J & J Snack Foods Corp. v. Nestle Usa, Inc.

• Decision Date: 27 June 2001
• Docket Number: No. CIV. A. 00-3081JBS.,No. CIV. A. 00-6230JBS.,CIV. A. 00-3081JBS.,CIV. A. 00-6230JBS.
• Citation: 149 F.Supp.2d 136
• Parties: J & J SNACK FOODS, CORP, Plaintiff, v. NESTLE USA, INC., Defendant. J & J Snack Foods, Corp., Plaintiff, v. The Earthgrains Co., et al., Defendants.
• Court: New Jersey Supreme Court

149 F.Supp.2d 136

J & J SNACK FOODS, CORP, Plaintiff, v. NESTLE USA, INC., Defendant.

J & J Snack Foods, Corp., Plaintiff, v. The Earthgrains Co., et al., Defendants.

No. CIV. A. 00-3081JBS.

No. CIV. A. 00-6230JBS.

United States District Court, D. New Jersey.

June 27, 2001.

COPYRIGHT MATERIAL OMITTED

Carlo Scaramella, Cureton Caplan Hunt Scaramella & Clark, PC Delran, NJ, and J. Rodman Steele, Jr., Akerman & Senterfitt, West Palm Beach, FL, for Plaintiff.

Kelly A. Clement, Colin Foley, Howrey Simon Arnold & White, LLP Washington, DC, and Richard D. Catenacci, Connell Foley LLP, Roseland, NJ, for Defendant Nestle USA, Inc.

Donald A. Robinson, Robinson & Livelli, Newark, NJ, and Richard Lehv, Jessica Mann, Fross, Zelnick, Lehrman & Zissu, P.C., New York City, Of-Counsel for Defendant The Earthgrains Co.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SIMANDLE, District Judge:

                TABLE OF CONTENTS
                  I. INTRODUCTION ...........................................................140
                 II. PROCEDURAL BACKGROUND ..................................................140
                III. FINDINGS OF FACT .......................................................140
                     A. Plaintiff J & J .....................................................140
                     B. Defendant Nestle ....................................................141
                     C. Defendant Earthgrains ...............................................142
                 IV. CONCLUSIONS OF LAW .....................................................143
                     A. Preliminary Injunction Standard......................................143
                     1) Likelihood of Success on the Merits .................................143
                        a.) Federal Claims under the Lanham Act .............................144
                             i.) Validity and Protectability of Mark ........................144
                                 (1) Whether the Mark is "Generic" ..........................145
                                 (2) Whether the Mark is "Suggestive" or "Descriptive".......147
                                 (3) Secondary Meaning of Descriptive Mark ..................151
                            ii.) Likelihood of Confusion ....................................154
                           iii.) Defendants' Fair Use Defense ...............................157
                        b.) Remaining Claims ................................................157
                     2) Irreparable Harm to Plaintiff without Injunction.....................157
                

                     3) Balancing Equities—Potential Harm to Defendants .....................158
                     4) Prevailing Public Interest ..........................................159
                  V. CONCLUSION..............................................................159
                

I. INTRODUCTION

This Court is called upon to decide whether a preliminary injunction should issue upon the allegations of plaintiff J & J Snack Foods Corporation ("J & J") that defendants The Earthgrains Company ("Earthgrains") and Nestle USA, Inc. ("Nestle") should be enjoined from using the "BREAK & BAKE" mark, which was first registered by Schwan's Sales Enterprises, Inc. ("Schwan") in 1996, and later obtained by J & J in 1999, on their refrigerated cookie dough products. Defendant Earthgrains uses the phrase "Break `N Bake" in connection with its refrigerated cookie dough product, and defendant Nestle uses the phrase "Just Break— & Bake" in connection with its Nestle's Toll House refrigerated cookie dough product.

There is no dispute that J & J owns the "BREAK & BAKE" mark. Therefore, the primary issues to be decided in this matter are: 1) whether plaintiff is likely to succeed in proving the trademark "BREAK & BAKE" is valid and protectable, which requires this Court to consider whether it is probable that the mark is suggestive or descriptive with secondary meaning and 2) whether plaintiff is likely to successfully show that the use of the mark by either defendant is confusing to consumers. The Court has considered the lengthy submissions of all parties, including detailed affidavits, attachments consisting of documents and depositions, several expert reports, as well as the oral arguments held on June 18, 2001.

II. PROCEDURAL BACKGROUND

Plaintiff J & J first filed a complaint against defendant Nestle on June 23, 2000, charging Nestle with trademark infringement and unfair competition in violation of federal, state, and common law. On July 12, 2000, the Complaint against Nestle was amended to include John Does I-X. Then, on December 26, 2000, plaintiff filed another action against defendant Earthgrains, charging Earthgrains with identical trademark infringement and unfair competition claims and requesting a preliminary injunction. On February 16, 2001, almost eight months after filing their original complaint against Nestle, J & J made a motion for a preliminary injunction against Nestle, seeking to enjoin its use of plaintiff's "BREAK & BAKE" mark. On March 21, 2001, this Court granted plaintiff's motion to consolidate the two proceedings for all purposes under civil action number 00-3081(JBS).

