 10 (2d Cir.1976) ("term that refers to the genus of which the particular product is a species" ). A term that is generic for one particular product may be arbitrary for another; for example Ivory soap versus products made with tusks. Abercrombie, 537 F.2d at 9 & n. 6; In re Seats, 757 F.2d 274 (Fed.Cir.1985).

Vess' primary argument is that chocolate fudge is a flavor of soda (like cherry or orange soda), which makes the term a common descriptive one. The district court disagreed, finding that chocolate fudge was not a flavor term. We disagree with the district court, but that does not mean agreement with Vess' conclusion that a flavor term must be a common descriptive term. See In re Andes Candies, 478 F.2d 1264 (C.C.P.A.1973) (unusual flavor name for candy industry not generic). The district court was not incorrect in deciding that chocolate fudge is a unique enough designation with respect to sodas so that it is not a common descriptive term. See In re Andes Candies, 478 F.2d 1264; Borden, Inc. v. Topps Gum, Inc., 173 U.S.P.Q. 447 (T.T.A.B.1972) (ice cream gum not generic term); Schmidt v. Quigg, 609 F.Supp. 227 (E.D.Mich.1985) (Honey Baked Ham not generic term). However, the fact that chocolate fudge is merely descriptive of flavor does make it less likely that Canfield will be able to show secondary meaning.

B. Merely Descriptive with Secondary Meaning

A term is merely descriptive if it specifically describes a characteristic or an ingredient of a product. Miller, 561 F.2d at 79. By acquiring secondary meaning such a term can become a valid trademark. 15 U.S.C. Sec. 1052(f); Miller, 561 F.2d at 79; Abercrombie, 537 F.2d at 10. A term acquires secondary meaning when the consumer associates it with the producer rather than the product. Wesley-Jessen Div. of Shering Corp. v. Bausch & Lomb, Inc., 698 F.2d 862 (7th Cir.1983); Harlequin...

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