Court Finds Infringement No Laughing Matter, Doubles Damages to $4.6M

After a jury found a likelihood of confusion in a case involving the trademark GRANDMA SYCAMORE'S HOME MAID BREAD, U.S. District Court Judge Dale A. Kimball doubled the jury's damages award to $4.6M.

Leland Sycamore, the Utah entrepreneur who originally created Grandma Sycamore’s Home Maid Bread, was ordered to pay the hefty damages to the company to whom he sold the name in 1998.

The Court ruled that the damages awarded to the plaintiff by the jury were inadequate given the lost sales and damage to the goodwill of the plaintiff.  The Court also noted there was evidence of willfulness, as the defendant had apparently joked about ignoring the plaintiff's cease and desist letters.

In 1998, the Defendant had sold the Grandma Sycamore’s trademark, business goodwill and trade secrets to Metz Baking Company, which was later acquired by the Sara Lee Corporation.

Leland subsequently started the Sycamore Family Bakery and began marketing a variety of breads identical to those marketed under the Grandma Sycamore’s brand. 

As part of the deal, Sycamore was given an exclusive license to use the Grandma Sycamore trademark in a limited number of areas outside Utah, only if given written approval from Metz.

A decade later in 2008, Sara Lee sent Leland a letter demanding that he refrain from using "Sycamore" or any other component of the trademark for any bread or bakery products, but Sara Lee received no response to that or three subsequent demand letters.

The Court noted that, on the defendant's bread packages, the name "Sycamore Family Bakery, Inc." was repeated 24 times above an image of a teddy bear holding hearts — similar to the hearts incorporated in the Grandma Sycamore’s packaging. The new business also marketed the bread as the "original granny bread" and "original version" of Grandma Sycamore’s.

Judge Kimball had granted the plaintiff's motion for a preliminary injunction in October 2009.  The judge had found that instances of actual confusion among both consumers and food distributors constituted persuasive evidence that consumers would likely believe that the "Sycamore family" was making both bread products, and that the defendants deliberately adopted the similar trademark to unlawfully benefit from its reputation.

Is "CHIPOTLE" a Valid Trademark?

Chipotle chilis - meco variety

The word "chipotle" comes from the Nahuatl word chilpoctli meaning "smoked chili pepper," and is a smoke-dried jalapeño pepper.  It is a flavorful chili pepper used primarily in Mexican and Mexican-inspired cuisines, such as Mexican-American and Tex-Mex.  The word has widely been used generically to describe this type of flavor.


Enter Chipotle Mexican Grill, Inc., a chain of restaurants located in the United States, UK and Canada, specializing in delicious burritos and tacos, and known for its fresh, natural ingredients and “assembly-line” production method. 


Despite its enormous success and popularity (as long lines of customers can attest), the company continues to face an uphill battle in legally capturing the word “CHIPOTLE” as a trademark. When the restaurant chain applied for the word trademark in 2003, the US Trademark Examiner initially refused to register it, finding that it was "highly descriptive of the goods and/or services."  


However, the Examiner went on to invite the company to offer specific evidence of distinctiveness, including dollar sales under the mark, advertising figures, samples of advertising, consumer or dealer statements of recognition of the mark, and any other evidence that establishes the distinctiveness of the mark as an indicator of source.  The Examiner reminded the company that "the [Trademark] Office will decide each case on its own merits."

Subsequently in June 2008, the CHIPOTLE trademark application became a registration on the Supplemental Trademark Register.  The Supplemental Register is a purgatory for descriptive or otherwise problematic marks which may (or may not) mature to the Principal Register.A quick search on Google demonstrates that CHIPOTLE has clearly become associated with the Plaintiff's restaurants.  


But can the CHIPOTLE word ever qualify to become a legally protectable trademark in its own right?  It may depend on whether CHIPOTLE is deemed "generic" or "descriptive" by a court.  The distinction is subtle, but meaningful.  A generic mark can NEVER become a trademark.  Examples of generic words are CHICKEN, RESTAURANT and GRILL. However, a mark that is descriptive CAN become a trademark, if sufficient "distinctiveness is acquired" by a single company.  Here, generic/descriptive use by unauthorized third parties create a chicken-and-egg problem for the restaurant chain, which is stuck with creating "distinctiveness in the making."  


Can such a brand owner who is still trying to establish trademark rights meaningfully assert a viable legal claim?  For example, Subway sandwich shops offer a product called CHIPOTLE CHICKEN. This usage does not appear to be licensed, and has apparently not drawn a lawsuit (yet). However, when the Kroger Company launched a product called CHIPOTLE CHICKEN in supermarkets, it was summarily sued and chose to settle.  Such outcomes can help a Plaintiff demonstrate good faith efforts to police the marketplace, but they do not in and of themselves resolve the ultimate linguistic -- and legal -- matter.  If larger and more visible third parties (such as Subway) continue to use the word in a generic or descriptive (i.e., non-trademark) manner, CHIPOTLE may be confined to those marks that never escape their perpetual sentence in trademark purgatory.  Only time will tell.