Ferrara Candy Company V Tops Cannabis

Case 2:20-cv-10349-SVW-PD Document 1 Filed 11/12/20 Page 1 of 16 Page ID #:1
1 Phillip Barengolts (pro hac vice pending)

2 Jessica A. Ekhoff (pro hac vice pending)
Kristine A. Bergman (pro hac vice pending)
3 PATTISHALL, MCAULIFFE, NEWBURY,
4 HILLIARD & GERALDSON LLP
200 South Wacker Drive, Suite 2900
5 Chicago, IL 60606
6 (312) 554-8000
pb@pattishall.com
7 jae@pattishall.com
8 kab@pattishall.com
9 Scott Lonardo (SB#285001)
10 PRANGER LAW PC
88 Guy Place, Suite 405
11 San Francisco, CA 94105
12 (415) 885-9800
slonardo@prangerlaw.com
13
14 UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA
15
16 FERRARA CANDY COMPANY, )

) Civil Action No. 2:20-cv-10349
17 Plaintiff,
)
18 ) PLAINTIFF’S COMPLAINT FOR:
vs. )
19 1. TRADEMARK
)
20 TOPS CANNABIS, ) INFRINGEMENT [15 U.S.C. §
) 1114]
21 Defendant. 2. UNFAIR COMPETITION [15
)
22 ) U.S.C. § 1125(a)(1)(A)]
) 3. TRADEMARK DILUTION [15
23
) U.S.C. § 1125(c)]
24 ) 4. UNFAIR COMPETITION IN
) VIOLATION OF CAL. BUS. &
25
) PROF. CODE, § 17200, ET SEQ.
26 ) 5. DILUTION IN VIOLATION OF
) CAL. BUS. & PROF. CODE §§
27
) 14330-14335
28 ) 6. CALIFORNIA COMMON LAW
UNFAIR COMPETITION
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Complaint Case No. 2:20-cv-10349
1 )
2 ) JURY TRIAL DEMANDED
)
3
COMPLAINT
4
This is an action for trademark infringement, unfair competition, and dilution in
5
violation of federal and California state law.
6
PARTIES
7
1. Plaintiff Ferrara Candy Company is an Illinois corporation, having offices
8
at 404 West Harrison Street, Chicago, Illinois 60607 ("Ferrara").
9
2. On information and belief, defendant Tops Cannabis ("Tops"), is a
10
California business having offices at 964 East Badillo Street, #515, Covina, California
11
91724.
12
JURISDICTION AND VENUE
13
3. This Court has jurisdiction because (1) this is an action arising under the
14
Trademark Act of 1946, as amended, 15 U.S.C. §§ 1051, et seq. (the Lanham Act),
15
jurisdiction being conferred in accordance with 15 U.S.C. § 1121 and 28 U.S.C. §
16
1338(a) and (b); and (2) this is a civil action between a citizen of California on one side
17
and a citizen of Illinois on the other side, in which the value of the amount in
18
controversy exceeds seventy-five thousand dollars ($75,000.00), exclusive of interest
19
and costs, jurisdiction being conferred in accordance with 28 U.S.C. § 1332.
20
Jurisdiction for the claims made under California state law is conferred in accordance
21
with the principles of supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a).
22
4. Venue is proper in this district under 28 U.S.C. § 1391(b) because a
23
substantial part of the events giving rise to the claims alleged herein occurred in this
24
district, and under 28 U.S.C. § 1391(c) because Tops is subject to this Court's personal
25
jurisdiction for purposes of this case.
26
27
28
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1 FACTS
2 FERRARA'S PRODUCTS AND FAMOUS TRADEMARKS
3 5. Ferrara makes, distributes, and markets well-known candy products,
4 including NERDS candy, and sells its candy throughout the United States.
5 6. Since its introduction in the 1980s, the NERDS candy brand has achieved
6 enormous commercial success as reflected in its extensive sales, and supported by its
7 effective marketing and promotional campaigns throughout the United States,
8 including in California.
9 7. Currently, Ferrara makes, distributes, and markets four lines of NERDS
10 products: NERDS candy; BIG CHEWY NERDS candy; NERDS ROPE candy; and its
11 latest, NERDS GUMMY CLUSTERS candy. Representative images of these
12 products appear below:
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15
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8. Since long prior to Tops' acts complained of herein, Ferrara has made
25
26
continuous use of the trademarks NERDS, , and NERDS ROPE
27
28 (collectively, "NERDS Marks") in connection with candy products.

