Source: https://ipmall.law.unh.edu/content/ttab-trademark-trial-and-appeal-board-1-nestle-company-inc-v-nash-finch-company-may-28-1987
Timestamp: 2019-04-20 01:14:17+00:00

Document:
*1 THE NESTLE COMPANY, INC.
Opposition No. 68,330 to application Serial No. 327,388 filed September 10, 1981.
Ward, Lazarus, Grow & Cihlar, for The Nestle Company, Inc.
An application has been filed by Nash-Finch Company to register DELI QUIK as a trademark for delicatessen products, namely, vegetable salads, bean salads, fruit salads and meat based sandwich spreads in International class 29, and for delicatessen products, namely, macaroni salads, flavored gelatin salads, puddings and sandwiches in International class 30. [FN1] The term DELI has been disclaimed apart from the mark as shown.
The record consists of the pleadings, the file of applicant's application, a number of applicant's responses to discovery requests propounded and relied on by opposer, a number of dictionary definitions relied on by opposer, status and title copies of registrations for the marks QUIK for chocolate milk; [FN6] QUIK for chocolate bars; [FN7] QUIK (stylized) for chocolate and strawberry flavorings for use in food and beverages [FN8] and NESTLE QUIK (stylized) for powdered, sweetened cocoa intended to be used to make chocolate milk, chocolate sauce, chocolate frosting and the like, [FN9] a number of discovery depositions taken by opposer and relied on by opposer, a number of opposer's responses to discovery requests propounded and relied on by applicant, a status and title copy of applicant's prior registration DELI-QUIK for rendering technical aid and assistance in the establishment and/or operation of delicatessen departments in retail grocery stores, [FN10] a dictionary definition relied on by applicant, excerpts from a number of printed publications relied on by opposer, a number of third-party registrations relied on by applicant and testimony (and exhibits) taken by both parties. Both parties have filed briefs on the case and opposer has filed a reply brief. Both parties were represented at an oral hearing held before this panel.
*2 The essential facts established through competent testimony and other evidence from which we must decide the issues of likelihood of confusion and abandonment are not in dispute. Opposer is the nation's leading producer and seller of milk additives in syrup and powder form. These products are sold under the NESTLE QUIK and QUIK marks. In addition, opposer is the industry leader in sales of ready-to-drink chocolate milk under the QUIK and NESTLE QUIK marks. Opposer's use of the marks in connection with its powders began in 1949. Its use of the marks in connection with syrups began in 1982. Use of the marks on ready-to-drink chocolate milk began in 1982, on sugar-free powder in 1985 and on ice cream bars in 1985. Generally the ready-to-drink chocolate milk products are displayed in dairy sections of supermarkets and grocery stores with other milk products. The powders, syrups and sugar-free products are generally shelved near coffee, tea and cocoa type goods.
Opposer's products under the NESTLE QUIK and QUIK marks are distributed nationally and are extensively advertised on television (since 1949), on radio (since 1985) and in newspapers. The newspaper promotional advertising is done jointly with the grocery trade and has been ongoing since each product has been introduced. In virtually all print type promotional advertisements, the grocery store or other retail store advertises a QUIK or NESTLE QUIK product along with other products, including many products not produced or sold by opposer.
Opposer's sales and advertising figures were deemed confidential information and were introduced into the record pursuant to a stipulated protective order. Opposer's sales, however, are substantial, amounting to over $100 million annually for the last several years with advertising and promotion expenditures amounting to over $150 million since 1972.
Applicant is a wholesale food distributor to supermarkets and grocery stores primarily in the midwestern states of North Dakota, South Dakota, Nebraska, Kansas, Iowa, Minnesota and Illinois. Applicant services some 390 affiliated stores and, in addition, applicant owns and operates some 90 supermarkets, grocery stores or warehouse type markets. Both the company-owned and affiliated stores carry a full range of grocery items, including NESTLE QUIK and QUIK products.
Of the 390 affiliated stores and 90 company owned stores, some 92 stores have delicatessen departments offering a variety of food for consumption on or off the premises or for preparation at home with minimal effort. Applicant adopted and has continuously used, since approximately 1972, the service mark DELI-QUIK for the services of rendering technical aid and assistance in the establishment and/or operation of delicatessen departments in retail grocery stores. Applicant secured a registration for this service mark on November 11, 1975. In 1981, applicant began using DELI QUIK as a trademark for various delicatessen products sold in the company-owned or affiliated stores, including those goods recited in the opposed application. Applicant's stores, both company-owned and affiliated, extensively advertise their products, including the DELI QUIK delicatessen products, through newspapers, handouts and the like. While the record shows that NESTLE QUIK and QUIK products are advertised by applicant through its stores, there is no evidence that opposer's products have ever been advertised along with any DELI QUIK goods.
