Borinquen Biscuit Corp. v. M.V. Trading Corp.

• Decision Date: 04 April 2006
• Docket Number: No. 05-2591.,05-2591.
• Citation: 443 F.3d 112
• Parties: BORINQUEN BISCUIT CORP., Plaintiff, Appellee, v. M.V. TRADING CORP., Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 112

443 F.3d 112

BORINQUEN BISCUIT CORP., Plaintiff, Appellee, v. M.V. TRADING CORP., Defendant, Appellant.

No. 05-2591.

United States Court of Appeals, First Circuit.

Heard March 8, 2006.

Decided April 4, 2006.

Manuel Fernández Bared, with whom Toro, Colón, Mullet, Rivera & Sifre, P.S.C., was on brief, for appellant.

Rafael Escalera Rodriguez, with whom Ileann M. Cañellas Correa and Reichard & Escalera, were on brief, for appellee.

Before SELYA, Circuit Judge, HANSEN,^* Senior Circuit Judge, and LYNCH, Circuit Judge.

SELYA, Circuit Judge.

After an evidentiary hearing, the district court preliminarily enjoined defendant-appellant M.V. Trading Corp. (M.V.) from advertising, distributing, or selling cookies or crackers in Puerto Rico under the trade name "Ricas" on the ground that such activities would likely infringe a registered trademark held by plaintiff-appellee Borinquen Biscuit Corp. (Borinquen). M.V. appeals. See 28 U.S.C. § 1292(a)(1). We affirm.

I. BACKGROUND

Borinquen is a manufacturer and distributor of "galletas." There is no precise English equivalent of this Spanish word; "galleta" (or, in the plural, "galletas") encompasses all types of crackers, cookies, and biscuits. Since 1976, Borinquen has sold a round, yellowish, semi-sweet galleta in Puerto Rico under the federally registered trademark "RICA." This galleta resembles a cookie. Borinquen acquired the recipe for the product and the rights to the mark from Sunland Biscuit Company (Sunland), which had sold the galleta in Puerto Rico under that mark since 1962. Sunland officially registered the mark on the principal register of the Patent and Trademark Office (PTO) in 1969. The federal registration states that "the Spanish word `Rica' may be translated as `rich.'"

Borinquen's "RICA" has always borne a logo that consists of a red circle encompassing the white-lettered phrase "Galletas RICA Sunland." Borinquen registered both the mark "RICA" and the product's logo with the Puerto Rico Department of State in 2000. It currently sells the product in predominately red-and-white packaging, with the circular logo centered against a background consisting of rows of the galletas.

While other firms have registered "rica" trademarks for different kinds of products (e.g., bananas, brown sugar, and tobacco), Borinquen's "RICA" is the only cookie, cracker, or biscuit registered under that name in the United States. Moreover, until the events at issue here, Borinquen was the only company to use the word "rica" in connection with the marketing or distribution of galletas in Puerto Rico.

The tectonic plates shifted in April of 2003, when M.V. began selling a round, yellowish, salty galleta bearing the name "Nestlé Ricas." This galleta, which resembles a cracker, is manufactured by Nestlé Ecuador and imported by M.V. The product logo consists of a white oval with the name "Ricas" centered in red letters and with a red square in the upper right-hand corner of the oval bearing the white-lettered brand name "Nestlé." M.V.'s packaging is mostly red and white, albeit with some yellow and blue design. The logo is centered in the upper half of the box against a background of scattered galletas.

In or around the summer of 2004, Borinquen learned that M.V. was marketing Nestlé Ricas in earnest. Since both parties' galletas were being sold in Puerto Rican supermarkets and convenience stores, this was a matter of considerable concern. Borinquen informed M.V. that it believed M.V.'s distribution of galletas under the name "Ricas" infringed its registered trademark and asked M.V. to cease and desist.

When M.V. refused, Borinquen filed suit for damages and injunctive relief in the federal district court. In its complaint, Borinquen alleged that M.V.'s use of the "Ricas" mark, coupled with similarities in trade dress, infringed its trademark and trade dress rights under federal law. See 15 U.S.C. §§ 1114(1), 1125(a).¹ M.V. denied the essential allegations of the complaint and counterclaimed for cancellation of Borinquen's "RICA" mark.

