Zatarains, Inc., Cross-Appellee v. Oak Grove Smokehouse, Inc. And Visko's Fish Fry, Inc., Cross-Appellants

Citations: 698 F.2d 786; 217 U.S.P.Q. (BNA) 988; 1983 U.S. App. LEXIS 30159Docket: 81-3573

Court: Court of Appeals for the Fifth Circuit; February 25, 1983; Federal Appellate Court

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In the trademark dispute between Zatarain's, Inc. and the defendants Oak Grove Smokehouse, Inc. and Visko's Fish Fry, Inc., the central issue is the alleged infringement of Zatarain's trademarks "Fish-Fri" and "Chick-Fri." The court upheld the district court's ruling that the defendants had a valid "fair use" defense regarding the term "Fish-Fri" and ordered the cancellation of the "Chick-Fri" trademark registration. Zatarain's produces a variety of food products, including "Fish-Fri," a corn flour-based coating used for frying seafood, which has been on the market since 1950 and registered since 1962. "Chick-Fri," a seasoned corn flour batter for frying chicken, has been in use since 1968 and registered since 1976. The competition includes at least four other companies offering similar products, including Oak Grove and Visko's, both of which began marketing their respective "fish fry" and "chicken fry" products in 1979 and 1980, respectively. Other competitors, like Boochelle's and Arnaud, also exist in the market. Boochelle's reached a settlement with Zatarain's, changing its product's name in the process.

Zatarain's initiated a legal action against Oak Grove on June 19, 1979, in the Eastern District of Louisiana, alleging trademark infringement and unfair competition under various statutes, including the Lanham Act and state law. The complaint was later amended to include Boochelle's and Visko's as defendants, but the dispute with Boochelle's was resolved, leading to its dismissal from the case. Oak Grove and Visko's counterclaimed under multiple federal and state statutes, including the Sherman Act and the Clayton Act, seeking cancellation of Zatarain's trademarks "Fish-Fri" and "Chick-Fri," as well as damages.

The district court trial, conducted without a jury, first addressed the trademark claims. It classified "Fish-Fri" as a descriptive term that had acquired secondary meaning in New Orleans, granting it trademark protection, but ruled that Oak Grove and Visko's were entitled to fair use of the term, thus finding no infringement. Conversely, for "Chick-Fri," the court determined it was merely descriptive and had not achieved secondary meaning, leading to the cancellation of its trademark registration.

In examining Zatarain's unfair competition claims, the court found no evidence of consumer confusion due to the dissimilarities in product presentation, ultimately ruling against Zatarain's claims under both federal and state unfair competition laws. The court dismissed the antitrust and unfair trade practices counterclaims from Oak Grove and Visko's, citing a lack of evidence to support allegations of monopolistic behavior or misbranding by Zatarain's. Both parties subsequently filed appeals.

Zatarain's is appealing an adverse judgment on multiple grounds, asserting that its "Fish-Fri" trademark is suggestive and thus not subject to the fair use defense. It contends that even if fair use applies, the appellees’ use of its trademarks lacks good faith in describing their products. Zatarain's also claims the district court wrongly canceled the trademark registration for "Chick-Fri," arguing that it demonstrated sufficient evidence of secondary meaning for the term. Consequently, Zatarain's seeks reversal of the district court's decision.

Conversely, Oak Grove and Visko's appeal the dismissal of their counterclaims against Zatarain's, alleging violations of the Sherman Act, the Lanham Act, federal product identity labeling regulations, and Louisiana trade restraint laws, along with a request for attorneys' fees. 

The document further outlines the basic principles of trademark law, emphasizing that the initial registrability of a trademark is critical in infringement actions. Trademarks are categorized as generic, descriptive, suggestive, or arbitrary/fanciful, with a generic term being one that refers to a class of products and is therefore unprotectable. If a registered trademark becomes generic, it can be canceled under the Lanham Act. Examples of generic terms include "aspirin" and "cellophane," which have been ruled unprotectable in prior cases.

A descriptive term indicates a specific characteristic of a product or service, such as color or function, and is generally not eligible for trademark protection under the Lanham Act unless it acquires secondary meaning among consumers. Examples include "Alo" for aloe vera products and "Vision Center" for optical goods. The distinction between descriptive and generic terms is nuanced but significant; while descriptive terms can gain trademark status through secondary meaning, generic terms cannot be protected at all. 