*3 Opposer has shown that it has standing to oppose the mark sought to be registered by virtue of proving proprietary rights in the NESTLE QUIK and QUIK trademarks and by showing a reasonable basis for its belief in damage, namely, a claim of likelihood of confusion that is not wholly without merit. See: Lipton Industries, Inc. v. Ralston Purina Co., 670 F.2d 1024, 213 USPQ 185 (CCPA 1982). Moreover, there is no issue of priority in this case in view of the introduction into evidence of competent testimony and supporting documentary evidence demonstrating opposer's use of the marks in connection with powders since 1949. The only questions to be determined, then, are the statutory grounds of abandonment and likelihood of confusion.
It is opposer's contention that applicant has abandoned any rights it may have had in the DELI QUIK trademark as a result of applicant's conduct in allowing use of the mark by others without retaining control over the nature and quality of the goods sold under the mark. Specifically, opposer asserts that no written license agreement exists between applicant and the affiliated stores using the mark which specifically refers to the DELI QUIK trademark; that no payment of money has ever been required to use the mark; that while applicant provides a recipe book, the book is not distributed to all affiliated stores using the mark and the use of recipes in the book is not mandatory; that stores using the mark are encouraged to develop their own recipes and do not need prior approval to sell products under the mark using such recipes; that no records are maintained by the stores indicating what new recipes have been used or what types of products are sold under the mark; that participation by affiliated stores in applicant's delicatessen training program is not mandatory and no records are kept of deli personnel training; that there is no requirement that stores using the DELI QUIK mark must buy goods or ingredients from applicant and there is no approved list of ingredient suppliers or program to monitor the ingredients and that periodic inspections by applicant of stores using the mark are incomplete and insufficient to ensure control over the quality of the products sold. In view of the foregoing, opposer maintains that the absence of quality control results in a naked license situation which has rendered any trademark rights void and unenforceable and has caused the mark to lose its significance as an indicator of origin and has become abandoned.
It is applicant's position, on the other hand, that it controls the nature and quality of the goods through training delicatessen personnel, through controlling the purchase of the majority of the raw materials and through inspection by applicant of products sold under the DELI QUIK mark.
The record demonstrates that when a store becomes affiliated with applicant, it enters into a contractual agreement setting forth the various conditions of affiliation. While there is no written license agreement dealing specifically with DELI QUIK per se, it is apparent that an affiliated store electing to participate in the merchandising program offered by applicant becomes a licensee to use applicant's various trademarks, including DELI QUIK.
*4 Applicant's activities in connection with controlling the nature and quality of the goods sold under the mark include training of licensees. A deli training manual exists for purposes of training corporate store and affiliated store personnel. The manual concerns various subjects ranging from advice in maintaining product displays to storage and handling of food, sanitation and the like. A six-month training program is offered to deli managers and assistant managers. Attendance is mandatory for company store personnel and voluntary for affiliated store personnel. The manual is also used in connection with seminars held approximately four times a year for deli personnel. These seminars are not mandatory for affiliated store personnel. While not required, it is recommended by applicant that a copy of the manual be kept on all delicatessen premises.
In addition to the foregoing training, applicant distributes recipe books for its DELI QUIK products offered in the stores. It is not mandatory that the recipes in the recipe book be followed by the individual stores and, in fact, development of new recipes is encouraged and the recipe book is often expanded by additional recipes that are developed. Also available to stores is a sandwich program manual providing specifications in connection with a variety of sandwiches. Most of the stores using DELI QUIK have received the sandwich manual and the recipe book. Applicant also regularly issues delicatessen merchandising bulletins to stores with delicatessen departments, involving sales promotion ideas, new products, recipes etc.
With respect to purchase of raw materials, the record is clear that it is not required that licensees purchase all materials from applicant although it is recommended that they do so and over 80% of the raw materials used in DELI QUIK products are, in fact, purchased from applicant. Applicant will assist in recommending food suppliers especially when it concerns items not handled by applicant but there is no list of approved suppliers.
Finally, with respect to inspection of DELI QUIK products, applicant has shown that zone managers regularly inspect company and affiliated stores to observe operations and handle problems. The inspector is responsible for checking the DELI QUIK operation and ensures that standards are being maintained. The zone managers typically visually inspect the food and surrounding conditions, check code dates, taste foods if needed and fill out reports covering various aspects of the delicatessen operation. Applicant also employs a deli merchandiser who visits the delicatessen department of each store on a regular basis and oversees the operation of these departments. This person checks sandwiches to ascertain whether they're being made correctly; he checks the ingredients put into the sandwiches and also checks code dates, freshness, shelf life etc. The deli merchandiser also fills out a report on each deli department visited.
