Industria De Alimentos Zenu S.A.S. v. Latinfood U.S. Corp., No. 16-6576 (KM) (MAH), 2023 WL 4200169, -- F. Supp. 3d --- (D.N.J. Jun. 27, 2023)
Industria, based on Colombia, produces and distributes food
products under two relevant brand names: Zenú and Ranchera. They’re successful
brands: approximately $300,000,000 annually in sales of Zenú products and
$100,000,000 in sales of Ranchera products. But Industria does not advertise or
sell its Zenú or Ranchera products in the United States and there are no market
surveys specific to the United States for Zenú or Ranchera.
Industria has never had a registration for Ranchera; its
application was opposed by an unrelated third party and has been suspended; a
prior registration for Zenú was cancelled and Industria never sold any Zenú or
Ranchera products in the United States when it owned that registered trademark.
Latinfood’s predecessor in interest was founded by Zuluaga, who
lived in Colombia until he was approximately 17 years old. Zuluaga claimed
first use of Zenú in 2011; the predecessor company applied to register the mark
in 2013, with specimens using actual images of Industria’s products (though
Zuluaga claimed lack of knowledge either of Industria or the specimens filed on
its behalf by a filing service). The mark was registered in 2013; nearly two
years later, Zuluaga told the filing service that “we need to replace / change
the pic of the specimen loaded in the application.... [T]he one showed in the
application is not mine.”
Zuluaga told a designer to look at Industria’s website when
creating Latinfood’s packaging designs for Zenú and Ranchera and brought one of
Industria’s Ranchera labels to the designer’s office. I have tried to sort
plaintiff and defendant’s labels based on what the court says, but I might be
wrong (which is clearly the point).
I believe these four images are Industria's Ranchera:
Industria's Zenú (again, I think):
Latinfood did ultimately change the Zenú logo.
Some of Latinfood’s Zenú and
Ranchera product labels state that the product is manufactured or distributed
by “Zenú Products US, Inc.”; display the web address www.zenu.us.com; and
contain the phrase “Linea de Exportacion,” which translates to “exportation
line.” Latinfood does not export its Zenú or Ranchera products outside the
United States. In 2016, the Latinfood website contained the phrase “We have
products from” followed by marks of imported brands, among which was an image
of Industria’s Zenú mark. Advertisements made for Latinfood Zenú products used
the phrase “una deliciosa tradición,” which translates to “a delicious
tradition.”
One supermarket sold Latinfood’s products in an aisle
designated for “Hispanic and Latin imported goods,” despite having another
aisle designated for similar goods made in the U.S. After a sales manager for Cordialsa
visited the supermarket and told the manager that he was “surprised to find”
Zenú-marked products at the store, it ceased carrying Latinfood’s products,
though the reason was unclear.
The extent of Industria’s plans for US sales and the reason
for Industria’s decision not to import its products was “heavily disputed” by
the parties. Prior import plans in 2010-11 were paused. Industria became aware
of Latinfood’s Zenú and Ranchera products sometime between October 2013 and
September 2014. Its cancellation petition for Zenú has been suspended during
this litigation.
Inter American Convention for Trademark and Commercial
Protection: Industria sought cancellation of the registration and priority in
the US under the IAC, as well as an injunction against “unfair competition.” [I’m
not sure how we should think about Article III standing for purposes of
injunctive relief—it seems clear there’s standing to contest the registration,
but is there sufficient injury/redressability for an injunction if there’s no
pending use in the US?]
Latinfood argued that the IAC claims were barred by territoriality.
“Here, the U.S. has purposely breached the territoriality principle by entering
into mutual treaty obligations with certain foreign nations. The IAC is a
self-executing treaty, having the force of law by virtue of its enactment. The
IAC has thus been recognized as an exception to the territoriality principle.”
And it creates a private cause of action. Industria didn’t need to comply with §44(d)
in order to claim rights under the IAC.
Latinfood won summary judgment on the claim under Article 7,
whose sole remedy is to grant priority. Industria clearly conceded that its IAC
claims weren’t based on a claim of priority rights in the US. Also, because Latinfood registered the Zenú
mark in the U.S., Industria was barred from using Article 7 to gain priority
over the Zenú mark for itself.
Article 8 grants the owner of a mark the “right to apply for
and obtain the cancellation or annulment of the interfering mark.” This
relevantly requires that the owner had legal protection for its mark in another
state and the other party knew of the owner’s use for the specific goods to
which it applied the mark before it adopted the mark. (There’s another route,
not available here, when the mark owner was already trading in marked goods in
the country in which cancellation was sought.)