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1 9. Ferrara owns, among many others, the following federal trademark

2 registrations issued by the United States Patent and Trademark Office for the NERDS
3 Marks:
4 MARK REG. NO. REG. RELEVANT
DATE GOODS
5 NERDS 2,209,131 December 8, Candy in Class 30
6 1998
4,400,174 September Candy in Class 30
7 10, 2013
8
10 10. These registrations are valid, subsisting and incontestable, and constitute
11 conclusive evidence of Ferrara's exclusive right to use the NERDS Marks for the goods
12 specified in the registrations. 15 U.S.C. §§ 1065, 1115(b).
13 11. Ferrara especially has marketed its NERDS and NERDS ROPE candy
14 products to parents as a fun and enjoyable treat for children of all ages. Therefore,
15 Ferrara would never condone or authorize the use of the NERDS Marks in connection
16 with products that could be harmful to children.
17 12. As a result of Ferrara's extensive sales, promotion, and advertising of
18 candy products under the NERDS Marks, the NERDS Marks have become famous
19 among the general consuming public of the United States, and represent an
20 extraordinarily valuable goodwill owned by Ferrara.
21 THE UNAUTHORIZED DISTRIBUTION OF "MEDICATED NERDS
22 ROPE"
23 13. Recently, many bad actors have sought to benefit off the goodwill
24 embodied by the NERDS marks and in doing so are endangering consumers’ well-
25 being.
26 14. The bad actors have infused NERDS ROPE candy with more than 400
27 milligrams of THC – more than 40 adult servings of THC. Under California law,
28
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1 edible cannabis products (such as cookies and gummies) have a THC limit of 10
2 milligrams per serving. California Bus. & Prof. Code, Ch. 13 § 26130. Ferrara has not
3 consented to such uses of its NERDS Marks, and in fact is actively enforcing its
4 NERDS Marks against such uses to protect its consumers from inadvertent
5 consumption of THC.
6 15. These bad actors label the THC-infused NERDS ROPE candy as
7 "Medicated Nerds Rope," as shown in the example below:
8
10
11
12
13
16. As shown in the comparison below, this Medicated Nerds Rope packaging
14
is highly similar to the packaging used by Ferrara for its NERDS ROPE candies:
15
Ferrara's Product Tops' Product
16
17
18
19
20
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17. Unsurprisingly, consumers are likely to be and actually have been
22
confused by the similar product packaging and have been led to believe, mistakenly,
23
that the Medicated Nerds Rope products are authorized, endorsed by, or affiliated with
24
Ferrara.
25
18. As a result of the resulting confusion between Ferrara’s NERDS ROPE
26
candy and the unauthorized THC-infused Medicated Nerds Rope, children have
27
become sick from ingesting the unauthorized THC-infused Medicated Nerds Rope.
28
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1 Even more alarming, there have been multiple reports of children being rushed to
2 emergency rooms after unknowingly consuming THC when they mistakenly ate THC-
3 infused Medicated Nerds Rope.
4 19. The unauthorized sale of Medicated Nerds Rope products is a health
5 hazard to the consuming public, including children.
6 20. Indeed, states across the United States have recognized the hazard posed
7 by cannabis products that are designed to appeal to children or that are packaged to
8 look like popular candy or grocery items, and have enacted statutes restricting how such
9 products may be labeled and packaged.
10 21. In California, for example, the Medicinal and Adult-Use Cannabis
11 Regulation and Safety Act expressly prohibits the use of packaging and labeling
12 designed to be appealing to children or to be easily confused with commercially sold
13 candy or foods that do not contain cannabis, and so would prohibit the sale of
14 Medicated Nerds Rope.
15 TOPS' SALE OF UNAUTHORIZED MEDICATED NERDS ROPE PRODUCTS
16 22. Ferrara recently learned that Tops was a significant seller of unauthorized
17 Medicated Nerds Rope products.
18 23. Tops has sold, promoted, distributed, and authorized, or otherwise
19 contributed to the sale, promotion, and/or distribution by others of products labeled
20 Medicated Nerds Rope consisting of NERDS ROPE product, or imitations of Ferrara's
21 genuine products, infused with THC/cannabis, as shown in the below image from Tops'
22 website:
23
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25
26
27
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10
11
12
24. On information and belief, Tops knowingly and willfully used the name
13
"Medicated Nerds Rope" to trade upon the goodwill in the NERDS Marks and give
14
Tops' cannabis-infused products a salability they would not otherwise have.
15
25. Ferrara does not produce, distribute, or sell any candy products containing
16
THC/cannabis nor has it authorized any other entity, including Tops, to do so.
17
26. Ferrara attempted to resolve this dispute by contacting Tops, including
18
advising it of the health hazards posed to children by Medicated Nerds Rope. At first,
19
an individual named "Sally Archer" responded to Ferrara on behalf of Tops and agreed
20
to work with Ferrara on finding an amicable resolution. After this initial response,
21
Ferrara never heard from "Sally Archer" again. Indeed, when Ferrara reached a
22
different representative of Tops, they claimed that no one named Sally Archer has ever
23
worked for or been affiliated with Tops. Ferrara continued to try to discuss a resolution
24
of this dispute with Tops, through a different representative, if possible, but never
25
received another response.
26
27. Thus, Tops is well-aware of the health hazard posed by Medicated Nerds
27
Rope, the confusion caused by Tops sale of these products, and Ferrara's objections to
28
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1 the sales. There can therefore be no question that Tops' marketing and sale of
2 Medicated Nerds Rope is willful and in callous disregard to both Ferrara's rights and
3 the health of the consuming public, especially children.
4 FIRST CLAIM FOR RELIEF
5 (TRADEMARK INFRINGEMENT IN VIOLATION OF
6 SECTION 32 OF THE LANHAM ACT)
7 28. Ferrara re-alleges paragraphs 1 through 27 as if fully set forth herein.
8 29. Without Ferrara's consent, Tops has used the NERDS Marks in commerce
9 in connection with the sale, offering for sale, distribution, and/or advertising of candy
10 infused with THC. These acts have caused or are likely to cause confusion, mistake, or
11 deception as to the source of origin, sponsorship, or approval of the "Medicated Nerds
12 Rope" products that Tops sells in that purchasers and others are likely to believe Ferrara
13 authorizes and controls Tops' sale of the "Medicated Nerds Rope" products in the
14 United States or that Tops is associated with or related to Ferrara.
15 30. Tops' acts are likely to injure and, on information and belief, have injured
16 Ferrara's image and reputation with consumers in the United States by creating
17 confusion about, and dissatisfaction with, Ferrara's NERDS candy.
19 Ferrara's business reputation and relations with retail accounts in the United States by
20 causing customer dissatisfaction, a diminution in value of the goodwill associated with
21 the NERDS Marks, and a loss of Ferrara's sales and market share to its competition.
22 32. On information and belief, Tops' sale, offering for sale, distribution, and/or
23 advertising of "Medicated Nerds Rope" products in the United States have been
24 committed deliberately and willfully, with knowledge of Ferrara's exclusive rights and
25 goodwill in the NERDS Marks and with a bad faith intent to cause confusion and trade
26 on Ferrara's goodwill.
27
28
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1 33. Tops' acts constitute an infringement of Ferrara's trademark rights in

