It was my pleasure today to be a guest on Bloomberg Law’s Podcast / Radio show with host June Grasso. The topic was Unilever’s lawsuit for false advertising against the egg-free spread sold by Hampton Creek under the brand name “Just Mayo.” You may listen to the complete podcast here.
Unilever owns the Hellmann’s® and Best Food’s® brands of mayonnaise. On October 31, 2014, Unilever filed suit in the U.S. District Court in New Jersey against Hampton Creek, Inc. for false advertising and unfair competition for selling an egg-free spread under the brand name “Just Mayo.” According to Unilever, the lack of any eggs in the product precludes it from being labeled as “mayonnaise” under federal regulations and consumers are further misled in this regard by the egg on the product label. As alleged in the Complaint:
“Mayo” is defined in the dictionary and in common usage as “mayonnaise.” Under federal regulations, common dictionary definitions and as consumers understand it, “mayonnaise” or “mayo” is a product that contains eggs. That ingredient does not exist in Just Mayo. By calling its vegan sandwich spread Just Mayo, Hampton Creek falsely communicates to consumers that Just Mayo is mayonnaise, when it in fact, it is not. The literally false product name is highlighted on the label, which also features a giant image of an egg … and in advertising for Just Mayo.
Finally, Unilever complains that comparisons made by Hampton Creek claiming that JUST MAYO tastes better and is superior to “real” mayonnaise, including Hellmann’s, are unsubstantiated and part of its “larger campaign and pattern of unfair competition.”
The JUST MAYO brand is a rising newcomer in this market segment. As noted by the Wall Street Journal, “Hampton Creek, founded three years ago, has raised $30 million from investors including Microsoft co-founder Bill Gates for its vision of making plant-based substitutes for common egg-based products that it says are healthier and more environmentally friendly.” The lawsuit has inspired a petition on Change.org asking Unilever to “stop bullying sustainable food companies” which has more than 16,000 supporters as of November 11th.
Although certain blogs have labeled the lawsuit frivolous, it is highly doubtful that Hampton Creek can have the claims dismissed as a matter of law. Rather, the case will likely move forward and hinge on the ultimate question of whether the “Just Mayo” label and associated marketing includes one or more false or misleading statements of fact that actual deceived or has the tendency to deceive a substantial segment of consumers and influence the purchasing decisions of consumers.
Significantly, this case underscores the dangers of creating and investing in an attractive but risky brand name. It is undisputed that the FDS’s standard of identity defines mayonnaise as “the emulsified semi-solid food prepared from vegetable oil(s),” an “acidifying” ingredient of either (1) vinegar or (2) lemon juice or lime juice, or both, and an “egg yolk-containing” ingredient. 21 C.F.R. § 169.140. Thus, by naming an egg-free product “Just Mayo,” there was always a risk that it would be accused of deceiving consumers.
UPDATE: I was just quoted in connection with this lawsuit on FoodNavigator-USA — see here.
In March 2013, Diageo North America, Inc., which owns the Canadian Whiskey brand “Crown Royal,” filed various trademark and unfair competition claims against Mexcor, Inc. and EJMV Investments, LLC. Diageo alleged that Defendants have been selling “directly-competing Canadian whisky products” under various brands “dominated by the term ‘CROWN,’ including Texas CROWN Club, Florida CROWN Club … and South Carolina CROWN Club.” Diageo alleged that this issue was compounded by Defendants’ packaging of the products in “imitative bags … violate Diageo’s rights in [its] Purple Bag mark” and “unfairly imitate the overall look and feel of Diageo’s CROWN ROYAL® product line.” In sum, Diageo claimed that consumers will mistakenly believe that [Defendants’] whiskeys are “affiliated with, sponsored by, approved by, or associated with Crown Royal” and/or that they “are regional variations or novelty line extensions of Crown Royal.”
Fast forward 20 months to the present and the case is now set to go to trial on December 3, 2014. Both parties had filed motions for summary judgment that were all rejected by the court in an October 27th Order that did not elaborate as to the reasons for the denials.
Specifically Defendants’ motions sought summary judgment (1) as to trademark dilution on the grounds that the Crown Royal trademarks were not “famous” (2) on all claims based on laches and limitations, and (3) on the trademark infringement and unfair competition claim. For its part, Diageo sought summary judgment on its trademark infringement, unfair competition, and false designation of origin claims.
The lack of any elaboration by the Court in its order likely means that it views issues of fact as precluding summary judgment on any of the motions.
With respect to the laches and limitations motion, Defendants claimed that they had been using the “CROWN” word mark on bottles in conjunction with velvet bags since 2008. Diageo’s Response disputed those facts and also focused on the doctrine of progressive encroachment, which “allows a trademark owner to tolerate de minimis or low-level infringements and still have the right to act promptly when a junior user either gradually edges into causing serious harm or suddenly expands or changes its mark.” This is an important principle to keep in mind for any brand owner. A brand owner might be at risk of a trademark infringement suit by expanding its product lines or its geographic scope. Thus, even if such a suit seems like a remote possibility when a trademark is adopted, strong consideration should be given to future events, especially if the brand might potentially be expanded or sold.