Court Opinion

ID: 810180
Source: CourtListenerOpinion
Date Created: 2012-10-16 17:08:50+00
Date Added: 2024-06-11T12:18:46.784196
License: Public Domain

REVISED October 16, 2012

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                  United States Court of Appeals
                                                                           Fifth Circuit

                                                                       FILED
                                                                   October 11, 2012
                                       No. 11-41105
                                                                     Lyle W. Cayce
                                                                          Clerk
GRUMA CORPORATION,

                                                  Plaintiff-Appellant
v.

MEXICAN RESTAURANTS, INC.,

                                                  Defendant-Appellee

                   Appeal from the United States District Court
                         for the Eastern District of Texas
                              USDC No. 4:09-CV-488

Before DAVIS, DENNIS, and HAYNES, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:*
       Plaintiff Gruma Corporation, a manufacturer of Mexican food product
which it markets nationwide under the MISSION trademark, sued the
defendant Mexican Restaurants, Inc., owner of a chain of restaurants using the
MISSION BURRITO mark, for infringement and dilution. The district court
found no likelihood of confusion between the plaintiffs and defendants marks

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
                                  No. 11-41105

and no dilution and dismissed Gruma’s case. Based on our conclusion that the
district court erred in its legal analysis of these claims, and because proper
application of the relevant factors favors Gruma, we reverse.
                                        I.
      On September 22, 2009, Gruma, a manufacturer of Mexican food products
sold nationally under the registered trademark MISSION, sued Mexican
Restaurants, Inc., the owner of a chain of Mexican fast-casual restaurants
operating in the Houston area. Gruma alleged trademark infringement and
unfair competition under the Lanham Act, 15 U.S.C. §§ 1114 & 1125(a)(1)(A),
and dilution under the Texas Anti-Dilution statute, Tex. Bus. & Com. Code §
16.29.      Gruma manufactures and sells Mexican food products including
tortillas, tortilla chips, taco shells, guacamole dip, and salsa under the
trademark MISSION. Since 1982, Gruma has obtained 29 federally-registered
trademarks, some with the word MISSION alone and some with the word
MISSION in a logo. The MISSION logo includes the word MISSION under a
Spanish style bell tower with a rounded top, usually using the colors red, orange
and white. Gruma sells its products nationwide in grocery stores or other retail
outlets, as well as directly to restaurants, schools and other institutions.
      Mexican Restaurants owns several different Mexican concept restaurants
in Texas and elsewhere, including the Houston based Mission Burrito
restaurants. The Mission Burrito restaurants first started as Mission Burritos
in 1995 and obtained a Texas trademark in 1997.             The restaurants are
considered fast-casual and serve tortilla chips, dips and salsa, and fresh tortilla-
based Mexican food items such as burritos, tacos, and quesadillas.             The
MISSION BURRITO logo is the top of a Spanish mission style church topped by
a cross in black and white. Throughout its existence, the title of the restaurant,
MISSION BURRITO, has generally been followed by a tagline, first “Fresh Food

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                                   No. 11-41105

Fast” and later “More choices. More flavor.” Mexican Restaurants obtained a
federal trademark for the logo and name in 2008.
      Pursuant to Federal Rule of Civil Procedure 39(c), the district court
convened an advisory jury in January 2011 to try issues relating to whether
Mexican Restaurant’s use of the MISSION BURRITO mark is likely to cause
confusion with or dilution of Gruma’s MISSION mark. The jury answered no to
both issues. The district court issued findings of fact and conclusions of law on
the issues, finding, like the advisory jury, that there was no likelihood of
confusion or dilution between the parties’ marks. Gruma appeals.
                                        II.
      The district court found that Gruma failed to establish a likelihood of
confusion between its MISSION trademark and Mexican Restaurant’s MISSION
BURRITO mark under federal law. We review questions of law de novo and
questions of fact for clear error. Elvis Presley Enters. v. Capece, 141 F.3d 188,
196 (5th Cir. 1998). The issue of likelihood of confusion is generally a fact
question. Id.
      However, "the 'clearly erroneous' standard of review does not
      insulate factual findings premised upon an erroneous view of
      controlling legal principles." When a likelihood-of-confusion factual
      finding is "inextricably bound up" in, or infected by, a district court's
      erroneous view of the law, we may conduct a de novo review of the
      fully-developed record before us.

