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Going Together Like Cheese and Crackers…That’s The Problem Says the 7th Circuit

Kraft Foods, the large provider of retail food items, has sold CRACKER BARREL labeled cheeses in grocery stores for more than fifty-five years.  In fact, it owns a U.S. trademark registration for its mark, which was registered in 1957.  Kraft recently learned that the Cracker Barrel restaurant chain planned to launch a CRACKER BARREL branded food line into grocery stores, including packaged meat.  Kraft grew concerned that consumers would associate the two companies or would believe Kraft produced the new line of meat products, which could become an issue if Cracker Barrel’s meats failed to satisfy consumers.

For that reason, Kraft filed a lawsuit in the U.S. District Court for the Northern District of Illinois for trademark infringement, seeking to prevent Cracker Barrel from moving forward with its new product line.  The District Court granted Kraft’s request for preliminary injunction, meaning Cracker Barrel was prevented from selling its CRACKER BARREL branded goods into grocery stores until the full trial was completed.

Unhappy with the decision, Cracker Barrel appealed to the U.S. Court of Appeals for the Seventh Circuit, which upheld the District Court’s decision.  Knowing the details of each side’s case would be fleshed out at a subsequent trial, the Court of Appeals quickly analyzed the primary factors for determining trademark infringement.  Those factors include the similarity of the two marks, the similarity of the goods offered under those marks, and the trade channels in which those goods are sold. 

Although there are visual differences between the labels of each party’s CRACKER BARREL products, the marks share obvious similarities.  Additionally, Kraft is selling cheeses and Cracker Barrel is selling meats.  These goods, although not identical, are both “low-cost packaged food items,” which are commonly sold through the same distribution channels and are often displayed together in grocery stores.  For these reasons, the Court determined that there was enough of a likelihood of consumer confusion and risk to Kraft’s reputation to uphold the District Court’s preliminary injunction against Cracker Barrel.      

Despite the big-named parties, this, in a lot of ways, is a run-of-the-mill trademark infringement case.  Nevertheless, there are lessons for businesses here.  For one, Kraft should be lauded for registering its trademark early on, and developing and maintaining the brand over time.  Trademarks deserving of strong protection contain those ingredients.  Kraft should also be credited for taking swift action to enforce its mark because, in many instances, the longer one waits, the harder it is to stop the allegedly infringing use. 

Cracker Barrel’s story, on the other hand, allows us to think about business forecasting and brand expansion.  As we know, Cracker Barrel is in the restaurant business.  When it selected its trademark, it was probably not concerned all that much by Kraft’s prior trademark registration for cheeses because, at the time, Cracker Barrel was presumably not selling packaged food products.  However, its success and growth in providing restaurant services has led Cracker Barrel to expand its brand into grocery stores and into a conflict with Kraft.  By initially selecting the brand it did, Cracker Barrel always ran the risk of boxing itself out of certain markets (in this case, supermarkets).

Of course the nature and direction of growth is difficult to predict, but businesses should always keep the future in view and try to avoid making choices that present potential business and legal risks.  This is especially true when those risks involve the company’s valuable brand.



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