Coincident with the institution of suit, Borinquen moved for a preliminary injunction. M.V. opposed that motion. The district court held an evidentiary hearing on May 31 and June 7, 2005. The president of each company testified about the advertising and sales history of his product. In addition, each side presented expert testimony anent the likelihood of confusion. The expert witnesses approached the problem from different directions. Borinquen's witness (an expert in advertising and brand recognition) polled others in his field and concluded that confusion was probable. M.V.'s witness (an expert in market research) conducted a survey of 100 consumers in metropolitan areas and concluded that consumers could recognize differences in the packaging of the two products. On that basis, she hypothesized that the marketing of Nestlé Ricas created no likelihood of confusion.

On September 6, 2005, the district court issued a preliminary injunction that enjoined M.V. from advertising, distributing, or selling any cookies or crackers in Puerto Rico under the name "Ricas." Borinquen Biscuit Corp. v. M.V. Trading Corp., No. 04-2070, slip op. at 12 (D.P.R. Sept. 6, 2005) (D.Ct.Op.). The court concluded, inter alia, that Borinquen was likely to succeed in establishing both that its "RICA" mark was entitled to federal trademark protection and that M.V.'s use of the "Ricas" mark was likely to foment consumer confusion. This interlocutory appeal ensued.

II. ANALYSIS

On appeal, M.V. advances two principal assignments of error. First, it charges that the district court blundered in not requiring Borinquen to establish that the "RICA" mark had acquired secondary meaning. Second, it maintains that the district court mistakenly concluded that M.V.'s product was likely to cause consumer confusion. After delineating the legal standards applicable to grants of preliminary injunctive relief, we address each of these claims.

A. The Preliminary Injunction Standard.

The preliminary injunction standard is familiar. Before granting this type of relief, a nisi prius court must consider (1) the likelihood of the movant's success on the merits; (2) the anticipated incidence of irreparable harm if the injunction is denied; (3) the balance of relevant equities (i.e., the hardship that will befall the non-movant if the injunction issues contrasted with the hardship that will befall the movant if the injunction does not issue); and (4) the impact, if any, of the court's action on the public interest. Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996); Narragansett Indian Tribe v. Guilbert, 934 F.2d 4, 5 (1st Cir. 1991). While all these factors must be weighed, the cynosure of this four-part test is more often than not the movant's likelihood of success on the merits. See Weaver v. Henderson, 984 F.2d 11, 12 (1st Cir.1993) ("The sine qua non of [the four-factor] formulation is whether the plaintiffs are likely to succeed on the merits."). The importance of that inquiry is magnified in trademark cases because the resolution of the other three factors will depend in large part on whether the movant is likely to succeed in establishing infringement. See Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215, 220 (1st Cir.1989); see also I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 33 (1st Cir.1998) (noting that irreparable harm can be assumed if a trademark holder demonstrates that it is likely to succeed in establishing infringement). This emphasis on likelihood of success is fully consistent with the tenet that, as a matter of public policy, trademarks should be protected against infringing uses. See Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d 812, 820 (1st Cir.1987).

A trial court's conclusions on these factors and its determinations regarding their relative weighting engender deferential appellate review. See Ross-Simons, 102 F.3d at 16. Thus, a decision to grant a preliminary injunction will stand unless the court "mistook the law, clearly erred in its factual assessments, or otherwise abused its discretion in granting the interim relief." McGuire v. Reilly, 260 F.3d 36, 42 (1st Cir.2001).

On appeal, M.V. does not challenge the district court's determinations regarding the last three components of the four-part preliminary injunction framework. Consequently, we need consider here only the first of the four factors: likelihood of success.

B. Likelihood of Success.

Before a party can succeed in an infringement action, it must demonstrate both that its mark merits protection and that the allegedly infringing use is likely to result in consumer confusion. Boston Beer Co. v. Slesar Bros. Brewing Co., 9 F.3d 175, 180 (1st Cir.1993). For purposes of a preliminary injunction, however, the trademark holder need only show a likelihood of success on these two elements. See Guilbert, 934 F.2d at 6 (explaining that "a court's conclusions as to the merits of the issues presented on preliminary injunction are to be understood as statements of probable outcomes," not as final determinations). M.V. claims that Borinquen did not adequately demonstrate below that it was likely to satisfy its burden with respect to either element. We examine each facet of this claim.

1. Eligibility for Trademark Protection. We start with M.V.'s contention that the district court erred, as a matter of law, in determining that Borinquen's "RICA" mark was entitled to trademark protection. This contention proceeds from the premise that the court should have required Borinquen to adduce evidence that its mark had acquired secondary meaning. We reject this premise.

It is common ground that, in order to be eligible for trademark protection, a mark must qualify as distinctive. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). When considering whether a mark meets that standard, courts often employ a...