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Most people who have strolled down the aisles in a grocery store have noticed two versions of almost every product � the brand-name version and a private-label version that intentionally imitates the trade dress of its brand-name counterpart. Indeed, as of 2005, private-label sales represented 20% of all U.S. supermarket, drug chain and mass merchandiser sales and totaled $50 billion. It seems that for every box of cereal, tube of toothpaste or roll of toilet paper, there are private-label imitations of brand-name products. While these goods bear their own private brand name � either the retail store’s name or a name created exclusively for the retailer � they endeavor to emulate the trade dress of their national brand-name counterparts by using labels and packaging consisting of identical or similar shapes, colors and fonts. Such imitation allows private labelers to benefit from the advertising and promotional efforts of the national brands they imitate. Moreover, private-label products play on increased consumer awareness of national brands by placing their own products, which are inevitably less expensive, adjacent to their brand-name counterparts on supermarket shelves. This “me-too phenomenon” is undeniably strong, and is happening more frequently brand to brand. National-brand owners contend that private-label products have been designed to trade on the goodwill of the national brands and to confuse consumers. As a result, large national brand-name companies have filed a slew of lawsuits against private-label companies in recent years, demonstrating their desire to warn private labelers off infringement of their trademarks and trade dress. For example, in 2006, The Procter & Gamble Co. reportedly filed a number of trade dress infringement actions against private-label manufacturers that deliberately imitated the trade dress of such products as Herbal Essences hair care products, Head & Shoulders shampoo and Crest Pro-Health Rinse. See, e.g., The Procter & Gamble Co. v. Vi-Jon Labs., No. 1:06-CV-01137 (S.D.N.Y. filed Feb. 15, 2006). Following this trend, Mead Johnson & Co. late last year served a complaint against a private-label manufacturer for trade dress infringement, among other claims, based on the introduction of a store-brand infant formula, the packaging of which mimics the trade dress of Mead Johnson’s Enfamil Lipil infant formula. The complaint alleges that the private-label formula is sold alongside Enfamil Lipil in wholesale retail facilities such as Sam’s Club, and that following the arrival of this “copycat product,” Mead Johnson experienced “a measurable and significant downturn in sales.” Mead Johnson Co. v. PBM Nutritionals LLC, No. 1:06-CV-1246 (S.D. Ind. filed Aug. 18, 2006). Legal commentators have asserted that the practices employed by private-label manufacturers effectively remove the element of choice in a consumer’s decision because consumers are duped into buying an inferior imitation. On the other hand, it has been argued that the end goal of private labelers’ blatant imitation is not consumer confusion, but rather to aid consumers by identifying the private-label product as a cheaper imitation of its brand-name counterpart. Manufacturers of private-label products contend that the packages must mimic the brand-name counterparts so consumers can be reassured in their own minds that the products do the same things. There are only a handful of published opinions discussing the validity of the private-label approach, despite the amount of litigation in this area. The most frequently cited case discussing the issue appears to be the U.S. Court of Appeals for the Federal Circuit’s opinion in Conopco Inc. v. May Department Stores Co., 46 F.3d 1556 (Fed. Cir. 1994), cert. denied, 115 S. Ct. 1724 (1995), in which the plaintiff sued the manufacturer and retailer of a private-label imitation of the plaintiff’s Vaseline Intensive Care lotion. Prior to Conopco, most of the published cases indicated a reluctance by courts to tolerate intentional copying by private-label manufacturers. Specifically, courts often presumed a likelihood of confusion from a private-label manufacturer’s deliberate imitation. In Conopco, however, the Federal Circuit rejected this presumption, and ruled in favor of the private-label manufacturer and retailer. Although the defendant had intentionally copied the Vaseline packaging, the Federal Circuit held that there was no likelihood of confusion because the private label prominently displayed the retailer’s nationally recognized logo. Specifically, the court stated that “[t]he retailer packages its product in a manner to make it clear to the consumer that the product is similar to the national brand, and is intended for the same purpose. At the same time, the retailer clearly marks its product with its private logo, and expressly invites the consumer to compare its product with that of the national brand, by name.” Id. at 1565. Thus, under Conopco, even when private-label products intentionally imitate the trade dress of their brand-name competitors, if such packaging is clearly labeled and differentiated, such competition will not be deemed presumptively unlawful. No intent to create