Court Opinion

ID: 38310
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:05:56+00
Date Added: 2024-06-11T17:15:57.894690
License: Public Domain

United States Court of Appeals
                                                                                 Fifth Circuit
                                                                              F I L E D
                   IN THE UNITED STATES COURT OF APPEALS
                                                                                May 18, 2005
                               FOR THE FIFTH CIRCUIT                       Charles R. Fulbruge III
                                                                                   Clerk

                                      No. 04-60101

      BLENDCO, INC.,

                                                       Plaintiff-Appellant,
                                                       Cross-Appellee,

                                          versus

      CONAGRA FOODS, INC., ET AL.,

                                                       Defendants,

      CONAGRA GROCERY PRODUCTS COMPANY,

                                                       Defendant-Appellee,
                                                       Cross-Appellant.

                   Appeal from the United States District Court for
                        the Southern District of Mississippi
                           (USDC No. 2:02-CV-544-PG)
          _________________________________________________________

Before REAVLEY, JONES and GARZA, Circuit Judges.

PER CURIAM:*

      *
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
       We have reviewed Blendco’s appeal and ConAgra’s cross appeal, and affirm the

judgment of the district court. We address below (in no order of importance) issues

relating to liability and damages.

A.     Liability

       We do not agree with ConAgra that it was entitled to judgment as a matter of law

because Blendco’s product, “Better-N-Butter,” is descriptive. Blendco maintains that the

jury properly found that its name was suggestive and therefore did not require proof of

secondary meaning. The distinctiveness of a mark is a fact question for the trier of fact.

Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 526, 537 (5th Cir. 1998). The jury did not

clearly err in finding that Better-N-Butter was suggestive rather than descriptive. A mark

is descriptive if it “identifies a characteristic or quality of an article or service, such as its

color, odor, function, dimensions or ingredients.” Id. at 540 (quoting Zatarains, Inc. v.

Oak Grove Smokehouse, Inc., 698 F.2d 786, 790 (5th Cir. 1983)).

       In Zatarains, we held that a district court did not clearly err in finding that the

“Fish-Fri” mark for a fish frying batter mix was not subject to trademark protection

because it was descriptive. The court considered four tests. First was the “dictionary

test,” under which the dictionary definition is considered. Id. at 792. This test is

inapplicable because “Better-N-Butter” is not a standard dictionary term. The second test

is the “imagination test.” Under this test, if the term “requires imagination, thought and

perception to reach a conclusion as to the nature of the goods,” it is considered

suggestive. Id. (internal quotation marks omitted). Under this test, we found “Fish-Fri”

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descriptive because “[t]he connection between this merchandise and its identifying

terminology is so close and direct that even a consumer unfamiliar with the product

would doubtless have an idea of its purpose or function.” Id. Under the imagination test,

we think “Better-N-Butter” might well mean to the average consumer that the product

was some kind of butter substitute, which it is. However, we note that ConAgra’s own

expert found in a survey that only 22 percent of respondents, when asked what the words

“Better ‘N Butter” meant, gave answers indicating a butter substitute, and only one

percent answered “oil based.” Both products in issue are oil-based butter substitutes.

Even when asked what the words “Better ‘N Butter” on a bulk container or package of

butter substitute product would “tell you about the product,” only 33 percent of survey

respondents answered “butter substitute.”

       The third test under Zatarains is “whether competitors would be likely to need the

terms used in the trademark in describing their products.” Id. at 793 (internal quotation

marks omitted). Under this test, we found that a merchant who made a batter mix for

frying fish would likely find “fish fry” a useful term, but in the pending case, a butter-

flavored oil would not likely need or even find useful the exact term “Better-N-Butter” or

a similar term in its name. “Liquid margarine,” “buttery blend,” “I can’t believe it’s not

butter,” or many other terms could be used. “Better” is a wholly unnecessary term for

describing such a product. “Margarine” could be readily substituted for “butter” in the

name for a butter flavored oil, and the record contains examples of competing products

that use names such as Whirl, Phase, and Savory.

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       The fourth test is “the extent to which a term actually has been used by others

marketing a similar service or product.” Id. In Zatarain’s, the evidence showed that “a

number of companies other than Zatarian’s have chosen the word combination ‘fish fry’

to identify their batter mixes.” Id. In the pending case, there are only the two instances

of Blendco and ConAgra using “better than butter” names for a nondairy butter-flavored

oil. ConAgra points to evidence that another competitor, Sysco, stated in advertising that

its product is “for those who know better than butter,” but these words do not denote the

actual name or brand of the Sysco product, Imperial Butter-It.

       In short, the various Zatarains tests do not uniformly point to Blendco’s mark as

descriptive, and we cannot say that the jury clearly erred in finding that Blendco’s

“Better-N-Butter” name is suggestive rather than descriptive.