Suggestive terms imply characteristics of the goods and require consumer imagination, thus receiving automatic protection without the need for secondary meaning, as illustrated by "Coppertone" for tanning products. Arbitrary or fanciful terms, which have no relation to the products, are also protected without proof of secondary meaning, with "Kodak" and "Ivory" as examples. 

To establish secondary meaning for a descriptive term, a plaintiff must demonstrate that consumers primarily associate the term with the producer rather than the product itself. The burden of proof lies with the plaintiff and is challenging to meet. Suggestive and arbitrary or fanciful marks enjoy automatic protection upon registration, whereas generic terms remain unprotectable regardless of any acquired secondary meaning.

The "fair use" defense permits the use of a trademarked descriptive term without liability for infringement if the term is employed fairly and in good faith to describe goods or services or their geographic origin, as outlined in Lanham Act Section 33(b)(4). This defense is applicable only to descriptive terms used in their primary sense, preventing trademark holders from monopolizing descriptive language and allowing others to accurately describe their products, provided there is no customer confusion regarding source. 

Additionally, under Section 37 of the Lanham Act, courts can determine the validity of registered marks, including ordering their cancellation if found to be generic or descriptive without secondary meaning. In the case at hand, Zatarain's claims "Fish-Fri" as a suggestive mark, while Oak Grove and Visko's argue it is generic or merely descriptive. The district court deemed "Fish-Fri" descriptive, a classification affirmed under the "clearly erroneous" standard, emphasizing that terms conveying immediate ideas about a product's qualities or characteristics cannot be exclusively trademarked. Various tests exist to classify marks as descriptive, reflecting a broad interpretation of descriptiveness in trademark law.

A dictionary serves as an appropriate starting point for understanding the term "Fish-Fri," which is defined as either a picnic involving catching and frying fish or simply fried fish. These definitions suggest that "Fish-Fri" is descriptive of Zatarain's product, indicating its purpose and function. The "imagination test" reveals that the term does not require much imagination for consumers to deduce that "Fish-Fri" refers to a prepackaged coating or batter mix for frying fish, thus qualifying it as descriptive. Additionally, courts assess whether competitors would need to use the term to describe their own products. In this case, it is evident that other merchants might find "fish fry" useful for their batter mixes, countering Zatarain's argument that alternatives exist. The legal perspective emphasizes that a term's uniqueness is not a determining factor for its descriptiveness; various ways to describe a product are acceptable. Finally, the lack of synonyms for "fish" and "fry" supports the idea that "fish fry" is a practical descriptor for such products.

The descriptiveness of a trademark is evaluated by examining its usage in the marketplace, particularly by competitors. The term "Fish-Fri," used by multiple companies, including Zatarain's and Arnaud's, indicates that it is likely descriptive. The district court determined that "Fish-Fri" is descriptive of the product's function, and this finding is upheld as not clearly erroneous. For Zatarain's to secure trademark protection, it must demonstrate that "Fish-Fri" has acquired secondary meaning in the minds of consumers. The court found sufficient evidence of secondary meaning in the New Orleans area due to Zatarain's extensive use and advertising of the term, which included over $400,000 in advertising from 1976 to 1981 and significant sales growth. Establishing secondary meaning requires showing that the mark uniquely identifies a product from a single source, with various factors such as advertising efforts and sales volume serving as circumstantial evidence. The effectiveness of these promotional efforts in changing public perception is crucial. The district court's assessment of the evidence supported Zatarain's claim of secondary meaning.

Zatarain's presented survey evidence at trial showing that a notable percentage of women in New Orleans recognized "Fish-Fri" as a product for frying fish, which contributed to establishing secondary meaning for the term in that geographical area. Despite the district court's conclusion that this evidence, alongside circumstantial factors like advertising and usage, supported the finding of secondary meaning, it acknowledged the close nature of the issue. The court affirmed that Zatarain's has a valid trademark for "Fish-Fri" due to its secondary meaning but noted that this does not grant exclusive rights to the term in its original descriptive context.

The "fair use" defense applies, allowing Oak Grove and Visko's to use "fish fry" descriptively. The district court found that their use was fair and in good faith, as they did not intend to use the term as a trademark, had not attempted to register it, and believed "fish fry" to be generic. Their product packaging was designed to reduce consumer confusion, further supporting the district court’s determination that confusion at the point of purchase was unlikely. As a result, Zatarain's trademark infringement claim was dismissed, affirming Oak Grove and Visko's right to use the term descriptively.

