Judges: Posner
Filed: Nov. 14, 2013
Latest Update: Mar. 02, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 13-2559 KRAFT FOODS GROUP BRANDS LLC, Plaintiff-Appellee, v. CRACKER BARREL OLD COUNTRY STORE, INC., et al., Defendants-Appellants, and JOHN MORRELL & CO., Intervening Defendant-Appellant. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 780 — Robert W. Gettleman, Judge. _ ARGUED SEPTEMBER 9, 2013 — DECIDED NOVEMBER 14, 2013 _ Before POSNER, ROVNER, and HAMILTON, Ci
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 13-2559 KRAFT FOODS GROUP BRANDS LLC, Plaintiff-Appellee, v. CRACKER BARREL OLD COUNTRY STORE, INC., et al., Defendants-Appellants, and JOHN MORRELL & CO., Intervening Defendant-Appellant. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 780 — Robert W. Gettleman, Judge. _ ARGUED SEPTEMBER 9, 2013 — DECIDED NOVEMBER 14, 2013 _ Before POSNER, ROVNER, and HAMILTON, Cir..
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐2559
KRAFT FOODS GROUP BRANDS LLC,
Plaintiff‐Appellee,
v.
CRACKER BARREL OLD COUNTRY STORE, INC., et al.,
Defendants‐Appellants,
and
JOHN MORRELL & CO.,
Intervening Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 780 — Robert W. Gettleman, Judge.
____________________
ARGUED SEPTEMBER 9, 2013 — DECIDED NOVEMBER 14, 2013
____________________
Before POSNER, ROVNER, and HAMILTON, Circuit Judges.
POSNER, Circuit Judge. This is a trademark infringement
suit (see Lanham Act, 15 U.S.C. §§ 1051 et seq.) brought by
Kraft against Cracker Barrel Old Country Store (we can dis‐
regard the other parties). The district judge granted Kraft a
preliminary injunction against the sale by Cracker Barrel Old
2 No. 13‐2559
Country Store of food products to grocery stores under the
name Cracker Barrel, which is a registered trademark of
Kraft. To prevent confusion (an especially apt goal in a
trademark case), we’ll call Cracker Barrel Old Country Store
“CBOCS,” as do the parties.
Kraft is a well‐known manufacturer of food products
sold in grocery stores. Its products include a wide variety of
packaged cheeses, a number of them sold under the trade‐
marked “Cracker Barrel” label. Kraft has been selling cheese
in grocery stores under that name for more than half a cen‐
tury. Thousands of grocery stores carry Kraft cheeses bear‐
ing that label. Kraft does not sell any non‐cheese products
under the name Cracker Barrel.
CBOCS is a well‐known chain of low‐price restaurants (it
opened its first restaurant in 1969), 620 in number at last
count, many of them just off major highways. Upon learning
recently that CBOCS planned to sell a variety of food prod‐
ucts (not including cheese, however), such as packaged
hams, in grocery stores under its logo, “Cracker Barrel Old
Country Store” (the last three words are in smaller type in the
logo), Kraft filed this suit. It claims that many consumers
will be confused by the similarity of the logos and think that
food products so labeled are Kraft products, with the result
that if they are dissatisfied with a CBOCS product they will
blame Kraft.
Kraft acknowledges that a trademark does not entitle its
owner to prevent all other uses of similar or even identical
marks. “It would be hard, for example, for the seller of a
steam shovel to find ground for complaint in the use of his
trade‐mark on a lipstick.” L.E. Waterman Co. v. Gordon, 72
F.2d 272, 273 (2d Cir. 1934) (L. Hand, J.). And likewise iden‐
No. 13‐2559 3
tical marks used on similar products sold through different
types of sales outlet might cause no confusion—indeed Kraft
does not question CBOCS’s right to sell the food products at
issue under the name Cracker Barrel in CBOCS’s restaurants,
in CBOCS’s small “country stores” that adjoin the restau‐
rants, or by mail order or on the Web. It objects only to their
sale in grocery stores. The district judge found the likelihood
of confusion, and of resulting harm to Kraft, from CBOCS’s
selling through such outlets sufficient to warrant the grant of
a preliminary injunction. These are factual determinations,
which bind us unless clearly erroneous, Eli Lilly & Co. v.
Natural Answers, Inc., 233 F.3d 456, 462 (7th Cir. 2000); Scan‐
dia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1427–28 (7th
Cir. 1985)—a reinforcing consideration being the need for
expeditious determination of whether to order preliminary
relief. The district judge must act with a certain haste, and
we must hesitate to nitpick his findings and casually remand
for further proceedings bound to cause additional delay.
