Sweet Street Desserts sued Better Bakery for violations of
the Lanham Act, common law unfair competition, breach of contract, unjust
enrichment, and misappropriation of Sweet Street's trade secrets. Better Bakery
successfully moved to dismiss many of the claims.
Sweet Street, which engages in R&D, production, and
distribution of speciality baked goods, worked with Better Bakery to develop a
new pretzel sandwich/stuffed pretzel, aka the “Sweet Street Pretzel Sandwich.” (Better Bakery allegedly had already tried
unsuccessfully to make a prototype before the parties agreed to work together
and executed a confidentiality agreement.)
The complaint alleged that the stuffed pretzel had unique design
features and visual appeal: showing the “stuffed” contents through distinctive
angled slits. Sweet Street alleged that
its expertise was important in “amplify[ing]” the quality, appeal, and
distinctiveness of the product. The
relationship soured; Sweet Street alleged that Better Bakery stole its secrets
and sold a “knock-off” on a large scale, including to many Sam’s Clubs. The knock-offs allegedly used the design
elements created by Sweet Street and protected by the confidentiality
agreements, including the wide top slits.
Along with its trade secret/breach of contract claims, Sweet
Street alleged reverse passing off because Sweet Street was “solely responsible
for the creation, design, testing, and production of this successful and unique
product.” The court pointed out that
this claim was brought “in the face of … clear guidance from the Supreme
Court”: Dastar says that “origin”
means the producer of tangible goods, not the author of any idea, concept, or
communication embodied in those goods.
Better Bakery was the origin of the product at issue and sold it under
its own name.
Sweet Street also alleged false advertising based on the
fact that the products were labeled and branded by Better Bakery, even though
the product concept wasn’t created, developed, or produced by Better
Bakery. While the complaint didn’t
specify what Better Bakery statements were allegedly false or misleading, the
court presumed that Sweet Street contended that the mere act of putting the
product on the market was an attempt to misled the public. It was clear that Sweet Street’s complaint
was “based solely on the defendant's alleged false attribution of the
authorship of the pretzel sandwich.” The
harm alleged was that the public would wrongly believe that the original
concept came from Better Bakery and not Sweet Street. But false attribution of
authorship/inventorship isn’t actionable as false advertising because it doesn’t
concern the nature, characteristics, or qualities of the goods and because such
a cause of action would interfere with patent and copyright law (citing Baden
Sports, Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed.Cir. 2009) and Sybersound
Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir. 2008)).
Nor could the same arguments sustain a claim for common law
unfair competition, since Pennsylvania law tracks the Lanham Act (and, I should
note, would be conflict preempted if it purported to give a right of action in
this type of case).
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2 comments:
What is meant by this, from the end?
"(and, I should note, would be conflict preempted if it purported to give a right of action in this type of case)."
I don't think the Lanham Act pre-empts any State Law Claims.
Anon, the rationale of Dastar was that interpreting "origin" in the Lanham Act to mean "origin of ideas" would conflict with the Copyright Act. That's not preemption because both are federal laws, but if a state trademark/unfair competition law purported to cover "origin of ideas" it should by the same rationale be conflict preempted, not by the Lanham Act but by the Copyright Act, just as the Patent Act would preempt state trademark law purporting to protect functional trade dress (see Sears/Compco). The Lanham Act does preempt state law claims in one circumstance: state law dilution claims against registered marks.
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