2 violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114.
3 34. Tops' acts greatly and irreparably damage Ferrara and will continue to so
4 damage Ferrara unless restrained by this Court; wherefore, Ferrara is without an
5 adequate remedy at law. Accordingly, Ferrara is entitled to, among other things, an
6 order enjoining and restraining TOPS from selling any "Medicated Nerds Rope"
7 products, as well as to Tops' profits, Ferrara's reasonable attorneys' fees, and any other
8 remedies provided by 15 U.S.C. §§ 1116 and 1117.
9
SECOND CLAIM FOR RELIEF
10
(UNFAIR COMPETITION IN VIOLATION OF
11 SECTION 43(a) OF THE LANHAM ACT)
13
36. Without Ferrara's consent, Tops has used the NERDS Marks in commerce
14
in connection with the sale, offering for sale, distribution, and/or advertising of the
15
"Medicated Nerds Rope" products. These acts have caused or are likely to cause
16
confusion, mistake or deception as to the source of origin, sponsorship or approval of
17
the "Medicated Nerds Rope" products Tops sells in that purchasers and others are likely
18
to believe Ferrara authorizes and controls Tops' sale of the "Medicated Nerds Rope"
19
products in the United States or that Tops is associated with or related to Ferrara.
20
37. Tops' acts are likely to injure and, on information and belief, have injured
21
Ferrara's image and reputation with consumers in the United States by creating
22
confusion about, and dissatisfaction with, the "Medicated Nerds Rope" products.
23
38. Tops' acts are likely to injure and, on information and belief, have injured
24
Ferrara's business reputation and relations with retail accounts in the United States by
25
causing customer dissatisfaction, a diminution in value of the goodwill associated with
26
the NERDS Marks, and a loss of Ferrara's sales and market share to its competition.
27
28
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6 40. Tops' acts constitute unfair competition in violation of Section 43(a) of the
7 Lanham Act, 15 U.S.C. § 1125(a).
11 order enjoining and restraining TOPS from selling any "Medicated Nerds Rope"
12 products, as well as to Tops' profits, Ferrara's reasonable attorneys' fees and any other
13 remedies provided by 15 U.S.C. §§ 1116 and 1117.
14 THIRD CLAIM FOR RELIEF
15 (DILUTION IN VIOLATION OF
16 SECTION 43(c) OF THE LANHAM ACT)
18 43. The NERDS Marks are famous and are widely recognized by the general
19 consuming public of the United States as a designation of source of Ferrara's
20 confectionary products.
21 44. Tops' acts as described herein began after the NERDS Marks became
22 famous and are likely to and have tarnished Ferrara's valuable business reputation and
23 goodwill and are likely to blur the distinctiveness of the famous NERDS Marks.
24 45. Tops' acts are likely to cause and have caused dilution by tarnishment and
25 blurring of the famous NERDS Marks in violation of Section 43(c) of the Lanham Act,
26 15 U.S.C. § 1125(c).
27
28
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2 advertising of "Medicated Nerds Rope" in the United States have been committed
3 deliberately and willfully, with knowledge of Ferrara's exclusive rights and goodwill in
4 the NERDS Marks and with a bad faith intent to cause dilution of the NERDS marks.
7 adequate remedy at law. If not restrained Tops will have unfairly derived and will
8 continue to unfairly derive income, profits, and business opportunities as a result of
9 their acts of dilution. Accordingly, Ferrara is entitled to, among other things, an order
10 enjoining and restraining Tops from selling any "Medicated Nerds Rope" products, as
11 well as to Tops' profits, Ferrara's reasonable attorneys' fees, and any other remedies
12 provided by 15 U.S.C. §§ 1116 and 1117.
13 FOURTH CLAIM FOR RELIEF
14 (UNFAIR COMPETITION IN VIOLATION OF
15 CALIFORNIA BUSINESS AND PROFESSIONS CODE §§ 17200 et seq)
17 49. Without Ferrara's consent, Tops has appropriated for its own use Ferrara's
18 NERDS Marks.
19 50. Tops has used the NERDS Marks in commerce in connection with the sale,
20 offering for sale, distribution, and/or advertising of "Medicated Nerds Rope" products.
21 These acts have caused or are likely to cause confusion, mistake, or deception as to the
22 source of origin, sponsorship, or approval of the "Medicated Nerds Rope" products that
23 Tops sells in that purchasers and others are likely to believe Ferrara authorizes and
24 controls Tops' sale of "Medicated Nerds Rope" products in California or that Tops is
25 associated with or related to Ferrara.
26
27
28
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2 Ferrara's image and reputation with consumers in California by creating confusion
3 about, and dissatisfaction with, the "Medicated Nerds Rope" products.
5 Ferrara's business reputation and relations with retail accounts in California by causing
6 customer dissatisfaction, a diminution in value of the goodwill associated with the
7 NERDS Marks, and a loss of Ferrara's sales and market share to its competition.