Kraft moved for a preliminary injunction on March 8 of this
year; it was granted on July 1; it is now November. The grant
of the preliminary injunction followed extensive discovery,
the presentation of expert evidence, and some live testimo‐
ny. Of the allegedly infringing CBOCS products, only the
spiral hams had been shipped to grocery stores before the
preliminary injunction was issued; and by then the stores
had sold them all.
Below, copied from CBOCS’s website, is a picture of the
logo that appeared on CBOCS food products shipped to gro‐
cery stores.
4 No. 13‐2559
Up close at least, it looks different from the label “Cracker
Barrel” that appears on Kraft’s cheeses. Yet even if a Cracker
Barrel cheese and a CBOCS ham (or other food products)
were displayed side by side in a grocery store, which would
make a shopper likely to notice the difference between the
labels, the words “Cracker Barrel” on both labels—and in
much larger type than “Old Country Store” on CBOCS’s la‐
bel—might lead the shopper to think them both Kraft prod‐
ucts.
Most consumers of Cracker Barrel cheese must know
that it’s a Kraft product, for the name “Kraft” typically
though not invariably appears on the label, as in the follow‐
ing picture:
No. 13‐2559 5
Kraft is concerned with the potential for confusion of shop‐
pers at the 16,000 or so grocery stores (or similar retail enti‐
ties) that sell Cracker Barrel cheeses, if the stores also carry
CBOCS food products under the CBOCS logo (not only ham
but also delicatessen meats, bacon, sausages, jerky, meat
glazes, baking mixes, coating mixes, oatmeal, grits, and gra‐
vies—all are sold by CBOCS). Were Cracker Barrel cheeses
and Cracker Barrel meats exhibited side by side on the shelf,
the difference in the appearance of the logos of the two
brands might as we said lead some consumers to think they
were made by different companies—but might lead others to
think the opposite, since different products of the same
manufacturer are often exhibited together. If on the other
hand the Kraft cheeses and CBOCS food products are at dif‐
ferent locations in the store, some consumers might forget
the difference between the logos and think all the products
Kraft products. Cf. Ty, Inc. v. Jones Group, Inc., 237 F.3d 891,
898–99 (7th Cir. 2001). Even savvy consumers might be
fooled, because they know that producers often vary the ap‐
pearance of their trademarks.
It’s not the fact that the parties’ trade names are so simi‐
lar that is decisive, nor even the fact that the products are
similar (low‐cost packaged food items). It is those similari‐
6 No. 13‐2559
ties coupled with the fact that, if CBOCS prevails in this suit,
similar products with confusingly similar trade names will
be sold through the same distribution channel—grocery
stores, and often the same grocery stores—and advertised
together. (In the brief period before the preliminary injunc‐
tion was issued, in which CBOCS hams were sold in grocery
stores, an online ad for Cracker Barrel Sliced Spiral Ham by
a coupons firm provided a link to a coupon for Kraft’s
Cracker Barrel cheeses.) The competing products would also
be likely to appear in the same store circulars. Such similari‐
ties and overlap would increase the likelihood of consumer
confusion detrimental to Kraft. See CAE, Inc. v. Clean Air En‐
gineering, Inc., 267 F.3d 660, 682 (7th Cir. 2001); Ty, Inc. v.
Jones Group, Inc., supra, 237 F.3d at 900–01.
Still another reason to expect confusion is that both
Cracker Barrel cheeses and most meat products that CBOCS
has licensed for sale to grocery stores are inexpensive—
under $5. Generally only very cost‐conscious consumers are
apt to scrutinize carefully the labels of the less expensive
items sold in a grocery store. Familiarity is likely to have
made the name Cracker Barrel salient to grocery shoppers,
and so any product bearing that name might be attributed to
Kraft even if close scrutiny of the label would suggest that
the product might well have a different origin.
