Tuesday, July 25, 2017

"Local" can be falsifiable representation of fact

Bimbo Bakeries USA, Inc. v. Sycamore, No. 13-cv-00749, 2017 WL 3089011 (D. Utah Apr. 28, 2017)

Leland Sycamore invented the process and formula for making Grandma Sycamore’s Home-Maid Bread and subsequently received federal trademark protection for part of the packaging’s design.  Leland ultimately sold Grandma Sycamore’s to Bimbo.  Bimbo sued Leland’s son and related entities for misappropriation of trade secrets, trademark infringement, and false advertising based on their sales of Grandma Emilie’s bread.  Though the recipe changed in 2013, Bimbo alleged that a person involved in developing the new recipe (now sold under a new brand name) learned the secret from Leland. In July 2012, defendant U.S. Bakery adopted a new tagline for its products, “Fresh. Local. Quality,” which provided the basis for the false advertising claims.

Among other things, the court held that U.S. Bakery’s use of additional ingredients not included in the Grandma Sycamore’s recipe didn’t absolve it from misappropriation liability.  Still, whether it used Bimbo’s purported trade secret was disputed.  Infringement claims also avoided summary judgment.

False advertising: Bimbo argued that the U.S. Bakery tagline “Fresh. Local. Quality” was false in Utah because U.S. Bakery neither maintained a baking facility in the state of Utah nor contracted with a Utah facility to manufacture its bread products. U.S. Bakery argued that the tagline wasn’t sufficiently definite to be a false designation of origin and wasn’t attributable to the relevant product. 

The court disagreed.  While the US Department of Agriculture has concluded “[t]hough ‘local’ has a geographic connotation, there is no consensus on a definition in terms of the distance between production and consumption,” Bimbo has provided surveys showing that the tagline “local” was misleading and material to potential purchasers. “Because the term local does not carry a set definition, whether the term is false or misleading is a question appropriate for the fact finder.”  [This really skips over the key question: does the term have a sufficiently consistent definition among the relevant consumers to measure its truth or falsity?  “Good” doesn’t have a set definition either—but it’s nonactionable puffery.]

As for whether the tagline was actually used on relevant products, U.S. Bakery argued that shelf-liners saying “Freshly Baked in Utah” were only used for products that were not baked in Utah once, when a product was mis-shelved (there are apparently U.S. Bakery buns baked in Utah for which the slogan was not problematic).  U.S. Bakery argued that Bimbo couldn’t prove that this was “systematic” (which would be “advertising or promotion”).  However, Bimbo’s sales director testified that he saw the shelf liners used in Utah in 2014 during a time that he understood that U.S. Bakery did not have a bakery in the state, creating a genuine factual issue.

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