A mark is deemed to be abandoned, for purposes of the Trademark Act, when the course of conduct of the owner of the mark causes the mark to lose its significance as an indication of origin. This course of conduct includes acts of omission as well as acts of commission. In a licensing situation, the question to be determined is whether the licensor exercises sufficient control to guarantee the quality of the goods sold to the public under the mark. Whether, in fact, sufficient control is exercised is a question of fact in each case and the burden of proving lack of control or insufficient control is in the party claiming the abandonment. See: J. Gilson: Trademark Protection and Practice, § 6.01(6) (1984). Moreover, the prevailing view is that since abandonment is in the nature of a forfeiture, it carries a strict burden of proof. See: Gilson, supra, and cases cited therein at n. 30.
*5 In the present case, we note at the outset that the lack of a written license specifically pertaining to use of the DELI QUIK mark is not required. See: Land O'Lakes Creameries, Inc. v. Oconomowoc Canning Co., 330 F.2d 667, 141 USPQ 281 (7th Cir. 1964); Basic Inc. v. Rex, 167 USPQ 696 (TTAB 1970). We do not think there is any question but that applicant and its affiliated stores using the DELI QUIK trademark are in a licensor-licensee arrangement and the only question to be determined is whether the control exercised by applicant is insufficient to the extent that the mark must be deemed abandoned for purposes of the Trademark Act. In this regard, we readily acknowledge that the control exercised by applicant over the nature and quality of the goods sold under the DELI QUIK mark is far from complete. Deficiencies exist in a number of areas detailed by opposer, including the deli training program which is not mandatory for affiliated personnel, the recipes which are not required to be followed and in the purchasing of raw materials which do not have to be from applicant or from an approved supplier. However, notwithstanding these defects, the fact remains that applicant's activities with respect to the control over the nature and quality of the goods include training programs for deli personnel, ongoing periodic seminars for experienced personnel, providing a deli training manual made available for all stores, distributing recipe books, a sandwich program manual and periodic merchandising bulletins, providing over 80% of the raw materials to licensees and assisting licensees in recommending food suppliers and providing periodic inspections over all aspects of DELI QUIK operations by zone managers and by applicant's deli merchandiser where problems relating to cleanliness, taste, freshness etc. can be rectified. We think that while the foregoing activities do not amount to total control they are, when taken as a whole, adequate, in our view, to protect the public and to ensure the quality of the goods sold. We conclude that the acknowledged defects in the licensing arrangement are insufficient to justify an inference of abandonment. See: Stockpot, Inc. v. Stock Pot Restaurant, Inc., 220 USPQ 52 (TTAB 1983), aff'd. 737 F.2d 1576, 222 USPQ 665 (Fed. Cir. 1984). The cases cited by opposer in support of its position, namely, Ex parte Dan River Mills, Inc., 109 USPQ 68 (Com'r. 1956), Poole v. Kit Mfg. Co., 184 USPQ 302 (N. D. Tex. 1974) and Robinson Co. v. Plastics Research & Development Corp., 264 F. Supp. 852, 153 USPQ 220 (W. D. Ark. 1967) all involved licensing situations with no retention of control by the licensor and are, thus, easily distinguishable from the situation presented herein.
*6 Applicant has applied to register the DELI QUIK mark in connection with various delicatessen products comprising a variety of salads, sandwiches, sandwich spreads and puddings. It is opposer's position that confusion as to source or sponsorship is likely since opposer's QUIK mark is identical to the DELI QUIK mark except for the term DELI which, opposer asserts, is a generic designation as applied to food sold in delicatessen sections of grocery stores and which, therefore, has little, if any, distinguishing value; that opposer's goods are often consumed with other food products and all of the food products sold under the DELI QUIK mark could be consumed at the same time or at the same meal with opposer's products; that the respective products are all relatively low-cost items and promoted as impulse goods; that many of the DELI QUIK products, such as puddings, could be made with opposer's QUIK products as ingredients and that the respective products are all sold through the same channels of trade.
