Sweet St. Desserts, Inc. v. Chudleigh's Ltd.

• Citation: 69 F.Supp.3d 530
• Decision Date: 23 December 2014
• Docket Number: Civil Action No. 12–3363.
• Parties: SWEET STREET DESSERTS, INC. v. CHUDLEIGH'S LTD.
• Court: U.S. District Court — Eastern District of Pennsylvania

69 F.Supp.3d 530

SWEET STREET DESSERTS, INC.

v.CHUDLEIGH'S LTD.

Civil Action No. 12–3363.

United States District Court, E.D. Pennsylvania.

Signed Dec. 23, 2014.

Nancy A. Rubner, Jacqueline M. Lesser, Lesley M. Grossberg, Baker & Hostetler LLP, Philadelphia, PA, for Sweet Street Desserts, Inc.

Ashly Iacullo Boesche, Hans Uli Widmaier, Janet A. Marvel, Pattishall McAuliffe Newbury Hilliard & Geraldson LLP, Chicago, IL, Emily J. Hanlon, Samuel W. Silver, Schnader Harrison Segal & Lewis LLP, Philadelphia, PA, Seth I. Appel, Pro Hac Vice, for Chudleigh's Ltd.

MEMORANDUM RE SUMMARY JUDGMENT

BAYLSON, District Judge.

This case presents the delicious issue, sure to please those with a sweet tooth, of whether summary judgment should be granted to either side in a trademark infringement dispute over apple pastry desserts. Plaintiff Sweet Street Desserts, Inc. (“Sweet Street”) manufactured an apple turnover sold at Applebee's restaurants that Defendant Chudleigh's Ltd. (“Chudleigh's”) contends infringed its registered product configuration trademark in the design of Chudleigh's Apple Blossom pie (the “Blossom Design”).¹ Both sides have moved for summary judgment. Sweet Street seeks summary judgment on its claims for a declaratory judgment of noninfringement, cancellation of Chudleigh's trademark registration, and tortious interference, as well as on Chudleigh's counterclaims. Chudleigh's seeks summary judgment on all of Sweet Street's claims except non-infringement.

Both sides were ably represented by counsel, who provided the Court with a fully baked factual record and excellent arguments in support of their positions. The parties are largely in agreement on the underlying facts, although they dispute certain factual and legal inferences that can be drawn from them. Ultimately, this case bakes down to the question of whether Chudleigh's Blossom Design trademark, which covers a round, single-serving, fruit-filled pastry with six folds or petals of upturned dough, is functional, and, accordingly, not protectable as a trademark or trade dress. See TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32–33, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001) (noting functional product design features are not protectable as trademarks or trade dress).

The Court concludes that there is no genuine dispute of material fact as to the functionality of Chudleigh's Blossom Design and will grant summary judgment in favor of Sweet Street on this issue. The Blossom Design “is essential to the use or purpose of the article” and “affects the cost or quality of the article.” TrafFix, 532 U.S. at 32, 121 S.Ct. 1255 (internal quotation marks and citation omitted). The product's size, shape, and six folds or petals of upturned dough are all essential ingredients in the Blossom's ability to function as a single-serving, fruit-filled dessert pastry. The six folds or petals of upturned dough are essential to contain the filling, and the number of folds or petals is determined in part by the size of the product and the need to limit the number of openings in the top for re-heating. Furthermore, permitting Chudleigh's to maintain proprietary rights in the Blossom Design would have the deleterious impact on competition that the functionality doctrine aims to prevent. See TrafFix, 532 U.S. at 29, 121 S.Ct. 1255 ; see also Wal–Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 213, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000) (cautioning against the overextension of trade dress because “product design almost invariably serves purposes other than source identification”).²

The Court also concludes, however, that Chudleigh's is entitled to summary judgment on Sweet Street's tortious interference claims. Because Sweet Street has failed to show that Chudleigh's sending of a cease-and-desist letter to Applebee's regarding Applebee's sale of Sweet Street's turnover was a “sham,” Chudleigh's conduct in sending the cease-and-desist letter is immunized under the Noerr–Pennington doctrine. Sweet Street has also failed to show a genuine dispute of material fact about whether Chudleigh's pressured bakery equipment manufacturer Form & Frys not to sell a dough-folding machine to Sweet Street.

I. Background

A. Factual Summary

The facts underlying this case are largely undisputed.

On January 20, 1999, the United States Patent and Trademark Office (“PTO”) issued Chudleigh's trademark registration No. 2,262,208 for the Blossom Design as a “distinctive configuration for baked goods” (Def. Statement of Undisputed Facts (“SOF”) ¶ 7). The drawing of the product configuration submitted with the trademark application and entered on the principal register of the PTO is as follows.

On October 24, 2000, Chudleigh's obtained a federal trademark registration for the BLOSSOM word mark (id. ¶ 13).

