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March 31, 1998


The opinion of the court was delivered by: CALDWELL


 The plaintiffs are Hershey Foods Corporation and Homestead, Inc. Hershey makes candy and sells it nationwide. Homestead is a related corporate entity that owns many of Hershey's trademarks and trade dress. (We will refer to Hershey and Homestead collectively as Hershey or the plaintiff.) This lawsuit was filed against Mars, Inc., another major candy maker, alleging violations of federal and state law governing competition. The suit stems from Mars' adoption of a trade dress for its peanut butter M&M's that Hershey asserts unlawfully resembles certain elements of its trade dress for its Reese's Peanut Butter Cups.

 We are considering Hershey's motion for a preliminary injunction, seeking an order prohibiting Mars from using its current trade dress (or the "trade dress at issue" because Mars freely adopts variations on this dress) on the basis that it dilutes by blurring the Reese's trade dress. Hershey invokes both federal and Pennsylvania law. A hearing was held on the motion on December 23, 1997, January 6, 1998, and January 14, 1998.

 The Court has subject matter jurisdiction over plaintiff's federal claim pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338(a), and supplemental jurisdiction over the state-law claim pursuant to 28 U.S.C. § 1367.

 The Law of Dilution

 A dilution claim protects a trademark holder's right in the mark's ability to act as a unique identifier of the mark's holder. 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24.70, at 24-118 (4th ed. 1997). This cause of action differs from 15 U.S.C. § 1125(a), section 43(a) of the Lanham Act, the federal trademark infringement law, by eliminating the need to show confusion; that is, the need to show that the defendant's mark causes consumers to confuse the defendant's goods with the plaintiff's. See, e.g., Versa Products Co. v. Bifold Company (Manufacturing) Ltd., 50 F.3d 189, 199-200 (3d Cir. 1995)(a significant aspect of a section 1125(a) claim is the need to show confusion). Instead, a dilution claim asserts that, while the defendant's mark does not confuse consumers as to the source of the goods, it leads consumers to believe that the plaintiff's mark now identifies two different sources of goods, thus diluting the mark's ability to identify the plaintiff's goods alone. An example of a diluting trademark would be the hypothetical "Dupont shoes." McCarthy, supra, § 24.68 at 24-116.

 In other words:

For dilution to occur, the relevant public must make some connection between the mark and both parties. But that connection is not the kind of mental link between the parties that triggers the classic likelihood of confusion test. Rather, the assumption is that the relevant public sees the junior user's mark, and intuitively knows, because of the context of the junior user's use, that there is no connection between the owners of the respective marks. However, even with those who perceive distinct sources and affiliation, the ability of the senior user's mark to serve as a unique identifier of the plaintiff's goods or services is weakened because the relevant public now also associates that designation with a new and different source.

 McCarthy, supra, § 24.70, at 24-117 to 118.

 Hershey's dilution-by-blurring claim is based on 15 U.S.C. § 1125(c)(1997), a 1996 addition to the Lanham Act, and 54 Pa. C.S.A. § 1124. The two laws are substantively similar. The federal law provides, in pertinent part, as follows:

Remedies for dilution of famous marks
(1) The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark . . . .

 15 U.S.C. § 1125(c).

 A "mark" is defined as "any trademark, service mark, collective mark, or certification mark." 15 U.S.C. § 1127. A "trademark" includes:

any word, name, symbol, or device or any combination thereof--
(1) used by a person,
. . . .
to identify and distinguish his or her goods . . . from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

 Dilution is defined as:

the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of--
(1) competition between the owner of the famous mark and other parties, or
(2) likelihood of confusion, mistake, or deception.

 15 U.S.C. § 1127.

 The Pennsylvania law provides as follows:

Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this chapter, or a mark valid at common law, or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.

 54 Pa. C.S.A. § 1124. It does not define dilution.

 The federal statute requires that the mark be "famous" and provides that the court "may consider factors such as, but not limited to" the following in "determining whether a mark is distinctive and famous":

(A) the degree of inherent or acquired distinctiveness of the mark;
(B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used;
(C) the duration and extent of advertising and publicity of the mark;
(E) the channels of trade for the goods or services with which the mark is used;
(F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks' owner and the person against whom the injunction is sought;
(G) the nature and extent of use of the same or similar marks by third parties; and
(H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

 15 U.S.C. § 1125(c)(1).

 We read this language as giving the court flexibility in analyzing the enumerated factors so that their relative weight in any given case can be balanced. See Star Markets, Ltd. v. Texaco, Inc., 950 F. Supp. 1030 (D. Haw. 1996)(balancing the factors and deciding whether any particular factor either heavily, slightly or merely favored one party).