13 54. Tops' acts constitute unfair competition in violation of California Business
14 and Professions Code §§ 17200 et seq.
18 order enjoining and restraining Tops from selling any "Medicated Nerds Rope"
19 products, as well as to Tops' profits and other remedies provided by California Business
20 and Professions Code §§ 17200 et seq.
21 FIFTH CLAIM FOR RELIEF
22 (DILUTION IN VIOLATION OF CALIFORNIA BUSINESS
23 AND PROFESSIONS CODE §§ 14330-14335)
25 57. The NERDS Marks are famous and are widely recognized by the general
26 consuming public of the United States and of California as a designation of source of
27 the confectionary products.
28
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1 58. Tops' acts as described herein began after the NERDS Marks became
2 famous and have diluted the distinctive quality of the famous NERDS Marks in
3 violation of California Business and Professions Code §§ 14330-14335.
5 advertising of "Medicated Nerds Rope" products in California have been committed
7 the famous NERDS Marks and with a bad faith intent to cause dilution of the NERDS
8 Marks.
11 adequate remedy at law. If not restrained, Tops will have unfairly derived and will
12 continue to unfairly derive income, profits, and business opportunities as a result of
13 Tops' acts of dilution. Accordingly, Ferrara is entitled to, among other things, an order
14 enjoining and restraining Tops from selling any "Medicated Nerds Rope" products, as
15 well as to Tops' profits and other remedies provided by California Business and
16 Professions Code §§ 14330-14335.
17 SIXTH CLAIM FOR RELIEF
18 (UNFAIR COMPETITION IN VIOLATION
19 OF CALIFORNIA COMMON LAW)
21 62. Without Ferrara's consent, Tops has appropriated for its own use Ferrara's
22 NERDS Marks.
23 63. Tops has used the NERDS Marks in commerce in connection with the sale,
24 offering for sale, distribution, and/or advertising of "Medicated Nerds Rope" products.
25 These acts have caused or are likely to cause confusion, mistake, or deception as to the
26 source of origin, sponsorship, or approval of the "Medicated Nerds Rope" products that
27 Tops sells in that purchasers and others are likely to believe Ferrara authorizes and
28
- 13 -
1 controls Tops' sale of Medicated Nerds Rope" in California or that Tops is associated
2 with or related to Ferrara.
4 Ferrara's image and reputation with consumers in the United States by creating
5 confusion about, and dissatisfaction with, the "Medicated Nerds Rope" products.
7 Ferrara's business reputation and relations with retail accounts in California by causing
8 customer dissatisfaction, a diminution in value of the goodwill associated with the
9 NERDS Marks, and a loss of Ferrara's sales and market share to its competition.
11 advertising of "Medicated Nerds Rope" products in California have been committed
13 the NERDS Marks and with a bad faith intent to cause confusion and trade on Ferrara's
14 goodwill.
15 67. Tops' acts constitute unfair competition in violation of California common
16 law.
20 order enjoining and restraining Tops from selling any "Medicated Nerds Rope"
21 products, as well as to Tops' profits and other remedies provided by California law.
22 PRAYER FOR RELIEF
23 WHEREFORE, Ferrara prays that:
24 1. Tops, its successors, assigns, affiliates, subsidiaries, officers, employees,
25 agents, representatives, and all others in active concert or participation with them, be
26 permanently enjoined from the importation into, and the dealing, marketing, sale or
27 distribution in the United States, of "Medicated Nerds Rope" products;
28
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1 2. Tops, and all others holding by, through or under Tops, be required, jointly
2 and severally, to:
3 a. account for and pay over to Ferrara all profits derived by Tops from
4 its acts of trademark infringement and unfair competition in
5 accordance with 15 U.S.C. § 1117(a) and California common law,
6 and Ferrara asks that this award be trebled in accordance with 15
7 U.S.C. § 1117(a);
8 b. pay to Ferrara the costs of this action, together with reasonable
9 attorneys' fees and disbursements, in accordance with 15 U.S.C.
10 § 1117(a);
11 c. destroy all of the "Medicated Nerds Rope" products in its
12 possession, including packaging, and any advertising, marketing, or
13 promotional materials that include references to the "Medicated
14 Nerds Rope" products;
15 d. send a notice to any existing customers that the importation,
16 dealing in, sale, marketing, or distribution of "Medicated Nerds
17 Ropes" products is unlawful and that Tops has been enjoined by a
18 United States District Court from doing so; and
19 e. file with the Court and serve on Ferrara an affidavit setting forth in
20 detail the manner and form in which Tops has complied with the
21 terms of the injunction, in accordance with 15 U.S.C. § 1116.
22 3. Tops has such other and further relief as the Court deems just and
23 equitable.
24
25
26
27
28
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1 DEMAND FOR JURY TRIAL