If a significant number of consumers confused the names
and thought CBOCS’s products were made by Kraft, Kraft
could be badly hurt. A trademark’s value is the saving in
search costs made possible by the information that the
trademark conveys about the quality of the trademark own‐
er’s brand. The brand’s reputation for quality depends on
the owner’s expenditures on product quality and quality
No. 13‐2559 7
control, service, advertising, and so on. Once the reputation
is created, the firm will obtain greater profits because repeat
purchases and word‐of‐mouth endorsements will add to
sales and because consumers will be willing to pay a higher
price in exchange for a savings in search costs and an assur‐
ance of consistent quality. These benefits depend on the
firm’s ability to maintain that consistent quality. When a
brand’s quality is inconsistent, consumers learn that the
trademark does not enable them to predict their future con‐
sumption experiences from their past ones. The trademark
does not then reduce their search costs. They become unwill‐
ing to pay more for the branded than for the unbranded
good, and so the firm no longer earns a sufficient return on
its expenditures on promoting the trademark to justify them.
The particular danger for Kraft of CBOCS’s being al‐
lowed to sell food products through the same outlets under
a trade name confusingly similar to Kraft’s “Cracker Barrel”
trade name is that if CBOCS’s products are inferior in any
respect to what the consumer expects—if a consumer has a
bad experience with a CBOCS product and blames Kraft,
thinking it the producer—Kraft’s sales of Cracker Barrel
cheeses are likely to decline; for a consumer who thinks
Kraft makes bad hams may decide it probably makes bad
cheeses as well. See, e.g., Ty Inc. v. Perryman, 306 F.3d 509,
510 (7th Cir. 2002); Omega Importing Corp. v. Petri‐Kine Cam‐
era Co., 451 F.2d 1190, 1195 (2d Cir. 1971) (Friendly, C.J.).
Granted, there is a consumer interest that is in tension
with the interest in avoiding confusion. Consumers benefit
from having a variety of products to choose among. CBOCS
wants to offer grocery shoppers products that it sells in its
restaurants. Think Starbucks—a notable example of a chain
8 No. 13‐2559
of restaurants (coffee houses) that sells its major food prod‐
uct (coffee) in grocery stores as well. The preliminary injunc‐
tion prevents CBOCS from doing that pending resolution of
the case. But CBOCS has and utilizes an alternative channel
to its consumers, outside the restaurant channel—an alterna‐
tive channel of ever greater significance in the electronic age:
the Web. CBOCS’s 620 restaurants invite their legions of cus‐
tomers to visit the CBOCS website, which displays pictures
of the hams and other food products that it sells and links
for buying the food from CBOCS online. Some of the foods
are also sold in CBOCS’s “country stores” adjoining the res‐
taurants. Yet doubtless CBOCS thinks it can reach additional
consumers by placing its food products in grocery stores—
else it wouldn’t have issued the licenses that invited this suit
(which it anticipated).
So competition in food products will be harmed if
CBOCS prevails in this suit, to the extent that the sale of
CBOCS food products in grocery stores confuses consumers
and as a result impairs sales of Kraft products for reasons
having nothing to do with any product‐quality problems
with Kraft. But competition will be helped to the extent that
grocery stores are able to offer their customers an additional
product line. The weighing and balancing of these compet‐
ing interests with any precision are not feasible undertakings
in a preliminary‐injunction proceeding, and probably not in
a full trial either. Imponderables are likely to dominate.
About all that is feasible at the preliminary‐injunction
stage is for the judge to estimate the likelihood that the
plaintiff will prevail in a full trial and which of the parties is
likely to be harmed more by a ruling, granting or denying a
preliminary injunction, in favor of the other party, and com‐
No. 13‐2559 9
bine these findings in the manner suggested in such cases as
Abbott Laboratories v. Mead Johnson & Co., 971 F.2d 6, 12 (7th
Cir. 1992): “the more likely it is the plaintiff will succeed on
the merits, the less the balance of irreparable harms need
weigh towards its side; the less likely it is the plaintiff will
succeed, the more the balance need weigh towards its side.”
See also Grocery Outlet Inc. v. Albertson’s Inc., 497 F.3d 949,
951 (9th Cir. 2007) (per curiam).
But for the grant of a preliminary injunction to be proper,
the harm to the plaintiff also must be judged irreparable—
meaning not fully compensable or avoidable by the issuance
of a final judgment (whether a damages judgment or a per‐
manent injunction, or both) in the plaintiff’s favor. See, e.g.,
Abbott Laboratories v. Mead Johnson & Co., supra, 971 F.2d at
16–17; Processed Plastic Co. v. Warner Communications, Inc.,
675 F.2d 852, 858 (7th Cir. 1982). For if the harm can be fully
repaired in the final judgment, there is no reason to hurry
the adjudicative process.
