Eagle Snacks, Inc. v. Nabisco Brands, Inc.

• Citation: 625 F. Supp. 571
• Decision Date: 20 December 1985
• Docket Number: Civ. A. No. 85-1552.
• Parties: EAGLE SNACKS, INC., Plaintiff, v. NABISCO BRANDS, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

625 F. Supp. 571

EAGLE SNACKS, INC., Plaintiff, v. NABISCO BRANDS, INC., Defendant.

Civ. A. No. 85-1552.

United States District Court, D. New Jersey.

December 20, 1985.

John F. Crane, Kuttner, Toner & DiBenedetto, Roseland, N.J., V. Bryan Medlock, Jr., Richards, Harris, Medlock & Andrews, Dallas, Tex., Jerre Swann, Kilpatrick & Cody, Atlanta, Ga., for plaintiff.

Jeffrey W. Lorell, Clapp & Eisenberg, Newark, N.J., Frank J. Colucci, Robert Weisbein, New York City, for defendant.

OPINION

HAROLD A. ACKERMAN, District Judge.

This is an action for common law trademark infringement and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). The Court has jurisdiction thereof under 15 U.S.C. § 1121, and Title 28 U.S.C. § 1338. Venue is proper in this district under Title 28 U.S.C. § 1392(b).

Plaintiff, Eagle Snacks, Inc., is a Delaware corporation. It is a wholly owned subsidiary of Anheuser-Busch Companies, Inc. and has its principal place of business at One Busch Place, St. Louis, Missouri.

The defendant, Nabisco Brands, Inc., is also a Delaware corporation, having its principal place of business at Nabisco Brands Plaza, Parsippany, New Jersey. Both plaintiff and defendant develop, manufacture, package, advertise and offer for sale peanuts and other nut meat products.

Beginning in 1980, Eagle started marketing a nut product, made according to a process of coating nuts with honey and roasting them, using the words "Honey Roasted", which it subsequently changed to "honey Roast."

On April 2, 1985, contemporaneously with Nabisco's launch of its PLANTERS honey roasted nuts into the marketplace, Eagle commenced this civil action by way of Order to Show Cause, seeking a temporary restraining order and, thereafter, a preliminary injunction to enjoin Nabisco's use of the words "Honey Roast" and "Honey Roasted" in connection with its product.

On April 2, 1985, I denied Eagle's application for a temporary restraining order and scheduled an evidentiary hearing on Eagle's motions for preliminary injunction beginning on April 29, 1985.

Testimony was given by Jerome Warren Ohlsten, plaintiff's first expert in market research; Robert C. Sorensen, plaintiff's second expert in market research; H. Smith Kirman, a retired individual who worked in the business of the sale of peanuts; James Kalbach, President of Edwards Freeman, a manufacturer of peanut products; Allen William Sherman, Vice President of Brand Management for Eagle Snacks; Sumner Catlin Putnam, a Nabisco Brands employee who was involved in the honey roast nuts marketing effort; Oris Edwin Holloway, a manager of nut technology for Nabisco Brands; and Ivan Ross, defendants' expert in market research.

On April 19, 1985, Nabisco served and filed its Answer and Affirmative Defenses. On the same date, Nabisco served and filed a cross-motion to dismiss the complaint, pursuant to F.R.Civ.P. 19, for failure to join Fisher Nut Company, a division of Beatrice Foods, Inc. and/or Beatrice Companies, Inc. ("Beatrice"), as an indispensable party.

The evidentiary hearing was held from April 29, 1985 to May 2, 1985. I make the following findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.

In 1978, Anheuser-Busch's New Products Development Group decided to investigate a line of snack products that would complement its existing business.

As part of its search for new snack food products, Anheuser-Busch contacted Carolina Peanuts of Robersonville, a company in North Carolina that manufactured "Honey Bunnies," a sweet-salty nut product with a totally new taste profile.

Anheuser-Busch decided to promote this peanut product, and, after reformulating the product to modify its taste profile, Anheuser-Busch began to sell the product as "Honey Roasted" peanuts. There were several reasons why the name "Honey Roasted" was selected. Allen Sherman, who was in Anheuser-Busch's New Product Development group and who was involved in selecting the words "Honey Roasted," testified that "Honey" was a good word from the consumer's standpoint because it connotated "good for you", "healthful" and "sweetness." "Roasted" was selected because it had a good connotation of "aromatic flavoring once the product is heated."

The new "Honey Roasted" peanuts were first sold by Anheuser-Busch in 1980. In that same year, in an effort to strengthen the trademark, Anheuser-Busch initiated steps to change the mark to "Honey Roast," and the change was completed by January, 1981.

