Trouble brewing in coffee TM/advertising case

Keurig, Inc. v. Sturm Foods, Inc., 2012 WL 4049799 (D. Del.)

Previous opinion, finding nominative fair use of some of Keurig’s marks on a motion for preliminary injunction. Keurig sued Sturm based on Sturm’s manufacture and sale of single-serve beverage cartridges for use in Keurig’s machines.  This opinion dealt with cross motions for summary judgment on Keurig’s patent, Lanham Act, and related state law claims, along with some counterclaims by Sturm, and related motions.

Keurig and its licensees make K-Cups for use in its machines.  K-Cups are sold under various brand names and produce various beverages, from coffee to hot chocolate and tea.  Not all K-Cups contain ground coffee and/or a filter, though many do.  Sturm’s Grove Square line of cartridges say: “For use by owners of Keurig coffee makers.”

Keurig’s patent claims were defeated because its patents, which were on the machine and on a method of using the machine and not on the cartridges, were exhausted by the sale of its machines.  “Here, plaintiff is attempting to institute a postsale restriction that prevents non-Keurig cartridges from being used in Keurig brewers. Supreme Court precedent prevents plaintiff from undertaking such an end run.”

Sturm sought to cancel Keurig’s trademark registrations for K-Cup and K-Cups as generic.  Keurig argued lack of standing: it was only claiming infringement based on the Keurig mark, and Sturm hadn’t sought to use the K-Cup mark or something similar, so it lacked standing to sue even though it was a direct competitor that would sure like to use the term. 

Sturm’s false advertising/unfair competition claim was that Keurig falsely represented that all of its K–Cups contain 1) a filter and 2) ground coffee.  Various Keurig brewer packages referred to the K–Cups’ “paper filter,” “technically advanced filter” and “internal filter,” and stated that: 1) “the K–Cup design holds fresh roasted coffee;” “K–Cups contain the ideal grind and measure of fresh 100% Arabica beans;” and “Each K–Cup contains the perfect grind and measure.” A press release said, “The K–Cup serves as a mini-brewer complete with a filter and fresh ground coffee[.]”

Though some K-Cups don’t have a filter or coffee, Keurig argued that there was no literal falsity, but that it was rather describing the typical or flagship product. Both parties focused on one case: In Schering-Plough Healthcare Products, Inc. v. Neutrogena Corp., 2010 WL 1992247 (D. Del.), defendant advertised that its suntan lotion contained Helioplex®, defined Helioplex publicly (though not on the bottles), and conceded that there was no Helioplex on those bottles.  The court rejected the argument that the Helioplex formula was “sufficiently elastic” to encompass a similar, but not identical, formula.  Because defendant never provided the public a definition elastic enough to cover the other formula, “the public has no basis on which to perceive the ‘flexibility’ in the formula advocated by defendant.”  The Schering-Plough court found literal falsity.  Here, by contrast, Keurig argued that the consuming public already had a “flexible” understanding that powdered beverages such as hot cocoa or chai latte don’t include ground coffee and need not be filtered. The court agreed that the statements were not unambiguously false.  None of the statements said that every K-Cup had coffee and a filter, and in the context of the brewer packaging (as opposed to packaging on cartridges) the statements were clearly “meant to generally describe how the brewing process works; they are not meant to explain how the process works with respect to specific beverage cartridges.”

The court turned to Keurig’s trademark claims, based on the statement on Sturm’s packaging, “For use by owners of Keurig® coffee makers.”  Puzzlingly, despite its separation of likely confusion from nominative fair use (a defense, in the Third Circuit), and its statement that not all the usual factors are relevant in nominative fair use cases, the court then found that the multifactor test is clearly an issue for the jury, making summary judgment inappropriate.  (Always?  That would be odd.)  Keurig had raised genuine issues of material fact, particularly with respect to actual confusion (it had a survey, as to which Sturm’s criticisms went to weight rather than admissibility, along with consumer testimony/complaint evidence).  For whatever reason, this opinion did not separately resolve the nominative fair use defense, despite the fact that the defense trumps confusion under the Third Circuit standard and that the court had previously ruled on nominative fair use.

Similarly, the court denied summary judgment on the trade dress claims.  Trade dress infringement requires the plaintiff to show nonfunctionality plus source significance and likely confusion.  Protecting an entire product line, however, is very difficult given the Third Circuit’s concern for protecting competition.  A plaintiff must first demonstrate that the line has a “recognizable and consistent overall look.”  Sturm argued that there was no consistent overall look across all K-Cup product lines; Keurig agreed, but argued that it was seeking protection for a narrower product line. It defined its trade dress as:

[1] an image of single-serve beverage cartridges, with at least one beverage cartridge depicted on its side and one beverage cartridge depicted right-side up, and a tagline below the image of the cartridges that states they are for use in Keurig brewers, [2] an image of spilled coffee beans, [3] an indication of the coffee's roast strength on a graded bar with shading varying from light to dark, along with an indication whether the coffee is caffeinated, [4] perforations for opening the package that form an opening that is tapered in a vshape and ending in a u-shaped tab, [5] prominent lettering displaying the name of the beverage, and [6] another face of the packaging providing a product story.

Its Green Mountain line did contain all these features, so there was a genuine fact issue on the existence of a consistent overall look. 

Again, this motion apparently didn’t address nonfunctionality or source signification; the court found issues of fact on likely confusion as well given the fact-intensive nature of the inquiry and Keurig’s evidence that Sturm’s marketing team “originally set out to model their packaging off the Green Mountain packaging display.”

Keurig also alleged false advertising in that “For use by owners of Keurig® coffee makers” was false and/or misleading because the Strum cartridges often fail to work properly with Keurig brewers.  The court again found genuine issues of fact.  Though the claim wasn’t literally or unambiguously false, Keurig presented evidence suggesting that the Strum cartridges fail at a significantly higher rate than those manufactured by plaintiff, which would be “unanticipated and unacceptable” to consumers.