Summary judgment for Industria was appropriate: It showed
legal protection in Colombia prior to Latinfood’s application, and the evidence
of knowledge of use on the same goods was “overwhelming and one-sided.” “Latinfood
cannot shirk responsibility by simply stating that Mr. Zuluaga was unaware of
the contents of the application he signed.” (There was other evidence of
knowledge too.) The same goods requirement was satisfied even though the
parties’ lists of food items didn’t correspond “precisely” or “item-for-item.” “Latinfood’s
registration covers various meat and fish products, which would fall within the
plain meaning of ‘meat, fish, poultry and game’ covered by Industria’s
registration.”
The order was temporarily stayed pending full authentication
of the Colombian registrations.
Under Article 17 of the IAC, Industria needed to show,
relevantly, that Latinfood’s interfering mark “may lead to error or confusion
in the mind of the consumer” with respect to Industria’s commercial name. The
court found an issue of fact and denied summary judgment on likely confusion
(see below).
Article 18 grants the right to “apply for and obtain an
injunction against the use of any commercial name or the cancellation of the
registration or deposit of any trade mark.” (The injunction-against-use
provision is where there may be an Article III problem, it seems to me.) This relevantly
requires a showing that Latinfood’s interfering name or trademark is “identical
with or deceptively similar to” Industria’s commercial name “already legally
adopted and previously used in [Colombia] in the manufacture, sale or
production of articles of the same class”; and prior to Latinfood’s use or
adoption of the name or mark, Industria used and continues to use the
“commercial name adopted and previously used” for the “same products” in
Colombia. But it does not seem to require harm. Still, the court granted
summary judgment for Industria (conditional on authenticating the registration).
Lanham Act (and parallel NJ Fair Trade Act): Here too there
may be standing problems. The TM part of this might need revisiting in light of
Abitron; the court earlier held that use of a mark in the US wasn’t
required to bring Lanham Act claims, but subsequently Meenaxi Enterprise, Inc.
v. Coca-Cola Company, 38 F.4th 1067 (Fed. Cir. 2022), demanded injury to sales
or reputation in the US and held that “nebulous future plans for U.S. sales
cannot be the basis for a Lanham Act claim.” [Dawn Donut, but for
extraterritorial use.]
So, did Industria satisfy Lexmark? There were genuine
issues of fact on (1) whether Industria had concrete plans to enter the United
States market; and (2) whether Industria’s commercial injury was proximately
caused by Latinfood’s actions. There was insufficient evidence of reputational
injury as an alternative theory; Industria didn’t provide any evidence even
showing that it had any particular US reputation to be harmed.
Industria argued that Latinfood blocked its entry into the
US market, and a jury could credit its evidence, but there was also evidence
that it couldn’t enter the US market because of various regulations.
False advertising: Industria argued that deception could be
presumed from literally false statements that Zuluaga “convinced a major
product manufacturer in Colombia to sign an exclusive distribution and
importing rights agreement for the tri-state area”; his statement to a supermarket sales associate
that he had Colombian products; and Latinfood’s website stating in substance
that it offered Industria’s Zenú products. For the first two, Industria failed
to show literal falsity. Among other things, the sales associate testified that
Zuluaga did not mention the names of the Colombian products (is that even
commercial advertising or promotion?). But the third statement was literally
false.
As evidence of deception, Industria submitted evidence that one
of Latinfood’s distributors believed that Latinfood’s products were associated
with Industria’s products. Also, a Twitter user sent a message to Industria’s
Twitter account with a picture of Latinfood’s Zenú and Ranchera products and
asked whether Industria had “a sales franchise for beer sausage and ranchera
sausage that they are selling in New York and New Jersey and Florida, as
so-called Colombian sausages.” Industria’s advertising agency manager,
responded that the products are not Industria’s, to which the alleged customer
replied “So why are they using your brand? This makes Colombians abroad get
tricked.” A supermarket sales associate testified at deposition that
Latinfood’s products were sold in a store aisle with other Hispanic or
Latin-sourced products, rather than in an aisle with products made in the U.S. A
supermarket store manager testified that Zuluaga had a reputation for selling
Colombian products and that Zuluaga told him that Zenú was a brand known in
Colombia. And of course, Latinfood’s packaging resembles and implies an
affiliation with Industria. The packaging also includes the line “Linea De
Exportacion,” which translates to “exportation line.”