Id.(citing Roto-Rooter Corp. v. O'Neal, 513 F.2d 44, 46-47 (5th Cir. 1975)
(reviewing the district court's fact-finding on a likelihood of confusion de novo
where it applied the incorrect legal standard)) (other citations omitted).
                                        III.
      The parties stipulated that Gruma owns a valid and protectible trademark
in MISSION that predates Mexican Restaurant’s use of MISSION BURRITO.
Thus, in this trademark infringement action under the Lanham Act, the central

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                                   No. 11-41105

question is whether Mexican Restaurant’s use of the MISSION BURRITO mark
is likely to cause confusion as to the “source, affiliation, or sponsorship” of
Mexican Restaurant’s products and services. Bd. of Supervisors for La. State
Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 473 (5th Cir.
2008).    “Likelihood” means more than a possibility; the plaintiff must
demonstrate a probability of confusion. Id. at 478. Case law is well settled that
the court should examine eight nonexclusive “digits of confusion” to determine
whether a likelihood of confusion is present:
      (1) the type of trademark; (2) mark similarity; (3) product similarity;
      (4) outlet and purchaser identity; (5) advertising media identity; (6)
      defendant's intent; (7) actual confusion; and (8) care exercised by
      potential purchasers. No digit is dispositive, and the digits may
      weigh differently from case to case, "depending on the particular
      facts and circumstances involved." The court should consider all
      relevant evidence.

Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009)
(citations omitted). “The absence or presence of any one factor ordinarily is not
dispositive; indeed, a finding of likelihood of confusion need not be supported
even by a majority of the . . . factors." Am. Rice, Inc. v. Producers Rice Mill, Inc.,
518 F.3d 321, 329 (5th Cir. 2008) (quoting Conan Properties, Inc. v. Conans
Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985)) (quotations marks omitted).
      Gruma argues that the district court correctly found that factors (1), (4),
(5), and (8) favor Gruma, pointing to a likelihood of confusion.            Mexican
Restaurants does not challenge these findings. However, Gruma argues that the
district court misapplied the law relating to factors (2) and (3), which should
favor Gruma, and erred in not fully analyzing factors (6) and (7), which factors
also favor Gruma or are at least neutral.

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                                  No. 11-41105

Factors found in Gruma’s Favor by the District Court -
      (1) the type of trademark - The district court found that this factor
favored Gruma because the MISSION mark is strong and distinctive. This is so
because the mark is arbitrary, meaning that the use of the familiar word
MISSION is used in an unfamiliar way (like Apple computers). The mark is also
commercially strong because it has achieved a high degree of awareness in the
marketplace. The mark is also in substantial exclusive use by Gruma, which
weighs in Gruma’s favor. This finding is clearly correct and is not challenged by
Mexican Restaurants.
      (4) outlet and purchaser identity - The district court found that
although the parties do not use the same retail outlets to sell their goods and
services, the consumers who purchase Gruma’s retail products substantially
overlap with the consumers who purchase Mexican Restaurant’s products and
services because both purchase Mexican food products. The likelihood of
confusion increases when two users of the mark compete directly for end-users
in the same market. Xtreme Lashes, LLC, 576 F.3d at 229. Again, the district
court correctly found that this factor favors Gruma.
      (5) advertising media identity - The district court found a significant
identity in the advertising media used by the parties. The district court correctly
found that this factor favors Gruma.
      (8) care exercised by potential purchasers - The district court
correctly found that because the parties’ products are inexpensive they would not
be purchased with a high degree of care as to their origin increasing risk of
confusion. The district court correctly found that this factor favors Gruma.

Disputed Factors -
      (2) mark similarity - The similarity of marks “is determined by
comparing the marks’ appearance, sound and meaning.” Elvis Presley Enters.,

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                                       No. 11-41105

141 F.3d at 201. The ultimate question is “whether, under the circumstances of
use, the marks are similar enough that a reasonable person could believe the two
products have a common origin or association.” Xtreme Lashes, LLC, 576 F.3d
at 228. Gruma argues that the district court erred in its analysis of this factor
by focusing on the differences between the two marks, rather than the
similarities. The district court noted that the MISSION BURRITO mark
contains additional words, burrito and also “fresh food fast” or later “more
choices, more flavor.” The district court also noted that the MISSION mark
appears with a bell tower, where the MISSION BURRITO mark appears with
the roof line of a mission style church. Also MISSION uses bright colors and
MISSION BURRITO generally uses black and white.
       We agree with Gruma that the descriptive words attached to Mexican
Restaurant’s use of the word MISSION –(T.T.A.B.) like “Burrito” and “Fresh
Food Fast” or “More choices. More flavor” – are relatively unimportant when
determining whether the marks are similar. Rather, it is clear from cases from
multiple sources that the dominant word or words in a mark should be the focus
of the analysis. In In re Golden Griddle Pancake House Ltd., 17 U.S.P.Q. 2d
1074 (T.T.A.B. 1990)1, the U.S. Patent and Trade Office’s Trademark Trial and
Appeal Board refused to register a mark for a pancake restaurant that wanted
to use the name GOLDEN GRIDDLE PANCAKE HOUSE because it was
substantially similar to a registered mark for pancake syrup, GOLDEN
GRIDDLE. The descriptive words “PANCAKE HOUSE” were not sufficient to
differentiate the applicant’s mark from GOLDEN GRIDDLE because the public
would look to the other words in the name as the distinguishing feature or mark.

