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Sweet Street Deserts, Inc v. Chudleigh's Ltd

April 4, 2013


The opinion of the court was delivered by: Baylson, J.



This is a case about trademarks and apple turnovers. The Plaintiff, Sweet Street Deserts, Inc. ("Sweet Street"), alleges that Defendant, Chudleigh's Ltd ("Chudleigh's"), tortuously interfered with its business by wrongfully asserting a trademark right to an apple turnover product with a generic design. Defendant has moved to dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons that follow, the Court will DENY in part and GRANT in part Chudleigh's motion.


Plaintiff seeks relief based on the following allegations:

Plaintiff and Defendant are bakery companies that, among other things, provide bakery products to restaurants and restaurant chains throughout the United States. Compl. ¶¶ 6-7. In or about July 2010, Plaintiff received a request for an apple desert product from the restaurant chain Applebee's Services, Inc. ("Applebee's"). Id. ¶ 8. In response to this request, Plaintiff "created in-house a new individual sized baked good product composed essentially of apple filling and pie crust," which met Applebee's approval. Id.

After receiving Applebee's approval, Plaintiff considered outsourcing production of the product to an outside vendor. Id. ¶ 9. In searching for a suitable vendor, Plaintiff discovered Defendant, and in September 2010, the parties began to "explore the possibility of entering into a business relationship, whereby Chudleigh's would manufacture Sweet Street's Apple Turnover product for a then undisclosed customer of Sweet Street." Id. ¶¶ 10-11. The parties signed a mutual nondisclosure agreement in which they committed "not to use any confidential information*fn1 of the other party for any purpose except to evaluate and engage in discussions concerning the Purpose." Id. ¶¶ 11-12. At no point during the parties' discussions "was there any mention that the shape of the Chudleigh's apple desert product was unique or proprietary to Chudleigh's . . . or that the product that Sweet Street was creating and producing as its Apple Turnover product was infringing any product or trademark of Chudleigh's." Id. ¶ 13.

After Plaintiff received samples of Defendant's proposed apple product in October 2010, Plaintiff decided against using Defendant as its outside vendor. Id. ¶ 14. According to Plaintiff, the samples that Defendant created "did not meet Sweet Street's specifications in terms of taste, quality of ingredients or look of the product."*fn2 Id. Shortly thereafter, Plaintiff decided it would produce the apple product in its own facilities. Id. ¶ 15. To do so, Plaintiff began working with a machinery manufacturer to obtain the necessary equipment for automating production. Id. ¶ 16. The manufacturer provided Plaintiff a list of items that would be needed, including a dough-folding machine made by a company (Forms and Frys) that provided the manufacturer a customized quote for a machine specifically tailored to make Plaintiff's product. Shortly afterwards, however, the company informed Plaintiff that it "would not make the dough folding machine for Sweet Street." Id. ¶ 17. Plaintiff believes, "[u]pon information and belief," that Forms and Frys's refusal to make the machine was the result of "being pressured by Defendant." Id. ¶ 18.

Eventually, Plaintiff was able to create its own in-house production process and, on or about August 15, 2011, Applebee's began selling Plaintiff's apple turnover on its menu. Id. ¶ 21. The turnover's tenure proved short-lived. On August 24, 2011, a Chudleigh's attorney sent Applebee's a letter demanding that the company cease selling the product. Id. ¶ 22. The attorney's letter stated that Applebee's turnover "looks strikingly similar to Chudleigh's well-known BLOSSOM design," for which Chudleigh's had obtained an "incontestable" trademark registration with the Patent and Trademark Office (PTO). Compl. Ex. A. Along with attaching a copy of its trademark registration (Reg. No. 2,262,208), the letter apprised Applebee's that Chudleigh's considered sale of the turnover to be "trademark infringement, unfair competition, false designation of origin, and an unfair and deceptive trade practice under federal, state and common law." Id.

Although Chudleigh's demand letter made no mention of Sweet Street, Plaintiff alleges, "[u]pon information and belief," that "Defendant knew that Sweet Street was supplying Applebee's with its Apple Turnover product" and that Defendant knew this "as a result of the confidential information that was disclosed to Defendant during the parties' business discussions in September and October of 2010." Compl. ¶ 24. Plaintiff also contends, "[u]pon information and belief," that "Defendant was aware that [the apple turnover] did not look like the configuration" in its trademark registration. Further, "Defendant was aware that it had no trademark rights in a configuration of what it identified as its 'BLOSSOM' product," because "Defendant did not, and does not utilize the configuration covered by the subject registration."

Id. ¶¶ 26, 44. Defendant was also allegedly aware "that the shape of [the BLOSSOM] product was and is not protectable as a configuration trademark," because it is a "generic configuration and is not capable of distinguishing Defendant's products from the products of others." Id. ¶¶ 26, 52.

Whatever Chudleigh's did or did not know, its demand letter convinced Applebee's to permanently cease selling Plaintiff's turnover. Id. ¶ 26. As a result, Plaintiff "has lost an opportunity to sell its Apple Turnover product to some of its other large customers because of Sweet Street's concern over Defendant's potential tortious interference with such relationships." Id. ¶ 27.


Plaintiff filed a nine-count Complaint on June 12, 2012. In Counts I and II, Plaintiff seeks declaratory judgments that (1) its apple turnover does not infringe Defendant's trademark, and (2) Defendant's trademark is invalid. In Counts III, IV, and V, Plaintiff alleges three separate grounds (generic, fraud ab initio, and abandonment) upon which this Court should direct the PTO to cancel Defendant's trademark registration. In Counts VI, VII, VIII, and IX, Plaintiff alleges that Defendant violated state law by (A) tortiously interfering with Plaintiff's contractual relations with Applebee's, (B) tortiously interfering with Plaintiff's prospective contractual relations with Forms and Frys, (C) violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), and (D) breaching the non-disclosure agreement.

On October 10, 2012, Defendant moved to dismiss Plaintiff's Complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. (ECF No. 6). Defendant argues that Plaintiff has failed to allege an actual controversy to support the Court's jurisdiction over its declaratory judgment claims, and, absent an actual controversy, the Court cannot consider Plaintiff's requests for cancellation in Counts III, IV, and V. Defendant moves to dismiss Plaintiff's state law claims on various 12(b)(6) grounds, including its contention that a demand letter is protected activity under the ...

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