Classic Foods Intern. Corp. v. Kettle Foods, Inc.

• Decision Date: 03 January 2007
• Docket Number: No. SACV 04-725 CJC (Ex).,SACV 04-725 CJC (Ex).
• Citation: 468 F.Supp.2d 1181
• Parties: CLASSIC FOODS INTERNATIONAL CORPORATION dba Classic Foods, Inc., Plaintiff, v. KETTLE FOODS, INC., Defendant.
• Court: U.S. District Court — Central District of California

Page 1181

468 F.Supp.2d 1181

CLASSIC FOODS INTERNATIONAL CORPORATION dba Classic Foods, Inc., Plaintiff, v. KETTLE FOODS, INC., Defendant.

No. SACV 04-725 CJC (Ex).

United States District Court, C.D. California, Southern Division.

January 3, 2007.

Colin Foley, Kathleen E. McCarthy, Siegrun D. Kane, Morgan and Finnegan, New York, NY, Craig S. Summers, Knobbe Martens Olson & Bear, Irvine, CA, for Plaintiff.

Arnold E. sklar, Ernest E. Price, Ropers Majeski Kohn and Bentley, Los Angeles, CA, for Defendant.

MEMORANDUM OF DECISION

CORMAC J. CARNEY, United States District Judge.

I. INTRODUCTION

This trademark case involves the use of the term "kettle" on packages of potato chips. Many snack food companies produce brands of potato chips, with "kettle" in their names, including Plaintiff Classic Foods International Corporation ("CFI"), which makes "Kettle Classics," and Defendant Kettle Foods, Inc. ("KFI"), which makes "Kettle Chips." These two companies make their style of potato chips in much the same way as other producers. They slice small batches of potatoes directly into industrial-sized kettles or troughlike metal fryers, where they are stirred and cooked by hand. This kettle-cooking (or batch-cooking) process requires careful, individual attention to the chips to ensure that the proper flavor and crunch are produced without burning the chips. The result of this careful preparation and cooking process is a crunchier, sweeter potato chip that is of much higher quality than an ordinary, mass-produced chip.

In this lawsuit, KFI contends that it has trademark rights in the term "kettle" and that CFI must stop using the term in its brand name. The critical question before the Court is whether the term "kettle" is a trademark when used with potato chips. The Court concludes that the term "kettle" is not a protectible trademark. It refers to a particular category of potato chips, specifically, kettle chips. Consequently, the term "kettle" is generic when used with potato chips and it must be available for use by the marketplace and the public at large. KFI has no right to deny CFI and other producers of kettle chips from using the term "kettle" to tell consumers exactly what their potato chips are.¹

II. FACTUAL BACKGROUND

According to culinary legend, the potato chip was created in Saratoga Springs, New York, in 1853. See Exh. 525 at 1, Exh. 609 at 123. Railroad Magnate Cornelius Vanderbilt complained that the fried potatoes he had been served were "too thick," and sent them back to the kitchen. Id. Offended by the criticism, Chef George Crum sliced the next potato extra-thin into a kettle of oil, fried the slices crisp, and sent them back out to the table. Id. Mr. Vanderbilt approved, and a snack food legend was born. Id.

Much has changed since Chef Crum prepared the first potato chips over one hundred fifty years ago. As potato chip production expanded and chips became more popular, companies drifted away from the original kettle-cooking method to continuous frying processes more conducive to mass production. The continuous frying method soon became industry standard, and potato chips produced by that method flooded the market. Potato chip production is now a $5 billion dollar-a-year industry. Hundreds of companies currently make potato chips (and hundreds more have come and gone) in flavors ranging from traditional flavors such as original, and sour cream and onion, to exotic flavors like spicy Thai, and Cholula. Potato chips are now not only fried, but also baked, and even "fabricated" (made from a dough of dehydrated potato flakes).

Thirty years ago, several companies "rediscovered" the original method of making potato chips. These companies developed ways to adapt the original kettle-cooking (or batch-cooking, as it is also known) process to allow for larger scale production and distribution without sacrificing the distinctive quality and characteristics that resulted from hand-cooking potato slices in a vat or kettle of oil. The kettle-cooking process involves potato slices being fed directly into a vat of hot oil. Cameron Healy Tr. vol. 1, 44:23-25.² Once in the vat, they are stirred by an individual with a tool, often called a paddle or rake. Healy Tr. vol. 1, 44:25-45:1; Timothy Meyer Tr. vol. 4, 81:20-22. This individual is responsible for monitoring the temperature of the oil in the vat and determining when the chips are sufficiently cooked. Healy Tr. vol. 1, 45:1-2. Temperature control is one of the trickier parts of the batch-cooking process, because when the cold slices of potato are introduced into the oil, the temperature drops dramatically. Florencio Cuetara Tr. vol. 5, 227:5-12. Controlling how much the temperature drops and how quickly it is brought back up determines the crunchiness of the chip. Meyer Tr. vol. 4, 80:17-18; Cuetara Tr. vol. 5, 227:8-12. Once the chips are done, they are removed from the oil, either manually or mechanically, and sent to be seasoned, inspected, and finally packaged. Healy Tr. vol. 1, 45:2-4. The final product has a hand-cooked appearance, is crunchy and sweet, and superior to an ordinary potato chip.

