Zatarains, Inc. v. Oak Grove Smokehouse, Inc.

• Citation: 217 USPQ 988,698 F.2d 786
• Decision Date: 25 February 1983
• Docket Number: No. 81-3573,81-3573
• Parties: ZATARAINS, INC., Plaintiff-Appellant Cross-Appellee, v. OAK GROVE SMOKEHOUSE, INC. and Visko's Fish Fry, Inc., Defendants-Appellees Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 786

698 F.2d 786

217 U.S.P.Q. 988

ZATARAINS, INC., Plaintiff-Appellant Cross-Appellee, v. OAK GROVE SMOKEHOUSE, INC. and Visko's Fish Fry, Inc.,

Defendants-Appellees Cross-Appellants.

No. 81-3573.

United States Court of Appeals, Fifth Circuit.

Feb. 25, 1983.

Lemle, Kelleher, Kohlmeyer & Matthews, Wm. R. Forrester, Jr., New Orleans, La., for plaintiff-appellant cross-appellee.

Butler & Reynolds, Peter J. Butler, New Orleans, La., for Visko's Fish Fry, Inc.

E. Wade Shows, Baton Rouge, La., for Oak Grove Smokehouse.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before GOLDBERG, GEE and HIGGINBOTHAM, Circuit Judges.

GOLDBERG, Circuit Judge:

This appeal of a trademark dispute presents us with a menu of edible delights sure to tempt connoisseurs of fish and fowl alike. At issue is the alleged infringement of two trademarks, "Fish-Fri" and "Chick-Fri," held by appellant Zatarain's, Inc. ("Zatarain's"). The district court held that the alleged infringers had a "fair use" defense to any asserted infringement of the term "Fish-Fri" and that the registration of the term "Chick-Fri" should be cancelled. We affirm.

I. FACTS AND PROCEEDINGS BELOW

A. THE TALE OF THE TOWN FRIER

Zatarain's is the manufacturer and distributor of a line of over one hundred food products. Two of these products, "Fish-Fri" and "Chick-Fri," are coatings or batter mixes used to fry foods. These marks serve as the entree in the present litigation.

Zatarain's "Fish-Fri" consists of 100% corn flour and is used to fry fish and other seafood. "Fish-Fri" is packaged in rectangular cardboard boxes containing twelve or twenty-four ounces of coating mix. The legend "Wonderful FISH-FRI TM " is displayed prominently on the front panel, along with the block Z used to identify all Zatarain's products. The term "Fish-Fri" has been used by Zatarain's or its predecessor since 1950 and has been registered as a trademark since 1962.

Zatarain's "Chick-Fri" is a seasoned corn flour batter mix used for frying chicken and other foods. The "Chick-Fri" package, which is very similar to that used for "Fish-Fri," is a rectangular cardboard container labelled "Wonderful CHICK-FRI." Zatarain's began to use the term "Chick-Fri" in 1968 and registered the term as a trademark in 1976.

Zatarain's products are not alone in the marketplace. At least four other companies market coatings for fried foods that are denominated "fish fry" or "chicken fry." Two of these competing companies are the appellees here, and therein hangs this fish tale.

Appellee Oak Grove Smokehouse, Inc. ("Oak Grove") began marketing a "fish fry" and a "chicken fry" in March 1979. Both products are packaged in clear glassine packets that contain a quantity of coating mix sufficient to fry enough food for one meal. The packets are labelled with Oak Grove's name and emblem, along with the words "FISH FRY" OR "CHICKEN FRY." Oak Grove's "FISH FRY" has a corn flour base seasoned with various spices; Oak Grove's "CHICKEN FRY" is a seasoned coating with a wheat flour base.

Appellee Visko's Fish Fry, Inc. ("Visko's") entered the batter mix market in March 1980 with its "fish fry." Visko's product is packed in a cylindrical eighteen-ounce container with a resealable plastic lid. The words "Visko's FISH FRY" appear on the label along with a photograph of a platter of fried fish. Visko's coating mix contains corn flour and added spices.

Other food manufacturing concerns also market coating mixes. Boochelle's Spice Co. ("Boochelle's"), originally a defendant in this lawsuit, at one time manufactured a seasoned "FISH FRY" packaged in twelve-ounce vinyl plastic packets. Pursuant to a settlement between Boochelle's and Zatarain's, Boochelle's product is now labelled "FISH AND VEGETABLE FRY." Another batter mix, "YOGI Brand TM OYSTER SHRIMP and FISH FRY," is also available. Arnaud Coffee Corporation ("Arnaud") has manufactured and marketed "YOGI Brand" for ten to twenty years, but was never made a party to this litigation. ¹ A product called "Golden Dipt Old South Fish Fry" has recently entered the market as well.