The court found that Industria’s argument for false
advertising “falls on the wrong side of the line between a false association
claim and a false advertising claim. On these facts, any mistaken belief that
Latinfood’s products were Industria’s products depends on evidence of a false
association between the brands, which is distinct from a false advertising
claim.”
The use of “exportation line” was arguably the exception,
but “[o]ne country’s exportation … is another’s importation, and the meaning is
unclear.” There was no evidence of a tendency to deceive.
What about injury? To get injunctive relief, a plaintiff has
to prove likely injury. But there was no evidence that the only actionable
statement—Latinfood’s use of Imdustria’s logo on its website in 2016—was likely
to cause injury. “[N]o reasonable jury in 2023 could conclude that Latinfood’s
use of Industria’s logo in 2016 is likely to cause damage to Industria in the
future.” Summary judgment for Latinfood.
Trade dress infringement: Summary judgment denied; I’m going
to skip most of the discussion because, sadly for the hardworking district
court, I think Abitron does require revisiting it, even if the trade
dress is inherently distinctive and was copied. Without a reputation in the US,
I don’t see how there can be confusion in the US.
On strength, Industria conceded that it didn’t actively
advertise in the US, but submitted evidence that its trade dress had been “seen”
by US residents and that its websites have been visited by US users “thousands”
of times 2012-2017, which “may indicate at least some commercial strength of
its trade dress.” (Later, the court noted, “there are no products for sale on
those websites and there is no indication that Industria sells products to
United States consumers either through its websites or in stores.”) In light of
the size of the food market, that’s a bit hard to credit. Citing domestic precedent,
however, the court reasoned that “the mark’s strength in other markets is
relevant.”
Other evidence of actual confusion, besides that noted
above, was that, sometime in or after 2014, a Facebook user posted in a group
titled “WikiWomen in Medellin” that she purchased “ranchera sausages” at an
unidentified location in the United States and that “they say” that “Zenú set
up a plant in New York for the Colombia market in the U.S.A.” And the copying
here could also lead to an inference of deception. “The fact finder might also find it
significant, however, that for a relevant period of eight years, Industria was
able to provide only three somewhat equivocal instances of customer confusion.”
Did intentional copying show intent to confuse? A jury could
go either way.
Trademark infringement/false association: There wasn’t
sufficient evidence that Industria owned the Zenú or Ranchera marks for
purposes of the trademark infringement claim. (I don’t quite get how it could
show ownership of the trade dress in the US but not ownership of the word
marks.) Summary judgment for Latinfood.
Cancellation for fraud: Industria wasn’t required to
establish United States trademark rights to petition for cancellation of
Latinfood’s Zenú mark. A trademark application is a “legitimate commercial
interest,” which satisfies the “real interest” requirement, and “blocking” an
application can satisfy the belief of damage requirement. It was entitled to
summary judgment because Zuluaga knew that Industria had a prior right. (This is
inconsistent with the holding above that Industria didn’t have US rights:
Zuluaga signed a declaration stating “to the best of his/her knowledge and
belief, no other person, firm, corporation, or association has the right to use
the mark in commerce, either in the identical form thereof or in such near
resemblance thereto as to be likely when used on or in connection with the
goods/services of such other person, to cause confusion, or to cause mistake,
or to deceive.” We know this means US commerce, so his knowledge of the Colombian
rights wouldn’t matter.)
But there was also fraud in using Industria’s products in
photos purporting to show Latinfood’s use. Industria showed that Latinfood
never used the Zenú mark in commerce prior to filing its application.
Copyright: The Third Circuit applies the discovery rule to
the limitations period of three years. Industria filed its copyright
infringement claims on April 21, 2017. Its witness testified that Industria
found out about Latinfood’s use of the Zenú mark in or around October of 2013. It
was put on notice of the need to investigate and the limitations period began
to run then for those claims, but copyright infringement is a continuing
violation so it could reach back three years prior to filing, and also Latinfood
didn’t show it was entitled to summary judgment on the limitations period as to
the Ranchera mark. (Not clear from this discussion if the copyright claims are
really for copyright in the logos or cover the labels.)
The tortious interference counterclaim failed; it related to
one supermarket that removed Latinfood’s Zenú products. Assuming that Industria’s
assertion of its trademark rights led to this removal, Industria had a
substantial basis for its claims, such that “even if its position is not
ultimately borne out, it does not meet the high bar of malice.”
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