Case 4:12-cv-00074-ALM Document 242

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION FRITO-LAY NORTH AMERICA, INC., Plaintiff, v. MEDALLION FOODS, INC. and RALCORP HOLDINGS, INC., Defendants. Case No. 4:12-CV-00074-ALM

FRITO-LAYS MOTION FOR JUDGMENT AS A MATTER OF LAW THAT IT HAS NOT ABANDONED ITS TRADE DRESS IN THE TOSTITOS SCOOPS! CHIP DESIGN Under applicable law, no reasonable jury could find that Frito-Lay abandoned its TOSTITOS SCOOPS! chip design that is the subject of the 278 trademark registration. Accordingly, Frito-Lay is entitled to a judgment as a matter of law on Defendants abandonment defense and corresponding counterclaim. By statute and under Fifth Circuit case law, there are two requisite elements to show abandonment. Defendants bear the burden to prove both. The party asserting abandonment must establish that the owner of the mark both (1) discontinued use of the mark and (2) intended not to resume its use. Vais Arms, Inc. v. Vais, 383 F.3d 287, 293 (5th Cir. 2004); 15 U.S.C. 1127. A party claiming abandonment of registered trade dress has a heavy burden. RE/MAX Intl, Inc. v. Trendsetter Realty, LLC, 655 F. Supp. 2d 679, 715 (S.D. Tex. 2009) (Rosenthal, J.) (citing Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F. 2d 368, 387 (5th Cir. 1977)). Abandonment rests on an intent to forfeit the trade dress. E.I. Du Pont De Nemours & Co. v. Celanese Corp. of Am., 167 F.2d 484, 489 (C.C.P.A. 1948).1

This is the only abandonment defense identified in the Pretrial Order. (Dkt. 217). Defendants have not pleaded, let alone proven, an alternative invalidity defense -- genericness. See Defs. Answer (Dkt. 100) at 20 19-21.
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On both required elements, Defendants have failed their burden of proof. First, there is no evidence to support a finding that Frito-Lay ceased using the registered mark. To the contrary, the evidence shows that, as required to obtain registration of a three-dimensional trade dress, Frito-Lay submitted to the U.S. Patent and Trademark Office (USPTO) both a twodimensional drawing of the trade dress and photographs of physical samples of the chips incorporating that design trade dress. 2/15/13 Morning Tr. 116:11-120:3; 2/25/13 Afternoon Tr. 3:15-7:16. See Pl.s Ex. 349 at FL00852012-025, FL00852039-40, FL00852066-078,

FL00852084 (attaching photographs of chips and packaging, dated January 6, 2003, and January 27, 2009); Pl.s Ex. 345 at FL00901338-345 (attaching photograph of chips to Declaration of Continuous Use and Application for Renewal of Registration, September 23, 2012). Since registration of the chip design in 2003, Frito-Lay has consistently sold millions of bags of TOSTITOS SCOOPS! tortilla chips embodying the registered trade dress. See 2/12/13 Afternoon Tr. 18:5-18:9; 2/15/13 Morning Tr. 116:11-120:3; 2/25/13 Morning Tr. 132:7-12. See Gruma Corp. v. Mexican Restaurants, Inc., Civ. No. 4:09-cv-488, 2010 WL 5390139, at *9 (E.D. Tex. Dec. 2, 2010) (granting summary judgment of no abandonment where trademark owner showed millions of dollars in sales of product and held trademarks with incontestable status). From the time it registered the mark (2003) until today, Frito-Lay has used the same molds to produce all of these tortilla chips. See 2/13/12 Afternoon Tr. 143:18-24; 2/14/13 Morning Tr. 40:17-21; 2/25/13 Afternoon Tr. 6:23-7:1; 2/15/13 Morning Tr. 116:11-120:3. To maintain its federal trademark registration, Frito-Lay repeatedly has submitted evidence of this continued use of the markphotographs of the chips it has made and sold and packaging
Genericness refers to a situation in which a mark has become generic, for example, the term aspirin came to identify a product, not a source. Defendants allege that Frito-Lay abandoned the 278 Mark because Frito-Lay is not now and has not been using the Bowl-Shaped Chip Mark as shown in the drawing contained in the 278 Registration for at least the past three years, and Frito-Lay has no intention to resume use of the mark. See Defs. Answer (Dkt. 100) at 20 19-21.
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showing the registered design.

See Pl.s Ex. 349 at FL00852012-025, FL00852039-40,

FL00852066-078, FL00852084 (attaching photographs of chips and packaging, dated January 6, 2003, and January 27, 2009); Pl.s Ex. 345 at FL00901338-345 (attaching photograph of chips to Declaration of Continuous Use and Application for Renewal of Registration, September 23, 2012); see 2/25/13 Afternoon Tr. 7:2-16. The USPTO has, on three separate occasions (most recently in September 2012), accepted these specimens as evidence of Frito-Lays continued use of the trade dress covered by the 278 registration, and as a result granted the registration incontestable status. See Pl.s Ex. 345, 349; see also 2/15/13 Morning Tr. 116:11-120:3; 2/25/13 Afternoon Tr. 3:15-7:16. There is no evidence that Frito-Lay ceased using its registered trade dress; all the evidence shows that Frito-Lay has consistently used its registered trade dress from the time of registration until today. Second, there is no evidence of the requisite intent to abandon the registered trade dress. This case is the antithesis of cases upholding abandonment judgments. For example, Vais Arms, Inc. v. Vais, 383 F.3d 287, 293 (5th Cir. 2004), involved a trademark owner who sold his business to the plaintiff and moved to Greece. When the trade dress owner returned to the United States more than three years later and tried to compete with the plaintiff by selling products under the business name that had been previously sold, the district court granted summary judgment to the plaintiff, and the Fifth Circuit affirmed. The evidence supporting the abandonment determination included declarations from defendants former customers indicating he had retired and a magazine article reporting defendants retirement from the business in question. Id. at 293-95. See also Exxon Corp. v. Humble Exploration Corp., 695 F.2d 96, 98, 101 (5th Cir. 1983) (corporation formally changed its name and made only limited sales using the former name as a secondary mark); RE/MAX Intl, Inc. v. Trendsetter Realty, LLC, 655 F.

