Manufacturers of branded products received a victory against private label manufacturers in the US Court of Appeals for the Third Circuit last month. In a case involving private label, or “look-alike”, products, the Third Circuit partially reversed a district court’s finding that there was no likelihood of confusion between the trade dress of the branded product, Splenda, and a generic private-label artificial sweetener. In the case, McNeil Nutritionals, LLC (McNeil), the manufacturer of Splenda, challenged Heartland Sweeteners, LLC (Heartland) for marketing its sweetener in “look-alike” non-branded packaging. In its ruling, the Third Circuit agreed that private label manufacturers can “get away” with developing brands that are somewhat similar to a well-known branded product packaging without being liable for trade dress infringement. The court notes that these manufacturers do not, however, have the right to develop product packaging that is duplicates the branded product packaging except for a “tiny differentiating label.” McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 2007 WL 4478981 (3d Cir. 2007).

The case began in 2006, when McNeil brought a trade dress infringement suit against Heartland based on Heartland’s packaging of a similar artificial sweetener for Giant, Stop & Shop, Tops, Food Lion, Safeway, Albertson’s and Wal-Mart grocery stores. McNeil claimed that the packaging infringed its Splenda trade dress, which consists of a horizontally oriented box displaying a yellow background, blue lettering, the word “Splenda” on the top-center of the box in italicized blue lettering, a white, oval-shaped cloud surrounding the trade name, pictures of a white coffee cup and saucer and ice tea pitcher, and a circular element containing the phrase “Made from Sugar, Tastes Like Sugar.” Id. at *2. In analyzing the likelihood of confusion between the trade dresses of both parties, the district court found that the trade dress similarity factor along with several other factors weighed in favor of McNeil with respect to the Giant, Stop & Shop, and Tops packaging. In spite of this finding, the district court denied McNeil’s request for a preliminary injunction.

On appeal, the Third Circuit undertook a side-by-side analysis of the Splenda trade dress and the trade dress of the store brands explaining that a side-by-side comparison may be appropriate when buyers typically see the two products side-by-side. In comparing the products, the court noted that the prominent display of a well-known word or design mark may be sufficient to cure an otherwise infringing trade dress. The court narrowly construed this statement, however, by adding that while the prominent placement of a well-known mark is not necessarily an affirmative defense to every trade dress infringement action, it is merely one aspect of the case a court will consider. The court also found that the consumer’s degree of care in making purchasing decisions was greater than normal in this case because many consumers purchase artificial sweeteners for health reasons. This lessened the likelihood of confusion because consumers would likely pay greater attention to product packaging.

After conducting its analysis, the court found that the Food Lion and Safeway packaging did not infringe the Splenda trade dress because the stores are represented prominently on their packaging through the use of store names, logos or design elements. Additionally, the store-brands (i) do not use the word “Splenda;” (ii) display a similar positioning of the product name; (iii) contain a white, oval-shaped cloud surrounding the product name; or (iv) contain a circular element surrounding the phrase “Made From Sugar, Tastes Like Sugar.” Thus, the court maintained that these distinctions were sufficient to prevent consumer confusion.

The side-by-side analysis led the court to a different decision with respect to the trade dress of the sweetener packaging sold under the Giant, Stop & Shop and Tops store brands. The court found there was a likelihood of confusion because the private label sweetener sold under these store brands did not prominently display design features that identified them as originating with a particular grocery store and the layout of the brands mimicked the Splenda packaging through their use of a yellow background, blue lettering, a photograph of a white coffee cup, and the placement of the product name in the top-center of the package. The court also noted that the similarity of the trade dress factor takes on even greater prominence in situations such as this, where the products are directly competing. Similarity in a case of private label products requires a finding of likelihood of confusion to prevent giving these private label manufacturers a “per se immunity” simply because they added their logo to an otherwise infringing package.

In reaching its conclusion, the Third Circuit notably acknowledged that store-brands displaying a well-known store label can be more similar to their competing nationally known products than can other nationally known products without being liable for trade dress infringement. The court stated “store brands can ‘get away’ with a little more similarity than other defendant’s products when they display prominently a well-known label . . . but they cannot copy the national brands to such a degree of similarity, then merely affix a tiny differentiating label as to become entirely immune to infringement actions.” Id. This holding grants generic and store-brand producers the ability to mimic the trade dress of national-product brands to some extent but prevents the wholesale copying that would result in consumer confusion.

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