B.     Damages

       Blendco complains that the district court erred in its measure of damages. The

district court’s discretion in fashioning monetary relief in trademark actions is unusually

broad. Any award of profits is “subject to the principles of equity” under the Lanham

Act. 15 U.S.C. § 1117(a). “An award of the defendant’s profits is not automatic, and is

committed to the discretion of the district court, whose decision we review for an abuse

of discretion.” Pebble Beach, 155 F.3d at 554 (citations omitted).

       We cannot say that the district court reversibly erred in limiting damages to

ConAgra’s lost profits on sales to customers of both Blendco and ConAgra, given the

factual circumstances of this case. The court allowed profits on sales of ConAgra’s

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Better ‘N Butter to any ConAgra customer that had ever used Blendco products,

irrespective of whether the customer was actually confused by the similar names. The

willfulness of the infringement in an important factor in deciding whether lost profits are

appropriately awarded but is not a prerequisite to such an award. Quick Techs., Inc. v.

Sage Group PLC, 313 F.3d 338, 349 (5th Cir. 2002). We have also stated that

       relevant factors to the court’s determination of whether an award of profits
       is appropriate include, but are not limited to, (1) whether the defendant had
       the intent to confuse or deceive, (2) whether sales have been diverted, (3)
       the adequacy of other remedies, (4) any unreasonable delay by the plaintiff
       in asserting his rights, (5) the public interest in making the misconduct
       unprofitable, and (6) whether it is a case of palming off.

Pebble Beach, 155 F.3d at 554.

       The evidence showed that ConAgra performed a comprehensive federal and state

trademark search and did not discover Blendco’s Better-N-Butter product name.

ConAgra independently created its Better ‘N Butter name and was not aware of

Blendco’s product at the time. Blendco had not registered its trademark at the time

ConAgra introduced its competing product. Although there was some evidence that

Blendco lost sales of its product to the ConAgra product, there was no evidence that

ConAgra chose its product name with the intent of deceiving customers into thinking that

they were buying Blendco’s product. Blendco presented no proof of its lost profits.

ConAgra discovered the alleged infringement in 1999 but did not file suit until 2002.

While Blendco advised ConAgra of its trademark claim when it discovered the use of

ConAgra’s similar name and product, ConAgra took the position, based on the view of

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legal counsel, that neither product name was subject to protection because both names

were merely descriptive, a colorable if ultimately unsuccessful defense. The district court

granted injunctive relief to Blendco and there is no indication that ConAgra has violated

or will violate that injunction.

       Furthermore, Blendco’s product was limited geographically to only seven states,

while ConAgra had marketed its product nationwide and had much larger sales.

Allowing damages measured by all of ConAgra’s profits or sales would have granted a

windfall to Blendco that we do not see as mandated by law or essential to principles of

equity in these circumstances.

       On the other hand, we do not agree with ConAgra’s cross appeal that the modest

award of $13,700 in money damages was unwarranted. ConAgra continued to use its

nearly identical product and name after notice of infringement by Blendco. While

ConAgra insists that it did not believe either its Better ‘N Butter product name nor

Blendco’s Better-N-Butter product name were subject to trademark protection, this view

of the law proved erroneous, and Blendco points out that ConAgra did affix a trademark

notice to its Better ‘N Butter name. The monetary award was within the district court’s

discretion.

       Blendco argues that the limitation on damages imposed by the district court was

improper because this limitation was not raised in ConAgra’s answer or other pleadings

or in the pretrial order. Blendco in effect argues that ConAgra was required, by the time

of the pretrial order, to anticipate the district court’s ultimate decision under equitable

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principles to limit damages to ConAgra’s profits on sales to common distributors. We do

not hold a defendant to such clairvoyance. The district court’s decision was not based on

a recognized “common distributor” affirmative defense that ConAgra was required to

plead in its answer or assert in the pretrial order. Nor do we think that the parties in these

circumstances can limit the district court’s statutory discretion to fashion an equitable

remedy that consists of injunctive relief and limited money damages by what they include

or fail to include in their joint pretrial order or earlier pleadings.

       Blendo complains that the district court erred in allowing a ConAgra marketing

manager, Frederick Wood, to testify that ConAgra’s profit was $1.89 per case. We

review a trial court’s evidentiary rulings only for abuse of discretion. United States v.

Clements, 73 F.3d 1330, 1334 (5th Cir. 1996). We have recognized that a corporate in-

house lay witness can testify about lost profits if he has sufficient personal knowledge of

the company’s business operations. DIJO, Inc. v. Hilton Hotels Corp., 351 F.3d 679,

685-87 (5th Cir. 2003). ConAgra points to trial evidence, which we have reviewed,

indicating that Wood was ConAgra’s marketing manager for Better ‘N Butter, and was

knowledgeable of the Better ‘N Butter product and its related internal financial

information. Blendco was allowed to examine Wood at length regarding his basis for and

confidence in the $1.89 figure and related financial information. We see no abuse of

discretion.

       AFFIRMED.

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