Prominence of house marks is key in trade dress infringement cases

In McNeill Sweeteners LLC v Heartland Sweeteners LLC (511 F3d 350), the US Court of Appeals for the Third Circuit has reached two separate holdings on the issue of the significance of a defendant's house mark in infringement litigation, each of which accorded significant weight to the prominence of the house marks. US courts have adopted differing views on the issue, and this debate occurs with greatest frequency in trade dress litigation.

The appeal arose from the denial of a preliminary injunction to McNeil Nutritionals LLC, the manufacturer of SPLENDA-branded artificial sweetener, against three 'store brand' competitors that had allegedly misappropriated McNeil's trade dress. Affirming the district court's refusal to grant relief in relation to two of the three defendants, the Third Circuit held that one factor above all supported the district court's finding that confusion was unlikely - namely, the presence of the SAFEWAY and FOOD LION house marks on the defendants' packaging. The court disclaimed any intent to suggest that "the prominent presence of another well-known mark is an affirmative defence to every trade dress infringement action". Nevertheless, it held that:

"this fact unquestionably plays a role in a district court's analysis of the... factor [of trade dress similarity], such that it may cause the overall impressions created by the two trade dresses to be different enough for... [this] factor to be weighed in a defendant's favour."

As the court was able to identify additional differences between the parties' trade dresses that were "not minute ones found only upon examination with a microscope", it held that the district court had not committed clear error in denying McNeil's motion.

Nevertheless, the Third Circuit reached the contrary conclusion as to the trade dress used by the remaining defendant. Both the district court in the first instance and the Third Circuit on appeal concluded that:

• colour coding practices in the industry did not increase the risk of confusion;
  
  
• the parties' purchasers exercised at least "some heightened care and attention"; and
  
  
• there was no credible evidence of actual confusion.

In the face of these findings, McNeil successfully invoked the district court's conclusion that the parties' trade dresses were similar, in part because of the defendant's failure to use a prominent house mark or other distinguishing element. However, the district court concluded that consumers would be aware of the origin of the defendant's goods because of a relatively inconspicuous logo used by the defendant and because of the consumers' mere presence in the defendant's store. Dismissing this conclusion, the Third Circuit remarked that:

"[t]he danger in the district court's result is that producers of store brand products will be held to a lower standard of infringing behaviour - that is, they would acquire per se immunity as long as the store brand's name or logo appears somewhere on the allegedly infringing package, even when the [defendant's] name or logo is tiny. The Lanham Act does not support such a per se rule."

Concluding that confusion was likely, the Third Circuit remanded the action to the district court for a determination of whether McNeil had otherwise established its entitlement to a preliminary injunction. This outcome demonstrates that the nature and prominence of house marks used by the defendants are more likely to have greater dispositive impact than any bright-line rule in the area.

Theodore H Davis Jr, Kilpatrick Stockton LLP, Atlanta