Tootsie Roll Industries, Inc. v. Sathers, Inc.

Citations: 666 F. Supp. 655; 2 U.S.P.Q. 2d (BNA) 1520; 1987 U.S. Dist. LEXIS 6904Docket: Civ. A. 87-75 LON

Court: District Court, D. Delaware; February 19, 1987; Federal District Court

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Tootsie Roll Industries, Inc. filed for a temporary restraining order against Sathers, Inc., alleging that Sathers was using a trade dress confusingly similar to Tootsie Roll's distinctive wrapper design, which has been in use since the early 1960s and is protected by U.S. Trademark Registration No. 1,324,905. The lawsuit is based on federal law, with additional state law claims, and jurisdiction is established due to diversity of citizenship between the parties. Tootsie Roll claims significant annual sales to Sathers, amounting to approximately $2,000,000, and contends that Sathers' use of a similar wrapper for its product, Snippits, creates a likelihood of consumer confusion and could harm Tootsie Roll's reputation. The Court outlines the standards for granting a temporary restraining order, which includes evaluating the likelihood of the movant's success on the merits, the potential for irreparable harm, the impact on other parties, and the public interest. Tootsie Roll's counsel notified Sathers prior to filing; however, Sathers was not present during the argument, leading the Court to adopt a procedure under Rule 65(b) of the Federal Rules of Civil Procedure.

Temporary restraining orders (TROs) and preliminary injunctions are considered extraordinary remedies, granted only with a strong showing of necessity to preserve the status quo until a full hearing can occur. Tootsie Roll's motion for a TRO has been granted based on a substantial likelihood of success on the merits of its claims against Sathers, specifically under the Lanham Act. Tootsie Roll alleges four violations: common law trademark infringement, trade dress infringement, a violation of section 43(a) of the Lanham Act, and a violation of the Delaware Trademark Act. The Court finds sufficient evidence to support Tootsie Roll's claim under the Lanham Act, which prohibits unprivileged imitation of trade dress.

To succeed in a trade dress infringement claim, Tootsie Roll must prove three elements: (1) its trade dress is non-functional, (2) it has acquired secondary meaning, and (3) there is a likelihood of consumer confusion regarding product source. The Court believes Tootsie Roll can likely prove that its trade dress is non-functional and has acquired secondary meaning, indicating that consumers primarily recognize the trade dress as identifying the source of the product rather than the product itself. Relevant factors for secondary meaning include duration of use, consumer association, sales and advertising extent, and evidence of copying.

To succeed in a claim of trade dress infringement under section 43(a) of the Lanham Act, a party must demonstrate a likelihood of consumer confusion due to the use of a similar trade dress. The Court finds that Tootsie Roll is likely to prove that Sathers' trade dress closely resembles its own, creating potential marketplace confusion. A comparison of the wrappers shows they are nearly identical in design, color, configuration, and texture, with similar twisting at the ends. Given that the candies are impulse purchases, this increases the likelihood of confusion among consumers.

Additionally, Sathers repackages Tootsie Roll's candies into a product labeled 'Kiddie Mix,' which also creates confusion as the packaging for 'Kiddie Mix' containing 'Snippits' is identical to that containing 'Tootsie Roll' candies. Consumers must closely inspect packaging to differentiate between the two types, further heightening the potential for confusion.

Tootsie Roll argues that it will suffer irreparable harm due to the loss of goodwill when consumers mistakenly purchase Sathers' products, as it cannot control the quality or nature of Sathers' offerings. This potential loss of goodwill, which encompasses public perception and brand reputation, is difficult to quantify but significant. The Court concludes that Tootsie Roll is likely to prevail under section 43(a) due to the substantial similarity in trade dress and the likelihood of confusion in the marketplace.

Tootsie Roll asserts that Sathers has produced 250,000 pounds of candy and sufficient wrapping for another 250,000 pounds, indicating potential consumer confusion regarding the product. The likelihood of consumer confusion establishes irreparable injury, with Tootsie Roll only needing to show a reasonable belief of potential damage due to the misleading wrapping, without needing to demonstrate actual sales diversion. The court finds that Tootsie Roll is likely to suffer irreparable harm if a temporary restraining order is not granted. 

Regarding Sathers, the court speculates that granting the order will not significantly harm the company, as it can retain its wrapped candy and continue production while awaiting the preliminary injunction decision. If Sathers wins, it can use its existing product and wrappers; if Tootsie Roll prevails, Sathers can rebrand under a different wrapper. Additionally, preventing further shipments now could save Sathers from costly recalls later.

Two public interests are at stake: protecting business goodwill and ensuring fair competition. Granting the temporary restraining order supports consumer confidence and knowledge about products, which aligns with public interests. The limited duration of the order minimizes potential harm to Sathers, while denying the motion could harm Tootsie Roll's goodwill and encourage unfair competition.

The conclusion reached is that granting a temporary restraining order serves the public interest. Tootsie Roll asserts that its trademarked color is orange, while it is categorized as such by the U.S. Trademark Registration. The trade dress associated with Tootsie Roll has been utilized on various products and as a logo for four years. Significant similarities between Tootsie Roll's and Sathers' Snippits wrappers have been identified, including the use of a wax paper wrapper, a brown center panel, parallel thin red (or orange) stripes, white outer panels, and specific placements of branding. The court has confirmed these similarities, despite acknowledging that the wrappers are not identical due to the differing brand names and corporate colors. The court emphasizes that overall design similarity can lead to consumer confusion, and minor differences do not negate this risk. Tootsie Roll has sold over 4 billion Midgees in the past two years, with the disputed 40 million pieces representing about 2 percent of their average annual sales. The court assumes the candy has a shelf life exceeding ten days, allowing Sathers to seek modifications to this order if necessary.