Consistent with this analysis, if the plaintiff has a strong
likelihood of prevailing in the full trial, and the costs to him
if the preliminary injunction is denied are at least as great as
the costs to the defendant if it is granted, and the plaintiff’s
costs could not be fully recouped by him in a final judgment
in his favor, the injunction should be issued. Roland Machin‐
ery Co. v. Dresser Industries, Inc., 749 F.2d 380, 387–88 (7th Cir.
1984); Omega Satellite Products Co. v. City of Indianapolis, 694
F.2d 119, 123 (7th Cir. 1982); 11A Charles Alan Wright, Ar‐
thur R. Miller & Mary K. Kane, Federal Practice and Procedure
§ 2948.3, pp. 202–11 (3d ed. 2013); cf. Weinberger v. Romero‐
Barcelo, 456 U.S. 305, 312 (1982). That seems the situation
here, given the district judge’s findings. The likelihood of
10 No. 13‐2559
confusion seems substantial and the risk to Kraft of the loss
of valuable goodwill and control therefore palpable. And as
emphasized in the Abbott Laboratories and Processed Plastics
opinions cited earlier, irreparable harm is especially likely in
a trademark case because of the difficulty of quantifying the
likely effect on a brand of a nontrivial period of consumer
confusion (and the interval between the filing of a trademark
infringement complaint and final judgment is sure not to be
trivial). And on the other side of the ledger, there is no in‐
formation on how many new customers CBOCS can expect
to obtain by selling through grocery stores, given that it al‐
ready sells its food products at its country stores and on its
website. So there is no basis for concluding that it is losing
heavily as a result of not being able to sell through grocery
stores until and unless it obtains a final judgment in its fa‐
vor.
So the grant of the preliminary injunction must be af‐
firmed. But mainly for future reference we want to say
something about the consumer survey that Kraft presented
in support of its claim of confusion. Consumer surveys con‐
ducted by party‐hired expert witnesses are prone to bias.
There is such a wide choice of survey designs, none fool‐
proof, involving such issues as sample selection and size,
presentation of the allegedly confusing products to the con‐
sumers involved in the survey, and phrasing of questions in
a way that is intended to elicit the surveyor’s desired re‐
sponse—confusion or lack thereof—from the survey re‐
spondents. See Robert H. Thornburg, “Trademark Surveys:
Development of Computer‐Based Survey Methods,” 4 John
Marshall Rev. Intellectual Property L. 91, 97 (2005); Michael
Rappeport, “Litigation Surveys—Social ‘Science’ as Evi‐
dence,” 92 Trademark Rep. 957, 960–61 (2002); Jacob Jacoby,
No. 13‐2559 11
“Experimental Design and the Selection of Controls in
Trademark and Deceptive Advertising Surveys,” 92 Trade‐
mark Rep. 890, 890 (2002); see also Joseph Sanders, “Science,
Law, and the Expert Witness,” 72 Law & Contemp. Probs.,
Winter 2009, pp. 63, 73–75. Among the problems identified
by the academic literature are the following: when a con‐
sumer is a survey respondent, this changes the normal envi‐
ronment in which he or she encounters, compares, and re‐
acts to trademarks; a survey that produces results contrary
to the interest of the party that sponsored the survey may be
suppressed and thus never become a part of the trial record;
and the expert witnesses who conduct surveys in aid of liti‐
gation are likely to be biased in favor of the party that hired
and is paying them, usually generously. All too often “ex‐
perts abandon objectivity and become advocates for the side
that hired them.” Id. at 75.
Of course, judges and jurors have their own biases and
blind spots. As Judge Jerome Frank noted many years ago,
dissenting in a pair of trademark cases that Seventeen maga‐
zine had brought against the makers of “Miss Seventeen”
girdles, “as neither the trial judge nor any member of this
court is (or resembles) a teen‐age girl or the mother or sister
of such a girl, our judicial notice apparatus will not work
well unless we feed it with information directly obtained
from ‘teen‐agersʹ or from their female relatives accustomed
to shop for them.” Triangle Publications, Inc. v. Rohrlich, 167
F.2d 969, 976 (2d Cir. 1948). And so a judge’s finding that
confusion was likely was “nothing but a surmise, a conjec‐
ture, a guess.” Id.
Nevertheless it’s clear that caution is required in the
screening of proposed experts on consumer surveys. Kraft’s
12 No. 13‐2559
expert in this case was Hal Poret, an experienced survey re‐
searcher, and we won’t hold it against him that he appears
to be basically a professional expert witness. See
www.pli.edu/Content/Faculty/Hal_Poret/_/N‐4oZ1z138h0?