On May 12, 2005, the PTO accepted Chudleigh's Sections 8 and 15 Declaration attesting to continuous use of the Blossom Design in U.S. commerce and supporting specimens, and the Blossom Design became incontestable (Id. ¶ 9). The parties agree that there are at least two versions of the Blossom Design, the hand-folded version and the machine-folded version, although they dispute which versions Chudleigh's trademark registration covers. Both versions are depicted as follows:

On June 26, 2009, the PTO accepted Chudleigh's Sections 8 and 9 Declaration attesting to continuous use of the Blossom Design in U.S. commerce (id. ¶ 11).

In the spring of 2010, Applebee's contacted Sweet Street to express interest in having Sweet Street manufacture an apple dessert for Applebee's (Pl. SOF ¶¶ 10, 189). In July 2010, after several discussions between Applebee's and Sweet Street, Sweet Street sent samples of an apple dessert to Applebee's (id. ¶¶ 12, 190). Applebee's liked the product, so Sweet Street began to investigate manufacturing the apple dessert, including the possibility of “outsourcing”³ its production (id. ¶ 15).

In September 2010, Sweet Street Channel Marketing Manager George Frangakis spoke with Chudleigh's President Scott Chudleigh about potential outsourcing (id. ¶ 21–22). On September 28, 2010, Frangakis and Chudleigh signed a mutual non-disclosure agreement, and they discussed pricing, options, and potential volumes (id. ¶ 24). In early October, Chudleigh's provided samples of its Blossom product to Sweet Street (id. ¶ 23; Def. SOF ¶ 37). During this time, the evidence indicates Chudleigh's learned the customer “was Applebee's and ... the volume is inherent” (Pl. SOF ¶ 25). The evidence indicates Chudleigh's did not inform Sweet Street of Chudleigh's trademark registration at the time the parties discussed possible outsourcing and Chudleigh's sent samples to Sweet Street (id. ¶¶ 26, 33–34).

Sweet Street decided not to outsource manufacture of the apple dessert to Chudleigh's, but the parties dispute the subsequent course of events. Sweet Street contends it rejected outsourcing to Chudleigh's because Chudleigh's product looked different than the turnover Sweet Street had developed for Applebee's, and Sweet Street decided to manufacture the turnover at its Reading, Pennsylvania, plant (id. ¶¶ 27–32, 45). Chudleigh's position is that Sweet Street misappropriated Chudleigh's Blossom Design and created an infringing product (Def. SOF ¶¶ 35–45).

On October 22, 2010, Applebee's gave Sweet Street the green light to produce 165 cases of “Apple Pocket” (Pl. SOF ¶ 41). The Apple Pocket was renamed the Apple Turnover and was successfully tested in a limited rollout in 27 Applebee's restaurants from February 21, 2011, to May 22, 2011 (id. ¶¶ 46–49).

In anticipation of the need to ramp up production of the Apple Turnover, Sweet Street contacted Rondo, Inc.,⁴ a seller of bakery and food processing equipment, to source automation equipment for making, cutting, and folding pastry dough (id. ¶ 50). Between November 2010 and February 2011, Rondo contacted Danish baking equipment company Form & Frys about obtaining folding machinery for Sweet Street to manufacture the Apple Turnover (id. ¶ 51). Although Form & Frys indicated as early as February 2011 that there might be issues regarding “exclusives” or a “patent” on either the machinery or the product it produced, Form & Frys sent Rondo a proposal to sell a Hercules dough-folding machine to Sweet Street (id. ¶ 52). Rondo provided an initial quote to Sweet Street for a baking system that included a Hercules machine on March 8, 2011, and a revised quote on March 29, 2011 (id. ¶ 56–57). Sweet Street submitted a purchase order for the Hercules machine to Rondo (id. ¶ 59).

The parties do not dispute that Form & Frys rejected the quote and would not sell the Hercules machine to Sweet Street (id. ¶¶ 61–63). The evidence indicates that Form & Frys rejected the quote because it understood Chudleigh's to have a “patent” and exclusivity in the shape of the pastry formed by the Hercules machine (id. ¶¶ 62–63; Def. SOF ¶ 21). Sweet Street suggests Chudleigh's misrepresented Chudleigh's proprietary rights in the Blossom Design to Form & Frys and called Form & Frys to pressure it not to do business with Sweet Street (Pl. SOF ¶¶ 64–66). Chudleigh's disputes these allegations and argues there is no factual evidence in the record to support Sweet Street's inferences (Def. SOF ¶¶ 21–24; Def. Supp. SOF ¶¶ 11–15).

On August 15, 2011, Applebee's launched Sweet Street's Apple Turnover as a limited time offer, and Sweet Street expected the Apple Turnover to become a core menu item (Pl. SOF ¶ 73–75). Sweet Street did not have a written, long-term contract with Applebee's. See ECF No. 102, Pl. Supp. Submission. However, Sweet Street contends a written contract was not necessary under the U.C.C. because Sweet Street's arrangement with Applebee's was one of open quantity and exclusivity. As evidence that Sweet Street had a contractual relationship with Applebee's, Sweet Street points to evidence in the record including the Demand Plan, which anticipated a quantity of no less than four Apple Turnovers per...