       1
         This court and other federal circuits cite decisions by the TTAB as persuasive
authority. See, e.g., Enrique Bernat F., S.A. v. Guadalajara, Inc., 210 F.3d 439, 443 (5th Cir.
2000); see also Rosenruist-Gestao E Servicos LDA v. Virgin Enters. Ltd., 511 F.3d 437, 460 (4th
Cir. 2007); Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 382 (2d Cir. 2005).

                                              6
                                  No. 11-41105

Id. Since those words, GOLDEN GRIDDLE, were identical to the trademarks,
the registration was not allowed. Id.
      Similarly, in In re Chatam International, Inc., 380 F.3d 1340, 1343 (Fed.
Cir. 2004), the Federal Circuit compared the marks JOSE GASPAR GOLD and
GASPAR’s ALE by looking for the dominant feature in each mark. The word
ALE, like the words PANCAKE HOUSE, was descriptive or generic with respect
to the involved goods or services. Id. The word JOSE was not considered to alter
the commercial impression of the mark as it reinforced the impression that
GASPAR is an individual’s name. Id. The term GOLD was determined to denote
a premium quality, a descriptive term that also did not alter the commercial
impression of the mark. Id. That left the word GASPAR as the dominant feature
of the mark. As the word was identical in both trademarks, the marks conveyed
a similar appearance, sound and commercial impression. Id. As applied to our
case, the word MISSION is the dominant feature of the two marks because the
word BURRITO, like the words ALE and PANCAKE HOUSE, is merely
descriptive or generic. See Am. Century Proprietary Holdings v. Am. Century
Cas. Co., 295 F. Appx. 630, 635-36 (5th Cir. 2008) (agreeing with district court’s
conclusion that the marks AMERICAN CENTURY CASUALTY COMPANY
which often uses a tree logo and AMERICAN CENTURY PROPRIETARY
HOLDINGS which uses an eagle logo are clearly similar.) Also, it is clear that
the dominant word in both marks, MISSION, sounds the same when spoken
aloud. Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisa, 754 F.2d 591,
597 (5th Cir. 1985) (noting that auditory similarity is an important factor when
determining likelihood of confusion.)
      Gruma also argues that the district court improperly focused on the
differences between the two marks rather than on their overall similarities. As
this court has explained:

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                                  No. 11-41105

      “The touchstone under [the Lanham Act] is … similarity in the
      overall trade dress of the products." Sun-Fun Products, supra, 656
      F.2d at 192 (emphasis added). See also Perfect Fit, supra, 618 F.2d
      at 955 ("It is the "combination of features as a whole rather than a
      difference in some of the details which must determine whether the
      competing product is likely to cause confusion in the mind of the
      public,' ") quoting Pharmaceuticals, Inc. v. United Whelan Corp., 22
      Misc.2d 532, 534-35, 197 N.Y.S.2d 22, 25 (Sup.Ct.1959). It was error
      to determine dissimilarity on the basis of a "close examination and
      comparison" in the face of close overall similarity. Accord, RJR
      Foods, Inc. v. White Rock Corp., 603 F.2d 1058, 1060 (2d Cir. 1979).

Chevron Chem. Co. v. Voluntary Purchasing Grps., Inc., 659 F.2d 695, 704 (5th
Cir. Unit A 1981).
      When we consider the similarities between Gruma’s MISSION mark and
Mexican Restaurant’s MISSION BURRITO mark, both marks use the word
MISSION in all caps and both use an image that clearly represents the tower of
a mission style Spanish church. We find it inescapable that both are clearly
employing the device of a mission-style tower associated with Mexico and South
Texas to draw an association with the name MISSION and the Mexican food
each party sells. In a somewhat similar case, Aladdin Industries Inc. v. Alladin
Lamp & Shade Corp., 556 F.2d 1263 (5th Cir. 1977), this court reversed the
district court’s finding of no likelihood of confusion noting, after factual errors
were corrected, that both parties’ marks were attempting to capitalize on an
association with Aladdin’s mythical lamp.
      The district court found that “[i]n totality, the marks are not comparable
in appearance, sound, or meaning” and “prospective purchasers are unlikely to
believe that the parties are somehow associated.” When we disregard the extra,
descriptive words in Mexican Restaurant’s mark and focus on the similarity of
the two marks as the case law requires, we conclude that the district court erred
in finding that this element favors Mexican Restaurant.

