On March 5, 2013 a jury returned a verdict against Frito-Lay North America (“Frito-Lay”) and in favor of Medallion Foods and Ralcorp Holdings, (collectively “Medallion Foods”) in the Eastern District of Texas –Sherman Division.
Frito-Lay brought a lawsuit against Medallion Foods for allegedly trademark infringement, trade dress infringement, unfair competition, and dilution under United States Trademark Act. Frito-Lay also alleged willful patent infringement under the patent laws of the United States.
In its amended complaint Frito-Lay alleged that Medallion Foods’ tortilla chips result from processes, which infringe one or more claims of United States Patent No. 6,610,344 either literally or under the doctrine of equivalents. Additionally, Frito-Lay contends that Medallion Foods is liable for infringing the ‘344 Patent under U.S.C. § 271, as well as the infringement being willful, entitling Frito-Lay to enhanced damages under §284.
Both sides tried to limit the scope of trial through pre-trial motion practice. On October 4, 2012, Frito-Lay filed a motion for summary judgment on Medallion Foods’ sale or public use affirmative defenses and counterclaims. Frito-Lay “contends that it is entitled to summary judgment because Defendants [Medallion Foods] failed to produce clear and convincing evidence that the chip sold by Frito-Lay in a test market had fluted edges, and all testing of a bowl-shaped chip with fluted edges occurred under confidentiality agreements.” The Court went through a thorough analysis and granted in part, and denied in part the motion.
With regards to the part of the motion that was granted the Court stated: “[t]he burden is on Defendants [Medallion Foods] to show by clear and convincing evidence facts that support the existence of a public use. The Court finds that Defendants are unable to provide such evidence…The evidence before the Court provided by Plaintiff indicates that the testing did occur in public to individuals that were subject to a confidentiality agreement. There is no indication that these tortilla chips were used in public without the presence of the confidentiality agreement, and there is no indication that any individuals violated the confidentiality agreements that they signed. Therefore, the Court finds Plaintiff’s motion for summary judgment should be granted on this ground.”
Medallion Foods also requested relief under Federal Rule of Civil Procedure 56(d), which provides that “if a nonmovant shows by affidavit or declaration that, for specific reasons, it cannot present facts essential to justify its opposition, the court may (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery. However the Court found this not to be the case: “[b]ecause Defendants failed to show any specific facts exist that would determine the testing was public, the Court finds that Defendant’s request for relief under Rule 56 (d) is denied.”
Although the motion for summary judgment was decided on January 8, 2013, the trial began in February of this year. Frito-Lay’s currently holds the rights to the ‘344 Patent, which covers the manufacturing process for the TOSTITOS SCOOPS! Product –which was issued in 2003. During the two-week trial, Frito-Lay alleged that Medallion infringed its trade dress rights to the Scoops design, as well as the chip packaging. Both Frito-Lay and Medallion had product packages that are blue and features a black name on a geometric background –while having a see through panel that gives the illusion that the chips are being dipped in salsa. One of the requirements to succeed on a trade dress claim is “a plaintiff must show that its trade dress is distinctive and non-functional and that a defendant’s product would confuse customers as to the source of the product.”
Based on the verdict, the jury did not believe that consumer confusion existed pertaining to the specific trade dress or patent infringement claims. “This was a very complicated trial, and we were fortunate to have an extremely smart jury that understood the issues and delivered a just verdict,” says Mr. John Ward, whose firm Ward & Smith helped represent Medallion. “This jury digested almost 40 pages of complex instructions and returned a verdict in our clients’ favor on all issues submitted.”
Needless to say, Frio-Lay was extremely disappointed by the outcome of the trial. Chris Kuechenmeister, a spokesman for Frito-Lay stated: “Frito-Lay’s trade dress and patent rights remain valid.” Frito-Lay is currently addressing its post-trial options, including appeal.
The presiding judge over the trial was United States Magistrate Judge Amos L. Mazzant.