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Supp. 2d 679, 716 (S.D. Tex. 2009) (granting summary judgment of no abandonment where real estate company used mark on business cards, stationery, and yard signs). In this case, there is obviously nothing like the evidence in Vais (retirement of a business) or Exxon (corporate name change). Not only is there no evidence of any intent on Frito-Lays part to abandon the registered trade dress, but there also is unequivocal and uncontroverted testimony that Frito-Lay has never intended to stop using the protected chip design. See 2/13/12 Afternoon Tr. 143:14-21; 2/25/13 Afternoon Tr. 3:15-7:16; 2/15/13 Morning Tr. 116:11-120:3. It is further undisputed that Frito-Lay repeatedly and consistently has filed sworn declarations of continued use with the USPTO demonstrating continued use of the trade dress. See Pl.s Ex. 345, 349; 2/15/13 Morning Tr. 116:11-120:3, 2/25/13 Afternoon Tr. 3:15-7:16. When conduct is consistent with the intention to retain trade-mark rights, or when acts which unexplained might establish abandonment are answered by affirmative proof that there never was an intention to give up the right claimed, abandonment is not established. E. I. Du Pont de Nemours & Co., 167 F. 2d at 489 (citation omitted). Frito-Lay also has continued to sell tortilla chips using the registered trade dress and to spend substantial sums advertising and promoting the trade dress. The evidence could support only one verdict: that Frito-Lay has continuously used the Tostitos SCOOPS! chip design trade dress covered by the 278 registration and has no intention to cease such use. Because Defendants have failed to prove either of the two essential elements of their abandonment defense, there is no basis for sending that issue to the jury, and Frito-Lay is entitled to judgment as a matter of law. Rather than shoulder the burden of proof that the law requires, Defendants have advanced an argument that seeks to invalidate the registered trade dress on the ground that not every single chip in every bag of Tostitos SCOOPS! tortilla chips is identical to the drawing shown on the

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278 registration. But this reflects a misunderstanding of the law. That some chips may have slight variations due to the reaction of the corn masa dough to the cooking process does not, as a matter of law, support an abandonment finding, because it shows neither disuse nor intent. Indeed, the specimen photographs showing the chip design that were the basis for issuance of the registration also show slight variations due to the cooking process. So do the photographs submitted to the USPTO as evidence of continued use of the mark covered by the 278 registration. Accordingly, any such variations cannot be evidence of disuse or intent to cease using the registered design. CONCLUSION Since no reasonable jury could find for Defendants on abandonment, Frito-Lay respectfully asks the Court to enter judgment as a matter of law on Defendants abandonment defense and counterclaim.

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Dated: February 27, 2013

Respectfully submitted, /s/ Timothy S. Durst Timothy S. Durst State Bar No. 00786924 tim.durst@bakerbotts.com Russell J. Crain State Bar No. 24045717 russ.crain@bakerbotts.com Susan Cannon Kennedy State Bar No. 24051663 susan.kennedy@bakerbotts.com BAKER BOTTS L.L.P. 2001 Ross Avenue, Suite 600 Dallas, Texas 75201 Telephone: 214-953-6500 Facsimile: 214-953-6503 Clyde M. Siebman SIEBMAN, BURG, PHILLIPS & SMITH, LLP Federal Courthouse Square 300 N. Travis St. Sherman, TX 75090 Telephone: 903-870-0070 Facsimile: 903-870-0066 ATTORNEYS FOR PLAINTIFF FRITO-LAY NORTH AMERICA, INC.

CERTIFICATE OF SERVICE I hereby certify that all counsel of record are being served this the 27th day of February, 2013, by the Courts ECF filing system. Any counsel not registered to accept ECF service will be mailed a copy by U.S. Mail this same date. /s/ Susan Cannon Kennedy Susan Cannon Kennedy

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION FRITO-LAY NORTH AMERICA, INC., Plaintiff, v. MEDALLION FOODS, INC. and RALCORP HOLDINGS, INC., Defendants. Case No. 4:12-CV-00074-ALM

ORDER GRANTING PLAINTIFFS MOTION FOR JUDGMENT AS A MATER OF LAW THAT IS HAS NOT ABANDONED ITS TRADE DRESS IN THE TOSTITOS SCOOPS! CHIP DESIGN Pending before the Court is Frito-Lays Motion for Judgment as a Matter of Law That it has not Abandoned its Trade Dress in the Tostitos SCOOPS! Chip Design (the Motion). The Court finds that the Motion is well founded and that no reasonable jury could find for the Defendants on abandonment of the Tostitos SCOOPS! chip design. It is therefore ORDERED that Plaintiff be granted judgment on all claims and defenses by Defendants regarding Plaintiffs abandonment of its trade dress in the Tostitos SCOOPS! chip design.