• One Famous Mark, Two Owners

    by  • April 2, 2013 • trademark • 1 Comment

    You all know that I’ll be having a “what were they thinking!” moment when I see a trademark case with a caption something like Del Monte v. Del Monte. We’ll start with the court’s opinion on the wisdom of the arrangement:

    This is the second trial between the two companies entitled to use the Del Monte brand and trademark. [Defendant] DMC is the successor to the original Del Monte, which in 1989 spun off its fresh fruit division. That division became [plaintiff] Fresh, which focuses on selling fresh fruit products, and DMC has since focused on distributing preserved, rather than fresh, produce. In splitting up the business, Del Monte also divided the rights to use the Mark in a license agreement between DMC and Fresh’s predecessor. DMC sold Fresh the rights — often to the exclusion of DMC’s own rights — to use the Mark on certain products primarily comprising fresh fruit and vegetables, while DMC largely retained the exclusive right to use the Mark on preserved produce.

    Two federal court trials and twenty-four years later, however, the parties still disagree about the meaning of the License Agreement.

    When you have two businesses using the same trademark in such closely related fields, it’s a guarantee for litigation as they each edge up to the line trying to sell as much as possible — there is no such thing as taking a conservative position on market share. And my proof? The gravamen of the present suit:

    Fresh alleged that a refrigerated fruit provision in the License Agreement carved out an exception to the fresh-versus-preserved division of the Mark. That provision specifies that the products covered by Fresh’s license include “on an exclusive basis, refrigerated pineapple products (including but not limited to peeled, cored, cut or diced pineapple) and refrigerated Non-Utilized Fruit.”

    And where else have we seen proof? The first publicly-posted legal rights objection was Del Monte v. Fresh Del Monte: Fresh applied for the top level domain dot-delmonte and Del Monte Corp. is objecting. Seriously, this isn’t something they could work out between themselves ahead of time? (I also hadn’t realized until the lawsuit that the two companies were in a licensor/licensee relationship — I’ll be curious to see the arguments licensee Fresh has for why it is entitled to the domain name.)

    Back to the lawsuit. A jury found that, indeed, licensor Preserved Del Monte breached the license by selling goods of a type that in the agreement were exclusive to Fresh Del Monte. In what appeared to be a “can we have it both ways” maneuver, what Preserved Del Monte sold wasn’t actually fresh fruit, it was just positioned as fresh fruit. Which meant that Preserved Del Monte was whacked both for breach of the license agreement and for false advertising, because in order to compete in fresh foods it deceived consumers into thinking the fruit was fresh when it wasn’t, by merchandising it in the fresh food section of the store and claiming the fruit needed refrigeration when it didn’t, and by not stating clearly enough that the fruit had preservatives.

    Oy vey. I know, for some business reasons it was advisable to split the company, there was (and is) a lot of goodwill in the mark, not granting a license would have significantly impaired the success of the new business, they couldn’t put too many restrictions on the new company’s use of the mark or it would reduce the value of the new company, and on and on. I’m sure it seemed like a good idea at the time; I wonder what the parties think of it now. And I titled this post “two owners” for a reason — is this really a licensor-licensee relationship or in effect a concurrent use agreement?

    If only they listened to the trademark lawyers.

    If you want actual legal analysis instead of a rant, Rebecca Tushnet and Marty Schwimmer can help you out.

    Fresh Del Monte Produce Inc. v. Del Monte Foods Co., No. 08 Civ. 8718 (SHS) (S.D.N.Y. March 28, 2013).

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