 In deciding whether the defendant's mark dilutes the plaintiff's by blurring, federal courts interpreting section 1125(c) have started from the framework first set forth in Judge Sweet's concurring opinion in Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026 (2d Cir. 1989), which Judge Sweet used for interpreting the New York antidilution statute. See Clinique Labs., Inc. v. Dep Corp., 945 F. Supp. 547 (S.D.N.Y. 1996); Ringling Brothers-Barnum & Bailey Combined Shows, Inc. v. B.E. Windows Corp., 937 F. Supp. 204 (S.D.N.Y. 1996); Star Markets, Ltd., supra; Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Development, 955 F. Supp. 605, 615-16 (E.D. Va. 1997); WAWA, Inc. v. Haaf, 1996 U.S. Dist. LEXIS 11494, 1996 WL 460083 (E.D. Pa. 1996).

 Judge Sweet used a six-factor test:

1) similarity of the marks
2) similarity of the products covered by the marks
3) sophistication of consumers
4) predatory intent
5) renown of the senior mark
6) renown of the junior mark

 875 F.2d at 1035.

 He believed there was a positive correlation between blurring and the similarity of the marks, the similarity of the products covered by the marks, the existence of predatory intent, and renown of the senior and junior marks, but that there was a negative correlation if the consumers were sophisticated.

 Some commentators have disagreed on whether all of the factors are relevant to a dilution analysis. See McCarthy, supra, § 24:94.1 at 24-163 to 164 (factors 2, 3, 4, and 6 do not appear to be relevant to a blurring analysis); Eric A. Prager, "The Federal Trademark Dilution Act of 1995: Substantial Likelihood of Confusion," 7 Fordham Intell. Property, Media and Entertainment L.J. 121 at n.51 (1996) (factors 2, 3, 5, and 6 are not relevant). Additionally, in Clinique Labs., supra, the court refused to use predatory intent because Congress had not made it part of the statute. See 945 F. Supp. at 562 n.22.

 When these legal principles are put together, to prove dilution by blurring, the plaintiff must make the following showing: (1) that its mark is famous (as opposed to merely being a valid trademark); (2) that the defendant began using a mark in commerce after the plaintiff's mark became famous; and (3) that the "defendant's use causes dilution by lessening the capacity of the plaintiff's mark to identify and distinguish goods or services." McCarthy, supra, § 24:89, at 24-138. See also Utah Division of Travel Development, supra, 955 F. Supp. at 614. In turn, dilution depends on at least how some of the factors set forth in Mead Data Central apply here. *fn1"

 Findings of Fact

 The Parties

 1. Hershey Foods Corporation is a corporation organized under the laws of Delaware with its principal place of business in Hershey, Pennsylvania.

 2. Homestead, Inc. is a corporation organized under the laws of Delaware with its principal place of business in Newark, Delaware.

 3. Homestead manages and owns many of the trademarks and trade dresses that Hershey uses in connection with its confectionery products.

 4. Mars, Incorporated is a corporation organized under the laws of Delaware with its principal place of business in McLean, Virginia.

 5. The M&M/Mars Division of Mars, Incorporated is an operating division of Mars.

 6. Hershey manufactures confectionery products, including chocolate and peanut butter candy. Hershey markets peanut butter cups under the trade name "Reese's" and sugar-shelled peanut butter candy under the trade name "Reese's Pieces."

 7. Mars also manufactures and sells candy throughout the United States and in foreign countries. Mars sells varieties of its sugar-shelled chocolate candy under its trademark M&M's, two lower-case "m"s connected by an ampersand.

 8. Hershey and Mars have long been the top two candy manufacturers in the United States. Hershey ranks number one and Mars number two in U.S. market share among marketers of confectionery products. Hershey gained the number one rank from Mars in 1988.

 9. Reese's peanut butter cup candy and Reese's Pieces candy and the Mars peanut butter M&M's candy compete directly with each other.

 The Parties' Products and Trade Dress

 A. The Reese's Peanut Butter Cup and Reese's Pieces Products and Trade Dress

 10. Hershey's Reese's peanut butter cup candy has been Hershey's best-selling brand for decades. This is a chocolate peanut butter candy in a shallow cup shape with milk chocolate on the outside and peanut butter on the inside.