One of the first companies to make potato chips using the batch-cooking process was a company in Pennsylvania called Martin's. Martin's was also the first company to use the term "kettle" on its packaging. In the mid-1970s, Martin's marketed its chips as "Martin's Kettle-Cook'd Hand Cooked Potato Chips." Kenneth Potter Dep. 27:14-16, 29:10-11; Exh. 548. In 1980, another company, the Cape Cod Potato Chip Company ("Cape Cod") in Massachusetts, also began producing a kettle-cooked potato chip. Steve Bernard Dep. 19:4-5, 21:15-18. Cape Cod marketed its product as "Old Fashioned Kettle Cooked Cape Cod Potato Chips." Exh. 228. Throughout the 1980s and 1990s, many other companies made potato chips using a kettle-cooking process that used the word "kettle" in their product names. Companies such as Granny Goose, Herr's, Utz, Poore Brothers, Groff s, Borden, Frito-Lay, Eagle Foods, Old Dutch, Saguaro, Tim's, and Pacific Snax all offered potato chip products that described themselves as "kettle," "kettle-cooked," or "kettle-style" prior to 1999. See Exh. 629 at 9-16; Cuetara Tr. vol. 5, 144:12-150:11; Meyer Tr. vol. 4, 41:10-53:14.

KFI was also one of the first companies to use the batch-cooking process to make potato chips and to use the term "kettle" in its product name. KFI, at the time known as the N.S. Khalsa Company,³ first began selling its "Kettle Chips" product in 1982. Healy Tr. vol. 1, 42:1. Cameron Healy,⁴ the founder of KFI, was inspired to start manufacturing his "Kettle Chips" by newspaper articles describing a company in Maui that was making hand cooked potato chips. Healy Tr. vol. 1, 42:20-43:10. Mr. Healy learned that these potato chips were made using a similar batch process to the kind KFI was already using to roast nuts. Healy Tr. vol. 1, 43:14-17. Through discussions with the proprietor of the Maui company, Mr. Healy learned how to adapt the batch process to potato chips. Healy Tr. vol. 1, 43:14-17. He made his first bag of chips in 1982 using the batch process, and KFI continues to use that process to manufacture its chips today.

KFI has associated "Kettle Chips" with kettle-cooking imagery. Throughout the 1980s, "Kettle Chips" packages stated, "Kettle chips are a delicious, all natural, gourmet quality potato chip produced in much the same way as in a previous era when potato chips were prepared by the batch and cooked in a giant gas-fired pot or kettle." Exh. 125 at 2 (emphasis added). For nearly twenty-five years, the image on the front of the "Kettle Chips" bag depicted one man carrying in sacks of potatoes while another is stirring a steaming kettle over an open fire. Exh. 125 at 1. And an advertisement that ran in Sunset Magazine described the "Kettle Chips" cooking process as "the lost art of potato chip making... . We slice select Oregon Russet potatoes directly into simmering kettles." Exh. 104 (emphasis added).

KFI initially obtained federal trademark registration for the mark "Kettle Chips" in 1984. Exh. 71. However, in 1990 the Patent and Trademark Office ("PTO") cancelled KFI's registration because their affidavit submitted pursuant to Section 8 of the Trademark Act failed to set forth "the goods or services recited in the registration on or in connection with which the mark is in use in commerce." Exh. 72 at 1. Although KFI appealed this cancellation, the decision was affirmed, and KFI's mark was officially cancelled as of June 5, 1991. Exh. 72 at 2. Since that time, KFI has submitted several applications to attempt to register "Kettle," "Kettle Chips," and "Original Kettle Chips." Exhs. 242, 638, 640, 643-47. Many of these applications were opposed by other companies in the potato chip industry who sold potato chip products that use the term "kettle" on their packaging. See Exhs. 531, 632, 655. KFI abandoned certain applications pursuant to settlement agreements it had reached with companies who had filed oppositions. See Exh. 75. Other applications were refused by the PTO because the term "Kettle" as used on potato chips was not sufficiently distinctive to qualify for trademark registration. See Exhs. 505, 640. In one such refusal, the PTO stated:

Where terms are so highly descriptive of the goods to be incapable of denoting origin in any one party in the trade, they are determined to be "generic" marks and unregistrable. The term "kettle chips" falls into this category.

Exh. 505 at 2 (refusing registration for "Original Kettle Chips") (emphasis added).

Despite losing its trademark registration, KFI continued to sell its products as "Kettle Chips" and has established itself as a major player in the retail potato chip market. By its own accounting, KFI's potato chip products command 34% of the market for natural potato chips in mainstream grocery stores and 49% of the market in natural food stores. Bruce Bechtel Tr....