H.J. Heinz Co. (“Heinz”) filed a federal lawsuit recently against Boulder Brands USA (“Boulder”) seeking to vacate and reverse a Trademark Trial and Appeal Board decision finding that Boulder’s SMART BALANCE trademark is not likely to be confused with Heinz’s SMART ONES trademark, and that the SMART ONES trademark is not famous.  H.J. Heinz Co. v. Boulder Brands USA, Inc., No. 15-0681 (W.D. PA, filed May 26, 2015). The underlying trademark opposition proceeding before the Board was unremarkable.  Heinz’s predecessor launched the very successful SMART ONES brand for frozen entrees and other frozen ready to eat food in 1992.  Boulder’s predecessor launched its successful SMART BALANCE brand for heart-healthy butter substitutes in 1996.  In 2009, Boulder’s predecessor filed a new application for SMART BALANCE, this time for a range of frozen appetizers and entrees, as well as ready-made snacks.  Heinz opposed that application at the Board, alleging that Boulder’s new SMART BALANCE application for frozen entrees so resembles Heinz’s SMART ONES mark as to be likely to cause consumer confusion.  Heinz also alleged that its SMART ONES brand was famous, and that therefore, registration of Boulder’s new SMART BALANCE application was likely to dilute the distinctiveness of Heinz’s unique and famous mark. 

In March, the Board held in favor of Boulder, applying the well-established multi-factor test for determining likelihood of confusion before the Board.  Although the Board considered the parties’ respective goods to be “legally identical,” the channels of trade to be the same, and the parties’ respective purchasers to be unlikely to exercise a high degree of care when making purchasing decisions, the Board found the parties’ marks themselves to be dissimilar.  The Board considered the shared term SMART to be descriptive, weak, and not entitled to a broad scope of protection.   The marks’ respective overall commercial impressions were considered to be different enough to weigh against a conclusion of likelihood of confusion.  The Board also said that its decision was heavily influenced by what it called a “17-year history of peaceful co-existence in the U.S. marketplace” since SMART BALANCE launched in the mid-1990s for its original goods.

In addition to finding that there was no traditional likelihood of trademark confusion, the Board found insufficient evidence to hold that Heinz’s SMART ONES trademark was famous under the high standards of the Lanham Act.  Though Heinz was able to point to general testimony that its mark had been heavily advertised during its twenty years of existence and has achieved a high volume of sales, such evidence was found to be too nonspecific to carry significant weight.  Significantly, Heinz was only able to show advertising and sales data for the SMART ONES mark closely paired with the WEIGHT WATCHERS mark.  The Board noted the established rule that where a party’s advertising and sales data is based on materials and packaging in which the mark at issue is displayed with another mark, the data falls short of proving the mark at issue possesses the requisite degree of consumer recognition.  In this case, the Board found that SMART ONES and WEIGHT WATCHERS were consistently coupled in the marketplace.  Further, Heinz’s survey evidence was considered by the Board to be insufficient to prove fame as well.

Heinz elected not to appeal the Board’s decision to the Federal Circuit.  Rather, Heinz commenced an action in the Western District of Pennsylvania for de novo review under 15 U. S. C. §1071(b).  This strategy appears to be a response to the U.S. Supreme Court’s decision in B&B Hardware, Inc. v. Hargis Indus., Inc., No. 13-352, slip op., 575 U.S. __ (2015).  In B&B Hardware, the Court held that Board findings can have a preclusive effect in subsequent federal court proceedings if the usual requirements of issue preclusion are met, and the issues litigated in the two actions are “materially the same.”  Prior to the Court’s ruling in B&B Hardware, parties to Board proceedings often approached the issue of the registrability of a trademark at the USPTO – with whatever evidentiary limitations that entailed – as something different from the issue of trademark infringement in a federal lawsuit, with the full evidentiary submissions and high expense that entails.

The Court in B&B Hardware signaled an end to that dichotomy under certain circumstances.  Although the Court recognized that Board proceedings are limited in terms of discovery, lack live testimony, and, at times, neglect to take into account the actual market realities of the parties’ goods (as opposed to the goods as they are described in the trademark application), notwithstanding those differences, the Court observed that “[a]lthough many registrations will not satisfy those ordinary elements [of issue preclusion], that does not mean that none will.” Slip. op. at 15.

It would appear that Heinz wisely decided to heed the Court’s advice to seek a clean slate through de novo review of the Board’s decision through a district court proceeding under 15 U. S. C. §1071(b).