Now before this Court are plaintiff's motions for preliminary injunctive relief against defendants Earthgrains and Nestle. This Court has federal question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338, and under the Lanham Act 15 U.S.C. § 1051 et seq. Having read the parties' submissions, and having heard extensive argument on the motions at oral argument on June 18, 2001, this Court will now make factual findings and conclusions of law as required by Rule 65, Fed.R.Civ.P.

III. FINDINGS OF FACT

The facts of these consolidated cases are, for the most part, undisputed.¹

A. Plaintiff J & J

Plaintiff J & J, a New Jersey Corporation, has been in operation for twenty-nine years, producing food and beverage products. (Pl.'s Br. at 2.) On January 16, 1996, the United States Patent and Trademark Office ("PTO") granted trademark registration to Schwan for the "BREAK & BAKE" mark for use on frozen cookie dough. (Id., Ex. B.) On February 4, 1999, J & J acquired Camden Creek Bakery from Schwan, and also received an assignment of the trademark rights to the "BREAK & BAKE" mark. (Id.)

J & J, through its food service division Camden Creek, has sold frozen cookie dough with the "BREAK & BAKE" mark (see Pl.'s Br., Exs. D & E) to distributors who offer the products to fund raising organizations. (Pl.'s Br. 3.) The mark "BREAK & BAKE" is featured below the brand name, Camden Creek Bakery. (See Exs. D & E.) Plaintiff has not offered evidence of any specific advertising of the products containing the mark, and all of their sales are through fundraisers. (Nestle Opp. at 8-9.) Plaintiff's Camden Creek product is sold only to commercial distributors in the food service industry, and the ultimate consumer would not know the product because it has not been advertised to consumers, according to J & J's Vice President of Marketing, Michael Karaban. (See Valenti Decl., Ex. C, Tr. 55-11 to 56-18.) To date, plaintiff's total sales using the mark range from $1 million (Pl.'s Br. at 3) to $2 million (Pl.'s Reply Br. at 11). It is the business practice of plaintiff to guard its trademarks and plaintiff claims that it has been considering breaking into the retail supermarket refrigerated cookie dough market. (Pl.'s Br. at 3.)

In August, 1999, Nestle began selling its pre-sectioned NESTLE TOLL HOUSE cookie dough bar product. (Nestle's Opp., Ex. Q at 41-42.) Plaintiff claims that in March, 2000, defendant Nestle, through a third-party, Kelly Pioneer Group, Inc., attempted to purchase the right to use the "BREAK & BAKE" mark. (Pl.'s Br. at 4.) J & J refused to sell the right to use the "BREAK & BAKE" mark. (Id. at 5.) In August, 2000, defendant Earthgrains began selling a break and bake style refrigerated dough, labeled as "Break `N Bake Style Cookies," which was sold under their own trademarked name, "MERICO," as well as other private supermarket labels. (See Earthgrains Opp. at 4-5 and 7, Ex. 19; Valenti Decl., Ex. E.) The labels on such products are "Break `N Bake Style Cookies."

In early April, 2000, plaintiff discovered that Nestle was using the words "break and bake" in conjunction with their line of refrigerated chocolate chip cookie dough. (Id. at 4.) Through discovery, plaintiff learned that Nestle had been considering use of the words "break & bake," despite knowledge of the mark's prior registration and an alleged attempt to obtain the right to use the mark, as early as September, 1998. (Id. at 4; Confidential Document Packet, Ex. 1.) On April 14, 2000, J & J's counsel sent a cease and desist letter to Nestle, demanding that they stop using the "BREAK & BAKE" mark. (Id. at 6, Ex. K.) Plaintiff asserts that Nestle did not discontinue use of the words "break and bake" on its packaging.

B. Defendant Nestle

One of defendant Nestle's most successful and well known product brands is NESTLE TOLL HOUSE, which is sold in yellow packaging under the Nestle name and TOLL HOUSE logo. (Nestle Opp. at 3.) Nestle has sold refrigerated cookie dough for the last four years, primarily in the familiar "chub" wrapper,² and that product accounts for 19% of all Toll House retail sales. (Id. at 3.) The chub requires the use of a knife and/or spoon in order to measure out the proper amount of dough required for each cookie. This style of cookie dough is also commonly referred to as "slice and bake." (Earthgrains Opp. at 2.) To date, there is no trademark for the commonly used phrase "slice & bake."

Nestle indicates that, in response to customer concerns about mess and the necessity for a knife, they expanded their Toll House brand to include pre-made cookie dough, similar to the dough in the chub, but packaged instead in rectangular bar form and scored for easy separation and baking. (Id. at 4.) In August, 1999, Nestle began selling the pre-sectioned refrigerated cookie dough under the Toll House name in retail stores. (Id. at 4-5; Ex Q at 41-42.) Sometime thereafter, after conducting consumer research, Nestle added the words, "Just Break & Bake!" under an illustration of a dough...