B. OUT OF THE FRYING PAN, INTO THE FIRE

Zatarain's first claimed foul play in its original complaint filed against Oak Grove on June 19, 1979, in the United States District Court for the Eastern District of Louisiana. The complaint alleged trademark infringement and unfair competition under the Lanham Act Secs. 32(1), 43(a), 15 U.S.C. Secs. 1114(1), 1125(a) (1976), and La.Rev.Stat.Ann Sec. 51:1405(A) (West Supp.1982). Zatarain's later amended its complaint to add Boochelle's and Visko's as defendants. Boochelle's and Zatarain's ultimately resolved their dispute, and Boochelle's was dismissed from the suit. The remaining defendants, Oak Grove and Visko's, filed counterclaims against Zatarain's under the Sherman Act Sec. 2, 15 U.S.C. Sec. 2 (1976); the Clayton Act Sec. 4, 15 U.S.C. Sec. 15 (1976); La.Rev.Stat.Ann. Sec. 51:1401 (West Supp.1982); the Fair Packaging and Labeling Act, 15 U.S.C. Secs. 1451-1461 (1976); and the Food, Drug, and Cosmetic Act Sec. 403, 21 U.S.C. Sec. 343 (1976). The defendants also counterclaimed for cancellation of the trademarks "Fish-Fri" and "Chick-Fri" under section 37 of the Lanham Act, 15 U.S.C. Sec. 1119 (1976), and for damages under section 38 of the Lanham Act, 15 U.S.C. Sec. 1120 (1976).

The case was tried to the court without a jury. Treating the trademark claims first, the district court classified the term "Fish-Fri" as a descriptive term identifying a function of the product being sold. The court found further that the term "Fish-Fri" had acquired a secondary meaning in the New Orleans geographical area and therefore was entitled to trademark protection, but concluded that the defendants were entitled to fair use of the term "fish fry" to describe characteristics of their goods. Accordingly, the court held that Oak Grove and Visko's had not infringed Zatarain's trademark "Fish-Fri."

With respect to the alleged infringement of the term "Chick-Fri," the court found that "Chick-Fri" was a descriptive term that had not acquired a secondary meaning in the minds of consumers. Consequently, the court held that Zatarain's claim for infringement of its trademark "Chick-Fri" failed and ordered that the trademark registration of "Chick-Fri" should be cancelled.

Turning to Zatarain's unfair competition claims, the court observed that the evidence showed no likelihood of or actual confusion on the part of the buying public. Additionally, the court noted that the dissimilarities in trade dress of Zatarain's, Oak Grove's, and Visko's products diminished any possibility of buyer confusion. For these reasons, the court found no violations of federal or state unfair competition laws.

Finally, the court addressed the counterclaims asserted by Oak Grove and Visko's. Because no evidence was introduced to support the defendants' allegations of monopolistic behavior, fraud, and bad faith on the part of Zatarain's, the court dismissed the federal and state antitrust and unfair trade practices counterclaims. The court also dismissed the counterclaim based on Zatarain's allegedly improper product identity labelling. Both sides now appeal to this court.

II. ISSUES ON APPEAL

The district court found that Zatarain's trademark "Fish-Fri" was a descriptive term with an established secondary meaning, but held that Oak Grove and Visko's had a "fair use" defense to their asserted infringement of the mark. The court further found that Zatarain's trademark "Chick-Fri" was a descriptive term that lacked secondary meaning, and accordingly ordered the trademark registration cancelled. Additionally, the court concluded that Zatarain's had produced no evidence in support of its claims of unfair competition on the part of Oak Grove and Visko's. Finally, the court dismissed Oak Grove's and Visko's counterclaims for antitrust violations, unfair trade practices, misbranding of food products, and miscellaneous damages.

Battered, but not fried, Zatarain's appeals from the adverse judgment on several grounds. First, Zatarain's argues that its trademark "Fish-Fri" is a suggestive term and therefore not subject to the "fair use" defense. Second, Zatarain's asserts that even if the "fair use" defense is applicable in this case, appellees cannot invoke the doctrine because their use of Zatarain's trademarks is not a good faith attempt to describe their products. Third, Zatarain's urges that the district court erred in cancelling the trademark registration for the term "Chick-Fri" because Zatarain's presented sufficient evidence to establish a secondary meaning for the term. For these reasons, Zatarain's argues that the district court should be reversed.

Oak Grove and Visko's also present an appeal to this court, contending that the district court erred in dismissing their counterclaims against Zatarain's. In particular, Oak Grove and Visko's again urge that Zatarain's conduct has violated the Sherman Act, the Lanham Act, the federal regulations governing product identity labelling, and Louisiana law prohibiting restraint of trade; Oak Grove and Visko's also pray for an award of attorneys' fees. We now turn to an appraisal of these issues.

III. THE TRADEMARK CLAIMS

A. BASIC PRINCIPLES ²

1. Classifications of Marks

The threshold issue in any action for trademark infringement is whether the word or phrase is initially registerable or protectable. Vision Center v. Opticks, Inc., 596 F.2d 111, 115 (5th Cir.1980); American Heritage Life Insurance Co. v. Heritage Life Insurance Co., 494 F.2d 3, 10 (5th Cir.1974). Courts and commentators have traditionally divided potential trademarks into four categories. A potential trademark may be classified as (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. These categories, like the tones in a spectrum, tend to blur at the edges and merge together. The labels are more advisory than...