In a further attempt to "strengthen" its purported trademark, Eagle in 1983 caused the letters "TM" to be placed above the word "Roast" and implemented the use of the word "Brand" to modify the mark. Eagle's own marketing expert, Mr. Jerome Ohlsten recognized, however, that use of the letters "TM" and/or the word "Brand" in conjunction with a common or descriptive word would not make that word into a brand name or trademark. For example, "shredded wheat", "ginger snaps" or "raisin bran" would not be a brand name merely because used in connection with the letters "TM" or "Brand."

Eagle does not own a federal trademark registration of "Honey Roast." Eagle did not file an application for Registration of "Honey Roast" with the United States Patent and Trademark Office ("PTO") until June 2, 1983, nearly three years after the purported mark was adopted (Application Serial No. 428,563). Eagle's application for registration of "Honey Roast" has been opposed by Beatrice, who on June 18, 1984 filed a Notice of Opposition with the PTO, Opposition No. 69,515. In its Notice of Opposition, Beatrice claims, inter alia, that it has the exclusive right to use the words "Honey Roasted" for peanuts, and that Beatrice is the prior user of these words for nut products in commerce. Beatrice also claims that Eagle's statements in its application in the PTO were false and fraudulent and also omitted material information about prior use by Carolina Peanut Company, which Beatrice claimed packaged peanuts for it. The opposition is currently pending before the Trademark Trial and Appeal Board ("TTAB").

On December 19, 1983, Fisher Nut Company, a division of Beatrice, filed an application (Application Serial No. 457,568) to register "Honey Roasted" as a trademark to be used in the marketing and sale of processed nuts. Fisher claimed a date of first use on May 10, 1978 and a date of first use in commerce of January, 1978 of "Honey Roasted", approximately 2½ years prior to the date of first use of "Honey Roast" claimed by Eagle. On June 21, 1984 the PTO denied Fisher's application on the ground that the words "Honey Roasted" are "merely descriptive" because the term "immediately describes the fact that the goods are made with honey and roasted." On November 2, 1984, Fisher requested that its application be suspended pending completion of the opposition proceeding.

Taking advantage of Anheuser-Busch's distribution network, Eagle honey roast nuts were initially sold to taverns and bars, which are referred to in the trade as "on-premise" establishments. In the fall of 1981, Eagle began attempts to expand its distribution of its nut product to "off-premise" establishments such as convenience stores, grocery stores and supermarkets, and to airlines.

Eagle honey roast nuts are currently available in approximately 100 markets east of the Mississippi River and in 30% of the markets nationwide. At the time of the hearing, Mr. Alan Sherman, Eagle's Vice President of Brand Management, testified that Eagle honey roast nuts would be made available throughout the United States within thirty (30) days.

Plaintiff has advertised its "Honey Roast" nuts in tens of millions of fliers mailed to households or included in newspaper supplements. Plaintiff has extensively sampled the product with airline passengers. In 1981, plaintiff sold 1,460,000 units to airlines; in 1982, 37,000,000 units; in 1983, 76,000,000 units; and in 1984, 104,000,000 units. Plaintiff's efforts have met with commercial success. Its sales, for example, have grown from $2,336,000 in 1981 to $6,330,000 in 1982; $12,100,000 in 1983; and $27,280,000 in 1984.

One part of Eagle's marketing strategy is the association of its products with the "Eagle" brand name and the association with Anheuser-Busch. All of Eagle's marketing strategy, its advertising, promotional material and packaging for its honey roast nuts contain the name "Eagle" as well as the words "honey roast." At no time have the words "Honey Roast" been used alone to promote Eagle's honey roast nuts.

Advertising and promotional literature prepared by Eagle and distributed to its sales people clearly describes its nut products as being made with honey, "roasted with honey", "roasted in honey" and "a combination of honey and salt and roasted to perfection." In addition, Mr. Sherman, testified that Eagle's sales people promote its nut products to the trade as being roasted with honey.

When shown a jar of Planters dry roasted nuts where the words "dry roasted" appeared in lower case and asked if the word "honey" were substituted for the word "dry", would that be a descriptive usage of "Honey Roasted", Mr. Ohlsten, a market research consultant called by plaintiffs, testified that it would. Mr. Ohlsten also thought that the words "Honey Roast" would tell the consumer about the type of nuts they would find in the package.

Sugar is the predominant ingredient of the solution with which the nuts are coated. Honey is, however, also contained in the solution used to coat the nut. The nuts absorb the honey through the roasting process and consequently give the nut the honey roasted flavor and color.

Eagle's United States Patent No. 4,161,545, describes it process of manufacture as a method for making a "honey coated roasted nut." There is some evidence, although minimal, that the press refers to such nuts descriptively as "honey roasted." An article appearing in the Detroit Free Press on...