By Peter Reap, J.D., LL.M.
A weighing of the relevant Polaroid factors revealed no likelihood of confusion between the trademark "Deli Express" for prepackaged convenience foods and a New York City deli’s use of "Deli Express" in its name and advertising.
A & M Deli Express (A&M) was not liable for infringing E.A. Sween Company’s (Sween’s) registered "Deli Express" mark for convenience foods by using "Deli Express" in both the name of its deli/restaurant and in advertising because analysis of the relevant Polaroid factors revealed that there was no likelihood of consumer confusion, the U.S. Court of Appeals in New York City has decided. In addition, because there was little similarity between the Deli Express brand and the A&M store, there was no trademark dilution under either the Lanham Act or New York state law. Therefore, a ruling by the federal district court in Brooklyn dismissing the complaint was affirmed (E.A. Sween Co., Inc. v. A&M Deli Express Inc., September 30, 2019, per curiam).
E.A. Sween Company sued Big City Deli Express Corp. for trademark infringement, unfair competition, and dilution. According to Sween, Big City infringed its "Deli Express" mark by: (1) operating a corporation with the legal name "Big City Deli Express Corp." and (2) employing an exterior sign that held itself out to the public as "Big City Deli Express and Pizza," even though the defendant had removed the word "Express" from the sign before the entry of default. After finding that the defendant’s default did not establish the conclusory allegations in Sween’s complaint, the court conducted a likelihood of confusion analysis de novo and ruled that Sween could not establish Big City’s liability for any of its claims. Sween appealed.
Procedural issues. Sween argued that the district court erred by dismissing its complaint sua sponte without giving it notice or an opportunity to be heard. The Second Circuit disagreed, noting that the magistrate judge gave Sween explicit notice that the district court would be considering dismissal and provided Sween an opportunity to be heard on the issue.
In addition, Sween contended that the lower court erred by dismissing the complaint because a defaulting party admits liability and the magistrate judge should not have conducted a merits analysis. The appellate court rejected this argument as well. In considering both Sween’s motion for default judgment and the propriety of dismissal for failure to state a claim, the district court was required to determine whether the facts, as alleged in well-pleaded, non-conclusory fashion, were sufficient to establish liability as a matter of law.
Trademark infringement. The court analyzed the trademark infringement and unfair competition claims together because they both required a showing of likelihood of confusion. Because the district court concluded that Sween alleged sufficient facts to meet the threshold requirements (protection, use in commerce, and use without consent), the sole issue on appeal was whether there was a likelihood of confusion between Sween’s mark and A&M’s use of Deli Express. Likelihood of confusion is determined by the eight-factor test developed in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961).
Here, the second factor (similarity) weighed in A&M’s favor. Sween argued that the magistrate judge erred by doing a side-by-side comparison of its Deli Express logos and the photos of A&M’s store. Sween was correct that serial, rather than side-by-side comparisons are preferable, the appellate court observed, but an examination of Sween’s mark and A&M’s store signage revealed a substantial amount of dissimilarity to the point where the differences were likely to be memorable enough to dispel confusion on serial viewing. The differences in use, font, colors, and arrangement were stark, according to the appellate court.
Sween also contended that it was error to fail to compare the parties’ use of the words "Deli Express" without the artwork. Even if this was error, it was harmless, the Second Circuit ruled. A comparison of the phrases "Deli Express" with "A & M Deli Express" and "Fresh for Less Deli Express" without considering the parties’ physical presentation of the words, e.g., the actual logos, revealed that they are not similar, the Second Circuit determined. Sween generally uses Deli Express to sell prepackaged convenience foods to retail outlets; it did not allege that it directly operated delis, convenience stores, or other similar retail operations. In contrast, A&M used "Deli Express" as the name of its store and for advertisements of its store. The uses are not so close that an ordinarily prudent consumer would confuse a freshly made sandwich bought at the "A & M Deli Express" store with a "Deli Express" sandwich from Sween’s line of prepackaged foods, the court reasoned.
The third Polaroid factor, proximity, also weighed in A&M’s favor. Market proximity asks whether the two products are in related areas of commerce and geographic proximity looks to the geographic separation of the products.Because Sween alleged that it sold its products in New York City, where A&M’s store is located, it alleged sufficient facts to show geographic proximity. The sole issue then was whether the parties were in close market proximity to each other.
Sween asserted that the strength of its mark and its use in the convenience food market was sufficient to show that it and A&M were competitively proximate. However, as discussed above, A&M’s usage of "Deli Express" was not confusingly similar to Sween’s mark. This weighed against a conclusion that consumers would confuse A&M’s sandwiches with Sween’s. The fact that A&M offered a different product, a deli counter, rather than prepackaged sandwiches, showed that the products are not in the same competitive arena.
The magistrate judge did err by concluding that the sixth factor (consumer sophistication) was neutral because it could be inferred that retail consumers (like A&M’s) were not as sophisticated as other types of purchasers, the appellate court found. However, the magistrate judge properly concluded that the seventh factor (bad faith) was neutral or slightly favored Sween and that the eighth factor (quality of goods) was neutral.
In conclusion, three factors weighed in Sween’s favor (strength of mark, consumer sophistication, and bad faith), one factor was neutral (quality of goods), and the remaining four factors (similarity, proximity, bridging the gap, and actual confusion) weighed in A&M’s favor. Taken as a whole, it was unlikely that consumers would confuse Sween’s Deli Express brand of prepackaged foods with the "A & M Deli Express" store.
Dilution. Sween argued that its mark was famous enough to warrant protection. But even if Sween sufficiently alleged that its mark was famous, the Second Circuit stated that it could affirm the dismissal of the dilution claim on the alternate ground that Sween did not allege facts showing that its mark was diluted, the court held.
Further, as discussed above, there was little similarly between Sween’s mark and A&M’s usage and Sween did not allege that the Deli Express brand was "widely recognized" beyond the fact that it won industry awards and had "significant" sales. Because there was little similarity between the Deli Express brand and the A&M store, the lower court properly dismissed the Lanham Act trademark dilution claim. For the same reasons, Sween’s state law dilution claim failed.
This case is No. 18-2998-cv.
Attorneys: Thomas H. Boyd (Winthrop & Weinstine, P.A) for E.A. Sween Co. and Minnesota Co. d/b/a Deli Express.
Companies: E.A. Sween Co.; Minnesota Co. d/b/a Deli Express; A&M Deli Express Inc.
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