McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC

Majority - Fisher, Circuit Judge

Yes, the District Court clearly erred in its ultimate finding of no likelihood of confusion for the Ahold store-brand products, thereby abusing its discretion in denying a preliminary injunction for those products. However, no, the District Court did not clearly err in finding no likelihood of confusion for the Food Lion and Safeway store-brand products. The court affirmed the denial of injunctive relief for Food Lion and Safeway products but reversed for Ahold products. To establish trade dress infringement under the Lanham Act, a plaintiff must prove the design is non-functional, distinctive, and creates a likelihood of confusion. This appeal focused solely on the 'likelihood of confusion' factor, using the ten 'Lapp' factors. The Court of Appeals found that the 'degree of similarity' (first Lapp factor) is the single most important factor, especially when goods are directly competing, and this factor involves assessing the 'overall impression' created by the trade dresses, not just minute differences. While a side-by-side comparison is appropriate when products are typically displayed together, the prominent presence of a well-known store brand name or distinctive logo on look-alike packaging can sufficiently differentiate the trade dress. For the Food Lion and Safeway products, the District Court did not clearly err in finding insufficient similarity due to the prominent display of the Food Lion logo and vertical design element, and the Safeway logo and S-shaped design element, respectively. These features created an overall impression sufficiently different from Splenda. The court rejected McNeil's arguments that similarities should weigh more heavily than differences and that color coding alone dictates confusion, noting consumers are aware of store brands and other yellow products in the sugar aisle. Regarding consumer care (third Lapp factor), the court found no clear error in the District Court's conclusion that sucralose consumers exercise heightened care due to health concerns, as the 'least sophisticated consumer' standard applies to mixed classes of professional and ordinary buyers, not solely to a class of ordinary consumers. On actual confusion (sixth Lapp factor), the court upheld the District Court's assessment that Margaret Grossman's testimony was not representative of a reasonably prudent purchaser, as she was a 'surgical strike' shopper, brand indifferent, high-income, and not wearing reading glasses. Isolated or de minimis instances of confusion from unrepresentative consumers do not compel a finding of actual confusion. However, the District Court clearly erred in its ultimate balancing of the Lapp factors for the Ahold products. Despite weighing the first, second, seventh, eighth, and ninth Lapp factors in McNeil's favor for Ahold products (and the third, fourth, and tenth as neutral), the District Court improperly concluded no likelihood of confusion. The Ahold packaging lacked the prominently displayed distinguishing store-specific features present on the Food Lion and Safeway packages, rendering the overall similarity to Splenda too high to be overcome by other general market factors like awareness of store brands or price differentials. The court clarified that the explanation for store-brand differentiation (`Conopeo` reasoning) is considered within the first `Lapp` factor, not as an independent defense that grants per se immunity to store brands simply by affixing a tiny label.