confusion Recent published opinions addressing this issue appear to favor private-label manufacturers when the private-label trademark is prominently displayed in connection with the product and the packaging includes other differentiating indicia such as disclaimers or “compare to” statements. For example, in McKeon Products Inc. v. Flents Products Co., 69 U.S.P.Q.2d 1032, 1033 (E.D. Mich. 2003), the plaintiff, which manufactured and sold earplugs under the brand name “Mack’s,” sued a private-label manufacturer of earplugs. While the defendant’s packaging was deliberately similar to the plaintiff’s trade dress, it did prominently display the name of the store in which the earplugs were sold (i.e., Walgreens or Albertson’s). Additionally, the Walgreens private-label earplugs contained the statement, “Compare to Mack’s.” Based on the use of Walgreens or Albertson’s marks and this comparative statement, the court denied the plaintiff’s request for injunctive relief. The court held that although “Walgreens and Albertson’s deliberately made the trade dress similar to [the plaintiff's] product, they presumably did so not to confuse the customer into thinking they were buying [the plaintiff's] product, but rather to force the customer to choose between the more expensive brand name and the less expensive private label. Thus, there is no intention to create confusion as to the source of the competitive products.” Id. at 1039. The defendant made a similar argument in the recent case of Klein-Becker USA LLC v. Product Quest Manufacturing Inc., 429 F. Supp. 2d 1248, 1258 (D. Utah 2005), in which a Utah district court found there was no likelihood of confusion despite similarities between the trade dress of the plaintiff’s skin cream product and its private-label competitor, when the packaging contained the private label trademark, “compare to” advertising and a disclaimer. As in McKeon, the defendants argued that “to achieve the private label industry goal of providing less expensive but similar alternatives, the private label always creates a physical resemblance between a private label product and the name-brand product with which it competes. The resemblance between these types of products serves to alert consumers to the functional equivalence between the two.” Id. at 1257. The Southern District of New York also adopted this line of reasoning in Pfizer Inc. v. Perrigo Co., 988 F. Supp. 686 (S.D.N.Y. 1997), in which Pfizer, the manufacturer of Plax dental rinse, brought a trade dress infringement claim against Perrigo, a private-label manufacturer. As in the McKeon and Klein-Becker cases, Perrigo used its own logo on its product’s packaging, the logo was prominently displayed and many of its products included a disclaimer urging shoppers to “compare to PLAX(r).” The district court found that while Perrigo “unquestionably seeks to imitate Pfizer and get a ‘free ride’ at Pfizer’s expense, Perrigo does not intend to deceive or to confuse customers into believing that they are buying Pfizer’s products when they are actually buying Perrigo’s products.” Id. at 700. Rather, the court held that Perrigo imitated Pfizer’s trade dress “to send a message that its products are as good as the national brand products.” Id. at 699. The court noted that while it was “sympathetic to Pfizer’s frustration at what it described as being ‘stalked’ by a competitor who seeks to deliver an equivalent product without going through the same expense,” it was not convinced that consumer confusion would occur as a result of Perrigo’s actions. Id. at 701. Most recently, the Eastern District of Pennsylvania denied a preliminary injunction motion filed by the manufacturer of Splenda artificial sweetener, McNeil Nutritionals LLC, against Heartland Sweeteners LLC, which packages, sells and distributes store-brand artificial sweetener products to a number of retail chains such as Food Lion, Safeway and Ahold. McNeil Nutritionals LLC v. Heartland Sweeteners LLC, No. 06-5336, 2007 WL 1520101 (E.D. Pa. May 21, 2007). McNeil’s complaint alleged that Heartland’s trade dress was likely to cause consumer confusion because it imitated many aspects of the Splenda trade dress, including a yellow background and blue italicized lettering. The district court, however, found that the “overall impression of [the] Heartland products [was] that they [were] not similar to the Splenda individual packet.” For example, the Heartland packets prominently displayed alternate product names such as “Sweetener” or “Sucralose,” and contained the store name and/or logo. The court also noted that the following facts dispelled a likelihood of confusion: Consumers are highly aware of the existence of store-brand products; when consumers are shopping in a particular store they are aware of the store’s name; each of the Heartland products on sale in grocery stores displayed the store name/logo; and the Heartland and Splenda products typically appear next to each other. In addition, the court found that price differentials and shelf-talkers inviting the consumer to compare and save indicated to the consumer that the Heartland and Splenda products were not the same. It should be noted that a court may be less likely to find in favor of the private-label