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                                  No. 11-41105

      (3) product similarity - The district court found that although both
parties are in the Mexican food industry, their goods do not compete. The
district court also found that Mexican Restaurant’s products are not similar to
Gruma’s and that consumers would not think they originated from the same
source. Finally, the district court concluded that consumers would not believe
that the restaurant business is a natural area of expansion for Gruma, given its
long history of only providing grocery store products and that consumers would
be unlikely to be confused about any sponsorship, affiliation or connection
between Gruma’s and Mexican Restaurants’s products and services. Based on
these findings the district court concluded that this factor favored Mexican
Restaurants.
      “The greater the similarity between the products and services, the greater
the likelihood of confusion.” Elvis Presley Enters., 141 F.3d at 202 (internal
quotation marks omitted). The parties do not have to be direct competitors to
establish a likelihood of confusion. Id.      “When products or services are
noncompeting, the confusion at issue is one of sponsorship, affiliation, or
connection.” Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 666
(5th Cir. 2000).
      The distinction between pre-packaged food products sold in retail stores
and finished food products sold in restaurants is not enough to show that
products are dissimilar. In Beef/Eater Restaurants, Inc. v James Burrough,
Ltd., 398 F.2d 637 (5th Cir. 1968), the court affirmed the district court’s finding
of likelihood of confusion on summary judgment between Beefeater Restaurants
and Beefeater Gin. “It is true that appellant operates a restaurant and appellees
on the other hand make and vend gin. Both are consumable and it is repeatedly
held that the parties need not be in competition and that the goods or services
need not be identical.” Id. at 639. In In re Azteca Restaurant Enterprises, Inc.,
50 U.S.P.Q. 2d 1209 (T.T.A.B. 1999), the T.T.A.B. affirmed the examiner’s

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                                  No. 11-41105

refusal to register the mark AZTECA MEXICAN RESTAURANT for a Mexican
restaurant as it would likely cause confusion with the earlier registered mark
for AZTECA prepared Mexican foods, because “consumers would be likely to
mistakenly believe that registrant’s Mexican food products sold under the mark
AZTECA and applicant’s restaurant services sold under the mark AZTECA
MEXICAN RESTAURANT originated with or are somehow associated with or
sponsored by the same entity.” Id. at 1212-13. We have almost identical facts
in this case. Gruma sells essentially the same type of Mexican pre-packaged
foods that appellee sells in its restaurants.
      Neither the record nor case law support the district court’s conclusion that
the restaurant business is not a natural area of expansion for Gruma. The
danger of confusion increases when the junior user’s market is one into which
the senior mark may naturally expand. Westchester Media, 214 F.3d at 666.
Actual intent to expand – or lack thereof – is not particularly probative of the
natural zone of expansion. Elvis Presley Enters., 141 F.3d at 202.        Rather,
consumer perception controls. Id. Gruma presented evidence from a marketing
survey that consumers in the region that includes Texas believe that the
manufacturer of MISSION tortillas could operate restaurants.             Mexican
Restaurants produced no contrary evidence. Also the district court did not
consider the possibility that MISSION BURRITO could expand into retail
products to compete with Gruma’s MISSION products. See Dr. Pepper/Seven
Up, Inc. v. Krush Global Ltd., 2010 WL 3798500, at *7 (T.T.A.B. Sept. 13, 2010)
(unpublished); In re Golden Griddle Pancake House, Ltd., 17 U.S.P.Q. 2d at 1074
(restaurants frequently package some of their products for retail sale.).
      Based on these facts and cases, the district court erred in marking this
factor in favor of Mexican Restaurants.