"Chick-Fri" is classified as a descriptive term for frying chicken, similar to "Fish-Fri." The association of "Chick-Fri" with Southern fried chicken is clear, and other merchants have used similar terminology. The district court's finding that "Chick-Fri" is descriptive is affirmed. Zatarain's failed to establish a secondary meaning for "Chick-Fri," which has been in use since 1968 and registered since 1976, with minimal advertising efforts compared to "Fish-Fri." Evidence presented for secondary meaning, including a survey by Allen Rosenzweig, was deemed inadequate due to its focus on fish fryers rather than relevant consumers of "Chick-Fri." Consequently, the court upheld the finding that "Chick-Fri" lacks secondary meaning and affirmed the cancellation of its trademark registration under section 37 of the Lanham Act. 

The counterclaims against Zatarain's by Oak Grove and Visko's include allegations of federal antitrust violations and state law breaches regarding trade restraint, along with requests for attorneys' fees based on Zatarain's purported bad faith in pursuing the infringement action. The district court found these claims to lack merit, as no evidence was presented to support them. This judgment is also affirmed.

Oak Grove and Visko's filed a counterclaim regarding Zatarain's sale of 100% corn flour branded as "Fish-Fri," alleging it was deceptive under federal labeling regulations (21 C.F.R. Sec. 101.3). They contended that the prominence of the term "corn flour" on the packaging did not meet regulatory standards. However, the district court found the counterclaim meritless, determining that the size of "corn flour" complied with the relevant regulations and was reasonably sized in relation to "Fish-Fri." This conclusion was affirmed as not clearly erroneous. The appellate court further dismissed the array of counterclaims as without merit. The court also noted Visko's motion to dismiss Zatarain's complaint or to join a third-party defendant was denied. The court affirmed the district court's rejection of claims that "Fish-Fri" was a generic term, finding no evidence of common recognition of the term in the food industry. Zatarain's argument that "Fish-Fri" is suggestive rather than descriptive was discussed, but the court noted that Zatarain overstated the consumer survey results supporting this claim. The judgment of the district court was fully affirmed.

The survey in question is deemed unpersuasive regarding suggestiveness due to several key factors. Initially, the survey was not designed to assess descriptiveness or suggestiveness, but rather to evaluate likelihood of confusion and secondary meaning, as clarified by expert witness Allen Rosenzweig. Additionally, the district court excluded Rosenzweig's testimony on the survey's implications for suggestiveness or descriptiveness. The survey questions themselves were inadequately structured, as they included leading hints that could bias responses, such as references to grocery stores and the product's intended use. The sample size of 100 women across four cities is also considered insufficient for robust conclusions.

While survey evidence is important in trademark law, it must be relevant, open-ended, and neutrally administered. Given the survey's limitations, Zatarain's claims of conclusive evidence for suggestiveness are rejected. Furthermore, Zatarain's asserts entitlement to a presumption of suggestiveness based on its federal registration of "Fish-Fri." However, the Lanham Act states that such registration is prima facie evidence of exclusive rights but does not prevent challenges based on the mark's descriptive nature. Zatarain's contention that opposing parties failed to prove "Fish-Fri" as descriptive is countered by ample evidence supporting the argument that the term describes a coating for frying fish, thus rebutting the presumption of suggestiveness. Lastly, a mark deemed "incontestable" under the Lanham Act cannot be contested for lack of secondary meaning, although it remains subject to certain defenses.

For a mark to achieve "incontestable" status, the registrant must demonstrate five years of continuous use post-registration and submit specific affidavits to the Commissioner of Patents, per 15 U.S.C. Sec. 1065. Zatarain's has not provided evidence of meeting these criteria, necessitating an assessment of any existing proof of secondary meaning. Survey data indicated that 77% of New Orleans respondents associated the term "fish fry" with a specific product rather than a general coating, although a follow-up question about the manufacturer was not asked, complicating the analysis. The district court dismissed Zatarain's unfair competition claims under the Lanham Act Sec. 43(a) and Louisiana law, citing a lack of likelihood of confusion among the products involved. It noted that it would be contradictory to classify the defendant's usage as both "fair" for trademark infringement and "unfair" for unfair competition within the same statute. Even if the survey results were considered, they were insufficient to establish secondary meaning for "Chick-Fri," with only 11 respondents identifying it as a coating for chicken, a number deemed inconclusive. Regulatory requirements for food packaging state that the principal display panel must include a clear statement of identity, presented in bold type and appropriately sized, according to federal guidelines.