Tuesday, December 20, 2016

kefir confusion: court finds definition of little-known product to be up for grabs

Lifeway Foods, Inc. v. Millenium Products, Inc., No. CV 16-7099-R, 2016 WL 7336722, -- F. Supp. 3d – (C.D. Cal. Nov. 17, 2016)

Before the case was dismissed on statute of limitations/laches grounds, the court denied a preliminary injunction. Lifeway makes kefir products, while defendants make a non-dairy beverage that they called kefir made with coconut water. Typically, kefir is a dairy-based beverage.”  Lifeway argued that kefir was, by definition, dairy-based and thus defendants’ CocoKefir was falsely advertised.  Lifeway sent the relevant defendant a C&D in 2010, and again in 2012.  In 2011, the FDA also sent the defendant a warning letter stating that it believed the CocoKefir name may mislead customers because it could imply that the product was a dairy-based beverage. But, after CocoKefir’s response, the FDA in 2013 issued a close out letter stating that CocoKefir had addressed its concerns.

The court declined to grant a preliminary injunction.  Although Lifeway cited “a wide range of dictionary definitions and websites supporting its argument that kefir must contain dairy,” the court found these sources “minimally convincing,” given that kefir only recently rose to popularity. Because the market for kefir was relatively small and not yet fully developed, “these websites’ and dictionary’s definitions do not provide a convincing definition of kefir, but rather, a surface-level understanding of a relatively new product. No regulatory body, including the FDA, had agreed; the FDA decided not to take regulatory action.  Lifeway argued that kefir has a more historical and specific definition as a dairy-based drink than soy milk,” but also argued that it had spent “millions” of dollars branding its kefir as a dairy-based drink. If the meaning of kefir was so clear and ‘enshrined,’ it would seem unnecessary to spend millions of dollars specifically branding kefir as a dairy-based beverage.

Even if kefir was by definition dairy-based, making CocoKefir misleading, Lifeway didn’t show that a substantial number of consumers were likely to be misled.  A survey created by counsel wasn’t convincing, and neither were social media comments.

Nor could Lifeway show irreparable harm.  Lifeway argued that, because the market for kefir was relatively new and small, CocoKefir would cut into Lifeway’s sales. The court was unconvinced: CocoKefir is advertised as a vegan beverage, while Lifeway Kefir is a dairy product. This type of speculative evidence offered by Plaintiff regarding a possible loss of market share is insufficient to establish irreparable injury under Herb Reed.

The balance of equities didn’t favor Lifeways: forcing defendants to pull the product would be a serious harm, while Lifeway has survived seven years of competition with CocoKefir.

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