Kraft v. Cracker Barrel Trademark Case Notes

Kraft Foods Group Brands LLC v. Cracker Barrel Old Country Store

Case Overview

• Kraft Foods Group Brands LLC brought a trademark infringement suit against Cracker Barrel Old Country Store, Inc. (CBOCS).
• The suit was regarding CBOCS's sale of food products in grocery stores under the "CrackerBarrel" name, which Kraft argued infringed on its trademark.
• The District Court granted Kraft a preliminary injunction, which CBOCS appealed.
• The Court of Appeals affirmed the preliminary injunction, finding that its issuance was not clearly erroneous.

Background

• Kraft is a well-known food manufacturer that sells a variety of packaged cheeses under the trademarked “CrackerBarrel” label in grocery stores for over half a century.
• CBOCS is a chain of restaurants and country stores that planned to sell food products (excluding cheese) in grocery stores under its “CrackerBarrelOldCountryStore” logo.
• Kraft argued that consumers would likely be confused by the similarity of the logos and believe that the CBOCS products were Kraft products.

Legal Arguments

• Kraft claimed that selling similar products with similar trade names through the same distribution channel (grocery stores) would cause consumer confusion detrimental to Kraft.
• CBOCS has alternative channels to sell products such as the internet and stores adjoined to its restaurants.
• Kraft acknowledges that a trademark does not entitle its owner to prevent all other uses of similar or even identical marks but the use of similar marks on similar products sold through different types of sales outlet might cause confusion.

Court's Reasoning

• The District Court found a likelihood of confusion and resulting harm to Kraft, sufficient to warrant a preliminary injunction.
• The Court of Appeals reviewed these factual determinations for clear error.
• The court considered the similarity of the logos and products, the overlap in distribution channels and advertising, and the potential for consumer confusion.
• Even if the logos looked different up close, the prominence of "CrackerBarrel" on both labels could lead shoppers to believe they are both Kraft products.
• The court acknowledged that savvy consumers might be fooled, as producers often vary the appearance of their trademarks.
• The court noted that cost-conscious consumers are less likely to scrutinize labels carefully, making them more susceptible to confusion.
• A trademark's value lies in the information it conveys about the brand's quality, and consumer confusion could damage Kraft's reputation.

Preliminary Injunction Test

• For a preliminary injunction to be proper, the harm to the plaintiff must be judged irreparable, meaning not fully compensable or avoidable by the issuance of a final judgment in the plaintiff's favor.

• The court applied the preliminary injunction test:

  • Likelihood of success on the merits.
  • Balance of irreparable harms: costs if the preliminary injunction is denied are at least as great as the costs to the defendant if it is granted that could not be fully recouped.

• The likelihood of confusion seemed substantial, and the risk to Kraft of the loss of valuable goodwill and control was palpable.

• Irreparable harm is especially likely in a trademark case because of the difficulty of quantifying the likely effect on a brand of a nontrivial period of consumer confusion.

• The court considered the consumer interest in having a variety of products to choose from but balanced it against the potential for consumer confusion.

• The court noted that weighing and balancing competing interests with any precision are not feasible undertakings in a preliminary-injunction proceeding.

• The injunction should be issued if the plaintiff has a strong likelihood of prevailing in the full trial, and the costs to him if the preliminary injunction is denied are at least as great as the costs to the defendant if it is granted, and the plaintiff's costs could not be fully recouped by him in a final judgment in his favor.

Consumer Survey Evidence

• The court expressed caution regarding consumer surveys conducted by party-hired experts, noting potential biases in survey design and execution.
• Kraft's expert presented a survey in which consumers who were shown a CBOCS ham were asked what other products the company makes, and a quarter said cheese.
• However, the court found it difficult to compare people's reactions to photographs shown to them online by a survey company to their reactions to products they are looking at in a grocery store and trying to decide whether to buy.
• The court suggested that statistical data on sales lift from proximity of products in grocery stores could be an alternative approach.

Alternative Expert Testimony

• The court suggested alternative expert testimony such as testimony by experts on retail food products about the buying habits and psychology of consumers of inexpensive food products and empirical study of consumer behavior.

Holding

• The Court of Appeals affirmed the preliminary injunction, citing the similarity of logos and products, the overlap in distribution channels and advertising, and the availability to CBOCS of alternatives to grocery stores.