There is no dispute that both opposer's NESTLE QUIK and QUIK products and applicant's products are all food products available in the same supermarkets and grocery stores. The record shows that, in fact, applicant's wholesale food distributor operation carries opposer's goods and that opposer's goods appear in applicant's company-owned and affiliated retail grocery stores. Applicant has engaged in cooperative advertising programs in connection with opposer's goods and applicant has participated in a number of promotions of opposer's products, including displays and certain soda glass and recipe book offers. In our view, however, the same availability of different food products in the same stores carrying a wide variety of food items in insufficient, in and of itself, to warrant a finding of likelihood of confusion. Applicant's goods, by definition, are delicatessen products sold in delicatessen departments of stores and the products are all designed to be consumed with little or no preparation. Opposer's goods, on the other hand, essentially comprise powders and syrups for use as flavorings in other foods as well as ready-to-drink chocolate milk. Opposer's syrups and powders generally are shelved with other types of dry goods, such as cocoas, coffees and teas while the chocolate milk is stocked in the dairy departments. It is our view that while opposer has enjoyed substantial success and popularity with its products, applicant's products are so different in their characteristics that purchasers familiar with opposer's QUIK products would not be likely to believe that the salads, sandwiches, puddings and the like sold under the mark DELI QUIK in delicatessen departments of grocery stores were associated with opposer's QUIK products or that they were somehow related. On the contrary, we believe that purchasers of goods sold under applicant's DELI QUIK mark would view the mark as suggesting exactly what the mark is intended to suggest, namely, that these products are delicatessen products designed for fast or quick preparation and consumption. We readily concede the possibility that some of opposer's flavorings could be used as an ingredient in applicant's puddings. We further acknowledge that the record shows that some of applicant's DELI QUIK operations have sit-down areas where the food can be immediately consumed and that beverages are offered for sale in these locations. These beverages could conceivably include opposer's chocolate milk or other beverages such as cocoa made with opposer's flavorings. Notwithstanding these possibilities, we do not think purchasers would be likely to associate opposer's QUIK products and applicant's DELI QUIK products with the same source even if those purchasers were aware (and it is doubtful they would be) of the ingredients in the puddings or beverages or if they were aware of the brand of chocolate milk consumed at the delicatessen sit-down area. We decline to find likelihood of confusion in these circumstances based on what amounts to speculative, theoretical possibilities. We reach this conclusion fully recognizing the extensive sales enjoyed by opposer and the large amounts of advertising expenditures in connection with QUIK products, although we do note that some testimony exists evidencing a number of third-party uses of various food products sold under various trademarks which include the term QUIK.
*7 For the foregoing reasons, we conclude that there is no likelihood of confusion from the contemporaneous use of applicant's DELI QUIK mark for its enumerated delicatessen products and opposer's NESTLE QUIK and QUIK marks for its powders, syrups, chocolate milk and related products. We further conclude that the record fails to show that opposer's course of conduct with respect to licensing the DELI QUIK mark to others is of such a nature as to cause the mark to become abandoned.
Decision: The opposition is dismissed.
FN1. Application Serial No. 327,388 filed September 10, 1981.
FN2. The opposition was filed by The Nestle Company, Inc. Opposer, in a notice filed January 13, 1987, advised the Board that, since the institution of the opposition proceeding, opposer has changed its name to Nestle Foods Corporation.
FN3. The ground of abandonment was not pleaded by opposer either in the original opposition filed October 6, 1983 or in the amended opposition filed October 24, 1983. Nevertheless, it is clear from a review of the record that this issue was tried by the implied consent of the parties for purposes of Rule 15(b) FRCP. Accordingly, this issue shall be treated as if it had been raised in the pleadings.
FN4. It is clear from the record that applicant also denies the claim that any rights it may have had in the DELI QUIK mark have been abandoned.
FN5. Applicant, while introducing into the record a copy of its prior registration, has not advanced its 'added damage' defense by way of offering any proof. Accordingly, we will give no consideration to this argument other than to note that the owner of a mark cannot extend the use of its mark to goods not covered by its previous registration, where the result would be likelihood of confusion caused by similarity of that mark to a previously used mark for the same or related goods. See: Key Chemicals, Incorporated v. Kelite Chemicals Corporation, 464 F.2d 1040, 175 USPQ 99 (CCPA 1972); Haggar Company v. Hugger Corporation, 172 USPQ 253 (TTAB 1971).
FN6. Registration No. 1,250,614 issued September 6, 1983.
FN7. Registration No. 1,194,821 issued May 4, 1982.
FN8. Registration No. 1,112,418 issued January 30, 1979. Section 8 affidavit accepted. Section 15 affidavit received.
FN9. Registration No. 629,231 issued June 19, 1956. Renewed. Title in the foregoing four registrations is shown to be in Societe Des Produits Nestle S. A., a Swiss corporation. The record shows that this Swiss corporation is opposer's parent company and that opposer uses each of the registered marks in the United States pursuant to an exclusive license agreement.
FN10. Registration No. 1,024,850 issued November 11, 1975. Section 8 affidavit accepted. Section 15 affidavit received.

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