2 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Ferrara demands a
3 trial by jury on all matters that may be so tried.
4
5 Dated: November 12, 2020 Respectfully submitted,

6
By: /s/Scott Lonardo
7
8 PRANGER LAW PC
Scott Lonardo
9 88 Guy Place, Suite 405
10 San Francisco, CA 94105
(415) 885-9800
11 slonardo@prangerlaw.com
12
PATTISHALL, MCAULIFFE,
13 NEWBURY, HILLIARD & GERALDSON
14 LLP
Phillip Barengolts
15 Jessica A. Ekhoff
16 Kristine A. Bergman
200 S. Wacker Dr., Ste. 2900
17 Chicago, IL 60606
18 (312) 554-8000
pb@pattishall.com
19 jae@pattishall.com
20 kab@pattishall.com
21
22
23
24
25
26
27
28
- 16 -

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Case 2:20-cv-10349-SVW-PD Document 1 Filed 11/12/20 Page 1 of 16 Page ID #:1

1 Phillip Barengolts (pro hac vice pending)

14 UNITED STATES DISTRICT COURT

16 FERRARA CANDY COMPANY, )

28 (collectively, "NERDS Marks") in connection with candy products.

1 9. Ferrara owns, among many others, the following federal trademark

1 33. Tops' acts constitute an infringement of Ferrara's trademark rights in

1 DEMAND FOR JURY TRIAL

5 Dated: November 12, 2020 Respectfully submitted,

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