 11. Hershey also markets Reese's Pieces candies, which is peanut butter encased in a candy shell.

 12. Reese's peanut butter cup is sold in a package with a particular shade of background orange, the Reese's logo (its trade name in a slanted handwritten style in bright yellow with brown "keylining;" i.e., the yellow letters outlined in brown) and a brown rectangular bar with a sawtoothed top (imitating in two dimensions the top edge of a peanut butter cup) directly underneath the logo. The bar contains the message in bright yellow letters "PEANUT BUTTER CUPS." This is the "complete Reese's trade dress." See plaintiff's exhibit 1.

 13. In this, case Hershey claims rights in the portion of that dress which consists of a particular shade of background orange as the principal element in combination with the brown and yellow elements, in a particular arrangement and juxtaposition used to create a distinctive overall impression. This is the "abbreviated Reese's trade dress."

 14. The Reese's Pieces trade dress is similar in that it consists of the same shade of background orange, the Reese's logo (its trade name in a slanted handwritten style in bright yellow with brown keylining). However, it differs by having a so-called lozenge (a cartouche-shaped element) beneath the logo. The lozenge is brown with white keylining and has the words "peanut butter" in white letters. See plaintiff's exhibit 2.

 B. The Mars' M&M's Products and Trade Dress

 15. Mars has been selling its M&M's plain chocolate candies, bite-size individual chocolate candies with a sugar shell, in a package having a solid brown background with its distinctive M&M's logo in white lettering since 1949.

 16. Mars began selling its M&M's peanut chocolate candies, a product with a peanut at the center, in the same style package, using a yellow background with the M&M's trademark (or logo) in its distinctive brown lettering style in 1964.

 18. Mars began selling its M&M's chocolate candies in a mint chocolate variety in the early 1990's. The packaging for the M&M's mint chocolate candies uses a green background color with the M&M's logo.

 19. Mars owns Federal trademark registrations for its M&M's variety packages Nos. 1,266,509, 1,272,035, and 2,005,935.

 20. All of Mars' M&M's varieties packaging have included a display of cascading individual M&M's candy pieces (the "lentils") since at least as early as 1994. These candy pieces are "cultural icons" and highly recognizable by the public. They serve to identify the M&M's brand candies to consumers.

 21. The design elements of the M&M's packages for these varieties, including the distinctive lettering style, the presence of the individual candy pieces or "lentils," and the lozenge indicating the variety situated below the M&M's trademark, are consistent throughout the range of these M&M's branded products.

 22. The different varieties of M&M's brand of chocolate candies are together the largest selling brand of candy in the United States. In the last four years, Mars has sold approximately 4 billion dollars worth of M&M's brand candies in packaging bearing a display of the "cultural icon" images of the individual M&M's candies bearing the letter "m".

 The M&M's Peanut Butter Variety

 A. Background and Concept for the Peanut Butter M&M's Product

 1. Peanut Butter M&M's: 1988-1993

 23. In November 1988, senior management of Mars approved a proposal to commence test marketing of a peanut butter M&M's variety. The proposal stated: "The product [the proposed new M&M's variety] marries the benefits of two best selling brands - "M&M's" Chocolate Candies and Reese's Peanut Butter Cups - to grow M&M/Mars share of the chocolate candy market."

 24. A test package for the Peanut Butter M&M"s product employed a red background color and a yellow M&M logo, keylined in brown. The lozenge underneath the logo had a yellow background containing brown letters stating "Peanut Butter."

 25. In 1990, Mars began to introduce Peanut Butter M&M's in phases. The initial package for the Peanut Butter M&M's product employed a red background color and a yellow M&M brand name, keylined in brown. Contrary to the test package, the lozenge had brown background containing yellow letters stating "Peanut Butter." Plaintiffs have referred to this package as "Trade Dress 1."

 26. After some initial success, by 1993 the product was "a disappointment." Sales of Peanut Butter M&M's fell from a peak of $ 78 million in 1991 to $ 40 million in 1992 to $ 34 million in 1993.

 2. 1993-1994 "Relaunch"

 27. Notwithstanding disappointing sales, Mars had confidence that peanut butter M&M's could succeed and, in 1993, Mars developed a plan to "relaunch" Peanut Butter M&M's.

 28. The relaunch plan was to reformulate the product and market it in a revised trade dress that would begin entering retail markets in 1994. The background color of the trade dress was changed from red to "a more orange red." The revised package also included a yellow "violator" (words in yellow on the left side of the package) that stated: NEW RECIPE/GREAT NEW TASTE! MORE PIECES! Plaintiffs have referred to this package as "Trade Dress 2."

 B. Hershey's Objections to Trade Dress 2

 29. Hershey became aware of Trade Dress 2 in the spring of 1995.

 30. Hershey objected to Trade Dress 2 because it employed a color combination "dangerously close" to that used on the REESE'S Trade Dress.

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