manufacturer, even if its trademark is prominently displayed, if that trademark is relatively unknown to consumers. Both the Conopco and McKeon courts recognized that consumers had been extensively exposed to the private-label trademark, thereby reducing the likelihood that consumers would identify that trademark with the brand-name manufacturer. Specifically, in McKeon, the court recognized that the potential for confusion was minimized, not only because of the prominent placement of the private label trademarks, i.e., Walgreens and Albertson’s, but also because those marks are “strong trademarks in their own right, perhaps more well known than the [brand-name] trademark.” McKeon Products Inc., 69 U.S.P.Q.2d at 1035-36. What brand owners can do Regardless of the motivation behind private labelers’ imitation of brand-name products, national-brand manufacturers must vigilantly monitor these copycats, as their actions can be detrimental to the goodwill built up in the national brand’s trade dress. The question then becomes: What can brand-name manufacturers do to protect their valuable trade dress from private-label imitators? First, the national-brand owner must ensure that the trade dress in which it is investing so much time and money qualifies for trade dress protection under federal law. Some national-brand owners modify the trade dress of their products to distance those products from private-label brands eroding their sales. The national-brand owner must ensure that the new trade dress qualifies for trade dress protection. This means that the trade dress is either “inherently distinctive” (i.e., its intrinsic nature serves to identify the source of the product), or has acquired distinctiveness through secondary meaning (i.e., over time, customers may associate the primary significance of a trade dress feature with the source of the product rather than the product itself). Thus, it is critical for brand-name owners to select a trade dress that is new or different, so that it will not be subject to claims that it is generic, commonplace or functional. If the brand-name owner is intent on selecting a common trade dress, it should heavily emphasize that trade dress in advertising and marketing efforts (i.e., “Look for the Orange Bottle”) in order to establish secondary meaning as quickly as possible. In that same vein, the national brand owner should maintain as much evidence as possible demonstrating consumer recognition of its trade dress, including everything from quantitative data to letters from satisfied customers who recognize the national brand as the source of a product with a unique trade dress. Moreover, any and all instances of actual confusion between the brand-name and private-label trademarks should be well documented by individuals in the sales, advertising and distribution chain. Second, a brand-name owner should consider obtaining a federal registration for its trade dress. Trade dress can be registered as a trademark with the U.S. Patent and Trademark Office (PTO), as long as the trade dress is inherently distinctive or has acquired secondary meaning and is nonfunctional. While unregistered trade dress may be protected under � 43(a) of the Lanham Act, as well as state statutes and common law, there are important benefits that accompany a federal registration. A registration is admissible as prima facie evidence of the owner’s rights in and to the trade dress, it serves as the foundation for nationwide protection of trade dress rights, it establishes federal jurisdiction in infringement actions and it provides the basis for treble damages. Third, a national-brand owner must consistently take action against private-label imitators when action is warranted (e.g., the private-label trademark is not prominently displayed and/or is relatively unknown to consumers) � it cannot be permissive in allowing private-label growth around it, nor can it pick and choose which private-label imitators it goes after. In Warner Lambert Co. v. McCrory’s Corp., 718 F. Supp. 389,393, 394 (D.N.J. 1989), three to six years of inaction by the brand-name manufacturer of Listerine Antiseptic mouthwash prevented it from obtaining injunctive relief against a retailer that sold a private label imitation. The court found that the brand name’s “conscious inattention . . . towards private label brands that have virtually the same trade dress as [the defendant's] brand severely undercuts plaintiff’s claim that it faces irreparable damage.” In sum, the shelves of our local grocery stores and discount department store chains demonstrate that the “me-too phenomenon” by private-label manufacturers is undeniably strong, and is happening more frequently brand to brand. Recent rulings by federal district courts in favor of private-label manufacturers only further the need for heightened awareness by national-brand owners. While these cases are extremely fact specific, they likely will embolden private-label imitators and lead to a continued increase in production of private-label products. Patricia B. Cunningham is a partner, and Erin C. Witkow is an associate, in the Atlanta office of Sutherland Asbill & Brennan. Both focus on intellectual property litigation.

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