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                                  No. 11-41105

Neutral Factors -
       (6) defendant's intent - The district court found that Mexican
Restaurants did not adopt its mark with the intent of copying Gruma’s mark or
benefitting from its reputation.     This finding is supported by the record.
Accordingly, this factor “drops out as immaterial.” Fuji Photo Film, 754 F.2d at
598.
       (7) actual confusion - The district court was unpersuaded that Gruma
established actual confusion between the marks. Evidence of actual confusion
is not required for a finding of likelihood of confusion. Smack Apparel, 550 F.3d
at 483. Gruma argues that the district court failed to give its evidence of actual
confusion any weight in the analysis. But the district court was entitled to
discredit Gruma’s evidence – fairly vague testimony of two employees about
encounters with customers. We find no error in the district court’s finding that
this factor was neutral.
       Based on the foregoing, every digit of confusion weighs in Gruma’s favor
or is neutral and no factor favors Mexican Restaurants. Based on our careful
review of the record and case law, we are left with the firm conviction that the
district court’s conclusion that there is no likelihood of confusion between the
two trademarks in this care was clearly erroneous. Accordingly we reverse the
judgment of the district court on Gruma’s Lanham Act claim.
                                       IV.
       The district court also found in favor of Mexican Restaurants on Gruma’s
claim under the Texas Anti-Dilution statute. The relevant provision of the
Texas Anti-Dilution Statute provides:
       A person may bring an action to enjoin an act likely to injure a
       business reputation or to dilute the distinctive quality of a mark
       registered under this chapter or Title 15, U.S.C., or a mark or trade
       name valid at common law, regardless of whether there is
       competition between the parties or confusion as to the source of
       goods or services.

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                                  No. 11-41105

Tex. Bus & Com. Code § 16.29. To maintain a dilution claim, the plaintiff must
establish (1) ownership of a distinctive mark, and (2) a likelihood of dilution.
Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson Improvement Corp.,
53 S.W.3d 799, 811 (Tex. Ct. App. 2001); Pebble Beach Co. v. Tour 18 I, Ltd., 942
F. Supp. 1513, 1564 (S.D. Tex. 1996), aff'd as modified, 155 F.3d 526 (5th Cir.
1998) (citing Hormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497,
506 (2nd Cir. 1996)).
      Dilution involves the gradual "whittling away" of a party's
      distinctive mark through unauthorized use by another. Even in the
      absence of consumer confusion, an unauthorized user's adoption of
      another's mark lessens that mark's capacity to identify the true
      owner's goods and services.

Horseshoe Bay, 53 S.W.3d at 812, (internal citations omitted). Dilution by
blurring occurs when the defendant uses the plaintiff’s trade name as his own,
thereby weakening the senior user’s ability to use the name as a unique
identifier. Express One Int’l., Inc. v. Steinbeck, 53 S.W.3d 895, 899 (Tex. Ct. App.
2001); Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1081 (5th Cir. 1997)
(Blurring is “a diminution in the uniqueness and individuality of the mark.”)
      The district court applied what Gruma characterizes as federal standards
for dilution by blurring from the Federal Trademark Dilution Act using the
following factors:
      To determine dilution by blurring, a court "may consider all relevant
      factors" including: the degree of similarity between the mark or
      trade name and the famous mark; the degree of inherent or acquired
      distinctiveness of the famous mark; the extent to which the owner
      of the famous mark is engaging in substantially exclusive use of the
      mark; the degree of recognition of the famous mark; whether the
      user of the mark or trade name intended to create an association
      with the famous mark; and any actual association between the mark
      or trade name and the famous mark. 15 U.S.C. § 1125 (c)(2)(B).

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                                 No. 11-41105

Dallas Cowboys Football Club, Ltd. v. Am.'s Team Props, Inc., 616 F. Supp. 2d
622, 642-43 (N.D. Tex. 2009). Even if we accept these factors as the appropriate
test, the analysis favors Gruma. As explained above, there is a great degree of
similarity between Mexican Restaurants’s mark and Gruma’s mark. We agree
with the district court that Gruma’s mark is distinctive, is in substantial
exclusive use, and has a high degree of recognition. Accordingly four of the six
factors favor Gruma. In sum, these factors establish that Mexican Restaurants’s
use of the MISSION BURRITO mark “dilutes the distinctive quality” of Gruma’s
MISSION mark, as required by the Texas Statute, and “lessens that mark's
capacity to identify the true owner's goods and services” which is the definition
of dilution by blurring. Horseshoe Bay, 53 S.W.3d at 811-12. The district court
erred by granting judgment on this issue against Gruma.
                                       V.
      Based on the foregoing analysis, we reverse the judgment of the district
court on Gruma’s Lanham Act and Texas Anti-Dilution claims and remand for
further proceedings consistent with this opinion.
REVERSED and REMANDED.

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