ID=PE830174 (visited Nov. 13, 2013). Poret was able to ob‐
tain a random or at least representative sample of 300 Amer‐
ican consumers of whole‐ham products, email them photo‐
graphs of the CBOCS sliced spiral ham, and ask them in the
email whether the company that makes the ham also makes
other products—and if so what products. About a quarter of
the respondents said cheese. It’s difficult to know what to
make of this. The respondents may have assumed that a
company with a logo that does not specify a particular food
product doesn’t make just sliced spiral ham. So now they
have to guess what else such a company would make. Well,
maybe cheese.
Poret showed a control group of 100 respondents essen‐
tially the same ham, but made by Smithfield—and none of
these respondents said that Smithfield also makes cheese.
Poret inferred from this that the name “Cracker Barrel” on
the ham shown the 300 respondents had triggered their rec‐
ollection of Cracker Barrel cheese, rather than the word
“ham” being the trigger. That is plausible, but its relevance
is obscure. Kraft’s concern is not that people will think that
Cracker Barrel cheeses are made by CBOCS but that they
will think that CBOCS ham is made by Kraft, in which event
if they have a bad experience with the ham they’ll blame
Kraft.
Also it’s very difficult to compare people’s reactions to
photographs shown to them online by a survey company to
their reactions to products they are looking at in a grocery
No. 13‐2559 13
store and trying to decide whether to buy. The contexts are
radically different, and the stakes much higher when actual
shopping decisions have to be made (because that means
parting with money), which may influence responses.
In some cases an attractive alternative to a survey might
be the use of statistical data to determine the effect of the al‐
legedly infringing logo. Suppose that before this suit was
filed, CBOCS products had been sold for a time in a number
of grocery stores. Probably in some of them Kraft Cracker
Barrel cheese would have been displayed side by side with
CBOCS hams plus similar meat products sold at comparable
prices, while in other stores the cheeses and the hams would
have been displayed in different areas of the store, and still
other grocery stores would have carried CBOCS hams but
not Kraft Cracker Barrel cheese. By examining the “lift”
(greater sales) if any that CBOCS hams obtain by proximity
to the Kraft Cracker Barrel label, an expert witness might be
able to estimate the extent of consumer confusion. The great‐
er the lift (and hence the greater the confusion) the greater
the likelihood of a consumer’s blaming Kraft as the sup‐
posed maker of the CBOCS hams if the consumer has a bad
experience with the hams. Such a study would not have
been feasible in this case, however, given the grant of the
preliminary injunction, which has kept CBOCS hams with its
Cracker Barrel logo out of grocery stores for now. Nor have
we such confidence in the reliability of such a study that we
would think it an adequate basis for refusing to grant pre‐
liminary injunctions in trademark cases.
We can imagine other types of expert testimony that
might be illuminating in a case such as this—testimony by
experts on retail food products about the buying habits and
14 No. 13‐2559
psychology of consumers of inexpensive food products.
“Although the ordinary consumer’s mindset is central to
trademark law and policy, neither courts nor commentators
have made any serious attempt to develop a framework for
understanding the conditions that may affect the attention
that can be expected to be given to a particular purchase.
Some of the classic judicial descriptions cast the ordinary
consumer as ‘ignorant … unthinking and … credulous’ or
‘hasty, heedless and easily deceived.’ In other cases, the
courts have bristled at the ‘claimed asininity’ of the buying
public, suggesting instead that the average buyer is ‘neither
savant nor dolt,’ but is one who ‘lacks special competency
with reference to the matter at hand but has and exercises a
normal measure of the layman’s common sense and judg‐
ment.’ For the most part, however, the debate is a vacuous
war of words, uninformed by any careful theoretical model‐
ing of consumer psychology or empirical study of consumer
behavior.” Thomas R. Lee, Glenn L. Christensen & Eric D.
DeRosia, “Trademarks, Consumer Psychology, and the So‐
phisticated Consumer,” 57 Emory L.J. 575, 575–76 (2008)
(footnotes deleted).
We have doubts about the probative significance of the
Poret survey. But the similarity of logos and of products,
and of the channels of distribution (and the advertising over‐
lap) if CBOCS is allowed to sell its products through grocery
stores under its Cracker Barrel logo, and the availability to
the company of alternatives to grocery stores for reaching a
large consumer public under the logo, provide adequate
support for the issuance of the preliminary injunction. The
judgment is therefore
AFFIRMED.