Kraft comes out as big cheese in domain case

A preliminary injunction ruling by the US District Court for the Northern District of Illinois in the case of Kraft Foods Holdings v Stuart Helm, 2002 US Dist. LEXIS 10258, has vindicated the rights of well-known trademark owners on the Internet.

The plaintiff, Kraft Foods Holdings Inc, is the manufacturer and distributor of the well-known Velveeta cheese product, a market it has dominated since 1923. Kraft advertises and promotes Velveeta extensively worldwide through a variety of media, including print, radio, television and the Internet.

The defendant, Stuart Helm, styles himself as 'King VelVeeda' and operates cheesygraphics.com as well as a porn site. He used the word 'velveeda' as a metatag and within a banner on the 'cheesygraphics' site. Helm testified that King VelVeeda is his nickname and that he has been using it for 17 years to identify himself and to sign his artwork.

Kraft sued for trademark infringement and dilution under Section 43(c) of the Lanham Act and moved for a preliminary injunction. The court noted that the section entitles owners of famous trademarks to an injunction against third parties that are diluting the famous mark, if the owner of the senior mark can prove that:

  • the senior mark is famous;

  • the junior mark is being used in commerce and for commercial purposes;

  • the use of the junior mark began after the senior mark became famous; and

  • the junior mark causes dilution of the senior mark (see Eli Lilly & Co v Natural Answers Inc).

The court concluded that VELVEETA is a famous mark and that Kraft has spent millions of dollars advertising, marketing and promoting its product. The court also found that Helm adopted the name 'King VelVeeda' in 1985, after Velveeta became famous.

In rebuttal, Helm argued that he was not engaged "in commerce". The court quickly rejected this argument noting that the US Supreme Court has held that courts must construe the phrase 'in commerce' liberally and the "requirement would be met in a typical internet message, be it trademark infringement or false advertising." Helm admitted that he had sold merchandise on his site to individuals outside of Illinois and that he continues to offer his products and services for sale.

The court went on to rule that the 'King VelVeeda' name dilutes the VELVEETA mark, referring to the Lanham Act's definition of 'dilution' as "the lessening of the capacity of a famous mark to identify and distinguish goods or services."

Helm asserted that even if he was found to be diluting Kraft's mark, the protections afforded to individuals under the First Amendment (freedom of expression) protect him from a preliminary injunction. Helm asserted that his site was a parody site and therefore protected under the First Amendment. The court found no evidence that anything on Helm's site was a parody of Velveeta and promptly rejected this defence, ultimately holding that "the public interest is served by [granting] a preliminary injunction because enforcement of the trademark laws prevents consumer confusion."

Scott Fields, Obermayer Rebmann Maxwell & Hippel LLP, Philadelphia

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